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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.

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.

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

What Costs How Much Where In San Francisco

A Survey of Recent San Francisco Home Sales

March-May 2013

Below are samples of recent city home sales sorted by price point. The list is not comprehensive and the sales are not necessarily representative of typical neighborhood values. In real estate, the devil is always in the details, and the short descriptions below cannot convey the many objective and subjective criteria that make up value. Still, they give an idea of what one can (or, at least could in recent months) purchase in San Francisco. 



As seen below, a large percentage of properties has been selling well over asking price: for example, in April, 90% of closed SF home listings sold, without going through any price reductions, at an average sales price 7.5% above list price. A red-hot market.

Abbreviations: BR=bedroom, BA=bath, DOM=days on market, LP=list price, sq.ft.=square foot/feet, HOA=homeowner’s association, pkg=parking space(s). Room counts do not include bathrooms, garages, storage rooms or rooms built without permit (bonus rooms): a 2 BR/2 BA home with a formal dining room, a living room and a kitchen would be considered 5 rooms. With a combined living-dining room: 4 rooms. A family room or office would count as an additional room.

Besides the sales below, maps and neighborhood values reports can be found here.
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 Over $12,000,000

$12,750,000. Pacific Heights on Jackson: the 4-level, 18-room, 7 bedroom/7.5 bath Hellman Mansion, originally designed and built by Julius Krafft in 1902; 11,500 square feet, 7 fireplaces, bay views, 2 car parking. 100 days on market (DOM), sold at 86% of original list price (LP) for $1109/square foot.

$12,375,000. Russian Hill on Francisco: 12-room, 7 BR/5.5 BA, 6050 sq.ft. mansion built in 1888; sweeping bay and city views, 4 view terraces, 2 car pkg. 70 days on market (DOM), sold at 92% of list price (LP) for $2045/sq.ft.

 

$5,000,000 – $10,000,000

$9,500,000. Presidio Heights on Presidio Terrace cul de sac: 14-room, 5 BR/6.5 BA, 1911 Beaux Arts mansion formerly the home of Mayor Alioto; 8040 sq.ft., library, home theatre. 29 days on market (DOM), 106% of list price, $1182/sq.ft.

$7,000,000. Presidio Heights on Pacific: 1951, detached, 11-room, 5 BR/4 BA, contemporary home featured on 2012 AIA Tour; 4264 sq.ft.; park, bay and GG Bridge views; roof deck; wine cellar for 800 bottles; 2 pkg. 13 DOM, 108% of LP, $1642/sq.ft.

$6,500,000. Russian Hill on Green: 3-level, 5 BR/6.5 BA, penthouse condo built in 1986; 5600 sq.ft., panoramic bay views, private elevator, 3 pkg, $1500/month HOA dues. 44 DOM, 108% of list price (LP), $1161/sq.ft.

$5,500,000. Clarendon Heights on St. Germain: 3-story, 5 BR/7 BA, modern home; views from GG Bridge to Mt. Diablo, 5701 sq.ft., elevator, deck, 2 pkg. 45 DOM, 102% of LP, $965/sq.ft.

$5,500,000. Buena Vista Park: 5-story, 21-room, 6 BR/5 BA, Arts & Crafts mansion with no parking; 6000 sq.ft., au pair quarters, deck; views of bay, city and GG bridge. 56 DOM, 100% of LP, $917/sq.ft.

 

About $3,000,000

$3,000,000. Noe Valley on 26th Street: 9-room, 4 BR/3.5 BA, custom house; 3058 sq.ft., city and bay views, 2 pkg. 6 DOM, 108% of LP, $981/sq.ft.

$3,000,000. Pacific Heights on Pacific: 2-level, 3 BR/3.5 BA, Edwardian condo; bay view, exclusive deck, music room, library, 1 pkg, $387/month HOA dues. 18 DOM, 100% of LP.

$2,995,000. Marina on Avila: 12-room, 4 BR/4 BA house built in 1925; 3025 sq.ft. + 600 sq.ft. deck, seismic upgrades, 2 pkg. 14 DOM, 109% of LP, $975/sq.ft.

$2,875,000. St. Francis Wood on Santa Clara: 1917, 4 BR/4.5 BA, detached, Spanish-Med house on double parcel; 3948 sq.ft., ocean views, 2 pkg, $4300/year HOA dues. 15 DOM, 120% of LP, $728/sq.ft.

