Typical home price in Silicon Valley tops $2M

In Silicon Valley, the price for a typical home now tops $2 million, becoming the first metropolitan market in the U.S. to enter the Double Million Dollar Club.

Prices for existing single-family houses in the San Jose-Sunnyvale-Santa Clara area rose 11.6 percent to $2.08 million in the second quarter from a year earlier, Bloomberg reported, citing figures from the National Association of Realtors.

No metropolitan area in the country had exceeded $2 million in NAR data dating back to 1979, the group said.

In May, Silicon Valley led a surge in sales of homes for $10 million or more across the Bay Area.

The nearby region of San Francisco, Oakland and Hayward ranked second among most expensive metro markets, with the median home price climbing 8.5 percent over the past year to nearly $1.45 million.

Seven of the top 10 priciest markets were in California. Anaheim-Santa Ana-Irvine was third at nearly $1.44 million; San Diego-Carlsbad fifth at $1.05 million; Salinas sixth at nearly $1.04 million; Oxnard-Thousand Oaks-Ventura seventh at $927,900; San Luis Obispo-Paso Robles eighth at $895,300; and Los Angeles-Long Beach-Glendale 11th at $854,800.

Orange County, a region of 3.1 million people south of Los Angeles, saw the price of a typical home in June rise 10.2 percent  year-over-year to $1.3 million, according to Realtor.com. Yet the region, which had a surge in luxury home sales, failed to make the NAR list. 

The steep home-price appreciation in the Golden State reflects a broader problem with affordability, according to Bloomberg.

Across the U.S., annual home-price growth for existing one-family houses rose 4.9 percent to $422,100 in the second quarter, compared with a 5 percent year-over-year advance in the prior period. 

Nationally, 89 percent of metropolitan areas saw home-price increases in the second quarter. The rate on a 30-year fixed mortgage ranged from 6.82 percent to 7.22 percent.

In 48 percent of the nation’s real estate markets, homebuyers require an income of at least $100,000 to afford a mortgage with a 10 percent down payment, according to NAR. In the first quarter, that was the case in 40.7 percent of the nation’s markets.

“It’s terrific news for homeowners who are moving ahead in wealth gains,” NAR Chief Economist Lawrence Yun said in a statement. “However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”

The emergence of a widespread $2 Million Dollar Club in Northern California appeared in June, when 33 former farm towns across the nine-county San Francisco Bay Area had a median home price of $2 million or more.

Many of the towns in the $2 million club have retained their status as wealthy enclaves by making it nearly impossible to build.

— Dana Bartholomew

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