AGENDA 21 RADIO

BY CHRISS STREET NEWPORT BEACH, CA

Zillow reported that 9 of the top 10 “hottest real estate neighborhoods” in America are in the Bay Area and the San Jose will be the hottest metropolitan area for 2018.

Each year Zillow makes sophisticated projections across the nation regarding real estate fundamental drivers and price dynamics for its institutional customers. For fun and marketing visibility, the big data company makes its “hottest predictions for state and metropolitan areas.

Zillow commented that California’s Bay Area for the first time since the Dot-Com boom, absolutely dominates the Hottest list for both neighborhoods and the metropolitan areas. The study highlighted that in the last five years, home prices in the San Jose metropolitan area appreciated by 78 percent. But despite concerns regarding rising interest rates, Zillow trumpeted that San Jose is about to be “off to the races.”

With San Jose’s median rent of stunning $3,514, and its average single-family residences valued at an average of $1,128,300, Zillow expects prices to rise 8.9 percent in 2018 to $1,228,719, a spectacular $104,419 spike.

That compares to Raleigh, North Carolina as Zillow’s second hottest market with median rent of $1,441 a third as much as San Jose and median home value of $233,900 expected to be up by 3.7 percent to $242,554, a more modest $8,654 bump and on sixth the price of San Jose.

Zillow’s number three hottest market where median rent is $1,621 and median home value at $463,800 are a fraction of San Jose. But price growth is predicted at a healthy 5.4 percent. The 10^th hottest is Dallas, where median rent is $1,621 and the median home value $218,300 is expected to rise by 4.7 percent.

Although the study finds that the biggest difference in real estate prices is average household income. San Jose’s average income $110,040 is only about 60 percent higher than Zillow’s top 10 hottest areas average household income of $68,000, but San Jose’s average home value is over 400 percent times more expensive than the average home price of the other 9 top areas.

All this Hot Boom in American real estate, has often been just before a very Cold Bust. The December 2017 New Home Sales report from the U.S. Census Bureau came in at 625,000, down 9.3 percent from 689,000 in November. But December was still 14.1 percent above the December 2016 national estimate of 548,000.

The median sales price for new single-family home in December 2017 was $335,400 and the average sales price for an existing home was $398,900. It is unclear if the 30-year mortgage rate that has moved up from about 3 percent to 4.1 percent is beginning to slow down home sales. But the current rate is far below the peaked in the early 1980s at 18.63 percent.