 

About $2,500,000

$2,550,000. South Beach on 1st: 2008, 5-room, 2 BR/2 BA, high-rise condo at One Rincon; “sky-level” bridge to bridge views, 1568 sq.ft., patio, 1 pkg, $854/month HOA dues. 20 DOM, 96% of LP, $1626/sq.ft.

$2,550,000. Alamo Square on Hayes: 1891, 4-level, 11-room, 5 BR/4.5 BA Victorian with in-law apartment; 3804 sq.ft., downtown views, no parking. 0 DOM, 98% of LP, $670/sq.ft.

$2,500,000. Noe Valley on Elizabeth: 1906, 7-room, 3BR/3 BA, “contemporary” house with studio-cottage; 2178 sq.ft., deck, hot tub, 2 pkg. 0 DOM, 125% of LP, $1148/sq.ft. $2,495,000. Sea Cliff on Lake: 1921, detached, 11-room, 5 BR/3 BA, traditional home; 2860 sq.ft., 2 pkg. 22 DOM, 100% of LP, $872/sq.ft.

$2,495,000. Sea Cliff on Lake: 1921, detached, 11-room, 5 BR/3 BA, traditional home; 2860 sq.ft., 2 pkg. 22 DOM, 100% of LP, $872/sq.ft.

$2,450,000. St. Francis Wood on San Buenaventura Way: 1941, 11-room, detached, 5 BR/3 BA, traditional home; 2 pkg, $2376/year HOA dues. 26 DOM, 111% of LP.

 

About $2,000,000

$2,060,000. Cole Valley on Stanyan: 1910, 9-room, 4 BR/2 BA house — legally a 2-unit bldg; 2183 sq.ft. + bonus rooms and bath, deck, 2 pkg. 21 DOM, 122% of LP, $944/sq.ft.

$2,050,000. Dolores Park on Church: 2-level, 8-room, Art Deco, 3 BR/3 BA, penthouse TIC in 6 unit bldg; 2749 sq.ft., 3 pkg, downtown and bay views, private patio and garden, $575/month HOA dues. 34 DOM, 103% of LP, $746/sq.ft.

$2,025,000. Inner Richmond on 10th: 8-room, 4 BR/2.5 BA, 1911, detached Edwardian; 2770 sq.ft., 2 pkg. 53 DOM, 107% of LP, $731/sq.ft.

$2,007,000. Glen Park on Laidley: 3-level, 4 BR/3 BA, modern house built in 1997; 2600 sq.ft., 2 pkg. 6 DOM, 115% of LP, $772/sq.ft.

$2,000,000. Lake Street on Lake: 9-room, 4 BR/2.5 BA, 1914 Edwardian; 2784 sq.ft., 2 pkg, large deck. 19 DOM, 114% of LP, $718/sq.ft.

$1,995,000. Telegraph Hill on Francisco: 3-level, 3 BR/2.5 BA, Mediterranean-style, townhouse condo built in 1988; 2374 sq.ft., 3 terraces, bay and city views, $1971/month HOA dues, 2 pkg. 100% of LP, $840/sq.ft.

$1,950,000. Bernal Heights on Nevada: 7-room, 4 BR/3.5 BA, contemporary home; 2879 sq.ft., bay views, full floor master suite, solar heat, 2 pkg. 31 DOM, 93% of LP, $677/sq.ft.

 

About $1,750,000

$1,775,000. Financial District on Pacific: 1984, 2-level, 3 BR/3 BA condo at Golden Gateway Commons; 1850 sq.ft., 4 decks, downtown and Bay Bridge views, 1 pkg, $747/month HOA dues. 2 DOM, 100% of LP, $959/sq.ft.

$1,750,000. Lower Pacific Heights on Pine: 8-room, 2-level, 4 BR/3.5 BA, Victorian condo in 2 unit bldg; 2375 sq.ft., 1 pkg, $300/month HOA dues. 26 DOM, 100% of LP, $737/sq.ft.

$1,750,000. Pacific Heights on Green: 1988, 5-room, 2-level, 2 BR/2 BA, townhouse condo; 1560 sq.ft., large view deck, GG bridge and bay views, 1 pkg, $577/month HOA dues. 27 DOM, 97.5% of LP, $1122/sq.ft.

$1,740,000. Mt. Davidson Manor on Monterey: 1930, 7-room, detached, 4 BR/3 BA, Spanish-Med house; 2668 sq.ft., ocean views, 1 pkg. 20 DOM, 116% of LP, $652/sq.ft.

