Prices Jumping – Yet Again – Across San Francisco

The San Francisco real estate market grew increasingly frenzied as the first quarter of 2014 progressed, leading to another surge in home prices in virtually every neighborhood in the city. The high-demand/ extremely-low-inventory/ competitive-bidding situation is similar to what occurred first in spring 2012 and then, to an even higher degree, in spring 2013. After the market seemed to stabilize in the second half of last year, we didn’t expect to see it turn this fierce in early 2014, but right now it appears to be every bit as ferocious as last spring’s.

Of major metro areas, the new Gallup-Healthways survey ranked SF-Oakland second in the nation (behind San Jose-Santa Clara) on their index for “well-being.” Though already the second most densely populated city in the country (after NYC), San Francisco simply has many more people wanting to live here than there are homes available to rent or buy.

Sales over Asking Price
The heated competition for new listings coming on market has resulted in an astounding percentage of sales occurring above, and often far above, list price.

This chart below breaks down, by neighborhood, the average sales price to list price percentage for the 90% of homes selling without price reductions. Of the areas assessed, Bernal Heights came out on top with sales prices averaging an incredible 21% over list prices over the past 2 months.



Median Sales Price Spikes
Typically, the first quarter of the year does not show a dramatic increase in median sales prices over the previous quarter – in fact, a decline is not unusual due to holiday market dynamics. But the first quarter of 2014 saw large spikes in median prices for both single family homes (houses) and, especially, condos in San Francisco.
This next chart is a look at quarterly median price appreciation over the past 3 years.



Longer-term trends: While virtually the whole country has been experiencing a large market rebound, San Francisco, because of our particular economic circumstances, is generally outperforming almost every other market area. The big exception is Silicon Valley, whose high appreciation rate is being driven by many of the same employment and demographic causes.



Far Too Little Inventory
When the market recovery began in earnest in early 2012, there were complaints of a shortage in inventory. In 2013, the market grew even more heated and supply declined further to what felt like desperately low levels. Now in 2014, amid no lessening of demand that we perceive, the supply of SF homes available to purchase has dropped again.

There are increasing numbers of new-construction housing units coming on market – and many more being planned and built – but so far they’re being snapped up, at very high prices, without noticeably altering the supply and demand dynamic.



Listings Selling Faster than Ever



San Francisco Neighborhood Snapshots
We updated analyses for a number of city neighborhoods with enough sales for quarterly data to be meaningful. In every district we looked at, there were significant spikes in median sales prices and/or average dollar per square foot values in the quarter just ended.
Below are two samples, but our full collection of long-term neighborhood analyses can be found here (some updated through the first quarter, others through the end of 2013):San Francisco Neighborhood Values







Affordability by Neighborhood
We broke the city down by neighborhood according to the number of house and condo sales in each price segment. Of course, in a generally appreciating market, these prices continue to move upward en masse. Below are 3 analyses from our 11-chart report, which can be found in its entirety here:Where Can I Afford to Buy in San Francisco






Please call or email if you have any questions or comments regarding these analyses.

Fluctuations in median and average sales prices and average dollar per square foot values are not unusual and these fluctuations can occur for other reasons besides changes in value, such as seasonality, inventory available to purchase, buyer profile and new condo development projects coming on market. How these statistics apply to any particular property is unknown without a specific comparative market analysis. All data from sources deemed reliable, but may contain errors and is subject to revision.

Current San Francisco Home Values by Neighborhood, Property Type & Bedroom Count

These tables report average and median sales prices and average dollar per square foot, along with average home size and units sold, by property type and bedroom count for a wide variety of San Francisco neighborhoods. The tables follow the map in the following order: houses by bedroom count, condos by bedroom count, 2-bedroom TICs, and finally a small table on 2-unit building sales.

The analysis is based upon sales reported to MLS between April 1, 2013, when the last big surge in home values began in San Francisco, and February 21, 2014. Value statistics are generalities that are affected by a number of market factors and all numbers should be considered approximate.

Continue reading

Possible Shift In San Francisco Real Estate Market? Should You Sell Your Home Now?

February 2014 San Francisco Market Report

It is far too early in the year to reach definitive conclusions regarding substantive changes in the market, but there are indications of a number of shifts. From the hurly burly on the street, the word is that the quantity of offers coming in on new listings is declining. Where a new listing might have attracted 10 or 12 offers last spring, 3 or 4 are coming in now; where 3 or 4 offers would have arrived, the seller is getting 1. And, according to Broker Metrics, for every 2 listings that offers in December and January, another listing expired or was withdrawn without selling.

The amount of competition deeply affects home price increases.

There are still a very large number of buyers looking at listings online and at open houses. But more of them appear to be first-time buyers and they are proceeding more cautiously. Some buyers are burned out on the multiple-offer bidding frenzies of last year and are reluctant to participate in them. Though the market remains hot by any reasonable standard, by some statistical measures it is cooling. This may reflect a transition or only a lull before the spring sales season begins.

Recently, the investment-property analysis firm Reis speculated that SF apartment-rent growth — which has been extraordinary by any measure, especially in a period of low inflation — will slow despite intense demand and very low vacancy rates, simply because people can’t pay any more. It’s an idea which may or may not be correct or apply to other types of housing costs. Rent rates do play a role in purchase prices as buyers often compare the net housing costs of the two options.

