San Francisco Real Estate Market Report, March 2017

The San Francisco real estate market continues to experience strong buyer demand and an exceptionally low number of homes and condos for sale. The strong demand is supported by a clean sweep of positive economic indicators just posted by The Conference Board, which reported that consumer confidence is at a 15 year high, and the Leading Economic Index, CEO Confidence, Help-Wanted Online, and the Employment Trends Index all rose in February.

Following the incredibly strong Snap IPO, Mulesoft, a San Francisco unicorn, filed for its IPO in February. This San Francisco-based company has over 700 employees who will be armed with a lot of cash following its IPO, anticipated later this year, which could further add to the number of buyers competing for properties.

The Federal Reserve Bank has said it is likely to raise its federal funds rate in March, with a second increase anticipated later in the year. These anticipated rate increases have already triggered a jump in mortgage rates, which now stand at 4.24% according to Mortgage News Daily.

In the following Infographic we see that the San Francisco single family home market dipped in median sales price, down 8.2% year-on-year. The number of sales were up 3.9%. The number of new listings dropped sharply, 37.6% fewer than last February, leading to a 10% drop in inventory to just 1.5 months of supply, which IMHO is correlating precisely with the “in the trenches” real-time buyer demand and multiple offer activity that we agents are experiencing first hand, but is yet to be shown on this “historical” data. The median sales price of single family homes also continues to be bid up above list price, coming in at 113% for February.

The news in condo/lofts sales is the sharp decline in the number of new listings in February, down 26.9% compared to last year. Sales were also down, but just by 10.3%. Inventory stands at only 2.1 months of supply. Median sales prices are up 4.9% year-on-year with the median price going 1.6% above list price.

State Of The Real Estate Union

If you had to guess, what would be the most common question you think a Realtor is asked?

“What’s my home worth?” No.

“Should I stage my home when I sell it?” No.

“Do you think interest rates are going to rise?” No.

All very close, and all very common questions we certainly answer more than we should (which is precisely why for the better part of a decade I’ve helped you answer those questions on your own), but by far the most common question asked by countless people (friends, clients, strangers at parties, on the ski lift, or out surfing) is….

“How’s the Market?”

If It’s Not Selling Over, It’s Selling Under

Top 10 Underbids in San Francisco this past week:

Address BR BA Parking List Price Sold Price Underbid
1219-1219A Stanyan Street N/A N/A 2 $2,579,000 $2,100,000 -18.57 %
1111 Bay Street 2 2.00 1 $1,199,000 $1,000,000 -16.60 %
677 Ellis Street N/A N/A 0 $2,695,000 $2,275,000 -15.58 %
338 Spear Street 2 2.00 1 $1,999,999 $1,799,000 -10.05 %
39 Carmel Street 2 2.00 1 $1,995,000 $1,800,000 -9.77 %
21 Dalewood Way 2 1.00 1 $995,000 $915,000 -8.04 %
3959-3961 Washington Street N/A N/A 1 $5,300,000 $4,995,000 -5.75 %
1650 Broadway 3 2.50 2 $5,395,000 $5,100,000 -5.47 %
354 Roosevelt Way 3 3.00 1 $1,795,000 $1,700,000 -5.29 %
1450 Post Street 2 2.00 1 $709,000 $675,000 -4.80 %

May 2016 Central San Francisco Market Conditions

District 5

District 5’s (See SF Districts Map Here) April numbers continue their strong upwards trend with their highest ever median sales price of $2,287,500. Year-over-year, the median price is up 8.9%.

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Resale Condo/Loft Median Prices

Resale condo-loft median prices have resumed the downward trend that started last September with a brief uptick in January and February. hey dropped 2.3% from March to April, landing at $1,245,000, which is the lowest median sales price since April 2015. They are down 0.4% year-to-date and 9.6% since their peak at $1,377,000 September 2015.

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While Single Family Homes Days on Market inched up to 17 in April, they are still at historically low numbers.

Days on Market for Resale Condo/Lofts dropped from 19 to 16.

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Single Family Homes Months Supply of Inventory dropped slightly to 2.4 from March’s 2.5 and up from April, 2015’s 1.7.

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This April there were the same number of single family home listings as in April, 2015. Over all, there have been 136 new listings in District 5 this year, one fewer than last year.

There have been 43 fewer condo/loft listings brought on the market year-to-date in 2016 than 2015. This is a 26% drop. And this is the first time in four years that the number of new condo/loft listings was lower in April than March.

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May 2016 Market Report | San Francisco

We saw first quarter median Single Family Home prices in San Francisco jump with their biggest percentage increase (5.6%) in a decade, and in April’s numbers continue this strong upwards trend. The median price in San Francisco was $1,380,000 in April, the highest ever, and a 4.5% increase over March (yikes!).