$1,700,000. Eureka Valley on Caselli: 1918, 3 BR/2 BA Edwardian; 1720 sq.ft., deck, south garden, 1 car pkg pad, plans for 1st floor expansion. 7 DOM, 122% of LP, $988/sq.ft.

 

About $1,500,000

$1,550,000. Cole Valley on Belvedere: 1907, upper unit, 2-level, 4BR/3 BA condo in 3-unit bldg; 2535 sq.ft., city and park views, 1 pkg, $300/month HOA dues. 30 DOM, 107% of LP, $611/sq.ft.

$1,515,000. South Beach on Brannan: 5-room, 2 BR/2 BA condo at The Brannan; 1602 sq.ft., city lights views, 1 pkg, 24-hour security, $977/month HOA dues. 14 DOM, 101% of LP, $946/sq.ft.

$1,505,000. Marina on Francisco: 3 BR/1.5 BA, full-floor condo built in 1923; 2 unit bldg, 1400 sq.ft., 1 pkg, $200/month HOA dues. 14 DOM, 116% of LP, $1075/sq.ft.

$1,500,000. Eureka Valley on Collingwood: 7-room, 2 BR/2 BA, contemporary house with no parking; 1850 sq.ft., downtown and bay views, deck, spa. 109% of LP, $810/sq.ft.

$1,500,000. Sherwood Forest on Casitas: 1952, 5 BR/4 BA, detached modern home; 4769 sq.ft. + basement, city and ocean views. 255 days on market, 75% of LP, $315/sq.ft.

$1,475,000. Inner Sunset on 5th: 1908, 4 BR/1.5 BA, Arts & Crafts Edwardian; 1864 sq.ft. + huge attic, deck, 1 pkg. 106% of LP, $791/sq.ft.

 

About $1,250,000

$1,275,000. Mission Dolores on Dorland: 6-room, top floor, 3 BR/1.25 BA, Edwardian condo with leased off-site parking; 1490 sq.ft., Liberty Hill views, shared yard, $660/month for HOA and pkg. 7 DOM, 116% of LP, $856/sq.ft.

$1,268,500. Inner Mission on Lexington: 2002, 6-room, top floor, 2-level, 3 BR/2.5 BA condo. 1589 sq.ft., Twin Peaks views, deck, 1 pkg, $319/month HOA dues. 15 DOM, 123% of LP, $798/sq.ft.

$1,265,000. Potrero Hill on Carolina. 1957, 7-room, 4 BR/2 BA, midcentury home; 1608 sq.ft., 1 pkg. 21 DOM, 101% of LP, $787/sq.ft.

$1,265,000. Haight Ashbury on Page: 1908, 6-room, top floor, 3 BR/1.75 BA condo in 2 unit bldg; private south deck, 1783 sq.ft., $150/month HOA. 18 DOM, 120% of LP, $709/sq.ft.

$1,260,000. Lone Mountain on Stanyan: 1937, 3 BR/1 BA, traditional house near Rossi Park; 1923 sq.ft., 2 pkg. 14 DOM, 110% of LP, $655/sq.ft.

$1,260,000. South Beach on 1st: 4-room, 2 BR/2 BA condo at The Metropolitan high-rise; panoramic views in 3 directions, 1166 sq.ft., large patio, 24-hour doorman, 1 pkg. 36 DOM, 101% of LP, $1081/sq.ft.

$1,251,000. Golden Gate Heights on 15th: 1946, 4 BR/3 BA, traditional house; 1781 sq.ft., bonus family room, ocean views, 2-tier patio, 2 pkg. 14 DOM, 126% of LP, $702/sq.ft.

$1,250,000. Central Richmond on 29th: 1936, 8-room, 4 BR/4 BA, center-patio, Spanish-Med home; 1705 sq.ft., 2 pkg. 21 DOM, 114% of LP, $733/sq.ft.

$1,235,000. SoMa on Stevenson: 2008-built, multi-level, 3 BR/3 BA, townhouse condo; 1679 sq.ft., 2 decks, 1 pkg, $402/month HOA dues. 25 DOM, 118% of LP, $736/sq.ft.

 

About $1,000,000

$950,000. Hayes Valley on Fillmore: 1981, 2 BR/2 BA condo flat in 3 unit bldg; 1500 sq.ft., 1 pkg, deck, $270/month HOA dues. 8 DOM, 119% of LP, $633/sq.ft.

$985,000. Duboce Triangle on 14th: 1907, 3 BR/2 BA, Victorian TIC flat in 3 unit bldg; 1529 sq.ft., 1 pkg, city lights view. 22 DOM, 109.5% of LP, $644/sq.ft.

