The real estate market in San Francisco is trending towards recovery. The inventory is dwindling, and the home prices are increasing, but pundits warn potential investors that the housing market, in general, will not recover until 2014. According to a survey conducted, Americans believe that the recovery of the overall housing market is two and half years away. Here is what potential investors should know prior to making an investment.
Foreclosures and the San Francisco Real Estate Market
The housing market is in jeopardy because of foreclosures primarily. This crisis has discounted houses by 46 percent in California and 35 percent all over the nation. When there are a significant number of foreclosures on the market, this forces the prices down on other properties.
In general, there is a two-year supply of bank-owned properties available. Typically, California homes require 600 days before foreclosure occurs. Since the process takes a considerable time, home buyers will begin witnessing homes in foreclosure that began the process almost two years earlier. This is why pundits speculate that the housing market will not show strong signs of recovery until 2014.
The large number of foreclosures is what keeps the prices low and also, keeps new construction at a minimum. San Francisco’s problems stem from the lack of inventory and the inability to find affordable properties. Inventory has reduced by 57 percent, and prices have increased by 25 percent. When cash buyers come into play, finding an affordable property becomes even more difficult. Short sales are also growing in popularity, but it creates a problem in the San Francisco housing market.
Future Housing Expectations and Policy Changes
Pundits are expecting to sell the rest of the distressed inventory in 2013 and into 2014. Then, there will be signs of recovery. One circumstance that may impede this process is the housing policy changes. Currently, 96 percent of all mortgages are originating from FHA, Fannie Mae, and Freddie Mac. There is also a considerable number of cash-paying investors.
The conversations on Capitol Hill may affect the number of mortgage arising from these organizations. The Dodd-Frank bill is one to watch. Without mortgages, there will be no housing market. The United States housing market is close to hitting rock bottom. Thus, this is the best time to buy before the prices start to recover and remain steady, but pundits do not expect the entire market to recover for another 18 months.
- A Strong Real Estate Market Ahead in 2013 for Lafayette and the Bay Area (teamrothenberg.com)
- A Sharp Improvement in Foreclosures, but Not Everyhwere (247wallst.com)