Below you will find important statistics for the past decade and a half on the luxury markets in District 5. The price point has reached $1.5M for an average home in Glen Park and more than $2M to own a home in Noe Valley and Eureka Valley. Note that the 2014 data are year-to-date, between 1/1/2014 to 7/25/2014.
I’m pleased to announce my clients have successfully sold their Richmond District top floor condominium for $1,200,000 (listed at $949,000), or as I like to point out, $200,000 more than the most recent, closest competitor property on 26th Ave that listed almost the same day as we did.
It’s no coincidence we knocked it out of the park. It was strategy, patience, perseverance, and knowing how to finesse each offer (we received five) to their highest and best without them walking away. Congratulations to my clients that just set the bar for Central Richmond condos – the last area of the city you can still find a deal. Let the migration begin.
The new S&P Case-Shiller Home Price Index for April 2014 came out today and it showed another bump in home prices for the 5-county San Francisco Metro Statistical Area. For homes in the upper tier of home values – as most of San Francisco’s are – prices are up approximately 17% in the past 12 months and up 41% since the recovery began in early 2012.
Based upon what we are seeing on the ground in the market, we expect another bump in the May Index, which will come out at the end of July.
Be sure to check back on theFrontSteps for future reports as well as all the good stuff you’ve come to love from us – including the top 10 Overbids of the Week, which will come out tomorrow.
USA is through to the next round!! (Sorry if you had it recorded and I just spoiled.)
This post comes to you by way of our friends at Redfin. Enjoy –
Waiting for the tech boom to burst? Aiming for that perfect gap to sell and then buy? Real estate cycles takes years, and it’s not for everyone, especially when you don’t have the time or the patience. But if you’re remotely considering flipping houses or simply curious about the numbers, continue reading this Redfin analysis which dug into the flipping market.
By all accounts 2013 was a record year for house flipping in San Francisco, with a monstrous average gain of $194,000 as compared to $90,200 across 25+ major markets.
It’s worth noting that gains are not profits. Home flippers, whether they’re banks, companies or individuals, generally make improvements to a home before selling it. Those improvements can range from simple cosmetic changes to completely gutting an entire home, which makes it difficult to pinpoint actual costs for each of the homes in this analysis. But according to Remodeling Magazine, replacing a door would cost somewhere between $1,000 and $3,000, while a major kitchen remodel could cost $55,000 or more.
Who’s Doing All the Flipping?
Many home flippers before the housing bust were individuals hoping to capitalize on huge price gains leading up to 2006. But after the bubble popped, banks had many foreclosed homes come on the books. By 2008, the majority of flippers were banks, who have since reduced their inventory of distressed housing. In 2013, bank real estate owned (REO) properties fell to their lowest levels since the foreclosure crisis, according to data provider CoreLogic. In 2013, only 35.2 percent of house flips in these markets were bank-owned, compared with 72.2 percent in 2008. This year, bank REOs are up 15 percent, signaling that they may be more active participants in the flipping market in the second half of 2014.
Gains from House Flipping Vary by Market
In 11 of the markets analyzed, the average gain from a flipped home was well over $100,000. San Francisco (average gain of $194,600), Long Island ($152,500) and San Jose ($152,000) were the three markets where home flippers saw the highest gains. On the other end of the spectrum, home flippers in Atlanta and Las Vegas saw average gains of $50,200 and $53,000, respectively.
Fewer Homes Being Flipped Than During The Boom
While big gains in home prices have created big opportunities for flippers, the number of homes being flipped is nowhere near the volume of 2005, which was the peak flipping year at 101,800 homes. The largest volume of house flips since the bust occurred in 2012, at 75,500 across Redfin markets.
“In 2005, homebuyers could easily access zero-down financing, which led to heightened activity from amateur investors who bought several homes without any upfront costs, and who planned to resell them at a profit,” said Nela Richardson, Redfin chief economist. “When the market crashed, those buyers were left in a lurch. Today, with low inventory, high demand and stricter mortgage standards, flippers are largely developers, corporate investors and all-cash buyers who are experienced and can act quickly to snatch up properties with flip potential. Unfortunately, high demand and low inventory have also limited the ability of average homebuyers to use sweat equity to renovate a property over several years and make a longer-term financial investment in a home.”
Even though fewer homes were flipped last year than in the three previous years, the success rate has been higher. In 2013, 77 percent of homes that were purchased and sold again within 12 months were sold for a gain, while in 2008 roughly the same percentage were sold at a loss. In 2008, only 24 percent of flipped homes were sold for a gain.