$995,000. Lake Street on 2nd: 1946, 5-room, top floor, 2 BR/1 BA condo in 2 unit bldg; 1209 sq.ft., 1 pkg, $200/month HOA dues. 11 DOM, 117% of LP, $823/sq.ft.

$999,000. Yerba Buena on Folsom: 2009, 5-room, 2 BR/2 BA condo at Blu; 1230 sq.ft., den, 1 pkg, $715/month HOA dues. 23 DOM, 105% of LP, $812/sq.ft.

$1,000,000. Outer Richmond on Fulton: 1931, 7-room, 3 BR/2 BA, Marina-style house; 1950 sq.ft., 1 pkg. 30 DOM, 118% of LP, $513/sq.ft.

$1,000,000. Central Sunset on 32nd: 1939, 6-room, 3 BR/1.5 BA, center-patio house; 1815 sq.ft., 2 pkg. 21 DOM, 105% of LP, $551/sq.ft.

$1,000,000. Bernal Heights on Bonview cul de sac: 1958, 3-level, 2 BR/2 BA, contemporary house; 1700 sq.ft., deck, western views, 1 pkg. Sold off-market, $588/sq.ft.

$1,001,000. Nob Hill on Washington: 2006, 4-room, 2 BR/2 BA, contemporary flat; 978 sq.ft., 1 pkg, $485/month HOA dues. 8 DOM, 111% of LP, $1023/sq.ft.

$1,005,000. North of Panhandle (NoPa) on Hayes: 1989, 4-room, 2-level, 2 BR/2 BA, townhouse condo; 1620 sq.ft., 2 pkg, private deck, $605/month HOA dues. 41 DOM, 106% of LP, $620/sq.ft.

$1,015,000. Glen Park on Van Buren: 1913, detached, 2 BR/2 BA Edwardian with no parking; 1249 sq.ft., city and bay views, “gardener’s paradise”. 52 DOM, 107% of LP, $813/sq.ft.

 

About $800,000

$795,000. Crocker Amazon on Lowell: 1923, 6-room, 2 BR/1 BA house; 1820 sq.ft., sunroom, bonus rooms, probate sale, 2 pkg. 18 offers, 119% of LP, $437/sq.ft.

$799,000. Lower Pacific Heights on Baker: top floor, 2 BR/1 BA, Victorian condo in 2 unit bldg; 902 sq.ft. + undeveloped attic, 1 pkg, $200/month HOA dues. 40 DOM, 100% of LP, $886/sq.ft.

$800,000. Outer Sunset on 44th: 1931, 2 BR/1 BA, Spanish-Med house; 1200 sq.ft., 1 pkg, 2 bonus rooms and bath. 20 DOM, 125% of LP, $667/sq.ft. (not including bonus rooms).

$800,000. Miraloma Park on Portola: 1926, 6-room, 3 BR/1 BA, detached Tudor home; 1435 sq.ft., bonus attic room, 3 pkg. 6 DOM, 123% of LP, $557/sq.ft.

$800,000. Inner Mission on 21st: 1999, 1 BR/1.5 BA live-work loft condo; 1137 sq.ft., 1 pkg, $260/month HOA dues. 17 DOM, 114% of LP, $704/sq.ft.

$805,000. Outer Parkside on 46th: 1943, 7-room, 3 BR/2 BA house; 1432 sq.ft., 2 pkg. 7 DOM, 121% of LP, $562/sq.ft.

$806,000. Mission Terrace on Santa Rosa: 1925, 6-room, 2 BR/1 BA house; 1600 sq.ft., trust sale, bonus room, 2 pkg. 124% of LP, $504/sq.ft.

$810,000. Noe Valley on Fair Oaks: 1900, 5-room, lower level, 2 BR/1 BA flat in 2 unit condo bldg with leased parking offsite; 1184 sq.ft., $250/month HOA dues. 104% of LP, $684/sq.ft.

$810,000. Midtown Terrace on Dellbrook: 1956, 2 BR/1 BA, mid-century home; 937 sq.ft., 2 pkg. 20 DOM, 108% of LP, $864/sq.ft.

 

About $650,000

$635,000. Excelsior on Maynard: 1907, 3 BR/1 BA, Victorian cottage with no parking; 1100 sq.ft. + bonus room, seismic retrofit. 33 DOM, 116% of LP, $577/sq.ft.

