San Francisco | December 2015 Real Estate Market Update

San Francisco Real Estate Report, December 2015 Market Update.
– Heading into the Holiday Slowdown after an Interesting Autumn Market
– Median home prices, over-bidding, housing affordability, luxury home sales, the new-home construction pipeline, and comparing the Shanghai and S&P 500 stock indices



Median sales prices in October and November jumped back up to levels similar to the spring peak selling season. It’s important to remember that median prices are not a perfect reflection of changes in fair market value: They often fluctuate due to seasonal inventory and buyer-profile trends, as well as issues such as an influx of new-construction listings. It is the longer-term trend that is most meaningful – however we can say with confidence that there was clearly no significant “crash” in prices this past autumn.


One indication of the heat of the market is the extent to which sales prices are bid up over asking prices. As is not untypical, the market becomes less competitive in November as it heads into the winter holidays. Still, an average sales price 6% over asking price would be considered crazy-hot in any other market in the country (though one also has to adjust for the fact that serious underpricing has become a not uncommon listing strategy in the SF market).


This chart based on S&P Case Shiller Home Price Index data illustrates the seasonality of home price appreciation in the past 4 years: surging in our feverish spring selling seasons, and then generally plateauing through the rest of the year. Note that Case-Shiller looks at home prices in a totally different way than median sales price trends, and probably reflects changes in fair market value more accurately. Case-Shiller Index numbers refer back to a January 2000 value of 100, thus the current Index reading for higher-priced Bay Area homes of 217 signifies home prices 117% above January 2000.

As we enter the winter holiday market slowdown, the next real indication of the direction of the market will come in the first quarter of 2016. Will spring 2016 repeat the overheated, high demand/ low supply frenzies of previous springs or has the market finally reached a longer term plateau or even an affordability inflection point? We shall soon know more.


In 2015 YTD, the dominant price segment for home sales in San Francisco was $1,000,000 to $1,499,000. As seen in the first chart above, the median sales prices for both condos and houses fall within this range. Note the change from just two years ago.


San Francisco Luxury Home Market




The high-end home market is the most seasonal segment in the city (as well as the most sensitive to sudden, large, negative movements in the financial markets). Market activity starts to plunge in November, hits its nadir in December, begins to pick up in the first quarter and then usually hits its peak in spring. Much of the center of gravity in the luxury market has been shifting in recent years from the city’s prestige northern neighborhoods to other districts of the city, such as the greater Noe Valley area and the South Beach/Yerba Buena district. This is not to say that the northern districts are not still both very expensive and considered highly desirable, and the greater Pacific Heights area still dominates the market for the most expensive houses in the city, i.e. those selling for $5m and more.



After the semi-hysteria – already half forgotten – that erupted in late August and September regarding the Chinese stock market and its impact on the U.S. stock market and economy, and possibly the Bay Area housing market, we thought it interesting to take a look back at how it has played out so far.



It is widely expected that the Fed will raise interest rates in December, probably by some minimal increment, but for the time being, as of the first week of December, rates have remained below 4%.


In November, we issued two mini-reports, one on Bay Area housing affordability and another on San Francisco new housing construction. Below are the featured charts:



I’ll continue to keep an eye on things for you, if you continue to read it.

Expect much lighter than usual blogging for the rest of the year, and don’t be surprised if theFrontSteps goes under construction.

Contact me today for a free property valuation, or to get you set up on my buyer system.


Pacific Heights Condo Goes 11% Under | Elevator Ensures Minimal Neighbor Contact

Last week it was this Bernal Heights home that went 20% under asking, thus claiming the podium position. The winner this week is an ultra-deluxe condo in one of the most sought-after neighborhoods on the “North End” of town, Pacific Heights. This home at 2955 Pacific has views, a deck, a formal dining room perfect for Thanksgiving (maybe a 9 lb. Turkey and 6 guests, instead of the 16 lb. Turkey you’re envisioning), and even an elevator that takes you from garage to your unit, so you never have to see your politically incorrect neighbors that love to corner you into a discussion (or lecture) about why their candidate is best suited to occupy the White House.

Listed for $4.1M and sold for $3.65, what a bargain…and those red chairs are so great…ornot.

