According to a report based on the S&P Case-Shiller Index, San Francisco home prices soared 23.1 percent on an annual basis, leading to speculation of a housing bubble among Chinese buyers who want to purchase a home in the San Francisco area.

However, some experts are debating whether Chinese buyers are the main contributor to soaring home prices and other experts and local real estate agents don't regard the rising prices as a mark of a housing bubble, but rather a sign of recovery in the Bay Area housing market.

Patrick Carlisle, chief market analyst and vice president of Paragon Real Estate Group told China Daily: "It's not uncommon to see this sort of fast appreciation in the early years of a market recovery after a long market recession. San Francisco is now two years into the recovery that began in early 2012. In past cycles, recoveries have typically lasted five to seven years."

Carlisle believes that housing prices will continue to appreciate, but at a lower rate than past two years, adding that the rate will be between 5 to 10 percent.

Mark McLaughlin, CEO of Pacific Union International, agreed with Carlisle's statement and said: "Pacific Union does not feel this is a 'housing bubble'. In comparison with other large cities in the world, such as London, Hong Kong, Beijing, Tokyo, and New York, the price in the Bay Area seems relatively affordable, and will indeed be more expensive to live driven by population growth, exceptional job growth, and a very limited supply of land for new housing units to be built."

He announced a more aggressive estimation about the development of housing market in next several years. "Pacific Union expects 10 percent price appreciation in single-family homes next year and likely a total of 20 percent appreciation by 2017," said McLaughlin.

Chinese buyers are contributors to the continued demand for San Francisco homes. However, the main driver of rapid price appreciation is the high-tech boom, which is increasing population and employment, as analyzed by Carlisle.

"We see a large influx of foreign capital - particularly from China in the marketplace. Chinese investors represent approximately 9 percent of all home purchases in the Bay Area. Much higher percentages are true in some popular cities, such as 18 percent in San Francisco and 25 percent in Palo Alto," said McLaughlin.

Chinese buyers generally have a very long term perspective on real estate acquisition as they hold properties longer than traditional buyers, McLaughlin told China Daily, adding that the "hold" strategy even further reduces inventory for sale in the market and drives housing prices up.

Lots of Chinese buyers purchase homes for their children, Carlisle explained, adding that the Bay Area is home to three of the most prestigious universities in the world.

Other Chinese buyers also purchase houses and high-end condominiums as second homes or investments, said Carlisle.

"The large majority of San Francisco homes are sold very quickly, without price reductions," said Richard Lee, a Chinese real estate agent in Silicon Valley, home to much of the tech boom in the area.

"We are in a very low inventory situation, so any additional buyers make the market that much tighter for buyers in general, but so far Chinese buyers are not a big enough percentage of our buyers to make a significant difference," said Carlisle.

In 2007, the US housing market began to sputter, eventually affecting housing markets in over half of the country. Housing prices peaked in early 2006, started to decline in 2007, and reached new lows in 2012.

zilian@chinadailyusa.com