Millennials’ Student Debt Is Larger Than Their Incomes

  • More than 80 percent of millennials surveyed say student loans are preventing them from buying a home.
  • The average millennial owes $2,400 more on student loans than they earn per year.
  • Debt is also affecting millennials’ career and relationship choices, as well as their ability to save for retirement.

Lingering student loans are causing younger Americans to make important life sacrifices, including postponing a home purchase.

In a survey of millennials currently carrying student debt, the National Association of Realtors found that only 20 percent reported owning a home. Of those who do not own homes, 83 percent pointed to student debt as an impediment, and these millennials expect that their education costs will delay homeownership by seven years.

The average millennial surveyed had student debt of $41,200, compared with an annual income of $38,800. In a statement accompanying the report, NAR Chief Economist Lawrence Yun said that millennials’ student debts are playing a large role in suppressing first-time homebuyer activity. According to a NAR report released earlier this year, first-time homebuyers accounted for 35 percent of sales in 2016, near an all-time low.

“Even a large majority of older millennials and those with higher incomes say they’re being forced to delay homeownership because they can’t save for a down payment and don’t feel financially secure enough to buy,” Yun said.

Besides buying a home, student debt is affecting millennials’ career choices, with nearly 90 percent reporting taking on a second job to make ends meet or being stuck in a unsatisfactory career. Forty-one percent of millennials are delaying marriage because of their student loans, and 61 percent are unable to save for retirement, which Yun noted ultimately drags down the U.S. economy and contributes to growing inequality.

Student debt is also impacting millennials who have managed to buy homes. One-quarter of younger homeowners said that they were unable to move up to bigger properties due to education loans or because of how debt has affected their ability to qualify for a mortgage again, which further puts the squeeze on first-time homebuyers.

“Millennial homeowners who can’t afford to trade up because of their student debt end up staying put, which slows the turnover in the housing market and exacerbates the low supply levels and affordability pressures for those trying to buy their first home,” Yun said.

Although millennials buyers in California and the Bay Area face numerous challenges on the path to homeownership, student debt is not as big of a hurdle as it is in other states. According to an analysis by WalletHub earlier this summer, Californians have the third-lowest average student debt in the country.

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California, Bay Area Inventory Continues to Shrink in August

  • The median sales price for a single-family home in the nine-county Bay Area was $856,200 in August, an annual gain of 10.2 percent.
  • Eight of nine Bay Area counties posted home price gains from one year earlier.
  • Inventory dipped both statewide and in all nine Bay Area counties from August 2016.

The number of homes for sale declined statewide and in every Bay Area county from one year earlier — particularly entry-level properties — keeping prices at a 10-year high.

The latest monthly home sales report from the California Association of Realtors says that the median sales price for a single-family home in the state was $565,330 in August, up 7.2 percent from one year earlier. August marked the sixth straight month that home prices were higher than $500,000 and the third consecutive month that annual gains topped 7 percent. Year-over-year appreciation for the lowest-priced segment of homes was even higher, at 10.7 percent, further complicating matters for first-time buyers trying to get a foot in the door.

“These homes are selling faster than historically and for top dollar, adversely impacting entry-level buyers who are already struggling to afford to buy their very first home,” CAR President Geoff McIntosh said in a statement accompanying the report.

The median sales price in the nine-county Bay Area was $856,200, up by 10.2 percent from August of last year. Eight of nine counties posted annual price gains, ranging from 0.6 percent in Marin County to 17.9 percent in Santa Clara County. Year-over-year appreciation was flat in Solano County.

San Francisco overtook San Mateo County as the state’s most expensive housing market, with a median sales price of $1,380,000. San Francisco buyers also paid the highest premiums in California — 114.8 percent of original price. The state’s three other seven-digit real estate markets are also located in the Bay Area: San Mateo ($1,375,000), Marin ($1,207,120), and Santa Clara ($1,150,000) counties.