Median Sales Price Appreciation by Neighborhood

In San Francisco, some of the most affluent neighborhoods — such as the Pacific Heights-Marina district and the Noe, Eureka and Cole Valleys district — started their recoveries in the second half of 2011, well before virtually every place else in the city or country. When 2012 began, prices in these districts soared, while other areas played catch up. In 2013, that dynamic flipped: Appreciation rates in comparatively less expensive neighborhoods surged, while slowing in the most affluent areas.

A big part of this is simple affordability: Priced out in one neighborhood (or city), buyers focused on others, similar in ambiance but less costly. Home prices there looked so good in comparison that buyers were willing to bid them up. The huge decline of distressed sales in areas severely affected, such as in Bayview, has had an outsized effect on median sales prices there. Continuing gentrification, as in the Mission, and increasing “luxury” condo construction in less affluent areas have also played parts in this trend. It’s not as if demand plunged in the Pacific Heights-Marina district (or Noe Valley, for that matter). Quite the contrary: its 9% appreciation rate in 2013 translated into the city’s largest median price increase in dollar terms ($300,000). However, in the previous year, this district saw year over year median price appreciation of 25%.

Note that median price appreciation does not perfectly correlate to changes in home values, as it can be affected by a variety of market factors. It does give an approximate sense of market trends.
Continue reading

The House Of Haight Ashbury Vintage Gets $1.3M More, Two Potrero Hill Comps You’ll Want To Track, And More Overbids To Ponder

Before I show you the list of the top 10 overbids, have a look at the building that houses Haight Ashbury Vintage:
Haight Vintage Building sells for $8,250,000
Listed for $6,950,000 back in October, it just closed for a mere $1,300,000 more. Apparently, Vintage is more hip than you thought…

I have more story. Just yesterday I heard of 25 offers on this condo on Missouri in Potrero Hill, and there will be many on this other condo on Mississippi, but those are not done deals. Get on the list and know when they close.

So…the overbids. Regardless of where these are priced, consider the number of buyers out there bidding on what little inventory we have, which ultimately drives the price up. Think it’s just a matter of pricing below comps to eventually get to market? I don’t. The data shows staggering growth in SF, and a possible plateau, but the truth is, buyers far outnumber sellers, and until those two numbers meet in the middle, we can expect another year of mind boggling overbids. Another thing to consider is when these properties went into contract, that being the “slowest” time of year for San Francisco real estate: The Holidays and a couple weeks after.
Anyhow, here you go. Overbids, cuz I know you love them:

Address BR/BA/Units DOM List Price Sold Price Overbid
2510 39th Ave 2/1.00/N/A 15 $599,000 $788,000 31.55%
179 Vienna St 2/2.00/N/A 11 $499,000 $650,000 30.26%
200 Amber Dr 4/2.50/N/A 12 $1,299,000 $1,670,000 28.56%
506 Molimo Dr 3/2.00/N/A 31 $859,000 $1,100,000 28.06%
12 Sherwood Ct 3/2.00/N/A 5 $788,000 $1,000,000 26.90%
700 Illinois St 1/2.00/3 13 $499,000 $630,000 26.25%
726 Masonic Ave 2/1.00/ 34 $750,000 $925,000 23.33%
94 Eastwood Dr 2/2.00/N/A 26 $898,000 $1,085,000 20.82%
738 Masonic Ave 2/1.00/ 6 $799,000 $955,000 19.52%
1501 Haight St 1509 N/A/N/A/14 39 $6,950,000 $8,250,000 18.71%

DECEMBER 2013 SAN FRANCISCO CONDOMINIUM PRICES INCREASE 18 PERCENT OVER PREVIOUS YEAR

San Francisco condominium prices rose 18 percent in December 2013 over the previous year, according to the Condominium Pricing Index released today by The Mark Company, a leading urban residential marketing and sales firm.

The Mark Company Condominium Pricing Index for December was $1,034 per square foot, which is up 2 percent from November. New construction inventory was 78 percent lower than a year ago, and down 26 percent from the previous month, with 92 units currently available.

“With fewer than 100 new condominiums now for sale in San Francisco, price appreciation is likely to continue in 2014,” states Erin Kennelly, senior director of research, The Mark Company.

The Condominium Pricing Index, part of the firm’s monthly Trend Sheet (available at www.themarkcompany.com), represents the price per square foot of a new 10th floor, 1,000-square-foot condominium. It is based on recent sales data, and uses a proprietary quantitative method to measure trends in market demand. It tracks the value of a new construction condominium without the volatility of inventory changes.

The Mark Company Penthouse Pricing Index, which applies the same methodology to a new 30th floor, 2,000-square-foot condominium, was $1,776 per square foot, up 18 percent year over year.

The condominium price per square foot was $868 for resales, up 26 percent over December 2012, according to The Mark Company Trend Sheet for San Francisco. In addition, there were 229 condominium resales in San Francisco in December, 134 active condominium listings representing less than one month of inventory, and 123 pending condominium units, the Trend Sheet found.

That’s some pretty insane growth and is not surprising. Thanks Mark Company for the info.

Dropping Knowledge: San Francisco Property Pie Chart

I know you’re all like me, you drive around town looking at all the wonderful, insanely expensive property we have here in San Francisco. I know you wish you knew how many of the properties you see were single family homes, how many are condominiums, how many are big ol’ properties of which you’d love to be the landlord (or maybe you already are). My company came up with this nice little pie chart for all y’all. Enjoy:

sf_housing_units

San Francisco Rated #1 Real Estate Market In The Country, And Solid “Buy” By The Urban Land Institute

In their “Emerging Trends in Real Estate 2014 (pdf)”, The Urban Land Institute named San Francisco the #1 real estate market in the country:

#1- San Francisco
The top-ranked market in the survey for the second year in a row, San Francisco has a real estate sector driven by a thriving economy that is projected to add jobs at a rate of 2 percent next year. According to survey respondents, the city is a solid “buy” for all property types, with each of these recommendations higher than the average for the other major markets.

