Saving for a down payment can often be challenging for first-time homebuyers, particularly in high-cost areas like Northern California, and it is likely an issue that most consumers carefully weigh before the housing hunt begins.

A recent report outlined just how much homebuyers would need to save for a 20 percent down payment in major metropolitan markets across the country. Not surprisingly, some of the largest down payments are required in markets throughout California.

A median-priced home in the U.S. is $192,500, which means buyers need $38,500 for a 20 percent down payment, according to the report by Zillow. But in most market areas in California, the down payment cost is much higher and the income burden is greater. In fact, metro areas in California were among the cities where homebuyers needed to save the highest percentage of income to cover a 20 percent down payment.

For homebuyers in areas like San Jose, San Francisco and Los Angeles, saving a year’s worth of income wouldn’t even cover a 20 percent down payment, according to the report. Buyers in those markets need to save at least 180 percent of the average income in those cities.

In San Jose, for example, the median 20 percent down payment translates to $192,320. That represents 182 percent of the average income and is roughly the same as the median price for a home in the U.S.

San Francisco-area buyers are faced with a median 20 percent down payment of $164,920, which is 180 percent of the average income.

Buyers in Sacramento need $70,040 for a 20 percent down payment, which is about 108 percent of the average income.

The down payments are particularly steep when compared to the nation as a whole: the average American homebuyer sets aside two-thirds of his or her annual income to make that 20 percent down payment.

“It’s a big number,” Zillow Senior Economist Aaron Terrazas told CNN Money. “Very few are saving for a down payment in one year, it’s something they do over multiple years. And for renters who have been faced with rising rent and health care costs, it’s very difficult to put away any money at all.”

There are programs to assist first-time homebuyers, particularly those that offer smaller down payment requirements. While it is possible to put down less than 20 percent, that often translates to a higher interest rate and the extra cost of private mortgage insurance for homebuyers.

“Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” said Zillow Chief Marketing Officer Jeremy Wacksman. “While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”

Here’s what our local Northern California offices had to say about market conditions as we started the new year:

East Bay – The East Bay market has had limited inventory and steady buyer demand and sales activity. Almost every property is receiving multiple offers because of the low number of homes available for sale, our Oakland manager reports, and buyers are eagerly waiting for more homes to come on the market. In fact, the office had 5 multiple offers. Sales associates have multiple buyers and many of them are looking for the same home, she added. The Oakland office has observed that many properties are being repaired and staged to be listed in the future, possibly by March.

Monterey County – Rain was a big factor in the area in the first weeks of January, but that hasn’t deterred sales associates and consumers. Buyers are looking in all price points and “sellers that have been waiting for the new year seem to be ready to get serious about selling,” says the manager of our Monterey Peninsula offices. A $10 million-plus property went into escrow this past week. There is limited inventory in the mid-level million-dollar price point.

North Bay – Pent-up buyer demand and low inventory continue to affect the North Bay area. However, a “surge” of new listings is expected in the Greenbrae and Southern Marin offices in coming weeks after the Super Bowl, our office managers report. The market is so short on supply that it has created an “off market” supply that is equal to almost 25 percent of all transactions in January, our Southern Marin manager reports. The office had 18 open houses and 10 properties under contract. Many buyers missed out on the opportunity to buy last year in Marin County, our Greenbrae manager said, so there could be a bump up in sales as new inventory comes on the market. The Greenbrae office had 7 open houses and 8 properties under contract. The high-end sector has also seen some activity, with new multi-million dollar listings coming on the market in January and February, and 2 $5 million homes going into escrow during the last week, said our Southern Marin office manager.

Placer County – Open house activity was slow in the first two weeks of the year because of the heavy rains and flooding, our Auburn manager explained, but listing inventory is steady and there were 3 multiple offers and 7 homes under contract. A majority of buyers are coming from the Bay Area, especially San Jose and Marin, because Auburn and the surrounding communities offer more affordable housing options, she said. Conditions in the Previews® luxury market are basically unchanged since December. High-end properties are being shown although the majority are overpriced, according to the Auburn manager, and several luxury listings will be hitting the MLS in upcoming weeks and months.

Sacramento County – Listing inventory is on the rise and sales are declining, according to both our Folsom and Sacramento Fair Oaks managers. However, the Fair Oaks office reported 6 multiple offers and 7 properties under contract. The office also had 19 open houses. The offices in the region are gearing up for the spring selling season.