The driver behind the price growth will be all-too familiar to anyone who follows California and Bay Area real estate: more willing buyers than available homes. CAR says that active listings dropped by 11.9 percent from last August, while the months’ supply of inventory was 2.9, down on both a monthly and yearly basis. McIntosh noted that the state’s inventory of starter homes is particularly tight.

The months’ supply of inventory also dropped from the previous month and year in the Bay Area, falling to 1.9. The number of homes for sale declined from last August in all nine local counties, with Santa Clara, Alameda, San Francisco, San Mateo, and Contra Costa counties having the state’s most severe shortages.

Homes in the nine-county Bay Area left the market in an average of 15 days, five days fewer than they did in August 2016. Santa Clara County was California’s fastest-paced real estate market last month, with homes selling in an average of 9.5 days.

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August Was a Mixed Month for Job Creation in California


  • Following incredible job growth in July, which was revised upward to 84,500 positions, the August data release from the California Employment Development Department was a mixed bag, showing a decline of 8,200 jobs. However, the overall state number carries some discrepancies with California’s combined metropolitan area numbers, which showed an increase of about 15,800 jobs in August.
  • Over the last 12 months, California has added about 265,000 jobs, which is a 1.8 percent increase and still outpaces the national growth rate of 1.4 percent. Nevertheless, as this year’s numbers have indicated so far, job growth has slowed from previous years.
  • California’s unemployment rate increased slightly to 5.1 percent in August, which is largely due to a sizable addition to the labor force of 31,600 new workers. This is the largest monthly increase in the labor force since the spring of 2010. Despite the 0.2 percent year-over-year increase in the labor force, California’s job markets remain tight.
  • Sectors that gained jobs in August include services, which encompasses personal-care services and equipment and machinery care. The manufacturing, retail, trade, and health care sectors also added jobs. What is interesting to note is that some industries are reversing previous trends. For example, data shows strong performance for manufacturing and retail jobs, which have been trending down so far this year.
  • Sectors that lost jobs in August included leisure and hospitality, another reversal of previous positive increases. But despite the one-month dip, year-over-year growth levels for the leisure and hospitality industry remain positive, showing an increase of 39,500 positions. Other notable declines were in professional, scientific, and technical services; government; and educational services. The professional, scientific, and technical services sector now shows a 0.4 percent jobs decline for the year, which could be concerning as it is the higher-wage segment of the labor market. The government and educational services sectors are still in the positive and show strong year-over-year increases.
  • In the Bay Area, San Francisco and San Mateo counties added 3,600 jobs in August. Government added a substantial 2,000 jobs net, which is double its average between July and August over the previous 10 years. The construction sector added 1,600 jobs, a change from its usual downward trend at this time of year. Leisure and hospitality gained 1,400 jobs seasonally, primarily within food services and drinking establishments. By contrast, the private educational and health services industries, with 1,500 fewer jobs, experienced a larger-than-typical cutback over the month. The professional and business services and information sectors both lost jobs, which countered the usual upward trends.
  • Alameda and Contra Costa counties lost 500 jobs from July, mostly in private education services; specialty trade contractors; trade, transportation, and utilities; government; leisure and hospitality; financial activities; and other services. Note that these sectors have actually posted year-over-year gains so far in 2017.
  • In Santa Clara and San Benito counties, the seasonal gain in local public schools dominated the monthly job growth, with a net increase of 3,800 positions, outpacing the combined prior 10-year average gain of 2,300 jobs between July and August. Statewide, public schools lost 200 jobs. Other sectors that showed gains include trade, transportation, and utilities; manufacturing; and electronic computer manufacturing. The information sector countered this year’s downward trend and added 900 jobs in August. By contrast, the leisure and hospitality industry lost 2,900 jobs from July.
  • Los Angeles County added 8,300 jobs, with the largest increase in the government sector. Most of the growth was in local government, while state and federal government jobs declined. The professional and business services sector saw notable gains, as well as job additions in the trade, transportation, and utilities; construction (up 1,300); and other services sectors. The information sector also posted a strong increase. Similar to other metros areas, Los Angeles’ leisure and hospitality industry posted the largest month-over-decline, with 67 percent of the decrease in accommodations and food services.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

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Real Estate Roundup: Bay Area Workers Are America’s Happiest

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

Bay Area workers earn the highest salaries in the nation and have the opportunity to work at some of the world’s most innovative companies, so it makes sense that employees here are more satisfied than they are anywhere else in America.

