Market Resources

  • San Francisco Home Value Tables by Neighborhood, Property Type & Bedroom Count

    These tables report median sales prices, average home size and units sold, by property type and bedroom count for a variety of San Francisco neighborhoods. If you are interested in data for a neighborhood not listed, please contact us. The tables follow the map in the following order: houses by bedroom count, condos by bedroom count, and 2-unit building sales. Within each table, the neighborhoods are in order of median sales price.

    The analysis is based upon sales reported to San Francisco MLS in 2016 by December 22. Value statistics are generalities that are affected by a number of market factors – and sometimes fluctuate without great meaningfulness – so all numbers should be considered approximate. Median prices often disguise a huge range of values in the underlying individual sales.

    Median San Francisco House Prices

    Median San Francisco Condo Prices

    Median Prices: San Francisco 2-Unit Buildings

    These statistics apply only to home sales with at least 1 car parking. Homes without parking typically sell at a significant discount. Below Market Rate (BMR) condos were excluded from the analysis.

    As noted on the tables, the average size of homes vary widely by neighborhood. Besides affluence, the era and style of construction often play a large role in these size disparities. Some neighborhoods are well known for having “bonus” bedrooms and baths built without permit (often behind the garage). Such additions can add value, but being unpermitted are not reflected in square footage and $/sq.ft. figures.

    Selected San Francisco District Snapshots

    Illustrating the breakdown of home sales by price segment over the 12-month period.

    Our full collection of district snapshot charts is here: SF District Home Sales by Price Segment

    The Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by “unusual” events or by changes in inventory and buying trends, as well as by changes in value. The median sale price for an area will often conceal a wide variety of sales prices in the underlying individual sales. All numbers should be considered approximate.

    Square footage is based upon the home’s interior living space and does not include garages, storage, unfinished attics and basements; rooms and apartments built without permit; decks, patios or yards. These figures are typically derived from appraisals or tax records, but can be unreliable, measured in different ways, or unreported altogether: thus consider square footage and $/sq.ft. figures to be very general approximations. Size and $/sq.ft. values were only calculated on listings that provided square footage figures. All things being equal, a house will have a higher dollar per square foot than a condo (because of land value), a condo’s will be higher than a TIC (quality of title), and a TIC’s higher than a multi-unit building’s (quality of use). All things being equal, a smaller home will have a higher $/sq.ft. than a larger one.

    Many aspects of value cannot be adequately reflected in general statistics: curb appeal, age, condition, views, amenities, outdoor space, “bonus” rooms, parking, quality of location within the neighborhood, and so forth. Thus, how these statistics apply to any particular home is unknown without a specific comparative market analysis. Data is from sources deemed reliable, but may contain errors and is subject to revision.

    This link below can be used to access other real estate reports and articles.

    Neighborhood Market Reports

    SAN FRANCISCO REALTOR DISTRICTS
    District 1 (Northwest): Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain

    District 2 (West): Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights

    District 3 (Southwest): Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview

    District 4 (Central SW): St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands

    District 5 (Central): Noe Valley, Eureka Valley/Dolores Heights (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights

    District 6 (Central North): Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights

    District 7 (North): Pacific Heights, Presidio Heights, Cow Hollow, Marina

    District 8 (Northeast): Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin

    District 9 (East): SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena

    District 10 (Southeast): Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission

    Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which, for example, includes both Russian Hill and the Tenderloin.

    © 2016-2017 Paragon Real Estate Group

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  • Home Price Tables by SF Neighborhood

    These tables report median sales prices, average home size and units sold, by property type and bedroom count for a variety of San Francisco neighborhoods. If you are interested in data for a neighborhood not listed, please contact us. The tables follow the map in the following order: houses by bedroom count, condos by bedroom count, and 2-unit building sales. Within each table, the neighborhoods are in order of median sales price.

    The analysis is based upon sales reported to San Francisco MLS in 2016 by December 22. Value statistics are generalities that are affected by a number of market factors – and sometimes fluctuate without great meaningfulness – so all numbers should be considered approximate. Median prices often disguise a huge range of values in the underlying individual sales.

    Median San Francisco House Prices

    Median San Francisco Condo Prices

    Median Prices: San Francisco 2-Unit Buildings

    These statistics apply only to home sales with at least 1 car parking. Homes without parking typically sell at a significant discount. Below Market Rate (BMR) condos were excluded from the analysis.