The other cities rounding out the top 5, in order are: Houston, San Jose, NY and Dallas/Fort Worth

Multifamily housing, which has been the most popular sector in recent reports, is still popular with investors, as the underlying fundamentals remain intact due to demand from members of generation Y seeking to rent and baby boomers looking to downsize from houses to apartments.”

There is a TON of good information in this report, so I highly recommend clicking through to read some, if not all, of the report.

-The full and very long report is here (pdf) [Urban Land Institute]

Even With San Francisco Market Near A Peak, Many Expect More Growth Ahead

With all the talk of bubble this, bubble that (did you cast your vote?), which I do not think we’re in, I thought it important to share a little report from the Goliath, National Association of Realtors.

medianpriceexpectation

REALTORS® generally expect a modest increase in prices in the next 12 months , with the median expected price change at about 4 percent. This is based on responses gathered from the August-October 2013 REALTORS® Confidence Index Survey. About 3,000 REALTORS ® respondents answer the survey each month. See the October report at http://www.realtor.org/reports/realtors-confidence-index.

The graph above shows the median expected price change across the states which are grouped into those with “low”, “middle” and “high” price expectations. States in the West and in the South expect the highest price increase in the range of about 4-8 percent. Tight inventory continues to bolster prices in these areas.

-Expected Price Growth Strongest In West And South Markets [Realtor.org]

Penthouses, Mansions, Short Sales & Fixer-Uppers

What Did San Francisco Homebuyers Buy in 2013?

Views, prices, architecture, neighborhoods, property types and sizes, parking, probate sales and appreciation rates: We data-mined all of San Francisco’s 2013 sales reported to MLS through the end of November and charted the results below.

Please call or email with any questions or comments.

Sales as described in and reported to San Francisco MLS by 11/25/13. All data herein is from sources deemed (at least somewhat) reliable — i.e. the information input by listing agents regarding their own listings — but may contain errors and is subject to revision. These charts do not include sales unreported to MLS, such as the sale of many so-called “pocket listings” and many of the new-development condo sales that occur.

San Francisco (Bay Area) Case-Shiller Index Shows Staggering Home Price Recovery And Possible Plateau

Case-Shiller Index numbers all reflect home prices as compared to the home price of January 2000, which has been designated with a value of 100. Thus, a reading of 180 signifies home prices 80% above those of January 2000.
caseschiller

The Case-Shiller Index for the San Francisco Metro Area covers the house markets of 5 Bay Area counties, divided into 3 price tiers, each constituting one third of unit sales. Most of the city of San Francisco’s house sales are in the “high price tier.” The Index is published 2 months after the month in question and reflects a 3-month rolling average. September’s Index was just released November 26th.

This chart illustrates the price recovery of the Bay Area high-price-tier home market which really got under way in 2012. In both 2012 and 2013, home prices surged in the spring and then plateaued in the summer-autumn. The surge in prices that occurred in spring of 2013 was particularly dramatic, reflecting a frenzied market of huge buyer demand, historically low interest rates, increasing consumer confidence and extremely low inventory. In San Francisco itself, it was further exacerbated by the high-tech-fueled explosion of new wealth. The market has since calmed down somewhat and that cooling is reflected in the Index readings of the past three months (through September).

Home Ownership as an Investment, Home Prices, Inflation, Leverage & Home Equity

First and foremost, any home purchased needs to work as a home: it fulfills your housing needs at an affordable monthly cost – ideally, a cost, after tax deductions and principal pay-down, less than or similar to that of renting the property. However, though it cannot be compared on an apples-to-apples basis to investments such as stocks, bonds and CDs (that you don’t live in), it’s worth looking at the issue of homeownership as a financial investment as well.

Home-Price Appreciation vs. CPI Inflation since 1988

This chart compares, over 25 years, the amount of inflation per the Consumer Price Index (CPI) to price appreciation for high-price-tier homes in the 5-county San Francisco Metro Area per the Case-Shiller Index. (Most of the City of San Francisco’s housing is in the high-price tier, the upper third of Bay Area unit sales.) In this chart, 1988 equals a price-value of 100; 127 equals a price 27% higher than the price in 1988 for the same goods or house. CPI inflation is relatively slow and steady: the average across the past 25 years is a little less than 3% per year. Home prices, however, jump dramatically up (appreciation) and down (depreciation) depending on the market cycle, but average appreciation from 1988 to mid-2013 was about 5% per year – though this calculation can vary greatly by the exact start and end dates chosen.

An average SF Metro Area home purchased in 1988 appreciated by 244% as of July 2013, while the overall CPI inflation rate was 97%. If the home had been sold at the recent bottom of the market, the difference would have narrowed to 165% appreciation vs. 95% inflation. Purchase and sell timing always matters and if one has to sell at the bottom of the market, it affects the return on any investment. As the chart illustrates, home-price appreciation usually outpaces inflation by a significant margin over the longer term: this is a good thing for homeowners and doesn’t include other benefits such as living in the property and the capital gains exclusion on the sale of a principal residence.

This analysis applies well to homes purchased with all cash and no financing. Leverage alters the picture substantially.