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Resale Condo/Loft Median Prices

Resale condo-loft median prices reversed their first quarter downward trend and went up 2.2% to end at a tie with the previous high median price of $1,125,000, back in June 2015. They are up 1.5% year-to-date.

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Both the single family homes and resale condo-loft days on market inched up in April, moving from 16 to 21 days for homes and 21 to 27 days for condos.

This compares to April, 2015’s 14 days and 18 days. So, up a bit from March and up a bit from April, 2015, but still incredibly low days on market.

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Single family homes months supply of inventory is up slightly to 2.3 from March’s 2.2 and a little above April, 2015’s 1.8.

Likewise, for resale condo/lofts, months supply inched up to 2.6 and over last years’ 1.7. It is the fourth consecutive months of rising inventory, something to be watched, but still a strong seller’s market.

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In April 2016, there were 15 more single family homes listed for sale than a year ago, and this was the first month this year to exceed the number of listings in 2015. We are still down slightly, 1.5%, in the number of new listings homes year-to-date over 2015.

Resale condo-lofts also saw fewer new listings in April 2016 than in 2015, however, overall there have been more new condo/loft listings in 2016 than in 2015, a rise of 6.7%. This helps explain the longer Days on Market and higher months of inventory.

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The best way to get answers to any questions you have about our market or timing a successful sale…contact me.

San Francisco Real Estate Market Splitting In Two

The reports are starting to come in, with Paragon, Sothebys, Pacific Union, I also touched on the subject in my last sfnewsletter, and now our very own Keller Williams team reporting the same thing…a softening condo market (mostly in areas in and around SOMA), and still very robust single family homes market, especially under $1.5M, and double Especial (preferably Modelo) in the Richmond/Sunset Districts (with lime and salt).

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As always, I’m here to help…

Golden Gate Heights Fixer Sells $455,000 Under Asking, But Still $1.9M

Hey! We’re back. What a great vacation (in Hawaii), and great to see even when I’m surfing, you’re all still browsing. So, on with the show…

Monday was a travel day, so Tuesday is all about the Underbid, and this week a sweet little fixer with amazing carpeting, staging, painting, and lighting (Oh yeah, there is a view too) wins top honors by selling $455,000 BELOW asking (yes, it happens).


It’s a shocker, I know, and I know you can hardly believe your eyes to read that properties sell UNDER asking in San Francisco, but they do, especially when ridiculously over-priced like this one. Regardless, it’s still a fixer for $1.9M, so who are we to judge…

As for the rest, here you go.

Top 10 Underbids San Francisco

Address BR BA Parking List Price Sold Price Underbid
1879 Funston Avenue 4 3.50 2 $2,365,000 $1,910,000 -19.24 %
301 Mission Street 3 3.50 1 $3,999,000 $3,500,000 -12.48 %
41 Rico Way 4 4.00 1 $4,000,000 $3,650,000 -8.75 %
252 9th Street 1 1.00 0 $826,000 $767,000 -7.14 %
3468 17th Street 3 1.00 1 $1,599,000 $1,500,000 -6.19 %
1770 Quint Street 3 2.00 2 $910,000 $865,000 -4.95 %
655 Corbett Avenue 1 1.00 1 $730,000 $700,000 -4.11 %
132 Coleridge Street 134 N/A N/A 0 $2,155,000 $2,075,000 -3.71 %
3305 Broderick Street 3 3.50 1 $3,150,000 $3,050,000 -3.17 %
435 China Basin Street 2 2.00 1 $1,399,000 $1,355,000 -3.15 %

To get this list (and more), delivered to your inbox on an almost regular basis, you might want to sign up for my newsletter: sfnewsletter.com

San Francisco New-Home Construction Report

The SF Planning Department just released updated Q3 information regarding the new-housing development pipeline. San Francisco is in the midst of one of its biggest new-housing construction booms in history. (The same is occurring on the commercial development side, but this report won’t deal with that.) Indeed, it often seems that new projects of one kind or another are being announced on an almost daily basis, and a detailed map delineating all projects in some stage of the pipeline makes many city districts appear to have measles.

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New housing construction has lagged population pressures for decades – pressures which have soared during the current economic and employment boom – and now there is a scramble to address the inadequacy of housing supply, and, for developers/investors, to reap the rewards of a high demand/low supply dynamic in one of the most affluent and expensive housing markets in the world.

Currently, there are approximately 59,000 housing units of all kinds – luxury condos, rental apartments, market rate and affordable units, and social project housing – in the relatively near-term pipeline (next 5 to 6 years). Most are in the Market Street corridor area, the Van Ness corridor just above Market Street, and in the higher-density housing districts to the southeast of Market Street (see map). If we add the mega-projects planned for Candlestick-Hunter’s Point, Treasure Island and Park Merced, which may take decades to become a reality, the number jumps to over 80,000. As a point of context, there are approximately 382,000 residential units in San Francisco currently. About 3500 new units were added in 2014.