San Francisco – The start of the new year was marked by a bump-up in listings. Total inventory was 30 percent higher compared to a year earlier, shares our Lombard office manager, but sales and buyer traffic have lagged. Entry-level priced homes and fixer uppers are seeing the biggest demand, while the mid- to upper-priced condos have seen the largest number of price reductions, he said, with two-thirds of closed condo transactions selling at or under asking price.  The Lombard office had 2 multiple offers and 3 properties under contract. With mortgage interest rates expected to climb this year, open houses and broker tours have been well attended, and sellers are noticing increased demand and not waiting until the Super Bowl to sell in hopes of “catching a more-than-ready and able buyer,” according to our Market office manager.

San Francisco Peninsula – There was a significant slowdown in activity, due in part to the holidays and inclement weather, with our Burlingame, Burlingame North, Half Moon Bay, Palo Alto Downtown, and Redwood City managers reporting that sales activity decreased. Several offices in region held open houses during the last two weeks – 6 in the Burlingame office, 4 each in the Burlingame and Half Moon Bay offices, and 2 in the Palo Alto Downtown office. Demand seems to be healthy. Our Redwood City manager says there are still a lot of buyers, with very limited inventory, and both the Half Moon Bay and Burlingame offices dealt with multiple offers (2 each).

Santa Cruz County – The Santa Cruz area has seen a decline in overall sales but an increase in sales activity in the high-end market. Inventory is steady when compared to the level of listings a year earlier, however sales are off by about 25 percent. Previews® luxury property sales, on the other hand, have climbed, with 15 more unit sales recorded compared to the same period last year. Open house activity is on the rise in the region.

Silicon Valley – The new year has started off on a strong note, with sales activity and prices picking up in some parts of Silicon Valley. Gains in inventory are starting to emerge, but inventory is still not sufficient to meet the robust buyer demand in most areas. There are currently only 32 active listings in all of Willow Glen with only 3 of those listings priced under $1 million. Sales associates are reporting heavy traffic at open houses and strong buyer demand, says the San Jose Willow Glen manager. Many of the homes that had been lingering on the market have either gone off the market or have been absorbed, said our Los Altos office manager, and there is a little more than a month’s worth of inventory. With such a limited number of homes available for sale, properties are still receiving multiple offers and some are going for over the asking price. Average sales prices climbed in multiple communities, according to our San Jose Almaden office manager. The average sales price so far for January in Almaden is $1,216,000, which is 4 percent higher than January 2016 ($1,169,000).  Blossom Valley’s average sales price is up 9 percent to $695,000 in January 2017 compared to $633,000 in January 2016.  Santa Teresa had the largest increase of average sales price in January.  It is currently $829,000, which is 23 percent higher than the $674,000 average sales price recorded a year earlier.  Cambrian was down with an average sales price of $883,000 from $1,024,000 in January 2016 ( -14 percent).  The luxury market — homes priced over $3.5 million — is steady but somewhat flat with days on market and inventory creeping up; frenzy bidding and/or multiple offers is the exception as opposed to the rule, shared our Los Gatos manager.

South County – Listings are down and sales have been slow and flat since the beginning of December in South County. The holiday season, coupled with the election and economic uncertainty that goes along with it, and the perception that mortgage interest rates are on the rise, has caused sellers and buyers to postpone or delay their real estate decisions. “The old saying that the real estate market doesn’t hit its stride until after the Super Bowl seems to ring true this year,” says our Gilroy & Morgan Hill manager. The office had 7 open houses and 10 properties under contract.

Market Watch is a bi-weekly column exploring the Northern California housing market. Click here to view past issues.

Over the past year, California has seen a strong seller’s market for housing – thanks in large part to a shortage of homes on the market, strong demand by buyers and mortgage interest rates that hovered near historic lows. But as 2017 gets underway, the question is whether that seller’s market will continue, especially given a recent uptick in interest rates.

According to Freddie Mac, the average 30-year fixed-rate mortgage nationwide climbed to 4.16 percent in mid-December (the latest figures available), up more than a half a percentage point just since the November presidential election. Economists say the increase is due to more optimistic economic growth projections, higher-inflation expectations, and the Federal Reserve’s recent rate hike.

Although mortgage rates remain relatively low by historical standards, the sudden increase in rates is one of several factors that could impact the housing market in the coming year: Will low inventory levels begin to rise? With the job market remain strong and continue to grow? What impact will the new Trump administration have on the housing market and the economy?

All of those factors could play a role in how the housing market shapes up in the new year.

A panel of industry economists in a recent article in Inman News, the national real estate trade publication, said they generally expect 2017 will remain a seller’s market in much of the country. But they believe that trend could begin to give way to more favorable conditions for buyers in 2018 and 2019.

