Ralph McLaughlin, a housing economist with the real estate information company Trulia, recently published a list of the ten fastest-moving housing markets in the country. The San Francisco real estate market topped the list, followed by four other California metro areas.
McLaughlin and his team examined the 100 largest metropolitan areas in the country. They looked at the share of homes listed for sale on Trulia over a two-month period, noting which cities had the lowest percentage of homes still on the market after two months. They then ranked cities in terms of how quickly houses are selling.
San Francisco, San Jose ‘Fastest’ Real Estate Markets in U.S.
By Trulia’s measurement, the San Francisco real estate market is currently the “fastest” in the country, as of spring 2015. In fact, the top-five list of markets where homes are selling fastest was basically a list of California’s major metros. San Jose, Oakland, San Diego and Orange County rounded out the top five.
In San Francisco, only 26% of homes for sale were still on the market at the end of two months. That means most homes are selling in less than two months. In the nearby San Jose real estate market, 30% of houses were still listed for sale after 60 days.
Of course, this will come as no surprise to buyers who are currently shopping for a home in the San Francisco Bay Area. Buyers in this market are competing, often fiercely, for limited inventory. It’s not uncommon for properties to receive multiple offers within days of coming onto the market, especially those that are located in desirable areas.
But what’s tough for buyers is good for sellers. According to McLaughlin, “If you’re a home seller, California may indeed be the Golden State. Eight of the 10 fastest-moving housing markets are there, and homes are selling much faster than in the Northeast, South, and Midwest.”
This is largely the result of inventory shortages that have plagued many California cities over the last few years. Fortunately, though, the supply-and-demand situation is beginning to level out in many parts of the Golden State (with the exception of the San Francisco real estate where inventory is still tight).
How to Buy a Home in a Smoking-Hot Housing Market
So how do home buyers compete in this kind of market? What does it take to buy a home in a place like San Francisco or San Jose, where houses are selling so quickly? For one thing, buyers need to have their finances lined up ahead of time. This means getting pre-approved for a loan before you start shopping for a home (learn how).
San Jose and San Francisco home buyers also need to enter the market with a good sense of what they can afford — and what they can’t afford. This can be accomplished with a bit of online research. Go onto Zillow, Trulia or Realtor.com and see what houses are selling for in your desired area. Silicon Valley and the San Francisco Bay Area are home to some of the most expensive real estate markets in the country. So be realistic.
Last but not least, home buyers in San Francisco and other hot housing markets need to make reasonable offers based on comparable sales in the area. This is the not the kind of market where you would try to low-ball the seller or push for concessions. If you do, that house you have your heart set on will probably go to the next person in line.
Prices Are Cooling a Bit in 2015
San Francisco and San Jose will likely outpace the nation over the next year or so, where home values are concerned. But prices have cooled a bit and could continue to do so.
According to Zillow, house values in the San Francisco real estate market rose by around 11% over the last year or so. But the company’s economists only expect prices to rise by 5% over the next 12 months.
It’s a similar story in San Jose. Home prices in and around the city rose by 11.7% over the last year (by Zillow’s estimate), with a more modest one-year forecast of 5%.
The bottom line: San Francisco and San Jose are two of the fastest-moving real estate markets in the country, but they are cooling a bit. Still, prices are expected to rise appreciably over the next year or so. Home buyers in these areas need to pay close attention to the real estate market, and should consider buying sooner rather than later.