San Francisco Housing Market Forecast 2017: Modest Gains Ahead?

A recent forecast for the San Francisco housing market in 2017 suggests that home prices could level off over the next 12 months. Housing affordability has become an issue in the San Francisco real estate market, and that’s one reason prices are expected to slow in 2017. Mortgage rates, meanwhile, surged to a two-year high toward the end of 2016.

Forecast for San Francisco Housing Market in 2017

According to the real estate analysts at Zillow, the median home price in San Francisco rose by a mere 0.8% during 2016. This is a big change from the double-digit gains posted in 2014 and 2015. So already we’ve seen a leveling off with regard to home values.

Looking forward, Zillow’s forecast for the San Francisco housing market in 2017 predicts a flat line in local home prices. Their house value forecast for the 12-month period ending in December 2017 was 0.0%.

Related: San Jose market outlook

But recent data from the real estate analytics company CoreLogic tell a different story. According to a report the company released in November, the median home price in San Francisco rose 10% in October 2016, compared to a year earlier. But this may only indicate a shift in the real estate market, with more high-priced houses being sold (as opposed to true home-price appreciation). According to Andrew LePage, a research analyst with CoreLogic, there was a definite shift to high-end homes in most parts of the Bay Area.

A recent forecast from Los Angeles-based Beacon Economics suggests the San Francisco real estate market will experience modest price growth in 2017. They expect that rising mortgage rates will hold single-family home price appreciation at 3% to 4.5% over the next year (through December 2017).

So there are some mixed signals here, as far as the predictions for San Francisco’s housing market in 2017. Some analysts are forecasting zero price growth, while others anticipate that home values will rise 3% to 4% next year.

Mortgage Rates Rising at Year’s End

Here’s another trend that could affect the San Francisco real estate market in 2017. In November 2016, mortgage rates began to rise sharply and reached a two-year high by the second week of December. The chart below shows this trend clearly.

This chart, courtesy of Freddie Mac, shows national mortgage rate trends during 2016. On the far right side, you can see the big surge that occurred during November and December. So here’s an easy prediction for the San Francisco housing market in 2017: We will start the year with higher mortgage rates than the same time a year ago.

Related: Average mortgage payment in California

Higher Loan Limits in 2017: FHA, VA and Conventional

Here’s some good news for San Francisco mortgage shoppers. Conforming, FHA and VA loan limits have all been increased for 2017. These changes were made in response to home price gains that occurred during 2016 (loan limits are based on house values).

According to federal housing officials, the loan limit for a single-family property in San Francisco will rise from $625,500 in 2016, to $636,150 in 2017. This applies to conventional mortgage loans, as well as FHA and VA.

Disclaimer: This article includes predictions and forecasts for the San Francisco housing market in 2017. Such statements were provided by third parties not associated with our company. We have compiled them here as an educational service to our readers.