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Bay Area home prices booming, other regions slowing

Bay Area home prices booming, other regions slowing

By Ron Trujillo/

California has become a state of two markets, where home prices are accelerating and other regions where price-growth has definitely slowed.

The Bay Area — from Oakland to San Jose — remained blistering hot with 11.6% and 16.9% gains during the third quarter, respectively, compared to a year ago, according to ATTOM Data Solutions. San Jose-area home prices are 57% higher than the pre-recession peak, and San Francisco is up 21.8%.

But Southern California, the Central Coast and Central Valley are definitely cooling off. Home prices continue to climb, but at a much-slower pace than a year ago.

For example, San Diego home prices have increased 6.3% during the third quarter compared to a year ago. The city’s home prices jumped 9.0% in third-quarter 2017 vs. a year earlier.

Some other regions: Los Angeles-Long Beach had a 5.8% increase in home prices during the third quarter vs. 8.2% a year earlier. Ventura County had a 3.5% gain during the July through September period, much slower than the 7.1% rate a year earlier. Sacramento, one of the hottest markets in the nation just a few months ago, has also slowed, to 6.2%vs. 8.3%. And Fresno home price increases have plummeted from 11.0% to 3.1% during the most recent third quarter.

Affordability is a major concern, as would-be buyers are dealing with a dramatic increase in home prices and mortgage rates, especially compared to a year ago. Only 27% of families could afford the median-priced home in the state during the third quarter, according to the California Association of Realtors.

“The continued slowdown in the rate of home price appreciation nationwide, and in many local markets, is a rational response to worsening home affordability, which has deteriorated at an accelerated pace this year due to rising mortgage rates,” says Daren Blomquist, senior vice president of ATTOM Data Solutions. “Markets not experiencing this price appreciation cool down may have more of an affordability cushion to work with, but some are in danger of overheating if home price gains continue to run hot.”

Check if your city is decelerating or increasing in home prices by clicking on an interactive map from ATTOM Data Solutions.

Photo of Victorian house in San Francisco by Irina Kosareva/Shutterstock

State capital’s housing market cooling off

Sacramento has been a red-hot housing market, where bidding wars and multiple offers became the norm during the past two years.

But there is definitely evidence the capital region, from Davis to Roseville-Rocklin, is cooling down, according to Zillow.

In fact, the Sacramento region was the eighth-best housing market in the nation for home-shoppers looking to gain the upperhand. About 5% of homes listed had price drops in September, and 29% of consumers can afford the median-home price of $400,600.

Orlando, Boston and Seattle were the three best major markets for homebuyers.

Photo of Tower Bridge in downtown Sacramento by Andrew Zarivny/Shutterstock

Fannie, Freddie boost conforming loan limits

Thanks, Uncle Sam.

The Federal Housing Finance Agency has increased conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac to $484,350 on homes and $726,525 in high-cost areas, such as the Bay Area and Southern California.

It’s a 6.9% across-the board increase from the previous conforming loan limits of $453,100 and $679,650, respectively.

The boost will help more homebuyers qualify for Fannie- or Freddie-guaranteed loans. The conforming loan limit determines the maximum size of a mortgage that the government-sponsored enterprises can buy or “guarantee.” Non-conforming — or “jumbo loans” — often have tighter underwriting standards and sometimes carry higher mortgage interest rates than conforming loans, increasing monthly mortgage payments and limiting the ability for families to buy homes in California.

The increase in conforming loan limits will “give tens of thousands of California homebuyers a chance at homeownership,” says Jared Martin, president of the California Association of Realtors. “Increasing the existing Fannie Mae and Freddie Mac conforming loan limits will greatly benefit higher-priced areas of the state and provide stability and certainty to the housing market.”

Check out the conforming loan limit for counties across the state — and nation. 

Photo illustration by W. Scott McGill/Shutterstock

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