$638,000. Silver Terrace on Silver: 1941, 5-room, 2 BR/1.5 BA house; 1075 sq.ft. + large bonus family room, 2 pkg. 31 DOM, 107% of LP, $593/sq.ft.

$649,000. Dogpatch on 23rd: 1 BR/1 BA live-work loft built in 2000; 1084 sq.ft., private patio, $502/month HOA dues, 1 pkg. 28 DOM, 100% of LP, $599/sq.ft.

$649,000. Pacific Heights on Washington: 2001, 1 BR/1 BA condo in high-rise Pacific Place; 745 sq.ft., Nob Hill views, 1 pkg, 24-hour security, tenant-occupied, $609/month HOA dues. 22 DOM, 100% of LP, $871/sq.ft.

$650,000. Central Richmond on 15th: lower level, Marina-style, 6-room, 2 BR/1 BA TIC flat in 2 unit bldg; 1350 sq.ft., 1 pkg, tenant occupied. 26 DOM, 108.5% of LP, $481/sq.ft.

$652,000. North of Panhandle (NoPa) on Broderick: 2007, 4-room, top floor, 1 BR/1 BA condo in mid-rise bldg; 671 sq.ft., 1 pkg, city lights view, $404/month HOA dues. 18 DOM, 109% of LP, $972/sq.ft.

$653,000. Parkside on Vicente: 1939, 4-room, 2 BR/1 BA, contemporary home; 837 sq.ft., 1 pkg. 29 DOM, 109% of LP, $780/sq.ft.

$655,000. Potrero Hill on Kansas: 2007, 4-room, 1 BR/1 BA condo at The Potrero; 804 sq.ft., downtown views, 1 pkg, $470/month HOA dues. 28 DOM, 109% of LP, $815/sq.ft.

$665,000. South Beach on King: 2007, 3-room, 1 BR/1 BA condo in high-rise; 681 sq.ft., city views, 1 pkg, $561/month HOA dues. 28 DOM, 102% of LP, $977/sq.ft.

$657,000. Sunnyside on Judson: 5-room, 2 BR/2 BA, split-level contemporary; 1226 sq.ft., 1 pkg. 31 DOM, 116% of LP, $536/sq.ft.

 

About $500,000

$485,000. Western Addition on Eddy: 1992, 2 BR/2 BA condo in low-rise bldg.; 812 sq.ft., 1 pkg, $411/month HOA dues. 124% of LP, $610/sq.ft.

$500,000. Oceanview on Minerva: 1941, 5-room, 2 BR/1 BA, contemporary house; 1030 sq.ft., sunroom, 1 pkg. 22 DOM, 116% of LP, $485/sq.ft.

$500,000. Portola on Woolsey: 1948, 5-room, 2 BR/1 BA, tunnel-entrance “fixer” house; 1250 sq.ft., 2 pkg. 17 DOM, 91% of LP, $400/sq.ft.

$500,000. Twin Peaks on Gardenside: 1975, top floor, 3-room, 1 BR/1 BA condo; 180 degree downtown and bay views, 693 sq.ft., 1 pkg, $342/month HOA dues. 117% of LP, $722/sq.ft.

$500,000. Civic Center on Van Ness: top floor, 1 BR/1 BA condo at Opera Plaza; 682 sq.ft., 1 pkg, 24-hour security, deck, $862/month for HOA dues and parking. 13 DOM, 114% of LP, $733/sq.ft.

$510,000. Bayview on Shafter: 1951, 8-room, 2 BR/1 BA home with legal 2 BR unit; 1695 sq.ft., 1 pkg. 24 DOM, 106% of LP, $301/sq.ft.

 

$300,000 – $400,000

$340,000. Visitacion Valley on Wilde: 1922, 1 BR/1 BA house; 700 sq.ft., 3 pkg. 20 DOM, 110% of LP, $486/sq.ft.

$368,000. Bayview on Rebecca Lane: 1992, 2 BR/2 BA house; bay views, deck, 1237 sq.ft., 1 pkg. 29 DOM, 108% of LP, $297/sq.ft.

$378,900. Downtown on Frank Norris Place: 1 BR/1 BA condo without parking; 522 sq.ft., south and east views, must be 55+ years old, $367/month HOA dues. 25 DOM, 100% of LP, $726/sq.ft.

$380,000. Downtown on O’Farrell: top floor, studio condo at The Hamilton; 480 sq.ft., huge south and east views, tenant occupied, $574/month HOA dues + $250/month for parking. 34 DOM, 100% of LP, $792/sq.ft.

