Tag Archives: San Francisco Real Estate

June Case-Shiller Index – High-Tier Home Prices Begin To Plateau For Summer

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 San Francisco’s, Marin’s and San Mateo’s house sales are in the “high price tier”, so that is where we focus most of our attention. The Index is published 2 months after the month in question and reflects a 3-month rolling average, so it will always reflect the market of some months ago. June’s Index was just recently released.

The 5 counties in our Case-Shiller Metro Statistical Area are San Francisco, Marin, San Mateo, Alameda and Contra Costa. Needless to say, there are many different real estate markets found in such a broad region, and it’s probably fair to say that the city of San Francisco’s market has generally out-performed the general metro area market.

Typically, the market cools off and plateaus for the summer months and that is what we are starting to see in the new Case-Shiller numbers for June. The next big indication of market conditions and trends will come after the autumn selling season begins in mid-September: That is typically when there is a large surge in new listings and buyer demand picks up again until the holiday slow-down begins in mid-November. It is difficult to make definitive statements about the market during the summer and mid-winter holidays because the market almost always slows substantially during these times.

The high-price home segment for the SF Metro area saw no significant change from May to June, though the low and mid-price segments both ticked up by a percentage point or two. Short-term fluctuations are much less meaningful than longer-term trends.

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To learn more about Seasonality & The San Francisco Real Estate Market, check out my most recent issue of sfnewsletter by clicking that link.

As always, if you have any questions, you should know where to find me by now.

-Seasonality & The San Francisco Real Estate Market [sfnewsletter]

15thkit

$1.6 to $2.2 – $1.2 to $1.6 – $1.6 to $2.3…San Francisco Overbids Continue With No End In Sight

Although I’ve been out and about and trying to enjoy summer, clearly the Overbid factory didn’t get the memo. Check out the most recent craziness, including one architect/owner designed house on 15th Ave that sold almost 40% over asking! To all of those that think things slow down in Summer…think again.

Top 10 Overbids for San Francisco:

Address BR/BA/Units DOM List Price Sold Price Overbid
414 Missouri St 4/3.00/N/A 6 $950,000 $1,410,000 48.42%
671 Alvarado St 2/1.00/ 12 $899,000 $1,305,000 45.16%
1426 6th Ave 3/3.00/N/A 13 $1,595,000 $2,300,000 44.20%
609 Precita Ave 2/2.00/N/A 42 $825,000 $1,175,000 42.42%
531 Sanchez St 2/1.00/N/A 8 $995,000 $1,400,000 40.70%
2570 Folsom St 4/3.00/N/A 14 $1,595,000 $2,210,000 38.56%
45 Richland Ave 3/1.50/N/A 10 $650,000 $900,500 38.54%
2628 15th Ave 3/1.50/N/A 12 $849,000 $1,175,000 38.40%
656 Arguello Blvd 2/2.00/3 21 $799,000 $1,104,713 38.26%
80 Jersey St 3/2.00/ 14 $1,195,000 $1,650,000 38.08%

Want the top 20, sign up for sfnewsletter @ sfnewsletter.com.

[Update: Business Insider Just Shared 13 Properties all Selling For $1M or more over...]

Have a great weekend!

San Francisco’s Top 10 Overbids

From $1,400,000 to $14,000,000 on 25th Ave?! Are you kidding me!? Yes, that’s a typo for sure. Agent error. Fat fingers. Something. It’s not right. But the rest – wow!

Address BR/BA/Units DOM List Price Sold Price Overbid
2910 24th Ave 4/2.00/N/A 10 $1,400,000 $14,000,000 900.00%
140 Jerrold Ave 3/1.50/ 7 $215,000 $413,000 92.09%
1725 Kearny St 5 2/2.00/5 14 $1,450,000 $2,450,000 68.97%
2186 14th Ave 2/1.00/N/A 1 $949,000 $1,500,000 58.06%
1574 Innes Ave 2/1.00/N/A 14 $599,000 $915,749 52.88%
2546 McAllister St 2548 2-4 Units 60 $995,000 $1,510,000 51.76%
228 3rd Ave 3/1.00/N/A 12 $995,000 $1,475,000 48.24%
2475 15th Ave 4/2.00/N/A 20 $1,195,000 $1,695,000 41.84%
141 Beaver St 2/2.00/N/A 18 $1,798,000 $2,507,000 39.43%
270 Valencia St 2/1.00/206 13 $648,000 $900,000 38.89%

Have a great weekend.

