San Francisco home buyers may have really pondered much on the rising prices of the bay area. In a study of Core Logic DataQuick, the home sales recorded in San Francisco are at their lowest in seven years, reports CNBC.
A report from Reuters citing the same study notes that sales of new and existing houses and condominiums in SF dropped 10.9 percent in February from the same month last year and 1.1 percent from January. The outlet notes that the region's 4,376 home sales are indeed the lowest February sales data since 2008.
What could be the factors affecting such very low home sales?
1. Tight Supply
Some buyers may be willing to buy homes in the region but they just can't without much supply. An article from SFGate reports that February listings for single-family homes in San Mateo County were the lowest recorded February listings for 17 years or since the year 1998, based on MLSListings Inc. tracks. Supply was also at its lowest record in February in Santa Clara.
2. San Francisco Area's Median Home Price is Extremely High
CNBC notes that the study reported a median price paid for a home in the region in February was $565,000. Although it was down 1.2 percent from January's median price, it was still 4.6 percent more than February 2014. Aside from that, it is almost three times the median home price in the national level. The median price for U.S. homes as of February was $202,600, YCharts notes.
"It is easy to see that supply is still constrained. It's also clear the mortgage market remains off-kilter. Home loans are readily available for those who have good credit, a W-2 income and who are applying for a government-backed mortgage, but it can still be challenging for others, such as the self-employed and retired, even for those with a high income or significant assets, or both," CoreLogic DataQuick analyst Andrew LePage explains in the study.
3. San Francisco's Rent is the Highest in the U.S.
Curbed reports that San Francisco's median rent of $3,460 in February for a one-bedroom unit tops the U.S. rental markets according to Zumper. In March, Zumper says it has come down to $3,400, yet it still tops the list for the 10th straight month. With a high rent like that, first-time buyers would not be able able to save easily for their first home's downpayment which is about 20 percent of the home value says SFGate HomeGuides.
According to the First Morgage Affordability Report of Realtor.com, San Francisco area is the least affordable among the 25 largest markets studied in 2014. With a mortgage-to-income ratio of 64.7 percent, and predicted 72 percent ratio this year, no one can imagine the fear of renters in the Bay area.
With the skyrocketing rents, homeowners in the region are also content in renting their homes, instead of selling them. Thus, making supply more limited.
4. Fear of Buying
SFGate adds that residents in the Bay area have a fear of buying new properties which is rooted from their fear of selling their properties. Thus, it aggravates the very limited inventory in the region.
"The move-up market is pretty much frozen. Even if you can do great on the sale of your property, you are terrified to enter the market as a buyer," Matt Fuller, an agent with Zephyr told the outlet.