Leverage (Financing), Inflation and Home Equity Growth

If one leverages one’s home purchase by taking out a loan, then the growth in one’s home equity dramatically outpaces inflation over the longer term. For the sake of simplicity, in the example above, we’ll assume that home price appreciation and inflation both run at 3% per year, and that the buyer put down 20% in cash plus closing costs, and financed the remaining 80% with a 30-year fixed rate loan. In this scenario, each year that the inflation/ home appreciation rate is 3%, one’s home equity asset grows by about 15%, plus the principal repayment on the outstanding loan (which is a major component – like a forced savings account – in the growth of equity over time). Indeed, the higher the inflation rate, the greater the equity growth. If home price appreciation outpaces inflation as well – as it has over the past 25 years – that accelerates the increase in home equity further. Moreover, the financing cost is currently subsidized by the mortgage interest tax deduction, if that applies to your financial situation.

This is why, using reasonable leverage, real estate is typically considered a good long-term investment – short-term can be much riskier – as well as an excellent hedge against inflation. Of course, if leverage is abused as it was in the years of subprime lending, underwriting standards decline, predatory lending and home-refinancing frenzy (i.e. “using one’s home as a piggy bank”), other risks arise.

In earlier times, when people didn’t move around as much, one bought one’s home, paid it off over the years and when retirement came, had a home owned free and clear – a huge financial asset to be used as appropriate.

Ongoing Homeownership Costs vs. Rental Costs over Time


In this chart, the increase in the annual cost of homeownership with a fixed-rate loan is compared with the increase in rent at a 3% inflation rate, and the increase in rent of a home subject to San Francisco rent control, where annual rent increases are limited to 60% of CPI. As seen, if one locks in a fixed mortgage interest rate, the increase in ownership cost is limited to the increase in property tax costs (limited under Prop 13) and maintenance expenses, while the entire rental cost may be subject to annual raises. Over the longer term, one’s ownership costs become more and more attractive when compared to rental housing costs subject to inflation. If one owned the home for the full 30-year loan period, the monthly mortgage payment itself would disappear.

We have generated two sample rent vs. buy scenarios for San Francisco here:

2-BR Apartment Rental vs. Condo Purchase and 3-BR House Rental vs. Purchase

And you can perform your own rent vs. buy scenario calculations here, using your own financial circumstances, assumptions and projections: Rent vs. Buy Calculator

Important caveats: Trying to compare buying a home to other financial investments on an apples-to-apples basis is impossible, because there are so many other variables at play: the use and enjoyment of the home, how the cost of homeownership compares to renting, physical condition decline over time (without further investment), risks and returns on other types of investments, home tax deductions, the capital gains exclusion on profit from a principal residence sale ($250k for single owner/ $500k for couple), market timing and other factors. All the analyses above are simply sample scenarios, looking at homeownership from a number of angles using a variety of assumptions. It is unknown whether they will apply to future trends.

As said in the first line of this report, first and foremost, any home purchased needs to work as a home: it fulfills your housing needs at an affordable monthly cost. If that’s where you start, with a fixed rate loan, and you don’t refinance out growing home equity, and you don’t have to sell during a market downturn (which, admittedly, isn’t always possible to avoid), then you should come out all right and more often, very well.

These analyses were performed in good faith, but may contain errors, are not warranted and should not be exclusively relied upon. Tax law and other factors referred to are subject to change. All information provided herein should be carefully reviewed according to your own circumstances, plans and economic projections with a qualified financial adviser and loan agent.

San Francisco Home Price Plateau?, And Recent Sales In Your Area – Via sfnewsletter

Holy sh*t! Did I go M.I.A. on tFS or what!? I’m back (for a bit) and wanted to bring you the most recent version of sfnewsletter, from which you can access The Goods. What are The Goods? You’ll just have to click through to find out (pssst….they’re comps…sold property reports…and new listings…at your fingertips.)

sfnewsletter week ending 8/29/13

-sign up for sfnewsletter
-recent issue of sfnewsletter

Heat Map Of San Francisco Median Home Price Changes Since Previous ’06-’08 Market Peak

Who doesn’t love a good heat map? Especially us San Francisco residents caught in the grip of one brutally long fog song…
[Click image to enlarge.]
Zipcode_Appreciation-since-Peak

This heat map compares 2013 2nd quarter or 1st half median home sales prices – for houses, condos, co-ops and TICs combined – with those at the peak value time prior to the recent market recovery. Previous peak value times vary by neighborhood: typically, the least affluent neighborhoods hit peak prices in 2006 and also fell the most, percentage-wise, during the crash, falling 25% to 50%. These neighborhoods were most affected by the subprime and distressed-property sales crises. The mid-affluent neighborhoods peaked in 2007, and usually declined in value in the 20% to 25% range. And the most affluent areas reached peak values last, in the first half of 2008 prior to the September 2008 crash: Their fall in value ranged approximately 15% to 20% from 2008 peak to 2010-2011 nadir.

Generally speaking, when the market began to turn around in late 2011/early 2012, the last neighborhoods to fall were the first to recover, followed by the mid-affluent and then the less affluent areas.

Five White-Hot Districts In A Red-Hot San Francisco Real Estate Market

July 2013 Special Report

Virtually every area of San Francisco and the Bay Area has been experiencing dramatic home-value appreciation in the past 12 to 18 months. Some that were hard hit by distressed property sales, which experienced the largest price declines, have surged in price but remain 20% – 30% below previous peak values reached in 2006 – 2008. As a state, California is still about 25% below its 2007 pre-crash median home price. And in San Francisco itself, many if not most neighborhoods now appear to have re-attained or moved slightly beyond previous high points.

