Weekend Events and the Weekly Real Estate Update

March '16 - It's Friday

Summer in San Francisco means a line-up of events and activities taking place, with this weekend being no exception. The North Beach Festival takes place both Saturday and Sunday from 10am-6pm on Grant and Columbus Avenues. If you feel like exploring the Haight this weekend the 2016 Haight Ashbury Street Fair will also be happening on Sunday 11am to 5:30pm.

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On the “Homes for Sale in San Francisco” front, here’s our report for this week, 6/5/16 – 6/11/16:

Mortgage News Daily recently published a terrific post on their website under the headline: “Home Prices: How High Is Too High?” The post looks at a Freddie Mac report that outlines a two-stage method for identifying unsuitably-high house prices. Stage one – you want to look at the median sales price to median household income (PTI) ratio. A high PTI would land a region on Freddie Mac’s watch list. However, “Normal” price to income ratios vary widely and in some areas are much higher than they are in the rest of the country.

According to the report for example, San Francisco is a location where residents have historically been willing to pay a larger share of income to live and where buildable land to expand housing is extremely limited. Both factors help explain the City’s high PTI ratio which is also much more volatile than the national average. Therefore, though its ratio is among the highest of the largest metros, it is not an outlier by Freddie Mac standards and the City is not even on its watch list.

The second stage of market assessment requires a look at a number of factors – chief among them the degree to which homes in the region have been leveraged. The good news is that while ten U.S. metros are on Freddie Mac’s watch list because of their high PTI ratios, second stage analysis failed to produce compelling evidence of an increasing house price risk. Home prices at this point are not considered too high.

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