Glassdoor’s list of the 10 cities where workers are the happiest puts San Francisco at the top of the heap, with an overall employee job-satisfaction score of 3.6 out of five. The city currently has a total of 232,156 open jobs, the second most on the list. San Francisco workers earn a median annual base salary of $75,000, also the second most of the 10 cities.

Workers in San Jose earn the largest salaries, an average of $100,000 per year, placing it second on Glassdoor’s list, with a  job-satisfaction score of 3.5. Currently, there are 106,809 job openings in San Jose. Both Santa Clara and San Francisco counties have some of the lowest unemployment rates in the state as of August according to the latest numbers from the California Employment Development Department, a respective 3.8 percent and 3.5 percent.

Companies hiring in San Francisco and San Jose include tech heavyweights such as IBM, eBay, and, as well as food-service companies like Chipotle Mexican Grill and Specialty’s Café & Bakery.

The Bay Area’s three largest cities have already thrown their hats into the ring as the potential location for’s second American headquarters, and now Concord has joined the party.

Curbed SF reports that the Contra Costa County city last week announced it was competing to be Amazon’s new home, a $5 billion-plus development that is expected to house 50,000 employees. Concord Mayor Laura Hoffmeister proposed that the online retailer take up residence at the city’s former navy base, where it is planning nearly 6 million square feet of office space and 12,000 housing units. She also touted Concord’s relative affordability when compared with its neighbors.

“Concord is a logical choice for companies of all sizes, especially global brands looking for plentiful office options, often priced at a quarter of what is offered in nearby San Francisco and half the prices in Oakland,” she said in the city’s official press release.

Silicon Valley home sellers remain squarely in the driver’s seat, with one recent sale proving that buyers are willing to go above and beyond to seal a deal in a tight market.

According to The Mercury News, a four-bedroom home in Sunnyvale recently sold for $2.47 million, $782,000 over its asking price. The home sold in seven days and received 20 offers, many of them also sizable overbids.

Overbids have been a common theme in Silicon Valley’s real estate market as of late, with more than 50 homes in the region commanding $200,000-plus premiums over the past month. More than half of those transactions were in Sunnyvale, which is gaining popularity with buyers priced out of cities like Palo Alto and Los Altos.

Although the article doesn’t specify the deep-pocketed buyer’s occupation, the seller’s real estate professional told The Mercury News that technology workers currently comprise a large percentage of buyers in Sunnyvale, and the home is located just 3.5 miles from Apple’s new campus. 

California legislators passed six housing bills late last week, including several intended to ease the state’s housing affordability crisis.

The Los Angeles Times reports that the state Assembly passed Senate Bill 2, which would impose a $75 fee on mortgage refinances. The bill is projected to raise $250 million per year, which would build and renovate housing for low-income residents.

The state also approved two other affordable-housing initiatives. Senate Bill 3 puts a $4 billion bond to finance low-income housing in front of voters in 2018, while Senate Bill 35 would remove some development restrictions to promote more home construction.

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U.S. Foreclosure Rate Falls to 10-Year Low

  • The U.S. foreclosure rate fell to 0.7 percent of properties with a mortgage as of June, with 4.5 percent of borrowers more than 30 days delinquent on payments.
  • California’s foreclosure rate was 0.2 percent, with 2.8 percent of borrowers more than 30 days delinquent.
  • Foreclosure rates in the Bay Area ranged from 0.2 percent in San Francisco, Santa Rosa, and Napa to 0.4 percent in San Jose.