But in this past quarter, a handful of neighborhoods and districts in the city have leapt well beyond the highest average home values achieved in the past. Interestingly, comparing these white-hot areas with one another, there are often huge differences in property type, era and style of construction, and neighborhood culture or ambiance. But all of them have been very affected by affluent – often newly affluent – high-tech professionals of one age group and level of affluence or another. Naturally, these neighborhoods are highly desired by other buyers too – often professionals in finance, bio-tech, medicine and law – but the high-tech-buyer dynamic has generally super-charged these markets in particular.

However, please note that the difference we’re talking about between these neighborhoods and the rest of the city is between white hot and red hot: Quite honestly, they’re all very hot markets right now.

The Inner Mission 

Super hot, super hip, generally young: this neighborhood has seen very dramatic changes since the early nineties as a classic process of gentrification occurred — changes which have recently accelerated. Houses here are often large, classic Victorians, while the condos are mostly modern, built within the last decade or so. This area has a large, vibrant and diverse commercial district centered around Mission and Valencia Streets, but is still close to Noe Valley and the Castro. This chart focuses on the condo market, in which values are approximately 15% above the previous peak.

Noe Valley – Eureka Valley (Castro) – Dolores Heights 

These neighborhoods are part of a district that includes Cole Valley, Ashbury Heights, Clarendon & Corona Heights, Duboce Triangle, Mission Dolores and Glen Park, all of which have seen enormous recent appreciation. Housing here is typically older, built in the first 4 decades of the last century; there are many parks for kids and pets; the streets are tree-lined and the ambiance of the neighborhoods is relaxed and family friendly. This district surged in popularity and price in the mid-late nineties, was one of the last to peak in value in 2008, and has been at the forefront of the market rebound which started early here, in 2011. Among other advantages, it has relatively easy access to highways south to Silicon Valley. The district also has a large condo market, but this chart focuses on house values.

South Beach & Yerba Buena 

After the Embarcadero freeway came down in 1991 and then AT&T Park built in 2000, this area changed from a place for B-class offices and car stereo installations to the home of some of the most dramatic and expensive condo and loft buildings in the country. More condos are now sold here than anyplace else in the city and high-floor units with staggering views often sell for millions of dollars – one sold for $28 million. It’s popular with a number of demographics – high-tech and bio-tech workers working in offices nearby in SoMa and Mission Bay, financial district professionals, and empty-nesters who want to enjoy city life and have all the amenities, but without the responsibility of maintaining a house. Affluent foreign buyers are also a significant segment. Its neighborhood ambiance is very urban. This chart is for condos below the price of $1,800,000, but the dynamic for ultra-luxury condos is also white hot, with an average dollar per square foot value of over $1200.

Bernal Heights 

Like Noe Valley and Glen Park, Bernal Heights was originally a blue-collar neighborhood filled with Victorian houses. Noe Valley soared in value first, becoming wildly popular, and now people who want a similar family-friendly neighborhood ambiance, but at a more affordable cost, have increasingly turned to Bernal Heights. It also has easy access to highways south to the peninsula.

 

Hayes Valley-North of Panhandle (NoPa)-Alamo Square

This condo market is made up of two totally different types: Edwardian flats that have been turned into condos and brand new, ultra-modern condo developments. The Hayes Valley commercial district is very hot and hip, similar to, but still different from the Mission’s Valencia Street. Buyers who are priced out of the nearby Cole Valley-Haight Ashbury condo market often look here for a similar neighborhood ambiance at lower cost. Hayes Valley is also close to the Civic Center cultural cluster of museum, opera, symphony, ballet and other performing arts, which appeals to another buyer demographic as well.

To put all of these charts into one simple suggestion: It’s a great time to sell your property in San Francisco, and our market desperately needs the inventory!

If you have questions or would like information regarding a neighborhood not listed above, please contact us.

The Agony & Ecstasy Of The San Francisco Real Estate Market In One Text Message

Depending on which side of the equation you’re on (buyer or seller), this text could bring tears to your eyes, or joy to your soul (read: pocketbook, retirement account, children’s college fund, travel fund).

Seller Ecstasy Buyer Agony
We were already roughly $200,000 over asking price.

For more insight and details, you’ll have to contact us, as we promised not to share anything else publicly until it closes.
[Update: The property has closed, so now I can share. 26 Hancock in Eureka Valley/Castro. Asking $1,675,000, selling for $2,025,000 and already closed! There is no doubt it is a nice home, but $2,025,000? Come on...it's Monopoly money we're dealing with now.]

To say it’s a good time to sell your home would be an understatement. Low inventory, insane demand, and TONS of cash floating around this town.

