What’s going on: $500,000-$700,000

We hear a lot of talk, and get a lot of heat about always using “high end” bits of anecdotal sales information, and always cheering the market on. All of which we’ve taken into consideration. So…we did a little searching.

Since 10/31/2007, according to MLS 85 homes throughout the entire city (condo and single family) within the price points of $500-700,000 closed escrow. The majority of which sold within 5% of asking.

A few averages in 2007:

List price $612,603

Square footage 1202

List price per square foot $602

Sales Price $613,093

Sales price per square foot $599

How does that compare to the same period one year ago? Well…it sucks. Using the exact same search criteria, we found in the same period in 2006 there were 144 homes that closed escrow, the majority of which also sold within 5% of asking. That equates to roughly 41% less activity today than a year ago in the price range $500-700,000, according to MLS. It does not take into consideration any new development sales, or off market deals.

The averages in 2006:

List Price $620,754

Square Footage 1090

List price per square foot $613

Sales Price $619,297

Sales Price per square foot $612

The verdict: You are now, officially, getting more for your money in the price range $500-700,000 than you were last year. We could, of course, go back to 2000, 2001, 2002, 2003, 2004, and 2005 to show that you really need to think long term when thinking real estate, but we’ll let you all enjoy this little bit of doom and gloom reporting by yours truly, theFrontSteps. Don’t get used to it. ;-)

2007 Properties List/Report [MLS]

2006 Properties List/Report [MLS]

13 thoughts on “What’s going on: $500,000-$700,000

  1. This looks like a very small drop, just 2.1% if my math is right. Is the sky falling here or is this natural fluctuation in a flattening market?

    [Editor’s note: A small drop in price, but a huge drop in volume. The sky is not falling. Not at all. But a very interesting look at some numbers. At least we thought so.]

  2. Yeah, but it seems to me like most of the problem here is this. What’s a 500 to 700K house anymore? Nowhere central. Barely the Mission, even. Very run down south slope Bernal, probably tiny. A fixer in Glen Park, maybe. A fixer in Parkside. It doesn’t even get you a full five in Sunnyside that’s in decent shape.

    Five to seven gets you a lot in Silver Terrace, Bayview, Lakeview and the like. This has a lot to do with working class people getting priced out of San Francisco. (And 500 to 700K isn’t working class most places, obviously.)

  3. Bought a very nice 1925 classic SF bungalow house in the spring. 2 bedroom, living with fp, built in cabinets, details, etc, formal dining with built-ins, big kitchen with a functional but honestly dated 1980’s feel. Small original bath but cute and nice tile work, bonus room and bath on lower level, 1 car garage, full size 25×100 lot, south views out the back, roof, electrial, and plumbing in good condition. $550,000. On Palou Ave about 1 1/2 blocks from 3rd st.

    Same house in north Bernal or the Mission would have been around $900,000. Forget Noe, Castro, Duboce, Cole Valley, etc for anything less than 7 figures.

    like the area for proximity to transportation and getting around. Sunny, good ground for earthquakes, but not a walking neighborhood. At least not yet. Feel reasonably safe, but used to live in the inner mission and hopefully a bit street savvy. Have a 65lb dog as my security system. 30 something white guy, but grew up in Chicago area.

    Take a chance and move to the area. Lots of community activists too. It will be a great neighborhood…sometime.

  4. Alex,

    First of all thank you for taking the time to look at a portion of the market that gets almost no attention from the local RE blogs. This is certainly a refreshing surprise.

    The key question is how many properties were listed in each year? If listings were way down, then that would support Kenny’s theory that sellable homes simply moved out of this range, which resulted in less inventory available to close escrow with. If, on the other hand, listings were comparitively stable, or only dipped slightly, then this would certainly suggest that the market, at least on the lower end, is entering a period of potential volatiity.

    [Editor’s note: This year there are 91 properties that remain on the market. Add that to the 85 and we’re at about 176. In 2006 144 sold, how many were listed….haven’t figured out how to get that data yet, but working on it.]

  5. I kindof disagree with the cutting of the pie. Yes it compares what you can buy with the same check, but no, it doesnt compare the markets now and then.

    I think what we want to know is what’s avaiable in the less expensive market, and that’s exactly how we should cut the pie.

    Let’s try again.

    From the sfnewsletter report, that’s my quick (with mistakes probably) count.

    10/19/07 -> 11/16/07 sorted by closing price.