As for the top 10 Underbid list, here you go:

Address BR/BA/Units List Price Sold Price Underbid
2955 Pacific Avenue 3/2/1 $4,100,000 $3,650,000 -10.98 %
622-626 Buchanan Street 2-4 Units $1,399,000 $1,250,000 -10.65 %
3283 25th Street 2-4 Units $1,788,000 $1,615,000 -9.68 %
765 Market Street 1/1.5/0 $1,550,000 $1,415,000 -8.71 %
2340 29th Avenue 4/2/3 $1,299,000 $1,190,000 -8.39 %
265 Minerva Street 2/1/1 $699,999 $659,000 -5.86 %
570-572 6th Avenue 2-4 Units $1,800,000 $1,700,000 -5.56 %
1052 Rhode Island Street 3/1/1 $899,000 $850,000 -5.45 %
313 2nd Avenue 2/1/1 $789,000 $749,000 -5.07 %
886 30th Avenue 2/2.5/1 $1,450,000 $1,380,000 -4.83 %

This data is pulled from properties sold within the past two weeks. To get this type of stuff sent to your inbox, sign up for sfnewsletter at I send it roughly every other week.

(Keep in mind the properties we feature go into contract, usually have an escrow period, then close…When we post that a property “goes” we’re referring to the day it actually is SOLD, not the day it goes into contract.)

04-alex-clark-portrait-citybg-2x3I wish you all a wonderful Thanksgiving Holiday filled with good food, good cheer, friends, family, football, skiing, surfing, no drama, no accidents, no injuries, tasty cocktails, cold beer, and old expensive delicious red wine. Happy Thanksgiving! Thank you all for your continued readership, loyalty, referrals, and business. It has been a great year, and it’s still not over (I have a great off market single family home in Cole Valley should you be interested.)

Top 10 Underbids | Would You Believe 20% UNDER Asking In Bernal?

15 prospect

The market is cooler…no doubt.. Is it seasonal, or longer term? Time will tell. As you saw last week, Overbids are still rampant, but more and more emails are coming to me, “Still Available”, “Offers as they come”, “Motivated Seller”, etc. Could we be approaching the year of the buyer?

Out of the 10 Underbids featured, 4 are multi-unit buildings, which made up the 1st, 2nd, and 3rd place on our list. The #1 underbid goes to a Bernal Heights duplex – a “Tremendous Bernal Heights Fixer” to be exact, 15 Prospect Avenue, which just closed 20% under asking or at $950,000 from its $1,199,000 list price. Looks like my buddy Eddie O’Sullivan got his clients a nice little project. Well done lad…

As for the rest, this is how it stacked up.

Address BR/BA/Units List Price Sold Price Underbid
15 Prospect Avenue 2-4 Units $1,199,000 $950,000 -20.77 %
622-626 Buchanan Street 2-4 Units $1,399,000 $1,250,000 -10.65 %
161-165 Cook Street 2-4 Units $2,395,000 $2,150,000 -10.23 %
2287 16th Avenue 4/2/2 $1,388,000 $1,250,000 -9.94 %
301 Mission Street #49D 2/3/2 $4,588,000 $4,180,000 -8.89 %
2829-2831 Pierce Street 2-4 Units $2,970,000 $2,750,000 -7.41 %
3260 Baker Street 3/2/2 $2,999,000 $2,800,000 -6.64 %
1308 Valencia Street 4/3.5/1 $2,499,000 $2,350,000 -5.96 %
265 Minerva Street 2/1/1 $699,999 $659,000 -5.86 %
2869 Broderick Street 4/3/2 $3,500,000 $3,300,000 -5.71 %

For more Good Real Estate Stuff…check out The Goods.

Luxury Home Segment Cools | “Affordable” Homes Market Remains Competitive

In case you don’t get sfnewsletter (I posted this there), here is our November 2015 San Francisco Real Estate Market Report, including 11 Custom Charts:

San Francisco led the Bay Area and the nation when its real estate recovery began in early 2012. Within the city itself, the more affluent neighborhoods led the rebound from the 2008 – 2011 recession and saw the highest rates of home price appreciation. That dynamic began to shift in 2014, when the more affordable neighborhoods began to take the lead in demand and in appreciation. All price segments in San Francisco have cooled off from the overheated frenzy of the spring 2015 selling season – this cooling is a common seasonal phenomenon – but while lower and mid-priced homes in the city have continued to remain solidly in “seller’s market” territory, in the luxury home segment, the dynamic between buyers and sellers has fundamentally shifted, at least for the time being.

A number of reasons may explain this: Firstly, the affluent are much more invested in the stock market than other groups, and the volatility of late August, early September may have encouraged more wealthy homeowners to sell (before things might possibly get worse), and more wealthy homebuyers to postpone buying until things clarified. As of very early November, the S&P 500 has regained its lost ground from August, so this effect may fade. Secondly, it’s certainly possible that sellers and listing agents have finally pushed the envelope on prices a little too far: San Francisco’s high prices have clearly motivated some buyers to look at options outside the city (which has helped pressurize the markets of other counties). Last but not least, more and more luxury condos are being built in San Francisco: Growing supply not only gives buyers more options and more negotiating room, but it decreases the urgency to write strong offers quickly or the motivation to compete with other buyers.