Some markets are seeing flipping activity increase this year when compared with year-to-date flipping activity last year, including Washington, D.C., Atlanta, Fort Lauderdale, West Palm Beach and Philadelphia. Los Angeles, Phoenix, Riverside, Calif., Washington, D.C., and Atlanta have seen the most house flipping when 2013 and 2014 are combined.
The Hottest Spots for Home Flipping
We looked at neighborhoods in each market to see where house flippers walked away with the biggest gains in 2013. Two neighborhoods in Washington, D.C.— Petworth and Brookland — were among the top three, with average gains of $312,400 and $271,900, respectively. The Beaumont neighborhood of Portland, Oregon, ranked second, with an average gain of $285,600.
[Editor's Note: I'd venture to say the real "flippers" in SF are making more than this per flip. Developers I work with won't even touch a property if they can't make at least $500,000 +. Good data to chew on nonetheless.]
This is for those of you that just fought your way into contract, closed, and are now wondering, “Will I ever make my money back?”
A good friend and colleague of mine recently (just this March) represented her buyers in the purchase of this awesome top floor penthouse at 2200 Market #502. They closed for $949,000, in an all cash purchase.
The owner decided not to move in, and therefore wanted to sell. Recently listed again – this time for $899,000, 2200 Market #502 came back on only 30 days after the buyers closed on their purchase. Fast forward four days of marketing, it went into contract, and voila! It has sold $101,000 higher than it sold for just 30 days prior – and it was an all cash transaction.
Because I know most of you are doing the math on how much this buyer/seller made, probably around $30,000 after commissions, title/escrow fees, and transfer tax. Not bad for holding a property just 30 days.
How’s that for nuts?
-2200 Market #502 [Listing Detail]
It’s Friday, that means it’s time to check in with this week’s Top 10 Overbids. From the number 10 on the list, which came in at 32% over on 2nd Ave in the Lake District, to the number 1 on the list, which was just 65% over on Wisconsin in Potrero Hill, there is surely something good for you to peruse, ponder, and discuss among friends.
|940 Wisconsin St 942||2-4 Units||17||$1,099,000||$1,815,000||65.15%|
|336 Banks St||3/2.00/N/A||12||$998,000||$1,455,000||45.79%|
|1526 Revere Ave||3/2.00/N/A||15||$499,000||$725,000||45.29%|
|159 Belvedere St 161||2-4 Units||16||$1,600,000||$2,300,000||43.75%|
|1783 Noe St||2/1.00/N/A||24||$1,195,000||$1,705,000||42.68%|
|2323 47th Ave||4/2.00/N/A||32||$759,000||$1,025,000||35.05%|
|5725 Diamond Heights Blvd||4/3.00/N/A||8||$1,595,000||$2,139,250||34.12%|
|319 26th Ave||3/1.25/N/A||13||$1,045,000||$1,395,000||33.49%|
|278 2nd Ave||2/1.00/N/A||52||$925,000||$1,230,000||32.97%|
For details about any of these properties in particular, or to send your clients a list of the top 20 Overbids, Top 20 Underbids, and more, check out theGoods-SF.com.
[Update: Since the questions keep coming in, I answered 'em: Are Overbids A Result Of Intentional Underpricing? No - It's Competitive Pricing]
-Send Your Clients The Goods [theGoods-sf.com]
-Are Overbids A Result Of Intentional Underpricing? No – It’s Competitive Pricing [theFrontSteps]
You read that correctly, 2224 Jackson Street, a Pacific Heights trophy three unit property listed at $2,095,000, just knocked out last week’s stunner at 2514 Gough (Sold $1.4M over), to take the cake for most insane insanity ever in real estate anywhere, ever, by selling for $1,706,000 over asking price, or a grand total of $3,801,000. It is a vacant multi unit property in one of the best areas of town, but still – that’s nuts.
