Housing in America’s most expensive region is going to get even pricier. For all the talk of the U.S. tax overhaul hitting wealthy blue-state real estate, the San Francisco Bay area is set for more home-price gains. Its technology-fueled economy and persistent housing shortage are sending values ever higher -- and that may get even more pronounced as tech share sales mint millionaires in San Francisco and Silicon Valley.
Making sense of the story
- Even after a years-long boom that has already priced out many residents, the San Jose metropolitan area is expected to be the hottest U.S. housing market in 2018, according to a report this month by Zillow that factors in home values, rents and jobs. San Francisco ranks as No. 5.
- The areas led Realtor.com’s list of the top U.S. markets in January, based on listing views and the length of time homes were for sale.
- The San Jose region -- which includes Silicon Valley towns such as Palo Alto and Cupertino -- saw the median home value soar 21 percent last year to $1.17 million, while inventory dropped 41 percent to “crisis levels,” according to Zillow. In areas from Oakland to Marin County, the story is the same: too much demand and too little supply.
- In San Francisco, low unemployment, at 2.2 percent, and the expansion of large employers such as Dropbox, Facebook Inc. and Google is likely to ensure demand for housing will continue outstrip supply. The median house price in the city soared 11 percent to a record $1.5 million in the fourth quarter, while the average time it took to sell fell to two weeks from 22 days a year earlier, according to a Paragon report.
- Such demand is expected to outweigh the concerns that the U.S. tax revamp will hit home prices. The new law limits deductions for state and local taxes, including property taxes, and also caps deductions on mortgage interest at loans up to $750,000 -- an amount that’s easily exceeded in the pricey Bay Area market.
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