Berkeley has been named the worst housing market for buyers in the country, according to a study from ConsumerAffairs, a journal focused on consumer research.<\/p>\n
The city falls just below Santa Clara, California. The rest of the bottom 10 are also located in California, with Oakland ranked 8th-worst and San Francisco 5th-worst.<\/p>\n
The study factors in housing market competitiveness, affordability, home size and livability. It compares the average income in a city to its average home price, and in Berkeley, the average three-bedroom home costs nearly 14 times what the average household earns in a year, according to ConsumerAffairs spokesperson Dayna Edens.<\/p>\n
\u201cIt\u2019s not just that Berkeley is expensive \u2014 it\u2019s that even relatively high earners are still priced out,\u201d Edens said in a text message. \u201cThat\u2019s really what pushes it to the bottom of our rankings.\u201d<\/p>\n
Antoine Levy, assistant professor of real estate at Haas School of Business, said he isn\u2019t surprised by the results.<\/p>\n
Levy attributes the unaffordability to two factors: the city\u2019s long-time restrictions on building new housing and a high concentration of older homeowners, which is primarily due to Proposition 13.<\/p>\n
The California proposition, passed in 1978, allows property taxes for homeowners to be calculated based on the value of a home at the time of purchase, rising only 2% each year until the next sale. It also keeps property taxes low for older homeowners. Because these taxes help fund essential public services, prospective homeowners are forced to make up the difference and could face very high property taxes.<\/p>\n
\u201cThis results in, effectively, a double whammy where old residents do not want to relinquish their tax base, they do not want to sell, which limits the supply available on the market,\u201d Levy said. \u201cA lot of houses are occupied by older residents who have a lot of extra space \u2026 but they do not downsize because they do not want to face higher taxes.\u201d<\/p>\n
A state like Texas, Levy says, has fewer barriers to young homeownership than California. Sugar Land, Texas, ranks 6th on the study\u2019s top 10 best cities for homebuyers, with six other spots being taken up by Florida cities.<\/p>\n
Proposition 13 would be very difficult to overturn. Levy said that when it was written, lawmakers required that a two-thirds majority would have to vote to get rid of it.<\/p>\n
Edens said researchers found that there were only 66 homes on the market in Berkeley in January, and roughly 61% of these homes sold above asking price. She added that buyers aren\u2019t just facing high prices, but also a thin supply and bidding wars.<\/p>\n