Bay Area's strengthening economy has positive effect on local housing market
The Bay Area's famous tech sector and strong core of high-paying jobs in finance, industry and law have helped the region remain a popular living destination even as other areas in California have hit hard times. Although, the Bay Area, like most metros, saw inflated unemployment numbers during the worst of the recession of the late 2000s, it never reached the levels seen in cities like Los Angeles and San Diego. This may partly explain why it has taken less time for the Bay Area to bounce back to pre-recession levels. In fact, by many important metrics, the region is now better off than it was directly before the downturn. This could be good new for people considering one of the homes for sale in Bay Area, as many local experts believe the region is poised for continued improvement.
One important statistic that is giving local government officials and real estate professionals a reason to be optimistic is the unemployment rate. Although it never climbed as high as many other nearby metros or as the state as a whole - California's jobless rate was a staggering 12.6 percent in April 2010 - the Bay Area's unemployment rate has shown substantial improvement recently.
In September, San Francisco's unemployment rate dropped to 6.9 percent, well below the national average. The news was greeted by many city officials - including the city's mayor, Edwin Lee - as a sign of renewed recovery.
"When I first came into office in January 2011, San Francisco's unemployment rate was 9.6 percent," said Lee, according to the California Newswire. "In September 2012, it was 6.9 percent, the lowest unemployment rate since 2008."
Effect on the housing market
The steadily shrinking unemployment rate has also had positive effects on the region's housing market. As jobs return to the area, many residents of other cities have begun to come to the city in search of employment. One way that this influx of new residents has helped the region's housing market is by helping get rid of some of the foreclosed properties that have weighed down home prices.
According to the San Francisco Business Times, the ratio of foreclosed home sales to sales in general has been sliced in half across the state. In the Bay Area, where there was a much lower proportion of foreclosed properties to begin with, this has led to what is considered by many experts to be a healthy market.
"Where there has been substantial job growth, for example in San Francisco, Santa Clara and San Diego counties, foreclosures are approaching more normal levels," Jerry Nickelsburg, a professor and economist at University of California, Los Angeles, Anderson School of Management, told the news source.
Unsurprisingly, the combination of dwindling unemployment, fewer distressed properties on the market and improving optimism has led to more home sales in and around the Bay Area. This increase in sales has had two familiar effects on the region's housing market: rising prices and shrinking inventory.
According to American Financial Resources, the median sales price for homes in the area climbed to $775,000 in October 2012, a 12.5 percent jump over the same month last year. As the region has rid itself of lower-priced foreclosed properties, the sale of higher-end homes has climbed, which has helped buoy sales prices throughout the metro.
It has also sapped the local inventory of for-sale homes. According to The Wall Street Journal, the sales activity in the region has considerably brought down the Bay Area's supply of homes for sale. As of late October, there was only a 3.2-month's supply of for-sale properties.
If you're thinking of buying a home in the Bay Area, the decreasing unemployment rate, rising prices and dwindling inventory suggest that acting fact may be in your best interest.