Bay Area home sales continue to skyrocket
SAN JOSE, Calif. (KGO) -- Home prices are still skyrocketing. The Case-Shiller 20-City Index rose 5.7 percent from last year.
San Francisco, Denver, Portland and Seattle all registered double-digit price increases.
Home prices can vary widely in the Bay Area from city to city, even by neighborhood, but the pressure on sellers and buyers is similar. Demand exceeds supply, pushing prices up. And appreciation can be significantly higher in some areas.
For example, a century-old house in San Jose's Willow Glenn neighborhood has three bedrooms and two bathrooms. It has also been updated and upgraded with energy-saving features. While Bay Area home prices have gone up 10.5 percent in January, compared to a year ago, that can be a conservative figure.
The house is for sale for $889,000. It sold four years ago for $539,000. That's appreciation of about 60 percent, or an increase in value of $350,000. That doesn't account for the possibility of multiple offers above the asking price, as buyers compete for a limited supply of homes.
Craig Gorman, immediate past president of the Santa Clara County Association of Realtors, says the sellers will need to sell high.
"If they're moving up the ladder, then they're going to pay a much higher price for their next home. So they need all the money they can get out of this home, of course to afford the next home," said Craig Gorman.
That makes it difficult for potential buyers who need a larger home to start a family in the next couple of years.
Lending criteria are tighter than during the era of sub-prime loans. Richard Wang is president of the Silicon Valley chapter of the California Association of Mortgage Professionals.
"We're looking at income, assets, credit and so any weak spot and any of those pillars could potentially derail a loan," said Richard Wang, a mortgage brokers for The Loan Story.
Even tech millionaires have difficulty getting loans. They might have a hefty down payment from stock options, but not the monthly income to get a $1.5 million loan.