Home price appreciation and a thriving job market have pushed down foreclosures and mortgage delinquencies across the country, with California and the Bay Area posting lower numbers than the national average.

CoreLogic’s most recent Loan Performance Insight Report, which tracks the health of the mortgage market through June of this year, puts the U.S. foreclosure rate at 0.7 percent, the lowest in a decade. The number of borrowers who were more than 30 days delinquent on their mortgage payments also dropped from one year earlier, to 4.5 percent. CoreLogic Chief Economist Frank Nothaft attributed the declines to home price growth, up 6 percent since June 2016, and an economy that added 2.2 million jobs over the past year.

California’s foreclosure rate was 0.3 percent as of June, down from 0.4 percent one year ago. The 30-plus-day delinquency rate also declined on an annual basis to 2.8 percent of properties with a mortgage.

The San Francisco, Santa Rosa, and Napa core-based statistical areas had slightly lower foreclosure rates than the statewide average, all at 0.2 percent, while San Jose had a 0.4 percent foreclosure rate. A seperate study from ATTOM Data Solutions puts foreclosure rates even lower for the first half of 2017: 0.11 percent in San Jose, 0.15 percent in San Francisco, and 0.17 in Santa Rosa.

The amount of borrowers more than a month delinquent on mortgage payments ranged from 1.7 percent in Santa Rosa to 4.9 percent in San Jose. Both 30- and 90-day delinquency rates dropped from June 2016 in all Bay Area regions for which CoreLogic tracks data.

Nothaft said that he expects mortgage-delinquency rates to further decrease over the next year, driven by continued job growth and projected home price appreciation of 5 percent.

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Oakland Remains America’s Most Difficult Home-Flipping Market

  • Oakland, San Francisco, and San Jose rank among the country’s 10 toughest real estate markets for home flippers.
  • San Francisco has the highest kitchen and bathroom remodeling costs in the country.
  • Fremont, San Jose, and San Francisco count among the 10 U.S. cities with the highest overall quality of life.

Expensive prices and hefty remodeling costs once again place the Bay Area’s three largest cities among the toughest real estate markets in the U.S. for flipping homes.

WalletHub’s annual list of the best and worst home-flipping markets ranks the 150 largest cities based on 22 criteria in on a scale of zero to 100. The three major categories that the study uses to grade a real estate market’s flip-friendliness are market potential, remodeling costs, and quality-of-life factors.

As in last year’s study, Oakland ranks dead last for home-flipping potential, with an overall score of 31.97. WalletHub places Oakland as one the six U.S. cities with the highest median home purchase price, along with three other Bay Area cities: San Jose, San Francisco, and Fremont. Those four cities are on average 14 times more expensive than the real estate markets with the lowest median purchase price.

San Francisco is the nation’s fourth most difficult real estate market for home flippers, notching a 34.38. Potential home flippers in the city will incur the highest average kitchen and bathroom remodeling costs in the country, four to five times highest than the least expensive markets for renovations.

San Jose also counts among the nation’s 10 least-friendly flip cities, scoring a 37.78. The city tied its neighbor to the north for the highest kitchen remodeling costs and ranked in the top five, along with Fremont, for the highest overall home-renovation costs. San Jose also has one of the lowest flipping returns in the U.S.

While Bay Area cities may not rank high for flipping based on financial considerations, they perform well on the quality-of-life metric, which includes criteria such as the quality of schools, access to parks, family-friendliness, and economic conditions. Three Bay Area cities rank among the 10 best places in America for quality of life: Fremont (No. 3), San Jose (No. 9), and San Francisco (No. 10).

WalletHub names San Francisco the No. 1 city in the country for walkable park access. Earlier this year, the Trust For Public Land gave San Francisco a perfect score of 100 for park access, finding that it is the only major American city where all residents live within a 10-minute walk of one of its 220 parks.

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