$385,000. Diamond Heights on Red Rock Way: 1972, studio condo with 1 car pkg; 592 sq.ft., $407/month HOA dues. 129% of LP, $650/sq.ft.

 

Dollar per Square Foot ($/sq.ft.) is based upon the home’s interior living space and should not include garages, unfinished attics and basements, rooms built without permit, outdoor space, patios and decks-though all these can still add value. These figures are usually derived from appraisals or tax records, but are sometimes measured in different ways, unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). All things being equal, a smaller home will sell for a lower sales price, but a higher dollar per square foot than a larger one. However, with our enormous variety in property types, all things are rarely equal in San Francisco real estate. There are often huge variations of value within a single neighborhood: the specific location, property condition, architectural style and curb appeal, amenities, parking, views, lot size & outdoor space all affect dollar per square foot values. Typically, the highest figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige, doorman buildings, and by mansions in the absolute best locations of the most prestigious neighborhoods-more often than not, they too will have great views.

 

How these sales apply to the value of any particular property is unknown without a specific comparative market analysis.

 

San Francisco Market Focus Report May 2012: Translation = The Market Is Kinda Hot

San Francisco Housing Market Accelerates

The spring home-buying season is well underway in San Francisco, as historically low interest rates and a limited supply of homes for sale have prompted nascent home buyers to pull the trigger. Cash transactions, competitive bidding and multiple offers are once again commonplace throughout the city.

Single-Family Home Sales

The city’s inventory of single-family homes for sale dropped by 30.7 percent compared to April 2011. With a substantially lower inventory, the number of homes under contract rose by 12.6 percent compared to this time last year, while the number of homes sold increased by 10.7 percent.

For homes that were priced below $700,000, the months of supply inventory fell by 61.4 percent to 1.3 months. For higher-priced homes between $700,000 and $1.2 million, the months of supply inventory also dropped, by 53.9 percent to 1.2 months. These exceedingly short time frames continue to place San Francisco high among cities in the nation where homes are selling the fastest.

One area of town which continues to experience high sales activity is the Central District. Since April of last year, the number of homes under contract in this point of the city has increased by 3 percent, but what is more noteworthy is that the number of homes sold has jumped by 51.9 percent, with 41 transactions closed. The Central District is home to a variety of neighborhoods, including the family-friendly Eureka and Noe Valleys, which are where many new affluent technology workers are competing to purchase homes. The median price for a home here is $1,355,000.

Another area of the city which experienced healthy sales activity is the southeastern section, east of Interstate 280 and extending past Candlestick Park. Compared to one year ago, the number of homes under contract here has surged by a whopping 76.5 percent, while the number of homes sold has also increased by 23.1 percent to a total of 48 transactions closed. Homebuyers seeking an easy commute to the Peninsula and some of the best prices in the city are turning to neighborhoods in the southeastern section like the Outer Mission and Mission Terrace. The median price for a home here is $477,500.

Condominium Sales

Just as with single-family homes, the inventory of condominiums for sale in the city dropped, by 38.9 percent compared to April 2011. Despite this, the number of condominiums under contract increased by 33.8 percent, while the number of condominiums sold rose by 15.6 percent.

For condominiums that were priced between $500,000 and $900,000, the months of supply inventory contracted by 68 percent to a reading of 1.2 months. For luxury condominiums priced above $900,000, the months of supply inventory also fell by 30.2 percent to 2.2 months.

One area of the city which experienced a robust increase in condominium sales activity is in the central-eastern section. Since April of last year, the number of condominiums under contract here has jumped by 48.5 percent, while the number of condominiums sold has only dropped by a marginal 1.1 percent, rounding out the month with 86 units closed. Stylish and contemporary mid-rise condominiums line the streets of the neighborhoods here, including South Beach, whose close proximity to Caltrain and AT&T Park is ideal for commuters and baseball fans alike. The median price for a condominium in the central-eastern section is $697,500.

Outlook

Nationally, there is strong evidence that the housing market is stabilizing, as all-time low borrowing costs and improving employment have helped fuel demand for a shrinking inventory of available homes. And, prices have bottomed out. The National Association of REALTORS® reported that prices for single-family homes improved in the first quarter of the year compared to last year for 74 of 146 metropolitan areas.

The consumer confidence index, which had declined slightly in March, remained virtually unchanged in April. The index now stands at 69.2, down slightly from a reading of 69.5 in March. Regarding the short-term outlook, Lynn Franco, director of the Conference Board Consumer Research Center, says that, “Overall, consumers are more upbeat about the state of the economy, but they remain cautiously optimistic.”

