San Francisco Hits #1 Position With An Expected 12.7% Increase
With most of the Bay Area real estate market in overdrive, we don’t find it so surprising that San Francisco and other metro areas in California are poised for the country’s strongest levels of appreciation in the coming year.
Guess what area will gain the most appreciation in the next year? Give yourself a Kewpie doll if you guessed San Francisco. The gaining numbers come via Veros Real Estate Solutions who specialize in predictive analytics. They recently announced that the top three positions now have double-digit forecast appreciation, with the re-emergence of California markets taking over three of the top spots.
Projected Five Strongest Markets*
- San Francisco-Oakland-Fremont, CA +12.7%
- Los Angeles-Long Beach-Santa Ana, CA +11.6%
- San Jose-Sunnyvale-Santa Clara, CA +11.1%
*Markets demonstrated are for residential real estate in major metro areas (typically greater than 250,000 residents) among single-family homes in the median price tier.
San Francisco Has Low Inventory, Good Affordability Levels, Relatively Low Unemployment
The numbers can be attributed to the San Francisco housing shortage, with supply down nearly 80% from its peak in 2008. Although prices still maintain relatively high price tags compared with much of the U.S., affordability sits at 2004 levels. The low supply, historically good affordability, relatively low unemployment of 6.7% (compared to the 7.5% national unemployment rate) and continued low interest rates continue to propel the SF Bay Area market to the #1 spot with 12.7% appreciation forecast.
Similarly, the Los Angeles and San Jose market upswings can be seen due to significantly reduced housing supply, down more than 70% and 75% respectively from their peaks. In Los Angeles, affordability returned to levels not seen in more than a decade and the low unemployment rate in San Jose position these markets in the #2 (+11.6%) and #3 (+11.1%) spots respectively.