Dive Brief:
- New construction in the San Francisco Bay area is not keeping pace with job growth, and there is a widening gap between rising home prices and income — setting up what some characterize as a bubble waiting to pop, according to Curbed.
- Silicon Valley home sale prices rose to $830,000 in 2015, more than double the California median price of $411,000, and one-bedroom rentals average $3,500 per month in San Francisco, the highest rent in the U.S. And in 2015 the Bay Area added 64,000 new jobs but only 5,000 new homes, Curbed reported.
- However, experts have said that even if the Bay Area was experiencing a housing bubble and it did burst, the market has historically been able to rebound more quickly than many other cities in the U.S.
Dive Insight:
"We can talk about how great it is to have so many job opportunities every year, but if we don't have enough housing to actually place these people it becomes a problem," Trisha Motter, president of the Santa Clara Board of Realtors, told Curbed.
The housing crunch has pushed Bay Area residents and officials to initiate conversations about affordable housing, which were spurred on by the California Supreme Court decision last year that upheld the San Jose, CA, ordinance requiring developers to set aside a percentage of units for affordable housing.
There are even whispers of developer impact fees in Oakland, CA, in an effort to ease rental prices. Typically, when governments charge developers impact fees, the developers are paying extra for permission to develop land. Historically in the Bay Area, these fees have gone toward affordable housing projects.
A Zillow report in December also identified the potential for a housing bubble in the San Francisco area. Zillow said one-third of housing experts they surveyed said they believed San Francisco is in a housing market bubble, and 20% said they believed the Bay Area would reach bubble levels in 2016. To a lesser extent, Zillow experts also said New York, Houston, Los Angeles, Seattle and San Diego could also be headed towards bubbles.