However, the luxury home market hasn’t “crashed”: there are still high-end homes selling very quickly for very high prices amid competitive bidding. But it has markedly cooled and the number of luxury home listings in San Francisco hit a new high in October, so correct pricing has becomes increasingly vital. It remains to see if this change is just a transitory market blip – such blips are not uncommon in financial or real estate markets – or the beginning of a longer term reality.


Median Sales Price by Month

Even with the general cooling in the market since spring and the significant slowdown in higher end home sales, the overall median sales price for houses and condos bounced back up to $1,200,000 in October. Median prices are impacted by seasonal trends: typically peaking in the spring, dropping in the summer, up again in the autumn and then plunging during the winter holidays. This has more to do with inventory than with changes in fair market value. Short-term fluctuations are not particularly meaningful: It is the longer-term trend that gives a sense of what’s going on in the market.

For houses alone, the median sales price in October was $1,300,000 and for condos, it was $1,100,000.


Supply & Demand Statistics
by Price Segment, October 2015

Months Supply of Inventory (MSI) is a classic measurement of supply and demand, calculating the time it would take to sell the existing inventory of homes for sale at the current rate of market activity. The lower the MSI, the greater the demand as compared to the supply, i.e. the hotter the market. The house market in San Francisco has been stronger than the condo market since the recovery began – though the condo market has been crazy hot as well – because the supply of houses is more limited and is dwindling as a percentage of sales because virtually no new houses are being added to inventory. However, new condos are being built in quantity. This chart above illustrates the dramatic difference in the markets for homes up to the median price ($1.3 million for houses, $1.1 million for condos) and in the next price segment higher, versus the luxury home segment, defined here as houses selling for $2,000,000+ and condos for $1,500,000+. (By this definition, luxury sales currently make up about 20% of San Francisco’s home sales.)

Because SF has been so hot for so long, we’ve adjusted the thresholds for what MSI readings define “seller’s market” and “buyer’s market” to better reflect the psychology of the current market.

Luxury Home Listings for Sale

As mentioned earlier, the number of high-end house and condo listings hit all-time highs in October, while sales numbers are well below levels hit in the previous 2 years. Even more so than the general market, the luxury segment is dramatically affected by seasonality and typically goes into deep hibernation from Thanksgiving to mid-January. Having so many active listings on the market just prior to the winter holiday doldrums is one of the reasons why we designate the luxury-home segment as currently having moved into “buyer’s market” territory.

The Luxury Home Market: Months Supply of Inventory
Year over Year over Year Comparisons

This chart above illustrates the change in the luxury home market supply and demand balance over the past three Octobers. As a further point of context to what has happened in the past year, during the feverish market of this past spring, the MSI for luxury houses hit a low of 1.6 months of inventory and the MSI for luxury condos hit a low of 1.7 months. Since 2012, spring has consistently been the hottest, most competitive, selling season of the year and most home price appreciation has occurred during that time.


4 Neighborhood Snapshots

Much more information regarding SF neighborhood prices and trends can be found here: San Francisco Neighborhood Values


Average Asking Rents in San Francisco

The real estate market has been challenging for homebuyers these past few years, but for anyone looking to rent a home in the city, it has been distinctly more difficult financially. Homebuyers have the benefit of historically low interest rates, multiple tax advantages and, hopefully, substantial appreciation gains over time; renters enjoy none of those advantages (though admittedly there can be long-term benefits to rent control for renters that qualify). Even with the big jump in home prices over the past 4 years, factoring in the 35% – 40% decline in interest rates and adjusting for inflation, the ongoing monthly cost of homeownership (for someone putting 20% down) is roughly the same as it was in 2007. But average monthly asking rents in the city have surged over 50% during the same period.

This has made rental property ownership an increasingly lucrative proposition, which we discuss in more detail in our last Commercial Brokerage report: Bay Area Apartment Building Market


Median Household Incomes

In Selected San Francisco Zip Codes

By Bay Area County

Screen Shot 2015-11-08 at 10.50.07 PM

Mission To Millennium | SF’s Top 10 Underbids of the Week

The top underbid of the week goes to an Outer Mission single family home that (dare we say) needs a bit of work. Listed for $699,000 and sold for $575,000 after 62 days on the market. According to our data from last week, single family homes continue to take up the majority of the top 10 underbid slots: 50% single family homes, 30% multi-units, and 20% condo.