    170 SFH changed hands. of which 29 closed at .7 or under. that’s 17% of the market.

    (there – you can simply decide to go for the bottom fifth: 20% = the first 34 houses)

    For THOSE houses, price range is 475.000 to 700.000

    average price is … median price is … average sqft is … median sqft is …

    to compare with the same 17% of another period. same maths side by side.

    Then repeat with condo and TICs (or do it only once with all property types)

    why? because nobody cares about .5 or .7 per say. people wonder about what’s in the lower end of the market so they can figure out if the overlap of the market and their own budget even exists.

    PS: the cutoff property of my count is … IN LOWER PACHEIGHT! which is even more refreshing as it’s so easy to over simplify and assume the bottom fifth would only be in the south east quadrant and the top fifth would be north of Geary.

  6. I will NEVER buy a 500-700 house, b/c finding a SFH in that price range in SF is basically putting you in a seedy area. Life is too short already, to risk your own safety.

    Instead, I would rather rent in a nice neighborhood ANYDAY if all i could afford was this price range. Or, I’d buy a nice 1bedroom, like 2171 Sacramento St. #3, feature here for $625,000, even if it is over $1,000/sqft.

    Anybody who dares put in a bid for a mid to upper end property in SF will be sorely disappointed due to the intense competition. Inventory is horendously low all year and will remain so for another couple years.

  7. ah boom,

    I think maybe if you look at the number of houses in Parkside, Souh Bernal, south Glen Park, Sunnyside, South Potrero, mid sunset, etc. that are priced at $800 to $1M and just sitting there with little action, it might back up my theory. You know, houses that used to be in the 500 to 700 range two or three years ago. I haven’t looked yet. But I bet I’m right.

    Referred a contractor to a job at a property in Glen Park. He went and looked at the rather big foundation-work it needed. Afterward, he called me up, surprised. What was interesting was, he tried to buy the house a year and a half ago. But we were outbid. It went for too much, we felt. Nowadays, north Glen Park has a $3M listing or two. This potential client’s remodel is going to make sense, even though we thought the house needed way too much capital at the time. That’s just one example. But it backs up my theory.

  8. And then, here’s the other thing. Who’s going to put 100K down on a house in Lakeview these days? The credit crunch is keeping the 500 to 700 houses that actually ARE out there from moving, I’m sure of it.

  9. I think the price movement is pretty immaterial, and only material if you had to sell within 1 or 2 years after your purchase.

    It’s clear that those who are really suffering are all people dependent on VOLUME. Remember, it’s always a good time to buy or sell. When volume shrinks, paychecks shrinks.

    As a homeowner, you don’t care if only 2 houses in your neighborhood sold for 5% more than last year vs. 4 that sold for 5% more than the year befoe. What you care about is the price, not the volume.

  10. That’s a good point, Boomtime. The people who are really suffering ARE volume dependent i.e. junior mortgage brokers. They hardly even exist any more.

    I just did an MLS search. There are 33 houses on the market between 800 and and a $1M in Glen Park, Bernal, the Mission, Potrero and Central Sunset Areas. The average DOM is 51 days for these properies. That fits with what I said earlier.

  11. I second the comments about: volume vs. price. As homeowners, volume of houses sold is not very relevant. What matters more are three metrics:

    For a determined period of time:

    – How many properties where listed within a certain price range ?

    – How many properties where sold within that price range ?

    – What was the price difference (bid vs. ask) at sale ?

    These metrics help assess if inventory is building up and what effect is it having on prices.

    From my own research (I’m looking to upgrade homes) into the $800K – $1.2M properties (condos/single family in west and north neighborhoods of SF) from the Sep. 1 period to the Nov. 21 period:

    * ~70%+ percent of properties listed have moved into escrow

    * There has been downward pressure (-5% to -7%) on asking prices for ~10% of properties in that range/timeframe

    * A few properties have sold above asking

    * ~10% of properties have been on the market longer than 80 days

    Interestingly, we’ve looked at 30+ properties in that category, and we found a grand total of … one that fit all of our requirements !

  12. A lot of the areas mentioned above are in the southern part of the city, close to or on the Daly City border. Prices in Daly City are down about 10% year over year, so no surprise that prices in these areas are falling as well. I compare Sunset/Parkside/Sunnyside/Excelsior more to Daly City or South San Francisco than I do to Pac Heights or the Marina. That said, it’s tough to deny that prices are indeed falling in these areas.

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