A downfall to living in the Bay Area is its housing crisis. Residents are surrounded by some of the most expensive homes in the nation but are unable to afford them. Those who are, are faced with a shortage of home buildings and it doesn’t look like conditions will change anytime soon, according to a report.
With Silicon Valley’s growth comes an increase in buyer demand and a shortage of home buildings causing a low inventory in popular cities. San Jose’s housing inventory was down over 40 percent, the biggest drop nationwide and inventory in San Francsico’s metro area was down 27 percent, the second biggest drop in the country, SF Gate reported.
"In a community like the Bay Area where land and labor costs are very high, it’s difficult to imagine a set of policies that would sharply increase inventory in prime locations," Zillow Senior Economist Aaron Terrazas tells SF Gate. "More likely, marginal increases in inventory will come from denser development — which often carries high prices — or from more affordable building in further-flung exurbs."
Terrazas also told Sf Gate that those who live in less-expensive sector of the market, have a harder time finding housing as buyers who are able to afford million dollar homes have more to choose from.
"In the San Francisco metro there are almost twice as many homes on the market in the top price tier than in the bottom price tier," Terrazas tells SF Gate.
Home owners in the Bay Area should think twice before selling their homes as recent federal tax changes discourage them from selling and missing out on mortgage deductions but they in turn also limit local deductions, something that may lead homeowners to sell, SF Gate reports.
"Since they lose these extra benefits if they move or refinance, homeowners benefitting from these additional deductions may choose not to move posing a headwind to inventory moving forward," Terrazas tells SF Gate. "However, limits to state and local income tax and property tax deductions may push some long-time owners to downsize or leave the area.'
Though living in the Bay Area continues to increase in cost and decrease in housing inventory, state-level proposals have the potential to change the current situation, Terrazas tells SF Gate. "The California Legislature is considering a number of bills to address the region’s crushing housing affordability challenges. In addition, state legislators are exploring ways to moderate the effects of new limits to the federal deductions."