As we get into the winter months, we are seeing luxury homes cooling down but affordable homes remaining competitive. One other notable Underbid is this wonderful Millennium Tower residence with million dollar water and landmark views on both sides of the Bay. Listed at $4.588M and sold for $4.18M after 122 days. Still a win, IMO.

As for the rest, here you go:

Address BR/BA/Units List Price Sold Price Underbid
2220 Cayuga Avenue 1/1/1 $699,000 $575,000 -17.74 %
161-165 Cook Street 2-4 Units $2,395,000 $2,150,000 -10.23 %
2287 16th Avenue 4/2/2 $1,388,000 $1,250,000 -9.94 %
18 Kronquist Court 4/2/1 $1,899,000 $1,725,000 -9.16 %
301 Mission Street #49D 2/3/2 $4,588,000 $4,180,000 -8.89 %
78 Gladys Street 3/2/0 $1,195,000 $1,100,000 -7.95 %
1437 47th Avenue 1437A 2-4 Units $1,275,000 $1,175,000 -7.84 %
2829 Pierce Street 2831 2-4 Units $2,970,000 $2,750,000 -7.41 %
3260 Baker Street 3/2/2 $2,999,000 $2,800,000 -6.64 %
2040 Franklin Street #506 0/1/1 $575,000 $540,000 -6.09 %

As is always the case, if you have any questions about the market, your home, homes in your area, or real estate referrals around the world, I am here to help. Just give me a shout by choosing any of the “contact” options all over this site.


August Case-Shiller Index | San Francisco Bay Area

The new S&P Case-Shiller Index for August was just released on Tuesday. The prices for homes in the upper third of prices – which dominate in most of San Francisco, central and southern Marin, and central Contra Costa – ticked down a tiny bit in summer, exactly as they did last summer. These short-term fluctuations are common and not particularly meaningful until substantiated by a longer-term trend.

Since Case-Shiller’s SF Metro Area covers 5 counties, it should be noted that not all the markets within the Area move in lockstep: activity and appreciation rates can vary significantly.

As is clearly illustrated below, for the past 4 years, spring has been the big driver of home-price appreciation. Prices generally plateau in subsequent seasons until the next spring arrives. For the past couple years, the spring selling season has started very early, in late January or early February, due to the incredible weather we’ve had in those months. El Niňo, if it arrives, might move the spring pick-up in sales back to mid-March/early April in 2016.


This second chart illustrates the huge burst in prices this past spring. It’s not unusual for the market to slump a little during the summer holidays, almost in exhaustion after the spring frenzy. We’ll have more autumn statistics soon when October’s MLS data comes in, but Paragon has been experiencing its most active autumn selling season in its history in 2015.


And here are 3 longer-term charts for each of the 3 Case-Shiller price tiers for the 5-county San Francisco metro statistical area. As can be seen, the different price tiers had bubbles and crashes of radically different magnitudes in 2006 – 2009, but as far as total appreciation since the year 2000, all of them display very similar appreciation rates.




That ought to do it for your data craving for a while. You might consider following this blog via email (link below) or get on the Twitter train @theFrontSteps, so you don’t miss a beat of San Francisco Real Estate.

Grace Cathedral, Nob Hill

For Sale | 1177 California #304 | Gramercy Towers | Nob Hill, San Francisco

This exquisitely remodeled luxury Nob Hill condominium with views West/Southwest to Twin Peaks & outlooks onto Jones Street, located in the heart-center of San Francisco’s premiere postcard neighborhood is for sale, and you get the first look.

Featuring one bedroom, one bath, one car parking, 24/7 attended lobby, pool, spa, workout area, onsite management, a gracious lobby & courtyard entry, with world famous landmarks at your doorstep (Grace Cathedral, Huntington Park, Fairmont, Mark Hopkins & Huntington Hotels, cable cars), and a short walk to Union Square, Hyde & Polk Streets, this is the A+ Nob Hill lifestyle so many crave. Blending old world San Francisco charm with a new school WALKSCORE of 100 points, Liebherr refrigerator, Miele Dishwasher, and Fagor Range/Oven, does it get any better?!

To add to the wonderful appeal of this home and location, Gramercy Towers is expertly managed.

Listing Details:
1 bed
1 bath
1 car parking
Remodeled Kitchen and Bath
Liebherr Refrigerator
Miele Dishwasher
Fagor Range/Oven
Caesarstone Countertops
Designer Cabinets
Custom Closets
Bar seating
HOA Dues: $848.83 (Includes earthquake insurance, PG&E, heat, water, garbage, common area maintenance, 24/7 lobby, onsite management, and reserves.)