-San Francisco Real Estate Stats & Numbers [theFrontSteps]
-Track Sales In Your Area [sfnewsletter]
-List Your Property [Contact]

San Francisco “Luxury” Real Estate Market Report

It’s funny, for the sake of talking market dynamics and data, we often refer to anything over $1,000,000 as “Luxury Home Sales”…at least most of the nation does, and so we’re kinda forced to as well. Even though we’re sharing these charts with you, and we’re clearly calling this a Luxury Market update, we’re starting to wonder at which point the über competitive price range of $1-2M stops becoming “Luxury”. I mean, really! A million bucks is still A LOT of money, isn’t it? So then, is a 1000 square foot condo that sells for $1,000,000 (Austin Powers voice), and doesn’t come with parking, a view, linen service, or a pool…luxury? (Yes, said condos already exist here.) Something to ponder on this Monday morning. Either way, have a look:

LuxHomes_Unit_Sales_by_QuarterV2

LuxHome_House-Sales_1500-1999_by-DistrictV2

LuxHome_House-Sales_2000-4999_by_DistrictV2

LuxHome_House-Sales_5m_by_DistrictV2

LuxHome_Condo-Sales_1500-Above_by_DistrictV2

Overheated Real Estate Market? Yes. Bubble? We’re Saying No…

Many adjectives are used to describe San Francisco, but normal isn’t a common one – and the same can be said about our real estate market. Even taking into account its tendency to be different in one way or another, this past spring’s market was overheated by virtually any definition. Surging consumer confidence and huge buyer demand chased a deeply inadequate supply of homes for sale, abetted by interest rates so low that loans – factoring in inflation and mortgage interest deduction – were almost like free money. All this led to an extreme seller’s market, a feeding frenzy and dramatic price appreciation.

But not, in our opinion, a bubble. The Economist, one of the first to sound the alarm for the last bubble, sees no sign of a U.S. housing bubble, basing its conclusion upon historical comparisons of home prices with rents and incomes. Also, it is not unusual for the market to go somewhat crazy following a 4-5 year down cycle after all the repressed demand bursts forth – this happened in 1996-1997 too. Besides which, we are only about 18 months into the current recovery. Though real estate is susceptible to sudden economic and political shocks, in past cycles, recoveries have typically lasted at least 6-8 years before peaking. That doesn’t mean there won’t be any short-term market adjustments, up or down, for one reason or another, along the way.

There are some signs of a normalizing market. After a year of declines, the number of new listings in the 2nd quarter was a little higher than the 2nd quarter of 2012. Though this inventory was quickly gobbled up and overall supply remains very low, it’s a good sign more sellers are entering the market. Median prices may be leveling off after spring’s big pop – it’s still too soon to be sure, but summer often sees a cooling down. It’s not welcome news to buyers, but interest rates have increased from extreme lows – though remaining very low by any historical scale. (See below: The Sky is Not Falling.) The distressed home segment, which distorts markets, is disappearing in the city and declining everywhere. And new-home construction continues to increase: even though we won’t see much of this new inventory until 2014 and later, it’s a very positive sign.

San Francisco Median Home Prices

For both houses and condos, the second quarter saw jumps well above previous peak values. Median sales prices are affected by other factors besides changes in value – seasonality, inventory, buyer profile, big changes in the distressed and luxury home segments – but the dramatic increases do reflect rapidly climbing home values in the city. Though all SF neighborhoods have been experiencing striking appreciation, this does not mean that all of them have now exceeded previous peak values.

Sales Over & Under List Price

This chart illustrates the enormous percentage of listings that sold for over – and sometimes far over – asking price. One in four houses sold for 20% or more above asking, which in San Francisco often equals hundreds of thousands of dollars.

San Francisco Luxury Home Sales

No market segment has been affected more dramatically by the recovery than luxury homes. In an inventory constrained environment, it has far out-performed the general market in unit sales – general unit sales were actually down, second quarter, year over year. Our new report also delineates the neighborhoods which dominate high-end house and condo sales: SF Luxury Home Report

Interest Rates: The Sky is Not Falling

Not to diminish legitimate concerns regarding rising mortgage rates and their effects on housing costs, but this graph puts recent increases in context. At any time 2011 and before, the current interest rates, even after their recent big percentage jump, would be reason for conga lines of celebration in the streets. Rates had to rise from their historic and artificial lows – how far and fast this may continue is unknown to us, but we don’t presently expect big shocks to the real estate market in the immediate future.

Very Few Price Reductions

89% of second quarter sales sold quickly without price reductions, at an average of 8% over list price – a clear indication of overheating. Still, not every listing sold without a price reduction and some didn’t sell at all, but ended up withdrawn from the market – in the last quarter, over 300 listings. (Many of these will eventually be re-listed, often at lower prices, and then sold.)

What Sells Where

What district of San Francisco has more house sales than any other? Which area has far more condo sales? You may be surprised at the answers.

Distressed Home Sales

The distressed home market in San Francisco is dwindling into insignificance. In most neighborhoods, the effect of these sales has disappeared altogether.

New Listings Coming on Market

The second quarter saw an increase in new listings not only against the first quarter of the year, which is normal, but against the second quarter of 2012. This is a hopeful sign if it continues.

Months Supply of Inventory (MSI)

Even with the increase in new listings in the second quarter, inventory remains drastically low by this measurement of demand versus supply.

Listings for Sale

Average Days on Market (DOM)

Time on market before acceptance of offer has also hit historic lows for virtually every property type in the city.

Percentage of Listings Accepting Offers

This is another clear statistic measuring demand against supply, and it is at historic highs.

All data from sources deemed reliable, but may contain errors and is subject to revision. Statistics are generalities and how they apply to any specific property is unknown. All numbers should be considered approximate.

 

Just Quotes: San Francisco Real Estate Market Heat Wave Shows No Signs Of Ending, But The Fog Is Back

“San Francisco’s median house price is poised to surpass $1 million this year after setting a record in May, the California Association of Realtors estimates. The county is the only one in the state with values to set a new high, said Leslie Appleton-Young, chief economist for the group.”

“‘There’s an improved economy, consumer confidence and extreme lack of inventory, and people want to buy [in San Francisco],’ Alan Mark, president of Mark Co.”