Don’t forget, we have the full Top 20 on The Goods, and Top 20 Underbids too.

-The Goods, Because your clients deserve better.

“Sensibility And Overall Likability Are A Winning Combination”

I just wrapped up a deal with some buyers in NOPA, and this is what they had to say about working with me:

Great agent. Not only did Alex stick by us through multiple offers but finally landed us our new home even though we weren’t the highest bidders and we were up against all cash offers. By really getting to know us and meeting with the sellers agent at offer time Alex was able to position us as the best fit for the home. His knowledge & navigational skills through this unpredictable market combined with a down to earth sensibility and overall likability are a winning combination. Thanks Alex – we look forward to hosting you at our moving in party!! Lauranne, Mike and Mary

Thanks guys! Looking forward to beers and barbecue. I’ll bring Tequila!

overbidnevada

From 32% In NOPA To 65% On Nevada – San Francisco’s Top 10 Overbids

It’s Friday, that means it’s time for the Top 10 Maximum Overbids of the week. As usual, there are some doozies, but nothing I would consider ultimate shockers like a few of the last weekly Top 10’s we’ve seen. The number one spot goes to the “Contractor’s Special” on Nevada in Bernal Heights that fetched 65% over (totally in line with market sales price, and not easy to price this type of property). The number 10 spot goes to my clients that finally won after so many years searching – 538 Baker in NOPA that was “only” 32% over asking and the winner out of 15 other offers, two of which were actually higher than ours and all cash. We had a loan. But we “won”.

Anyhow, on with the show. The Top 10 Overbids for San Francisco this past week:

Address BR/BA/Units DOM List Price Sold Price Overbid
270 Nevada St 1/1.00/N/A 14 $530,000 $876,000 65.28%
866 Cayuga Ave 4/3.00/N/A 20 $928,000 $1,380,000 48.71%
27 Day St 3/1.00/N/A 43 $895,000 $1,310,000 46.37%
1271 15th Ave 1273 4/3.50/ 13 $1,795,000 $2,550,000 42.06%
307 Parker Ave 3/2.00/N/A 13 $1,250,000 $1,710,000 36.80%
25 Miraloma Dr 3/2.00/N/A 10 $1,050,000 $1,420,000 35.24%
1150 Holloway Ave 2/1.00/N/A 35 $889,000 $1,200,000 34.98%
320 Castenada Ave 3/1.50/N/A 26 $1,695,000 $2,250,000 32.74%
471 Hickory St 2/1.00/N/A 5 $1,060,000 $1,400,000 32.08%
538 Baker 2/1.50/N/A 11 $948,000 $1,250,000 31.86%

On a side note, one of my listings will hopefully be closing today, and believe me when I say we knocked it out of the park. Will we make the Top 10? No, but maybe we’ll scratch into the Top 20.

If you’re curious what your property might sell for, give me a shout.

Have a great weekend!

-Top 20 Overbids Delivered to Your Door (Inbox) [sfnewsletter.com]
-Are Overbids A Result Of Intentional Underpricing? It’s Competitive Pricing [theFrontSteps]
-Top 20 Underbids [sfnewsletter.com]

Case-Shiller_Simpl-Percentages

Recessions, Recoveries & Bubbles

My company just put out some heavy duty data crunching that can shed some light on this recent housing boom. I have put the entire report below. Enjoy and share.