    As noted on the tables, the average size of homes vary widely by neighborhood. Besides affluence, the era and style of construction often play a large role in these size disparities. Some neighborhoods are well known for having “bonus” bedrooms and baths built without permit (often behind the garage). Such additions can add value, but being unpermitted are not reflected in square footage and $/sq.ft. figures.

    Selected San Francisco District Snapshots

    Illustrating the breakdown of home sales by price segment over the 12-month period.

    Our full collection of district snapshot charts is here: SF District Home Sales by Price Segment

    The Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by “unusual” events or by changes in inventory and buying trends, as well as by changes in value. The median sale price for an area will often conceal a wide variety of sales prices in the underlying individual sales. All numbers should be considered approximate.

    Square footage is based upon the home’s interior living space and does not include garages, storage, unfinished attics and basements; rooms and apartments built without permit; decks, patios or yards. These figures are typically derived from appraisals or tax records, but can be unreliable, measured in different ways, or unreported altogether: thus consider square footage and $/sq.ft. figures to be very general approximations. Size and $/sq.ft. values were only calculated on listings that provided square footage figures. All things being equal, a house will have a higher dollar per square foot than a condo (because of land value), a condo’s will be higher than a TIC (quality of title), and a TIC’s higher than a multi-unit building’s (quality of use). All things being equal, a smaller home will have a higher $/sq.ft. than a larger one.

    Many aspects of value cannot be adequately reflected in general statistics: curb appeal, age, condition, views, amenities, outdoor space, “bonus” rooms, parking, quality of location within the neighborhood, and so forth. Thus, how these statistics apply to any particular home is unknown without a specific comparative market analysis. Data is from sources deemed reliable, but may contain errors and is subject to revision.

    This link below can be used to access other real estate reports and articles.
    Neighborhood Market Reports

    SAN FRANCISCO REALTOR DISTRICTS

    District 1 (Northwest): Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain

    District 2 (West): Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights

    District 3 (Southwest): Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview

    District 4 (Central SW): St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands

    District 5 (Central): Noe Valley, Eureka Valley/Dolores Heights (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights

    District 6 (Central North): Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights

    District 7 (North): Pacific Heights, Presidio Heights, Cow Hollow, Marina

    District 8 (Northeast): Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin

    District 9 (East): SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena

    District 10 (Southeast): Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission

    Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which, for example, includes both Russian Hill and the Tenderloin.

    © 2016-2017 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on Home Price Tables by SF Neighborhood

  • San Francisco District Home Sales Breakdown

    These charts show the breakdown of San Francisco home sales as reported to the city’s Multiple Listing Service in 2016 (as reported by 12/21/16). These analyses are sorted by city districts and neighborhoods by the number of transactions in different sales-price segments. Note that median sales prices will change every time the time period or neighborhoods included in an analysis change.

    The first 4 charts are overviews for the entire city, first for house sales and the second for condo, co-op and TIC sales. Then below the San Francisco neighborhood map come the breakdowns for specific city neighborhoods and districts.

    For further breakdowns of neighborhood home prices by bedroom count: SF Home Prices by Bedroom Count, Property Type & Neighborhood

    Home Sales by Property Type & Price Segment
    San Francisco Overviews
    San Francisco House Sales

    San Francisco Condo, Co-op & TIC Sales

    Home Sales by Property Type & Price Segment
    by San Francisco Neighborhood & District

    These 2 charts below track San Francisco luxury home sales by price range and neighborhood. In these charts, we designate the luxury segment as those condos, co-ops and TICs selling for $2,000,000 or more, and those houses selling for $3,000,000 and above.


    These statistics are based upon sales reported to the Multiple Listing Service (MLS).
    All data herein is from sources deemed reliable but may contain errors and is subject to revision. All numbers should be considered approximate.

    © 2017 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on San Francisco District Home Sales Breakdown

  • Gold, Google, Facebook & San Francisco Homes

    This first chart is a somewhat lighthearted, but we believe accurate look at how various 2011 investments would have played out through 2016. (FB is dated from its 2012 IPO.) When calculating appreciation, purchase and sale dates are critical factors, and changing those can alter the results significantly: Using 2011, the last bottom of the real estate market, as the purchase date certainly plays to the advantage of home price increases. If you bought gold or soybeans in 2011, you really should have sold them a couple years ago at the height of the commodity price boom.

