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San Francisco Bay area homes 16 per cent above sustainable levels, says Fitch

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Backyard view of a home in Santa Clara, California, the heart of Silicon Valley. Property prices were now at a new all-time high for the Bay area, and 62 per cent above the post-recession low in early 2012, rating agency Fitch said. Photo: Reuters

Home prices in the San Francisco Bay area, a hotbed for technology startups, climbed 16 per cent above sustainable levels in the third quarter of 2015, Fitch Ratings reported on Monday.

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Property prices were now at a new all-time high for the Bay area, and 62 per cent above the post-recession low in early 2012, the rating agency said.

“The last time the Bay area experienced this kind of home price growth was during the dot-com era from 1997-2000,” said Fitch analyst Grant Bailey.

Sustainable price levels, according to the Fitch index, are calculated as a ratio of current home prices against local wages growth and the state of the economy.

The area’s high exposure within post-crash RMBS and its prior vulnerability to boom and bust cycles, made the surge in house prices a particular concern.

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San Francisco area mortgages accounted for about 12 per cent of all jumbo home loans that were securitised into private-label mortgage bond deals since 2009 – the largest of any other metro statistical area, Fitch said.

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