“The San Francisco area had the biggest gain in home prices among 20 U.S. cities in the S&P/Case-Shiller index. Single-family house prices in April jumped 24 percent from a year earlier, compared with gains of 12 percent of the broader gauge, which was still the biggest advance in more than seven years.”

“’We ended up taking something that wasn’t our first choice,’ said [one buyer]. ‘We really wanted to be on higher floor, but if we waited we’d get priced out.’”

Moral of the story? It’s a great time to list your property for sale in San Francisco, and if you’re buying in San Francisco, you will have to concede on at least one of your “must haves”, or you’ll never get in.

-San Francisco’s Million Dollar Homes Spur Condo Surge [Bloomberg.com]

It’s Simple Supply And Demand, Watson

So why do so many people try to complicate the obvious? It’s really quite simple. But as further support of a market that is clearly en fuego, here are a variety of standard supply and demand analyses: Months Supply of Inventory, Units for Sale, New Listings Coming on Market, Percentage of Listings Accepting Offers, Average Days on Market.

They all indicate very strong demand against very low supply (inventory).

MSI_Blended_SFD-Cond-Coop_Month

Units_FS_Last_Day_of_Month

New_Listings_by_Month

Percent_UC_Blended_by_Month

DOM_Blended_SFD-Condo-Coop_Month

…and with that, we end a week’s worth of very pertinent and compelling data supporting the end of the dark days, the beginning of a new peak in San Francisco property values, and the impetus to get you off your tush and onto the market if you’ve even remotely been considering selling your San Francisco property.

We do these graphs and data quite often, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page. You can also sign up for sfnewsletter and get “the Goods” (Property Sales and Listing info) delivered to your email inbox weekly.

Data Source: Paragon Real Estate

San Francisco Market Dynamics, And More Stats That Will Blow Your Mind

“So why oh why, why all the fuss…cuz (#$%&!) we ain’t got no dust…” (Bonus points for getting the band to those lyrics.) Anyhow…so what makes up the dynamics of our price ranges, and why did we mention those lyrics? Because “dust” in our world is a distressed property (bank-owned, short sale/foreclosure, Stalefish), and we ain’t got many of them here in San Francisco, and price reductions are incredibly rare.

There are three main underlying currents occurring in San Francisco real estate. First is the rapid dwindling of distressed property sales: Thus, sales under $500,000, the price range of most distressed sales, have dropped by 62% since last year. This segment is on the verge of disappearing completely in SF. Second is the dramatic resurgence in luxury home sales: the affluent have profited most from the economic recovery and the city also has large numbers of the newly affluent (often high-tech) who wish to buy homes. So, sales of homes costing $1,500,000 plus have surged by 76%. The third dynamic is simply the general appreciation of home values. All three factors add up to a large migration from lower-priced to higher-priced sales. Note: The medians quoted on this chart are for many different property types combined.
[Click Images to Enlarge.]
Unit-Sales_by_Price-Range_Year-Year_Comp

Let’s have a look at some May listings and Sales numbers as a clear indication of the red-hot heat of our market: 90% of SF home sales closing in May sold without going through any price reductions, at an average sales price 7% higher than the asking price and a very low average days-on-market of 29 days. These are very dramatic statistics illustrating the high demand/low supply situation here in the city.
May-Snapshot_Sales-UC-Expired

We still have a couple more graphs and data to share with you in the next few days, and we crank these types of things out all the time (along with a fair bit or real estate p*rn), so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Been thinking about selling? Now might be the time, no?

Data Source: Paragon Real Estate

Doesn’t Matter What ‘Hood You’re In, Things Are Looking Up

So you think you’re neighborhood is unique, and more badass than the other…Think again. Home price appreciation is across the board, across all neighborhoods. Some of you might think Noe Valley is better than Cole Valley, and some of you might think life is better in the Marina over Pacific Heights. The fact is, if we’re talking numbers, they’re all pretty damn good and getting better every day.

These four San Francisco Realtor districts generate a lot of house sales, so they’re good for statistical analysis. For 2013, this chart looks at the last 5 months of sales—if assessing just the last 3 months, 2013 numbers would typically be higher. The central Noe-Eureka-Cole Valleys district, a hot bed of high-tech buyer demand, has soared well beyond its previous peak value in 2008. The very affluent northern district of Pacific Heights-Marina has also exceeded its previous peak. Sunset-Parkside in the southwest has regained its 2007 peak, and the southeast Bayview-Portola-Excelsior district, which was hit hardest by distressed sales, while recovering rapidly, has not yet made up the value lost since its 2006 peak. This district, with more house sales than any other, lost more percentage value in the downturn (25-45% depending on neighborhood) and so has more ground to make up. But it’s well on its way.
[Click Images to Enlarge.]
Median-SFD_Multi_Areas

But what about condos? Fear not, we’ve gotcha covered.

2006-Present: SF 2-Bedroom Condo Values by Neighborhood

These six areas of the city generate high numbers of condo sales, which is why we chose them for this analysis. Condos in all these areas have increased in value beyond their previous peaks in 2006-2008; some of them, such as South Beach, very dramatically so.
2BR_Condos_Medians_Multiple_Areas-V2

Remember that little 180+ unit building we mentioned…it’s in South Beach, and it’s in demand. So if you’re in that area, have a property you’re considering unloading, now might be a good time to pull that trigger.