Showing Schedule:
Broker Tour: 10/20/15 from 9-10:30am
Private Showings Available upon request
Offer date (if any) TBD

MLS Listing Information

Representing buyers and sellers of amazing and unique property is what I do. This property is no exception. Please come take a look or contact me for further details.

Exclusively listed by:
Alexander Clark
Paragon Real Estate Group

You can also contact me with the form below:

The San Francisco Real Estate Market Report | October 2015

Home-Buying vs. Gold & Apple Stock – as an Investment, Median Home Price Appreciation & Neighborhood Values, the City’s Most Expensive Condo Buildings…it’s all below. Read on dear Reader, read on!

The autumn selling season started with a large surge of new listings right after Labor Day, but it will be another month or so before preliminary statistical data is available on home sales negotiated since then. However, it is clear that the recent volatility in national and international financial markets has not so far caused a severe adjustment to local home prices. While we wait for early autumn sales to close in quantity, we’ll review the market from a variety of angles.


Short-Term & Long-Term
San Francisco Home Price Appreciation

2011 – 2015, by Quarter


It’s not unusual for median prices to drop in the 3rd quarter, which happened this year as well. This has less to do with fair market value, than with the fact that the market for higher priced homes slows down much more than that of the general market in summer.

1994 – 2015, by Year



Return on Cash Investment

Comparing Buying a Home in San Francisco
to Inflation, Gold, the S&P 500 & Apple Stock


For the purposes of this analysis, we’ve broken home ownership into 2 aspects, the first being ongoing housing costs – mortgage interest, home insurance, property taxes, maintenance – which after tax deductions could be compared to the cost of renting a similar home. The second aspect, illustrated in the chart above, is the cash investment side of buying a home and the compound annual return on that investment, after closing costs and loan principal repayment are deducted, if one had purchased a median SF house in 1994.

For the San Francisco Median House calculation, we used the 1994 median price ($265,000), with a 20% downpayment ($53,000) and paying 1.5% in buy-side closing costs ($3975) for a total cash investment of $56,975. Net proceeds were calculated using the 2015 YTD median sales price ($1,250,000), deducting 6% in sell-side closing costs ($75,000) and the original 80% mortgage balance ($212,000), which equals $963,000. This equals an annual compound return on investment of 14.4% over the 21-year period.

All of us should have put every penny we had into Apple stock in 1994, but barring that, purchasing a home in San Francisco would have been an excellent alternative – particularly if you’d bought in the Mission. Three factors not included in the above analysis further increase the financial benefits of home purchase over the other investments graphed: 1) the $250,000/$500,000 capital gains tax exclusion on the sale of a primary residence (potentially saving up to $75,000 in taxes), 2) the “forced savings” effect of gradually paying off one’s mortgage (if one resists refinancing out growing home equity), which has a substantial wealth-building effect, and 3) over time, the ongoing cost of housing with a fixed rate loan, strategically refinanced when rates go significantly lower, will usually fall well below rental costs that continue to rise with inflation.

With financial assets subject to market cycles, changing the buy or sell dates in this analysis can dramatically affect the return. We picked 1994, because of the availability of MLS median price data going back to then.


Median Sales Prices by Neighborhood

2-Bedroom Condos in San Francisco


3-Bedroom Houses in San Francisco



Market Dynamics

Sales Price to List Price Percentages
& Average Days on Market



These two charts above illustrate both how competitive the market has been – the average SF home selling without a price reduction sold very quickly for 13.5% over asking price in the 3rd quarter – and the significant difference between homes that get an immediate market response and those that have to go through one or more price reductions before selling.

Months Supply of Inventory

Seasonality, Luxury and Non-Luxury Homes


The lower the Months Supply of Inventory, the stronger the buyer demand as compared to the supply of homes available to purchase. This chart illustrates the seasonality of the real estate market – typically strongest in spring (especially) and autumn, and slowing down during the summer and especially the winter holidays. It also shows that the lower-priced home segment is generally hotter than the higher priced – as shown by the lower MSI readings – and finally, how much more the luxury home segment is affected by seasonality. The dramatic slowdown in the highest-priced segment during summer and winter is one of the big reasons why median home prices usually drop during those seasons.


Condo Average-Dollar-per-Square-Foot Values
by Era of Construction


The Most Expensive Condo Buildings in San Francisco


This doesn’t include brand new luxury condo developments – some of which are selling at very high prices – nor many very expensive and very prestigious condo and co-op buildings which simply have too few sales for meaningful statistical analysis.


3rd Quarter Market Snapshot