“2017 is probably going to skew more toward the seller’s market,” Svenja Gudell, chief economist at Zillow, told Inman. “Most markets will skew more toward seller’s markets, and even in the Midwest there are probably more seller’s markets than buyer’s markets compared to their own history.”

But Jonathan Smoke, chief economist at realtor.com, said the three laws of real estate – location, location, location – will be ever more important this year.

Markets in the western U.S. have seen the most significant price appreciation, making it difficult for first-time buyers to find success. Smoke expects that trend to continue, but sees great variations geographically – even from city to city and neighborhood to neighborhood in a particular market.

“We’re seeing some clear patterns emerge within markets — one might be slowing down and cooling off where another part is really heating up,” he told Inman. “Real estate is so local that I would argue that a neighborhood view is really where you can see the differences and disparities and changes that are occurring around the country.”

The economists did project that inventory levels will likely rise in 2017 and new construction will pick up as well, giving frustrated buyers a bit more to choose from.

The upshot is that sellers might find that it will take a little longer to sell their property this year than it did in 2016. However, the increase in listings and construction probably won’t be enough to offset pent-up demand from buyers as long as the job market remains strong.

The National Association of REALTORS® publication, realtor.com, said the days of multiple offers and bids well over the asking price probably won’t go away in 2017 – although they may not get much worse from a buyer’s standpoint.

Citing rising mortgage rates and a shortage of affordable homes for sale, realtor.com projected a smaller increase in sales in 2017 than last year and slightly slower price appreciation of about 4 percent on average nationally, down from 5 percent in 2016.

“2017 will be a year of growth in both sales and prices, but that growth will be slower than what we’ve seen over the last three years,” according to Smoke.

Much of what happens in the coming year could depend on how high mortgage interest rates go. Smoke projects 30-year fixed mortgage rates to rise to 4.5 percent in 2017, while Gudell of Zillow expects a peak rate of 4.75 percent following additional Fed rate hikes.

No one knows for sure what will happen to interest rates or the housing market. But if you have been thinking about buying or selling your home, now may be a good time to make your move before rates go higher and while demand for housing remains strong.

Coldwell Banker Real Estate is continuing its efforts to be the smart home leader in real estate. This month, Coldwell Banker Real Estate teamed up with Vivint Smart Home to conduct a survey on the types of smart home technology consumers want and the smart home trends they expect to see in 2017.

The survey revealed that the vast majority of Americans who have smart home products – controlled remotely by a smartphone, tablet, computer or by a separate automatic system within the home itself – want voice control. The survey also found that an increasing number of consumers are already using voice control.

According to the survey results, a whopping 72 percent of respondents with smart home products said they wanted voice control. Another 48 percent of Americans with smart home products already have voice control capability.

What systems and products do consumers want to control using their voice? More than half of Americans who own smart home products with voice control use the feature to control entertainment, such as playing music, televisions and speaker systems. In addition to entertainment, the next three most popular functions being controlled by voice activation for smart home product owners are lighting, security products and shopping (all tied at 33 percent).

“We’re not surprised that so many Americans want to be able to use their voice to control smart home products because it makes for a much more intuitive user experience,” said Sean Blankenship, chief marketing officer of Coldwell Banker Real Estate LLC. “As the smart home leader in real estate, Coldwell Banker is at the forefront of smart home trends and we’re hearing directly from our agents that their clients are demanding voice control to make their smart home experience more seamless.”

Voice controlled smart home products were a significant part of the 2017 Consumer Electronics Show (CES®) in Las Vegas, which kicked off January 5 and concluded on January 8. Coldwell Banker was proud to participate in CES once again, even broadcasting live on Facebook from the CES show floor. The company was the only real estate brand to have a presence in this pre-eminent consumer technology conference which drew thousands of exhibitors and product launches from more than 3,800 companies. To see the live broadcast and more coverage from the Coldwell Banker team on the ground, make sure to visit ces.coldwellbanker.com.

Advances in smart home technology are something to watch in 2017.

Here’s what our local Northern California offices had to say about market conditions as we closed out 2016:

East Bay – In Pleasanton, Walnut Creek and the surrounding areas, listings were somewhat steady with some slight declines and sales activity was off. One factor that is being closely monitored throughout the region is the uptick in mortgage interest rates which can affect affordability for many buyers. The rise in rates will either spur buyers to make a move before further increases or may deter sellers from putting their homes on the market who are enjoying lower interest rates and fear having to obtain loans with higher rates—which all puts more pressure on the market.

