How Much Have San Francisco Home Values Declined Since Their Peak?

Paragon Real Estate has the answer.

A snapshot of declining price per square foot shows the Bayview Hunters Point district down 25%, Richmond District down 6%, Sunset down 11%, SOMA down 22.5%, Noe Valley down 7%, and Pacific Heights also down 7%:

Declining SF Values, Click image to enlarge

A snapshot of declining values by price doesn’t look much better with the number of sales down in all price ranges except the sub $500,000:

Click to enlarge

We’ve said it before, and we’ll say it again…It’s a great time to be a buyer.

How Much Have San Francisco Home Values Declined [Paragon Real Estate]

17 thoughts on “How Much Have San Francisco Home Values Declined Since Their Peak?

  1. I’m a buyer who has been looking aggressively and is eager to move now on a condo that is <$600k in the city, and I don’t feel like it’s such a great time to be a buyer. Most of the properties I’ve seen are still priced unrealistically high (including some listed at prices higher than direct/identical comps were selling for two years ago!) and many sellers simply CAN’T drop the prices further because they’re already priced at the value of their mortgage. There’s at least one condo I really like but is about ~$75k overpriced but the agent informed me that the seller can’t reduce the price further because it’s already been reduced to the outstanding value on the mortgage. I told him that would make it unworkable and he said he knew. Sounds like they’re just waiting for foreclosure or trying to convince the bank to allow them to do a short sale, and want to field offers to prove that they need to go that route.

    I feel both a) priced out and b) like anything I buy will immediately lose so much value that it will be in my price range. Which means that, short of picking out a short sale or REO (unlikely in the areas I’m looking) or getting a great deal from a developer (most of whom have completely delusional pricing) then I’m going to be a renter, which I’m not thrilled about since I sold my place on the East Coast specifically to buy here.

  2. many home purchases seem driven by life events, so “buyers” are often folks who feel compelled to buy something fairly quickly, no matter what the price. if that is your definition of buyer, than yes, your choices today are better than they have been in years. otherwise, the comments are exactly correct.

    there is no danger of prices rebounding anytime soon, and with prices virtually guaranteed to be lower by Fall, it is a great time to be on the sidelines.

  3. Jason, are you working with an agent. There are other strategies out there. My favorite is to find homes/condos that have been in a family for 20+ years. These sellers just want market rates at the end of the day. If you are not working with a broker — you should. Just make your intentions clear.

    Call Alex, he’ll set you straight.

    [Editor’s Note: This is not a paid endorsement, but appreciated nonetheless. Guess slipping that $20 into your jacket worked…]

  4. I have lots of reasons for waiting on the sidelines. FIrst, as the market continues to slide, prices will be better in the fall than now. Also, because of market conditions, we are taking a much longer-term look at where we want to live. When we moved to SF in the summer, we planned to buy a condo for 2-3 years, build some equity from appreciation, and move up to a house and start a family. Now, we’re thinking that we better like the place we buy next, because we’re going to be there for a while.

    Most important, while prices are down dramatically here, we lost 2/3 of our cash equity in the 9 months it took to sell our house out east. When we accepted our job offers we had the ability to purchase a $1.5m property with 20% down, and could easily gotten financed at 10% or less. WIth such a tight lending market, we no longer have the ability to get financing on a property that we would want, even though it is discounted compared to last year. So….we will wait on the sidelines, lick our wounds and save up more cash so we can afford the new terms.

    I think that many are understating this problem. There just aren’t that many out there who have the cash for a house. We have a combined (not bonused) income of over $400k and can’t afford a family home in these conditions and we’re much more fortunate than most.

  5. Every asset class is down 30% or more no matter how well they are/were rated. So guess what is going to happen to real estate? Even Pac heights and Noe. There may not be sellers, but if a seller wanted to come to market, they will have to be realistic and mark to reality in the next few months.

    So I guess I’m waiting too. Better to buy on the way up than be a monkey calling the bottom.

  6. Good discussion. It always has made sense to me that length-of-hold should correlate strongly to price and price flexibility. Is there any source that collects this data and makes it available? In other words, without doing my own home-by-home research, where can I found stats on, e.g., homes held for more than 10 years in a specific district?

  7. Steve says:

    “many home purchases seem driven by life events, so “buyers” are often folks who feel compelled to buy something fairly quickly, no matter what the price. if that is your definition of buyer, than yes, your choices today are better than they have been in years. otherwise, the comments are exactly correct.”

    Does that really describe “buyers” though, or “sellers”? Buyers always have the rent option, so never *have* to buy. I don’t know of anyone who bought due to a life event, although sure, people get married, have kids, etc. and want a place of their own. Not really a life event, more of a life stage.

    That said, I know many *sellers* who sold due to a life event. Death, divorce, layoffs. Those are life events that force action.

  8. This market has hit landlords a little on asking rent, however, I’ve noticed rent demand is huge for the very reason that good credit people are finding it difficult to get a loan. And, with prime areas like Pac Heights, Marina, Presidio Heights down only 5-7% from the peak, that’s not that great for buyers.

    Always buy in the best area possible.

    A lot of people getting their 2008 bonuses tomorrow. Should be good for retailers and property. People made a lot of money still in 2008, just ask all the Merrill Lynch guys!

  9. Well done to Paragon for providing this data! I remain a little cautious about a full endorsement because many listings omit square footage numbers altogether. Still, the numbers seem believable, and IT”S IMPORTANT TO NOTE THAT THE CORE SF AREAS ARE DOWN ONLY 10% OR LESS FROM THEIR ALL TIME HIGHS. C’mon folks, that may not help people like Jason and Sidelined from getting a house, but it should provide some reassurance that SF is a basically sound market if the damage is in the 10% range.

    As to when to buy, I tell my clients not to even consider it if they don’t have a stable time horizon of at least 5 years. Beyond that, I agree that these decisions are driven by personal factors as much or more than economic ones. Ever see a pregnant family (note gender neutrality) that wasn’t looking to secure the nest by hook or by crook?

  10. alex, though the reading of these data can differ just like the reading of anything else in the world, since people come from different realities when they approach, i applaud you including it all. including sunny as well as rainy forecasts in real estate makes you seem a more honest weather man (so to speak)

  11. My wife and I have been waiting on the sidelines as well to buy something in SF. Fortunately for us we waited and are starting to feel the market coming down. The problem we have is the places we like are TICs and not condos. This is unfortunate cause it pretty much negates are excellent credit rating and interest rates are ridiculous. Any ideas on how to get condo interest rates on TICs?

  12. Unfortunately as far as I know the options for TIC loans are limited to:

    – Fractional loans offered by a handful of local banks. Because they cannot securitize these loans and must hold the paper the rates are higher than condo loans. Typically 7% or more, and with much shorter terms. A typical TIC loan may have only a 5 to 7 year term (with a 30 year amortization).

    – Group jumbo loan, where all TIC partners sign on to one big loan for the building. These are not easy to get as banks don’t like having a bunch of individuals (versus one) to pursue if the loan goes south. Jumbo loans also have higher rates – maybe 7% or higher. And if one partner fails to perform the bank can go after all of the remaining partners. Before going down this route (if you can even find a bank to do it) I’d consider forming an entity like an LLC to hold your shares in the property.

    – Private financing. Some owners in this market are so desperate to sell that they offer buyers their own loans. This is definitely an option, but you have to be a very savvy negotiator and may need some legal advice when reviewing the loan contract as the owners typically establish loan terms to best protect themselves.

    No loan options for TICs are as cheap and straight forward as a long term fixed rate condo loan at today’s bargain rates.

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