The San Francisco median home price topped $1 million this month. That milestone happened quickly: a 32% jump from last year.
The phenomenon isn’t solely confined to San Francisco proper. Other cities surrounding San Francisco are experiencing similar surges in housing prices with a 22% increase in prices over the past twelve months.
If this information makes you a little nervous about another housing bubble, relax. Unlike the real estate bubble that triggered the Great Recession, the current situation is not the result of sketchy financing. What’s going on in our neighborhoods is the result of a tech-fueled job market. Simply put: wealthy people are being drawn into areas lacking in supply.
That problem was only exacerbated by a lack of homes being built to accommodate the growing population. The construction industry was devastated in the housing bubble. Today, new construction is not happening quickly enough to stabilize demand.
Even so, many of these buyers are paying cash, only to flip the property for profit. According to experts, the average gross profit for flipping a house in San Francisco last year was 23% over the original price, making it one of the best markets in the nation for flipping.
“This is not a bubble,” economist Diane Swonk told ABC News. “We are regaining lost ground which is a game-changer for most households since their home is what they rely on for wealth.”
If you want to discuss your options in buying or selling your home, please contact me via email at Daniel.DerVartanian@sothebyshomes.com or give me a call at (415) 200-7744. To see what’s on the market, be sure to check my website.