Lake Tahoe & Truckee –  2016 ended on a fairly high note. The company consistently led the market in terms of listings and sales in the region, according to our office manager in the region. Inventory levels were approximately 10 percent lower than 2015, and the high point for listings was in late June, when 840 properties were listed for sale in the region. We ended the year with 514 available listings. Luxury sales increased, with the sale of $1 million-plus properties shooting up 49 percent. (280 sales in 2016 vs. 187 sales in 2015). Sales prices in the high-end of the market, however, eased with the median sales pricing decreasing 5 percent to $1,536,875 from $1,622,5000 in 2015.

North Bay –  Sales and listing inventory were steady in some areas and lighter in others to close out the year. The Greenbrae office had 15 properties under contract, but inventory and sales overall were lighter compared to the rest of the year as both sellers and homebuyers were preoccupied with the holidays. But the market was surprisingly active in our Santa Rosa Mission office, and the Previews market was experiencing about the same pace as a year earlier in terms of closed sales and listings, according to our local manager in that area. Our Novato office manager reported a drop in sales and listings, with three accepted offers in the last two weeks.

Placer County – Sales and listings fell during the last two weeks in the area, with consumers pausing to focus on holiday festivities. Listing inventory is still limited, with a low number of homes priced below $400,000 available for sale, according to our Auburn office manager.  Despite the slowdown, there were three multiple offers and 12 properties that went under contract in the Auburn office. A number of homeowners have indicated they are waiting until after the holidays to put their homes on the market, so the Auburn manager expects an increase in listings in coming weeks. One area of concern is that appraisals are still coming in lower than the purchase price, according to the Auburn office manager, and last-minute contract cancellations are occurring. The higher-end of the market was also slow, with buyers being very specific about what type of property they are seeking, and with additional properties expected to come on the market this month.

Sacramento County – Restricted inventory remained an issue in the region. Sacramento County’s inventory was down 40 percent in December, compared to the same month in 2015, with just over a month’s worth of inventory, according to our Elk Grove office manager. The average price stood at $331,000 and demand has been strong but sales were off by more than 7 percent, he said. There was a particular lack of inventory of homes priced under $350,000, according to our Sacramento Fair Oaks office manager. Still the Fair Oaks office recorded 17 accepted offers and had 7 multiple offers during the last 2 weeks. Our Folsom office saw increased sales activity, with 14 properties under contract. 

San Francisco –  While a slowdown in activity isn’t unusual during the holiday season, our Pacific Heights office manager observed a bump-up in listings and sales, with 9 properties going under contract. Heading into the 2017, it will be interesting to see whether the new administration’s policies will have any significant impact on the region’s housing market.

San Francisco Peninsula – The holiday season was affecting the local market, as consumers focused on the holiday hustle and bustle. There was a decrease in the number of for-home sales, as well as a dip in sales activity in the area, with the Palo Alto downtown and Redwood City offices reporting 2 properties under contract each. Demand appears to be healthy, however, as there were multiple offers on all 6 properties that went under contract in the San Mateo downtown office.

Silicon Valley – There was some mixed news about inventory and sales activity in the region. Our Los Gatos manager shared positive news for home searchers, saying that listing inventory was up slightly while sales activity was steady. There were 35 homes available for sale over the last two weeks, which is up from 27 homes during the same period last year. The office also juggled 20 multiple offers. Meanwhile our San Jose Willow Glen office saw steady sales activity, with buyers coming off the fence to make those year-end purchases and multiple offers on practically all of the office’s in-house listing that went well over asking price. Several agents affiliated with the San Jose Willow Glen office wrote offers for buyers who experienced sticker shock with both the amount of offers on each property and how much over their asking price they went, according to our local manager. Most offices in the region were reporting that listing inventory was down over the last two weeks. The low inventory and holiday season likely affected sales activity in the last two weeks of 2016 in both our Cupertino and San Jose Almaden offices, with both revealing a decrease in sales activity. The limited inventory also likely led to three multiple offices in the San Jose Almaden office, with the manager saying it was surprising that 7 properties went under contract given the low number of listings. But activity will likely pick, as our Cupertino manager pointed out that agents have many prospective buyer clients who are waiting for new inventory to the come on the market. Most homeowners are likely waiting until after the Super Bowl to list their homes for sale, she said.

South County – Market conditions shifted with listing inventory experiencing a significant decline. In all of Morgan Hill there were only 32 active listings, while Gilroy had 62 listings. Agents are dealing with a restricted supply that’s not nearly sufficient to meet buyer demand, according our Gilroy and Morgan Hill office manager. Some buyers have been frustrated by the lack of inventory and are anxious to secure a property since mortgage interest rates appear to be on the rise.

Market Watch is a bi-weekly column by Coldwell Banker San Francisco Bay Area and Sacramento-Tahoe president Mike James exploring the local Northern California housing markets. Click here to view past issues.