According to the latest figures from the California Employment Development Department, the unemployment rate for the San Francisco Bay Area rose slightly this past March, from 8 percent to 8.1 percent, following a similar statewide trend. Between February and March of this year, leisure and hospitality were among the top industries with added job growth. In San Francisco, 38,200 people were out of work in March, while 432,600 had jobs.

Prospective home buyers still on the fence about purchasing should consider the current state of the rental market in the city, which continues to tighten with rising rents. Based on a recent article published in the San Francisco Chronicle, rental rates in the city rose by 15.8 percent compared to the same time last year, with an average rent of $2,663 for all units. Studio apartments rose by 16.5 percent to an average of $2,075, while one-bedroom, one-bathroom apartments also increased by 19.9 percent to an average of $2,611.

-San Francisco Market Focus Report May 2012

San Francisco Housing Market Continues To Show Promising Signs Of Recovery

salesup1
From the source:

The San Francisco housing market continued to show promising signs of recovery through October 2009. Pending single family home sales jumped to 271 homes in October 2009, which represents a 30% increase in the number of pending sales month over month and a 58% increase year over year. Although greater scrutiny in obtaining a mortgage is expected to extend the time between signed contracts and closings, the sharp rise in the number of homes under contract should lead to strong sales activity going forward.

The high level of home sales activity observed during the two previous quarters helped to reduce single family inventory levels to 639 homes on the market in October 2009, 200 fewer units on the market during the same month last year.

The jump in contract sales combined with the drop in active homes on the market brought the months supply of single-family home inventory to 2.4 in October 2009 from 4.9 the same time last year. This dramatic tightening in market conditions is encouraging and is a reflection of improvements to housing affordability driven by price adjustments and low interest rates.

Inventory levels fall while home prices at the lower-end of the market stabilize

The stabilization of home prices at the lower-end of the housing market combined with a more evenly distributed pattern of home sales activity across districts and price ranges resulted in a 3.4% month-to-month increase in the median single-family sales price to $760,000 in October 2009, marking a second consecutive month of increasing prices. In comparison to the same month the previous year, the median single-family sales price rose 3.3%, which was the first year-over-year increase since April 2008.

Although sales at the higher-end of the market have gained traction, lower-priced homes in District 10 (Bayview-Hunters Point, Visitation Valley, Portola, Excelsior, Crocker-Amazon) still account for more than one-fifth of all single family home sales during the month. Though relatively high, this is much improved from earlier in the year during which home sales in District 10 accounted for close to 40% of all sales activity in January 2009.

Despite high unemployment levels and continued job cuts, the extension, as well as expansion of federal programs should continue to promote housing demand. The First-Time (And Move-Up) Homebuyer Tax Credits extension and the increase in income limits from $75,000 to $125,000 for single-person households, and from $150,000 to $225,000 for married households should make the program marginally more valuable to buyers in San Francisco. However, the price limits of $800,000 excludes the higher-end of the San Francisco market. The Federal Reserve’s support of lower mortgage rates brought the 30-year fixed mortgage rate to 4.98% as of November 5, 2009. As a result of continued government intervention in the housing market, traditional supply/demand dynamics have shifted in this current environment, as tax credits and mortgage rate subsidization counter the negative effects of high unemployment levels and job market uncertainty.

The demand for condominium units continued to show signs of improvement into the last quarter of the year. Pending condominium sales nearly doubled from October of last year with 288 units under contract in October 2009. With more than 1,200 condominiums on the market in October of 2008, the dramatic price cuts and other incentives during the previous twelve-month period brought the condominium for-sale inventory to 998 units in October 2009.

As a result of these price reductions, the median condominium sales prices fell 9.2% from October 2008 to $640,000. Condominium sales in District 5 (Mission/Noe Valley/Castro/ Glen Park/Upper Market) and District 9 (South Beach/Potrero Hill/ Bernal Heights/ Mission Bay) still account for close to half of all condominium sales activity in the city.

Although inventory levels have retreated in recent months, the rising number of homes entering the early stages of foreclosure, as well as the existing shadow inventory might
continue to pose supply-side risks going forward. The concentration of job losses in white-collar employment sectors during the current down-cycle and the disproportionate
impact that this has had on the San Francisco economy increases the likelihood of pushing more distressed homeowners into foreclosure.