 30 Years of Housing Market Cycles in San Francisco

Updated Report

Below is a look at the past 30 years of San Francisco Bay Area real estate boom and bust cycles. Financial-market cycles have been around for hundreds of years, all the way back to the Dutch tulip mania of the 1600’s. While future cycles will vary in their details, the causes, effects and trend lines are often quite similar. Looking at cycles gives us more context to how the market works over time and where it may be going — much more than dwelling in the immediacy of the present with excitable pronouncements of “The market’s crashing and won’t recover in our lifetimes!” or “The market’s crazy hot and the only place it can go is up!”

Market Cycles: Simplified Overviews 

Up, Down, Flat, Up, Down, Flat…(Repeat)

Case-Shiller_Simplified_from-1984

Case-Shiller_Simpl-Percentages

Smoothing out the bumps delivers these simplified overviews for the past 30 years. Whatever the phase of the cycle, up or down, while it’s going on people think it will last forever: Every time the market crashes, the consensus becomes that real estate won’t recover for decades. But the economy mends, the population grows, people start families, inflation builds up over the years, and repressed demand of those who want to own their own homes builds up. In the early eighties, mid-nineties and in 2012, after about 4 years of a recessionary housing market, this repressed demand jumps back in (or “explodes” might be a good description) and prices start to rise again. It’s not unusual for a big surge in values to occur in the first couple of years after a recovery begins.

Surprisingly consistent: Over the past 30+ years, the period between a recovery beginning and a bubble popping has run 5 to 7 years. We are currently about 2.5 years into the current recovery. Periods of market recession/doldrums following the popping of a bubble have typically lasted about 4 years. (The 2001 dotcom bubble and 9-11 crisis drop being the exception.) Generally speaking, within about 2 years of a new recovery commencing, previous peak values (i.e. those at the height of the previous bubble) are re-attained — among other reasons, there is the recapture of inflation during the doldrums years. In this current recovery, those homes hit hardest by the subprime loan crisis — typically housing at the lowest end of the price scale in the less affluent neighborhoods, which experienced by far the biggest bubble and biggest crash — may take significantly longer to re-attain peak values, but higher priced homes have already done so.

This does not mean that these recently recurring time periods necessarily reflect some natural law in housing market cycles, or that they can be relied upon to predict the future. Real estate markets can be affected by a bewildering number of economic, political and even natural-event factors that are exceedingly difficult to predict.

Mortgage Interest Rates since 1981

It’s much harder to decipher any cycles in 30-year mortgage rates over the same period. Despite the rate spike over the summer, rates remain very low by any historical measure, and this, of course, plays a huge role in the ongoing cost of homeownership.

Average_30-Year_Mortgage-Rates

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In the 2 charts below tracking the S&P Case-Shiller Home Price Index for the 5-County San Francisco Metro Area, the data points refer to home values as a percentage of those in January 2000. January 2000 equals 100 on the trend line: 66 means prices were 66% of those in January 2000; 175 signifies prices 75% higher.

1983 through 1995 

(After Recession) Boom, Decline, Doldrums

Case-Shiller_HT_1983-95

In the above chart, the country is just coming out of the late seventies, early eighties recession – huge inflation, stagnant economy (“stagflation”) and incredibly high interest rates (hitting 18%). As the economy recovered, the housing market started to appreciate and this surge in values began to accelerate deeper into the decade. Over 6 years, the market appreciated almost 100%. Finally, the eighties version of irrational exuberance — junk bonds, stock market swindles, the Savings & Loan implosion, as well as the late 1989 earthquake here in the Bay Area — ended the party.

Recession arrived, home prices sank, sales activity plunged and the market stayed basically flat for 4 to 5 years. Still, even after the decline, home values were 70% higher than when the boom began in 1984.

