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San Francisco housing market second strongest in the U.S.

30 May 2013 12:21 PM
San Francisco housing market second strongest in the U.S.

Anecdotal and informal evidence about the rapidly improving San Francisco real estate market has been mounting for months, but it can now be officially supported by hard data. In fact, skyrocketing home prices and steadily improving consumer optimism have helped make San Francisco's housing market the second strongest in the country, according to the San Francisco Chronicle?. 

Over the last year, home values in the Bay Area have climbed 18.9 percent, a figure that trails only Phoenix. Low interest rates and growing confidence throughout the U.S. have helped many metro areas experience steady housing market improvements, but those gains have pooled in several specific areas - often those that were hardest hit by the recession - and San Francisco and Phoenix are leading the pack.

A tightening market
These factors have combined to make the Bay Area one of the most competitive in the country. According to Redfin, homes in the region are selling quickly and attracting many bids. In fact, 93 percent of for-sale homes solicit multiple bids, the highest rate for any metro in the country and nearly 20 percent higher than the national average. In San Francisco's case, this doesn't only mean two or three offers per property.

"Some properties are receiving in upward of 40 to 60 offers and selling in 24 hours or less," Charmaine Frank, who works for Redfin in the Bay Area, told the Huffington Post. 

This high level of competition may be frustrating for some buyers, but it represents the growing strength of the city's market in general. After several difficult years in the wake of the recession, San Francisco's housing market has made significant strides in the last few years, which has made properties in the city more attractive and quickly depleted the region's reservoir of available homes.

Economy
In addition to rising consumer optimism across the country and attractive interest rates, the city's strengthening economy is partially responsible for the recent surge of home sales. According to the Chronicle, San Francisco has experienced substantial job growth in recent years, including a rate of 3.6 growth during the last year.

Investor influence
As is often the case when a city's economy is improving and its housing stock becomes more in-demand, a large number of investors have started scooping up properties in the Bay Area. According to the Home Buying Institute, investors have been infusing the market with money since 2010, when prices were low. Typically, these buyers begin abandoning a market when it starts to improve, but this has not been the case with San Francisco, another sign that the city's housing market is in good shape.