APPLE’S NEW “SPACESHIP” CAMPUS CAUSING BIG HOME PRICE GAINS IN CUPERTINO
Although Apple’s massive, circular new campus — dubbed the “spaceship” — has yet to open its doors to employees, it has been affecting nearby home prices for the past several years.
That’s according to an October report by Realtor.com, which found that median list prices for homes located within a one-mile radius of the company’s new Cupertino office increased by 20.5 percent from the second quarter of 2015 to the second quarter of 2016 — almost double the appreciation rate in Santa Clara County. Since the Cupertino City Council approved the 2.8 million-square-foot building in 2013, home prices within a mile of the structure have appreciated by 18.4 percent on an annual basis. Currently, there are only 14 homes listed within a two-mile radius of the new building.
One reason that highly paid Apple employees will shell out big money for modest suburban homes within close proximity to the spaceship campus is because of the crushing traffic jams that currently plague the Bay Area and Silicon Valley. When Apple’s new building opens, the company will employ 24,000 workers based in Cupertino.
THE PROS AND CONS OF THE BAY AREA’S ROARING ECONOMY
While freeway congestion is one major downside of the Bay Area’s thriving job market, a slim supply of homes for sale and low affordability conditions are likely to be the region’s largest hurdles moving forward.
Citing data from the California Association of Realtors, The Mercury News reports that home prices in Alameda, Marin, San Francisco, San Mateo, and Santa Clara counties surpassed their peaks earlier this year. At a recent Silicon Valley Association of Realtors’ meeting, CAR Vice President and Chief Economist Leslie Appleton-Young said that the Bay Area leads the nation and the state for job growth. In September, six Bay Area counties had the lowest unemployment rates in the state according to the numbers from the California Employment Development Department.
The drawback to robust job growth is that the state is creating 65,000 more jobs than housing units. In Santa Clara County, there were 175,000 new jobs between 2010 and 2015 but only about 35,000 new housing permits. Appleton-Young said that tight supply conditions are exacerbated by more owners choosing to remodel rather than move, as many have favorable mortgage rates and may be dissuaded to trade up due to hefty capital-gains taxes.
U.S. FORECLOSURE ACTIVITY SEES BIG SPIKE IN OCTOBER
Foreclosure activity saw its biggest monthly increase in more than nine years in October, highlighting that the housing recovery — while still solid — is not without risk.
That’s according to a new report from ATTOM Data Solutions, which says that there were 105,481 foreclosure filings in October, a gain of 27 percent from September. On an annual basis, foreclosure activity has declined for 13 consecutive months and is 8 percent lower than it was in October 2015.
In a statement accompanying the report, ATTOM Data Solutions’ Senior Vice President Daren Blomquist said that foreclosure spikes in states such as Arizona, Colorado, and Georgia are heavily tied to loans originated after the last housing boom but don’t necessarily portend an impending foreclosure crisis. Currently, low-down-payment loans such as those made by the Federal Housing Administration and the Veterans Administration appear to be the most at risk for foreclosure.
MORTGAGE RATES TICK UP IN ADVANCE OF ELECTION
Though mortgage rates are down from one year ago, they crept up last week and could end up being one of the presidential election’s largest impacts on the U.S. housing market.
For the week ended Nov. 10, Freddie Mac puts 30-year, fixed-rate mortgages at 3.57 percent, 3 basis points higher than the previous week. Fifteen-year, fixed-rate mortgages averaged 2.88, also up from the previous week but lower than at the same time last year.
In a recent analysis about how the Trump administration might affect the housing market, Pacific Union Chief Economist Selma Hepp said that while she expects mortgage rates to increase over the coming year, they should still remain favorable — in the 4 to 5 percent range.