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1996 to Present 

(After Recession) Boom, Bubble, Crash, Doldrums, Recovery

Case-Shiller_HT_1996-2011This next cycle looks similar but elongated. In 1996, after years of recession, the market suddenly took off and became frenzied — actually quite similar to what we’re experiencing today. The dotcom bubble pop and September 2001 attacks created a market hiccup, but then the subprime and refinance insanity, degraded loan underwriting standards, mortgage securitization, and claims that real estate never declines, super-charged a housing bubble. Overall, from 1996 to 2006/2008, the market went through an astounding period of appreciation. (Different areas hit peak values at times from 2006 to early 2008.) The air started to go out of some markets in 2007, but in September 2008 came the market crash.Across the country, home values fell 15% to 60%, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco got off comparatively lightly with declines in the 15% to 25% range. The least affluent areas got hammered hardest by distressed sales and price declines; the most affluent were typically least affected. Then the market stayed flat for about 4 years, albeit with a few short-term fluctuations. Supply and demand dynamics began to change in mid-2011, leading to the market recovery of 2012.

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San Francisco from 2010 to 2014

A Strong Recovery


Median_SFD-Condo_by-Qtr_Short-term

Case-Shiller_High-Tier_2011

In 2011, San Francisco began to show signs of perking up. An improving economy, soaring rents, low interest rates and growing buyer demand coupled with a low inventory of listings began to put upward pressure on prices. In 2012, as in 1996, the market abruptly grew frenzied with competitive bidding. The city’s affluent neighborhoods led the recovery, and those considered particularly desirable by newly wealthy, high-tech workers showed the largest gains. However, virtually the entire city soon followed to experience similar rapid price appreciation.

San Francisco median home sales prices increased dramatically in 2012 and then accelerated further in the first half of 2013. San Francisco and the Bay Area are in the midst of a very dramatic recovery. Among other positive signs, new home construction is soaring once again, generally in the form of large new condo projects.

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Different Bay Area Market Segments:
Different Bubbles, Crashes & Recoveries

1990 to Present

Case-Shiller_3-Tiers_Trends

Again, all numbers in the Case-Shiller charts above relate to a January 2000 value of 100: A reading of 182 signifies a home value 82% above that of January 2000. These 3 charts illustrate how different market segments in the 5-county SF metro area had bubbles, crashes and now recoveries of enormously different magnitudes, mostly depending on the impact of subprime lending. The lower the price range, the bigger the bubble and crash. The upper third of sales by price range (far right chart) was affected least by the subprime fiasco and has now basically recovered peak values of 2006-2007. In the city itself, where many of our home sales would constitute an ultra-high price segment, if Case-Shiller broke it out, many of our neighborhoods have risen to new peak values. The lowest price segment (far left chart), more prevalent in other counties, may not recover peak values for years. If one disregarded the different bubbles and crashes, home price appreciation for all three segments since January 2000 is almost exactly the same, in the range of 75% to 82%.

All data from sources deemed reliable,
but may contain errors and is subject to revision.All numbers are approximate and percentage changes will vary
depending on the exact begin and end dates used.

Are Overbids A Result Of Intentional Underpricing? No – It’s Competitive Pricing

It’s happened again – I did a post Friday about the week’s overbids, and the comments and emails immediately come in, “Is this because the owners are listing for under market prices to crest bidding wars?” or “Why do you always highlight overbids? Aren’t these properties underpriced to begin with?” or “These properties are selling at market price, so why all the hype about overbids?” or “Can you post comps for each overbid you show?”

It’s nonstop, so let me elaborate. The answer is no, most of these overbids are not underpriced, and no, most listings are not intentionally underpriced*. Most properties are “competitively” priced. In a market where buyer activity drives property values up, we have learned (this isn’t San Francisco’s first crazy real estate rodeo) it is best to price a property lower than where you expect it will sell, get a lot of people through the door, and let the buyers set the new market price for any particular property. It is the best way to get the highest price for the seller. The truth is, in this market, we listing agents have run out of crystal balls and simply don’t know what true market value of a property is until you open it up to the hordes of buyers out there, and let them do their thing.

