Home prices in Silicon Valley area top US$2 million for first time
THE median home price in San Jose topped US$2 million in the second quarter, the first time a US metropolitan area has exceeded that threshold and a symptom of the nation’s persistent affordability challenge.
Prices for existing single-family houses in the San Jose-Sunnyvale-Santa Clara area rose 11.6 per cent in the second quarter from a year earlier to US$2.08 million. No metropolitan area in the country had exceeded US$2 million in National Association of Realtors (NAR) data back to 1979, the group said on Tuesday (Aug 13).
Neighbouring San Francisco ranked second among most expensive metro areas, with the median home price climbing 8.5 per cent over the past year to about US$1.45 million. Seven of the top 10 priciest markets were in California.
The steep home-price appreciation in the Golden State reflects a broader problem with affordability. Across the US, annual home-price growth for existing one-family houses rose 4.9 per cent to US$422,100 in the second quarter, compared with a 5 per cent year-over-year advance in the prior period.
Nationally, 89 per cent of metropolitan areas saw home-price increases in the second quarter. The rate on a 30-year fixed mortgage ranged from 6.82 to 7.22 per cent during the period.
In 48 per cent of US markets, an income of at least US$100,000 is required to afford a mortgage with a 10 per cent down payment, NAR data show. In the first quarter, that was the case in 40.7 per cent of the nation’s markets.
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“It’s terrific news for homeowners who are moving ahead in wealth gains,” NAR chief economist Lawrence Yun said in a statement. “However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”
Typical payment
The typical mortgage payment was US$2,262 a month, up about 11 per cent from the first quarter. Families typically spent 26.5 per cent of their income on mortgage payments in the second quarter compared with 24.2 per cent in the prior three-month period.
Some surprising markets topped the NAR’s list of areas with the biggest annual percentage increases. Racine, Wisconsin and Glens Falls, New York both experienced 19.8 per cent year-over-year home-price growth in the second quarter. However, the mix of homes sold influence the figures, the NAR said.
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Meantime, price growth moderated in some real estate markets that had seen rapid growth. In Austin, home prices were flat in the second quarter, while those in Nashville matched the national median home-price gain of 4.9 per cent.
Median prices in the New York-Jersey City-White Plains area rose 14.8 per cent from a year earlier to nearly US$699,000. BLOOMBERG
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