Data is as of the 10th of the month.
Sources: Terradatum

-FULL REPORT CLICK HERE [San Francisco Association of Realtors]

Palm Springs We Are Not, Shocking Information This Is

From a reader who’s email says, “The housing crisis summed up in one house in Palm Springs”:

Check this out – from NPR’s Plante Money exercises:
Twitter Tweet 1 for this info on one Palm Springs House:

Date           Event           Price            Appreciation            Source

Apr 30, 2009   Sold      $32,500    -87.1%/yr       Public Records
Feb 08, 2008    Sold      $399,479    -8.3%/yr        Public Records
Sep 22, 2006   Sold       $450,000    28.4%/yr     Public Records
Sep 20, 2005  Sold      $350,000    63.3%/yr      Public Records
Jul 30, 2004   Sold       $200,000     89.0%/yr     Public Records
Oct 06, 2003   Sold      $119,000     24.3%/yr      Public Records
Oct 11, 2002   Sold       $96,000    114.3%/yr      Public Records
Jun 28, 2001   Sold      $36,000    -26.2%/yr      Public Records
Apr 16, 2001   Sold      $38,250      –                        Public Records

and then this

Twitter Tweet 2 for this info on the house across the street:

Date          Event                 Price               Appreciation         Source

May 19, 2009    Sold      $47,500        -68.6%/yr       Public Records
Jan 15, 2008    Sold       $225,000       7.4%/yr         Public Records
Jan 31, 2005    Sold       $182,000       22.8%/yr        Public Records
Jul 09, 2003    Sold       $132,000       96.3%/yr        Public Records
May 08, 2002    Sold     $60,000        -12.3%/yr       Public Records
Oct 24, 2001    Sold       $64,392          -8.4%/yr       Public Records
Feb 01, 2000   Sold      $75,000         112.1%/yr       Public Records
Nov 13, 1998   Sold      $30,000         -79.0%/yr      Public Records
Apr 14, 1998   Sold       $74,598         -0.1%/yr         Public Records
Mar 03, 1992   Sold      $75,000          271.3%/yr   Public Records
Jun 01, 1990    Sold      $7,500             –                       Public Records

Apologies for the horrible formatting on the columns (working remotely), but the information is there nonetheless.  Thanks to the reader, and (raising glass of wine in the air), “Here’s to the end of the Recession, please!”

San Francisco Property Sales And Prices Continued Rising In June, But Still Down From 2008

We’ve been getting a lot of requests lately to run comparable property reports for homeowners looking to reduce their property taxes, and having to fight an uphill battle against the city proving their case that our market has, in fact, declined on more levels than one. Here is a little bit of information for San Francisco that might help.

Sales of single-family, re-sale homes and condos continued rising last month [June] as we move through the Spring selling season. Home sales were up 16.9% from May, off 2.41% year-over-year. Year-to-date, home sales are down 17.1%.

Condo sales were up 20.5% month-over-month, but off 15% compared to June 2008. Year-to-date, condo sales are down 33.9%.

The median price for single-family homes rose for the third month in a row. The median price rose 3.2% from May, but was down 5.7% year-over-year. The average price also rose, gaining 9.5% month-over-month, but down 12.3% compared to last June.

The median price for loft/condos in San Francisco dipped 0.5% from May, and was down 15.1% year-over-year. The average price for condos fell 5.4% month-over-month, and was off 16.2% year-over-year.

The above information is from the Real Estate Report, a detailed version of which you can find by clicking that link.

Here’s the question. There are many different sources out there reporting on the data at hand and they all slice it differently. DataQuick looks at the big (Statewide, Bay Area picture), SocketSite takes their data and always finds a way to focus on the negative, and Realtors will always focus on the positive (we’ll get that data to you shortly), so the question is who to believe?

As for why the city continues to not see the obvious, maybe a good ophthalmologist recommendation is in order.

[Update: Right after putting this post live, we did another one with more data, that is still different than the other two data points we referred to above: Stats & Numbers San Francisco Home Sales June '08 Versus June '09.]

Noe Valley Is Not Immune (Noe Valley Median Slides Along With SF As a Whole)

Woah! Where the hell has theFrontSteps been? A few things…I did, in fact, have a birthday (29 for those wondering) and I’ve been slammed with real estate. Thank goodness for the people behind theFrontSteps. This graph again from Misha Weidman:

noe-valley-vs-sf-all-districts-percent-change

This is median prices, and SINGLE FAMILY HOMES ONLY.

If this isn’t ammo for the haters, we don’t know what is. Thanks Misha for keeping the data coming!