We still have a ton more graphs and data to share with you in the next few days, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Data Source: Paragon Real Estate

San Francisco’s Real Estate Market Surge Is A Doozy

For further evidence of San Francisco’s housing recovery and new peak (for Condos and Single Family Homes), have a look at these numbers as they pertain to short-term appreciation trends.

This chart breaks down the rise in values occurring over the past 2 ½ years. Though it appears 2013 prices surged after the first quarter, the surge actually started in March, which is when the market really started to reflect offers negotiated in 2013. January and February sales mostly reflect the holiday season market, when the higher-end home market typically checks out. We prefer quarterly or longer time periods because they make for more reliable statistics: monthly statistics often fluctuate without great meaning. The high overall median prices achieved in March-May may drop somewhat during the summer due to seasonal and other factors.
[Click Images to Enlarge.]
Median_SFD-Condo_by-Qtr_Short-term

Still more graphs and data to come, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Data Source: Paragon Real Estate

San Francisco Condo Market Exceeds Previous Peak Values, Outpaces Single Family Home Sales In The Process

Not to be outdone by yesterday’s news of the Single Family Home recovery in San Francisco, today we present some data about all those condos dotting our skyline and filling our neighborhoods.

Previous peak values for city condos occurred in 2008, and once again we’ve taken the highest-end sales (over $2m) out of the analysis since they distort average statistics. As with houses, condos sales values over the last 3 months have exceeded previous peak values. Condos now make up the largest percentage of home sales in the city.
[Click Images to Enlarge.]
Condo_Median-Averages_Change

Over the past 5 years, the San Francisco market has switched from being dominated by house sales to being dominated by condo sales; with the continuing construction of large condo projects, we expect this trend to continue. TIC sales have dropped significantly over that time period, both as a percentage of sales and in actual unit sales: This is due to a number of complex issues such as changes in city condo conversion and tenant protection regulations, and availability of financing.
Prop-Type_Percentages-Changes

We still have a ton more graphs and data to share with you in the next few days, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Time to sell? Rolling the dice to see if prices can still go higher? We did some recent comparables for a building in the city that has 180+ units, and there is currently not one unit for sale in the building, yet demand is through the roof. That building is not unique. Your neighborhood is not unique. If ever there is a time to sell and get out of San Francisco real estate (on top, or damn near it), now might be your time.

Data Source: Paragon Real Estate

From Peak To Valley To (New) Peak, San Francisco’s Housing Recovery Is For Real

New highs in home prices have not yet been reached in every San Francisco neighborhood, but the majority has either regained the value lost since the 2008 market meltdown, or now exceeded the previous high points of 2006-early 2008. (Different neighborhoods peaked at different times, just as they are now recovering at different speeds). This does not mean that every property bought at the height of the bubble in feverish multiple-offer bidding wars has now regained peak value. Nor does it mean that values might not fluctuate or drop in future months due to seasonal and/or other economic factors.

Though virtually every market in the country is now on a similar upward trajectory, San Francisco’s has recovered more quickly than most in the Bay Area, state and country. The city’s neighborhoods, with a few exceptions, were never hit as hard as most other areas by the tsunami of distressed property sales: our home values generally fell in the 15-25% range compared to huge declines of 40-60% elsewhere and so we have had less ground to recover. That said, the city has always been an exceptional real estate market and the confluence of economic factors both general (such as the lowest interest rates in history) and unique (such as the local, high-tech boom) jumpstarted and supercharged our recovery beyond most others.

It should be noted that, looking at past recoveries in the early eighties and mid-nineties, it is not unusual once a recovery gets underway after years of recession and repressed demand, for the market to regain previous peak values within a couple years of the turnaround beginning. Recoveries often start with a dramatic surge and that is what has happened with this one.

City, State & National Long-Term Overview

In this chart, one can see the recovery occurring everywhere, but most dramatically in San Francisco. In this analysis, we’ve calculated the 2013 SF median house sales price for the 5 months since the year began; if we looked at just the last 3 months (reflecting offers accepted in 2013, when the market accelerated further), the SF median house price jumps to about $1,000,000. (Note: State and national data sources are behind those we can access for the city, and the last median prices reflect that disparity.)
1968-2010_US-CA-SF_Median_Price

SF Houses: Previous Peak Values to Present

In this chart, since we’re also calculating average statistics, we’ve capped the sales price at $3,000,000 because ultra-high-end sales usually distort averages. We see the previous peak value in 2007 (for SF houses in general), the drop to the bottom of the market in 2011, and the rebound starting in 2012 and accelerating in 2013. By all 3 main statistical measures of value, San Francisco houses have met or exceeded previous peak values. To adjust for seasonality, the comparisons are for the spring months of each year.
SFD_Median-Averages_Change

We have a ton more graphs and data (including condo and neighborhood stats) to share with you in the next few days, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

It’s a good time to sell…especially if you have that Wanderlust.

Data Source: Paragon Real Estate

San Francisco’s Gender, Sexual Preference (Orientation), Income, Ethnicity, Marital Status, And More

Have you ever wondered, how many San Franciscans: Trace their ancestry from China, Ireland, Mexico or the Philippines? Are children under 5? Speak Spanish at home? Have their cars stolen? Are heterosexual or gay? Divorced? Live alone? Give birth each year? Vote Libertarian? Earn over $200,000/year? Have graduate degrees?

There is no city in the world like San Francisco, so wonder no more:

All data herein is from a wide variety of third party sources deemed reliable– much of it comes from the United States 2010 Census –

but it may contain general estimates as well as errors, and is subject to revision.