Additionally, buyers have become accustomed to looking at property priced lower than what they expect to pay in the end. So if you list higher than what they’re searching, you won’t get them through the door. For example, a buyer that is expecting to pay $1.2M on a property is likely looking at properties priced well below that (in the $800-995,000 range), knowing they have to bid over. It’s mean, and totally wrong, but it is the way it is. If you bring a property to market at the higher price you hope to achieve, you might get less buyers through the door, no offers in the end, and end up “chasing the market down”, which is not a fun thing.

The last three listings I had blew our (mine and my clients’) minds. We had expectations as to where they might sell, and even entertained the idea of an off market sale, but man were we glad we didn’t go that route. In each situation we received at least 10% more than what we originally thought was “market value”. Did we intentionally price it low? No. We really didn’t know exactly where it would end up selling, so we priced it competitively knowing the buyers will set the market price, and they did, and always do.

It’s frustrating being a buyer in this market, no doubt, but it’s stressful being a seller too. Selling a property for an exorbitant amount of money, regardless of how much over asking an offer might be, is not entirely relaxing. Appraisers strike the fear of God in sellers, because each new appraisal is at a level not yet seen. Hence the draw of accepting cash offers over those with loans. Miraculously appraisals keep coming in at value, but sometimes other things can derail the process too, and then what? Re-list? List at higher price? Are the same buyers still out there? Will you get that magical (through the roof) number again? Do you put the backup offer in (if they’re still there)? So many variables cause so much stress, but that’s another topic altogether.

The bottom line is the overbids that are highlighted here and make headlines are not so much about property being underpriced, as much as they are about the multitude of buyers out there willing to go to astronomical heights to realize their dream of owning property in San Francisco. Arm chair analytics are great for SocketSite, not so great for listing your home on the market, or trying to be the lucky buyer that wins in a market with far too little supply, and over-flowing demand.

So take these overbids with a grain of salt, and if MLS was smart, they’d add a category when reporting sales that will show us all the number of offers on any given property and any given overbid. That’s the real stat to focus on. For every property that gets sold there are usually 10-15 buyers (at least) that just lost and are moving on to the next one, and ready to go crazy big just to be done with it.

I hope that sheds a little light on the matter, and I hope it clears up the air around most of us real estate agents that are simply doing what it takes to get the seller the highest and best price for their property. It’s a bit of a game, but if you know how to play, you can win. As always, I’m here to help you buy and sell, because I do know the game, and I do know how to win.

*Some agents do intentionally underprice property, and some agents do use this as a way to brag about getting “$$$ over asking on my latest listing, I can do the same for you.” But those agents are the exception, not the rule, and you should avoid them.

-Last Week’s Top 10 Real Estate Overbids-San Francisco [theFrontSteps]

Top Sales Over Asking In San Francisco For The Last Two Weeks

I get a lot of people in real estate in other markets around the country contacting me and telling me their market is crazy good. I have to nod my ahead and agree, “Uh huh. Yep. That’s impressive.” But really, it’s not. San Francisco real estate is an entirely different beast. Case in point, the most recent overbids:

Address BR/BA/Units DOM List Price Sold Price Overbid
219 Richland Ave 3/1.00/N/A 15 $818,000 $1,250,000 52.81%
1527 Ofarrell St 3/2.00/ 4 $899,000 $1,300,000 44.61%
317 Crescent Ave 3/3.00/N/A 28 $995,000 $1,425,000 43.22%
610 Russia Ave 2/1.00/N/A 13 $599,000 $850,000 41.90%
2909 Jennings St 1/1.00/N/A 8 $190,000 $269,444 41.81%
173 27th St 3/1.00/ 22 $900,000 $1,265,000 40.56%
1223 Bosworth St 2/2.50/N/A 24 $1,495,000 $2,100,000 40.47%
354 28th St 2/1.00/N/A 19 $1,100,000 $1,525,000 38.64%
432 Moraga St 3/2.00/N/A 12 $889,000 $1,220,000 37.23%
755 Mangels Ave 5/3.00/N/A 11 $959,000 $1,315,000 37.12%

In case you’re wondering, yes, we have Underbids too.

Olé!

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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.
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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.

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