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    Besides the appreciation percentage noted, buying a home in 2011 with all cash would have generated large, additional financial returns in the form of extremely low monthly housing costs. Buying it with 20% down supercharges the return on cash investment, and that is before adding in other advantages: Even with an 80% loan, by 2016 your monthly housing costs, with recent low interest rates and tax advantages, would be well below market rents. Then there is the huge capital gains exclusion on the sale of a primary residence, which would not apply to other investments.

    Sales of Probates, Penthouses, Fixer-Uppers, Lofts;
    Homes with Views, Elevators & Wine Cellars

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    Long-term San Francisco Median Home Price Appreciation

    4-1 5-1

    San Francisco median house prices continued to appreciate in 2016, albeit, at 6%, at a considerably slower rate than the previous 4 years, while condo prices basically plateaued (and indeed dipped in some neighborhoods). As with almost everything to do with real estate values, it boils down mostly to supply and demand, as discussed below.

    6-1 7-1

    In 2016, the supply (and sales) of house listings in the city continued to dwindle, while a surge of new-construction condo projects hitting the market appreciably increased the inventory of condos available to purchase. In 2003, house sales in San Francisco were over 50% higher than in 2016. According to a study by the National Association of Realtors, the median time house owners are staying in their homes has jumped from an average of 6 years in 1987-2008 to 9 years since: Owners are getting older, not changing jobs as often, and baby boomers are aging in place as NAR put it. House owners sell their homes much less frequently than condo owners, who tend to be younger. In SF, there is also the factor of a reluctance to sell when that means facing a very challenging market for buyers. And with very low interest rates, and very high rents, some owners are renting out their houses instead of selling.

    It all boils down to a continuing strong demand for houses meeting a steadily declining supply: Even with a market that cooled somewhat in 2016, competition between buyers continues to push house prices up, especially in more affordable neighborhoods. The equation is different for condos, which has become the dominant property-sales type in the city: A cooling market is meeting increased supply. There has been no crash in condo prices, but areas with the greatest quantity of new condo construction have seen small declines.

    What Costs How Much Where in San Francisco

    Below are a few of our many updated analyses on home sales and prices by neighborhood, property type and bedroom count.

    House Sales & Values

    8-1 9-1 10-1

    As can be seen above, two of the most affordable districts for houses, Districts 10 and 2, also provide 37% of all the house sales in the city. Generally speaking, they have continued to experience very strong buyer demand in 2016.

    Condo Sales & Values

    11-1 12-1 13-1

    District 9, a large district that stretches from SoMa, South Beach and Mission Bay to Potrero Hill, Dogpatch and Inner Mission, is increasingly dominating condo sales in the city. The great majority of new condo construction, especially of the largest projects, has been occurring in this district.

    All our breakdowns by neighborhood and home size are here: SF Home Price Tables

    Home Sales by Price Segment by District

    Behind the overall median prices often quoted is a wide range of individual sales across a spectrum of prices. Here are a few of our updated analyses for every district of the city.

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    Our complete collection of district analyses: SF District & Neighborhood Sales Breakdowns

    San Francisco Overview Market Statistics

    The following classic measures of market heat all tell the same story: Coming out of the recession in 2011, the San Francisco market became increasingly frenzied through the spring of 2015. In late 2015, as housing affordability became a critical issue, and the local high-tech economy saw some cooling, and financial markets worldwide experienced increasing volatility, the SF real estate market began to cool and normalize. Buyer competition for new listings softened, overbidding declined, days-on-market increased, appreciation declined or plateaued, and so on. And the condo market cooled more than the house market due to issues discussed above.

    2016 saw a reasonable adjustment to a desperately overheated market, but nothing that suggests, so far, an imminent, dramatic downturn. Indeed, by national standards, most of our current statistics still define a relatively robust market. In a recent interview, Ted Egan, chief economist of the City of San Francisco, put the odds of a new recession at 10% or less.

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    Real Estate Market Seasonality

    Listing and sales activity builds from early January, the nadir of the market, into spring, typically the most active season. Accepted-offer activity provides an excellent illustration of the heat of the market during different times of the year.