Housing supply and affordability issues, strong feelings regarding neighborhood gentrification and tenants’ rights, and even simple NIMBYism (or in SF, NBMVism, “not blocking my view!”) make development the most contentious political issue in San Francisco. Furious battles are ongoing in the Board of Supervisors, the Mayor’s office and the Planning Department; with neighborhood associations and special interest groups; and at the ballot box. Development is not for the faint of heart or shallow of pocket: One cannot contemplate building virtually anything in the city without vehement opposition and sometimes a well-funded coalition in opposition. For developers, the equation to be penciled out includes high costs, enormous hassle-factor and extended project timelines on one side, and the potential for large financial returns on the other. In new San Francisco developments, condos often sell for $1250 per square foot and above, and 500 square foot studio apartments can rent for up to $3500 per month.

Of the units in the greater pipeline of 80,000 units, over 9000 units are designated as “affordable housing” – but about 5000 of those are in the long-term Candlestick-Hunter’s Point and Treasure Island projects. Because of the nature of the political environment, much to do with how much affordable housing will be built is in flux. Many developers are in intense negotiations with government agencies and neighborhood associations to find a workable compromise between return on investment on one hand, and unit mix and affordable housing requirements on the other. Said requirements may consist of a percentage of units in the project, building affordable units elsewhere in the city, or contributing substantial amounts to the city’s affordable housing fund in lieu of building.

New housing construction is very sensitive to major economic, political and even environmental changes (i.e. natural disasters), so simply because something is in the pipeline doesn’t mean it will be completed as planned within the timeframe contemplated. First of all, plans are constantly being changed in the normal course of things. And if a big financial or real estate market correction (or crash) occurs, as happened in late 2008, projects in process can come to a grinding halt, and new projects substantially altered, delayed or abandoned. Because the timeline in San Francisco can run 3 to 6+ years, from initial filing with Planning to construction completion, developers and their financiers make enormous financial bets on what the future will look like. Timing is everything in real estate development, and can make the difference between exceedingly large profits and bankruptcy. When the music stops – which it always does sooner or later, though the time range of opportunity can vary greatly – not everyone will find a chair to sit down in. That especially applies to those who over-leveraged their projects.

As a side note, big Chinese developers have been investing in both large residential and commercial real estate development projects in the Bay Area, and, according to reports, continue to aggressively seek additional opportunities. Though significant – constituting billions of dollars in investment – these projects do not constitute the greater part of Bay Area development.

The Planning Department’s pipeline-report webpage is here: http://sf-planning.org/index.aspx?page=1691

And if it keeps snowing, you will find me here.

Housing Affordability and Market Corrections

A look at San Francisco Bay Area housing affordability trends over time and how they intersect with real estate market corrections:

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The 2008 San Francisco Bay Area real estate crash was not caused just by a local affordability crisis: It was triggered by macro-economic events in financial markets which affected real estate markets across the country. It’s important to note that in the past, major corrections to Bay Area home prices did not occur in isolation, but parallel to national economic events. Ongoing speculation on local “bubbles” often neglect to remember this.

Still, dwindling affordability is certainly a symptom of overheating, of a market being pushed perhaps too high. Looking at the chart above, it’s interesting to note that the markets of all Bay Area counties hit similar and historic lows at previous market peaks in 2006-2007, i.e. the pressure that began in the San Francisco market spread out to pressurize surrounding markets until all the areas bottomed out in affordability. This suggests that one factor or symptom of a correction, is not just a feverish San Francisco market, but that buyers can’t find affordable options anywhere in the area. We are certainly seeing that radiating pressure on home prices occurring now, starting in San Francisco and San Mateo (Silicon Valley) and surging out to all points of the compass.

San Francisco, with a Housing Affordability Index (HAI) reading of 10% is about 2% above its all-time historic low in Q3 2007, but affordability in most other Bay Area counties, while generally declining, still remain significantly above their previous lows. By this measure, the situation we saw in 2007-2008 has not yet been replicated.

Significant increases in mortgage interest rates would affect affordability quickly and dramatically, as interest rates along with, of course, housing prices and household incomes, play the dominant roles in this calculation.

Note that Affordability ratios are just one relatively blunt measuring tool, and there are certainly other factors at play affecting our real estate market: local (high-tech boom; surging population, employment and wealth; inadequate housing supply, rental rates, etc.), national (financial markets, unemployment rates, consumer confidence, etc.) and, nowadays, even international economic factors (such as recent events in the Chinese stock markets and the EU).

Information on the methodology behind the California Association of Realtors’ HAI can be found here.

Speaking of financial markets, we decided to take a look at how the recent volatility played out in the S&P 500 and the Shanghai stock indices. These indices are constantly fluctuating, but the general picture has not altered significantly since we graphed this in early November:

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