Buying a home in the Bay Area is not for the faint of heart.
Just ask John Mullenholz, who recently bought a home in San Francisco with his wife, Lauren. Mullenholz — who, as the founder and CEO of cyber security firm Pikotime, is no stranger to big projects — calls the process “one of the biggest projects I’ve tackled in my life, bar none.”
“Not long after you arrive at an open house with dozens of couples walking around what might turn out to be our future home, your realtor convinces you that submitting a blind bid with zero contingencies at 20% above asking price is the only way to get this house,” he says. “It makes sense at the time, and yet you also can’t help but feel like you might be going insane — and that you might be surrounded by insane people who are doing exactly the same thing as you.”
Though the home-buying process wasn’t easy — the couple looked at “at least 50” homes, bid on two and calls the entire process “so competitive” and “incredibly nerve-racking” — the Mullenholzs did end up with a house they love with views of the water, though he jokes that “it’s really small and very overpriced.”
He’s not alone in his struggles to buy in the Bay Area. According to a study released Monday from personal finance site Bankrate, San Francisco — despite it’s charm, great food, robust culture and decent job market — is the worst place in America for first-time buyers to purchase a home, primarily for the reasons Mullenholz says: Affordability and market tightness.
Out of 50 largest metro areas, San Francisco ranked second to last in terms of affordability and market tightness (its Bay Area neighbor San Jose was last), and also ranked 43rd in terms of safety, according to Bankrate — though it did score highly on culture (9) and was in the top half of markets in terms of jobs (24). (For its part, San Jose landed in the No. 4 worst spot overall on the list despite its affordability and market issues, thanks in part to its superior safety and job market ranking.) The study ranked 50 American major metro areas in terms of affordability, culture, job market, market tightness and safety.
Indeed, Bankrate data analyst Adrian Garcia tells MarketWatch that to buy the median home in San Francisco, you’d need an income of nearly $300,000. That’s because median home prices are now more than $950,000, according to real estate firm Trulia.
And custom data that Trulia ran for MarketWatch shows that even with these sky high prices and income requirements, homes are flying off the market. This year, homes in San Francisco were sold at a faster clip than in any other market in America — staying on the market for just 57 days. In some neighborhoods, it’s even faster.
5 San Francisco neighborhoods with the fewest days on market
1. Seacliff: 27.5 days
2. Dolores Heights: 31.5 days
3. Laurel Heights: 32.25 days
4. Ingleside: 33 days
5. Holly Park: 33.5 days
Source: Trulia, 12-month rolling median 2018
That’s true even outside of San Francisco proper too: “Multiple offers are still quite common. Overbids are inflated compared with a few years ago … very limited inventory, still,” says Lucy Armentrout, a broker associate at Red Oak Realty in the Bay Area. “In other words, the market still seems to be climbing and buyers are overbidding on things further afield.”
What’s more, it’s not just San Francisco where buyers will struggle — it’s much of California, with six of the top 10 worst markets to buy a home in the Golden State. “Many of the same problems troubling San Francisco are troubling California: Affordability is an issue with rising home prices and inventory is low,” says Garcia.
10 worst markets for first-time buyers to buy a home
1. San Francisco
2. Los Angeles
4. San Jose
6. Riverside/San Bernardino
7. San Diego
8. Las Vegas
On the plus side, there are plenty of markets that will be easier bets for first-time homebuyers.
10 best markets for first-time buyers to buy a home
3. Oklahoma City
5. St. Louis
9. Kansas City
10. Virginia Beach
Pittsburgh takes the number one spot on this list in part due to its extreme affordability and safety (the Steel City earned a first-place ranking for both). It also has pretty low market tightness, culture and a good job market.
This post was originally posted at http://www.marketwatch.com/news/story.asp?guid=%7B19DC4A1C-4762-11E9-9C08-1714D97AE5B7%7D&siteid=rss&rss=1.