That was the winner, but there were more. Second place was a paltry
$600,000 over asking- that one got kicked off the list today. See the top 10 Overbids list below.
|2224 Jackson St||2-4 Units||13||$2,095,000||$3,801,000||81.43%|
|1783 Noe St||2/1.00/N/A||24||$1,195,000||$1,705,000||42.68%|
|390 Franconia St||2/1.00/N/A||6||$895,000||$1,262,375||41.05%|
|239 Judah St||3/2.00/N/A||27||$1,199,000||$1,661,000||38.53%|
|2200 Lyon St||3/2.50/N/A||19||$2,100,000||$2,900,000||38.10%|
|141 2nd Ave||3/3.50/N/A||9||$1,900,000||$2,600,000||36.84%|
|3700 Folsom St||2/2.00/N/A||12||$1,049,000||$1,425,000||35.84%|
|79 Everson St||3/2.50/N/A||24||$1,195,000||$1,610,000||34.73%|
|5725 Diamond Heights Blvd||4/3.00/N/A||8||$1,595,000||$2,139,250||34.12%|
|727 35th Ave||5/4.50/N/A||13||$1,525,000||$2,025,000||32.79%|
I need a drink. You?
San Francisco New-Housing Construction Trends
Within its 47 square mile envelope, San Francisco is already
the 2nd most densely populated city in the United States,
and it’s growing denser, more affluent and more expensive.
May 2014 report with 13 custom charts
The following charts are mostly based on the San Francisco Planning Department’s excellent Housing Inventory and Pipeline reports, which can be accessed using the links at the bottom of this article. Quotes below are excerpted from these reports.
Packed with information, the data in one report section will not always agree perfectly with that in another – due to the multiple sources of data used by the Planning Department – and this is reflected in our charts as well. In the complex, lengthy process of application and review, public hearings (and, lately, ballot proposals), revisions, entitlement, permitting, construction and completion, how and when a project is counted may vary. Housing units are being built and being removed, and there are so many types: rental or sale, market rate or affordable, social-project housing or luxury condominiums.
Last but not least, this landscape is in constant flux: new projects, plan changes, and shifts in economic and political realities. Everything below is simply a good faith estimate. The basic reality is that San Francisco, after its recent 2008-2012 new-construction slump, is now experiencing a building boom. So far, however, it has not been able to keep up with population growth and rising buyer/renter demand.
New construction authorized typically will not show up as housing units completed until later years. And, of course, a developer can decide not to build after authorization if market circumstances change. The post-2008 drop in authorizations is clearly illustrated here.
“Some of the larger projects completed in 2013 include: 1190 Mission Street (355 market-rate units and 63 affordable units), Rincon Green (277 market rate units and 49 affordable units), Nema (279 market rate units and 38 affordable units).”
“Very large projects (200 units or more) filed in 2013 and are under Planning Department review include: Mission Rock (1,500 units); 150 Van Ness Avenue (429 units); 41 Tehama Street (398 units); 1066 Market (330 units); 950 Market Street (316 units); and 1301 16th Street (276 units).”
A glance at the recent past, the present and the possible future of new housing construction in the city. New projects are continually entering and moving through the pipeline, and existing plans may be changed or even abandoned.
“There are currently 857 projects in the pipeline. Of these, 74 percent are exclusively residential and 17 percent are mixed-use projects with both residential and commercial components. Only 8 percent of projects are non-residential developments. A net total of 50,400 new housing units would be added to the city’s housing stock according to current data. Around 18 percent of all projects, representing 6,000 net added housing units and 2,750,000 sq. ft. of commercial space, are under construction. Around 20 percent of projects (with another 4,200 net units and 3.8 million sq. ft. of commercial space) have received building permit approvals. As of the time of writing, some may have moved to the construction phase.”
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.
January 2014 Market Report
The real estate market recovery started in earnest in 2012 and then went red hot in spring 2013, which resulted in an additional, big, fast jump – approximately 20% – in home prices. After the spring peak, the market calmed somewhat in the second half of the year and prices stabilized, but buyer demand remained very strong by historical standards. Economic conditions have continued to improve, household net worth has increased dramatically with rising stock and housing markets, foreclosure rates and distressed property sales have plunged, the second-home market has picked up, and interest rates, after jumping in 2013, are still relatively low. Though it is impossible to predict the future, these factors typically form the foundation of a healthy, active housing market.
In the next few weeks, new listings will start coming on market in quantity, buyers will get back in home-search mode and the market will begin to wake up after the holiday hibernation. Then we’ll start to get an inkling of what the new year has in store.
Median Sales Price Appreciation, 2011-2013
This first chart above gives an idea of the scale of the rebound in home values since the recovery began about two years ago. Median prices are affected by other factors besides changes in value, and different areas experienced bubbles and crashes (and now recoveries) of different magnitudes. Median sales prices are generalizations and changes in them should be considered very approximate indicators of appreciation, but by any measure there has been a huge recovery in North Bay real estate values.
Comparative Dollar per Square Foot Values