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    3 Important Economic Indicators

    San Francisco & Bay Area Employment Trends

    After dropping a little in the first half of 2016, SF and Bay Area employment numbers jumped back up in the second half, an encouraging sign for the local economy.

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    Mortgage Interest Rates in 2016

    Interest rates popped 22% higher since the election, though they still remain very low by any historical measure. Where they will go now is a subject of intense speculation since they are a critical component of housing affordability.

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    The S&P 500 Stock Index since 1994

    To the surprise of many, U.S. stock markets also popped after the election to their highest points ever.

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    And now on to 2017, certain to be another interesting year.

    Wishing you and yours a safe, healthy, happy and prosperous New Year.

    It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis, which we are happy to provide upon request. Please call or email if you have any questions or need assistance in any way.

    These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

    © 2017 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on Gold, Google, Facebook & San Francisco Homes

  • Real Estate Cycles, Interest Rates & Neighborhood Appreciation Trends

    The first chart below is a simplified graph based on the S&P Case-Shiller Home Price Index illustrating percentage increases and decreases in prices for houses in the higher-price tier. The markets in San Francisco, Marin, San Mateo and Lamorinda/Diablo Valley are generally dominated by high-price tier home sales. (If you wish our chart of market cycles for low-price or mid-price homes, please let us know.)

    All the short-term fluctuations up and down have been removed so that the chart only reflects major turning points in the market. This chart is a general overview for 5 Bay Area counties, and there have been significant variations between market trends in different neighborhoods, cities and counties.

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    San Francisco Median Sales Price Trends
    since 1994

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    Year-over-year median sales prices for SF condos and TICs have plateaued in 2016, while median house prices have continued to appreciate, albeit at an appreciably slower rate than the previous 4 years.

    Note that the Case-Shiller Index does not measure home price appreciation by changes in median sales price (as in the second chart above), but uses its own special algorithm, which it believes adjusts for factors that often affect overall median sales prices, but are not related to changes in fair market value of specific properties.

    Our complete report on cycles is here: 30+ Years of SF Bay Area Real Estate Cycles. This is by far the most widely read report on our website.

    Short & Long-Term Mortgage Interest Rate Trends

    Interest rate movements are much in the news since the election, and below are 2 charts illustrating short-term and long-term trends. Interest rates can be very volatile and affected by a wide range of economic and political factors: Rate changes are famously difficult to predict. Most experts believe the Federal Reserve Bank will raise its benchmark rate, for the first time in 12 months, later this month. Needless to say, mortgage interest rates play a large role in ongoing housing costs, except for buyers paying all cash.

    3 4

    Our post-election report is here: Interest Rates & Housing Affordability

    Average Dollar per Square Foot Trends by District
    San Francisco HOUSE Sales, 2011-2016 YTD

    Realtors divide the city into 10 different districts. For example, Pacific & Presidio Heights, Cow Hollow and the Marina constitute District 7. The central cluster of neighborhoods surrounding Noe, Eureka and Cole Valleys make up District 5. The broad area running south of Market all the way to Inner Mission and Bernal Heights is District 9, and so on. Some districts contain neighborhoods of relatively similar values, such as D5 and D7, and others contain neighborhoods of significantly varying values: For example, D8 includes both Russian Hill and the Tenderloin. In any case, using districts allows us to look at what is broadly going on in the city without breaking out the 70-odd individual neighborhoods. (If you would like data specific to a single neighborhood, please call or email.)

    A San Francisco neighborhood and district map is included at the bottom of this report.

    Like all value statistics, average dollar per square foot is not a perfect indicator of changes in home values. It can be affected by a variety of factors to create anomalous fluctuations; square footage can be measured different ways; and a fair percentage of home sales do not publish square footage at all, so that the calculations can only be made on those that do.

    5 6

    Very generally speaking, the more affordable house districts in the city (and around the Bay Area) have continued to see significant appreciation in average dollar per square foot values in 2016, while the more expensive neighborhoods have plateaued or even ticked down a little. However, one should not make too much of small percentage changes up or down over the shorter term. Sometimes, one has to allow a trend to develop instead of jumping to dramatic conclusions about where the market is headed based on limited data. 2016 YTD statistics may well change when the last 3 weeks of the year are included in the analysis.

    Average Dollar per Square Foot Trends by Realtor District
    San Francisco CONDO Sales, 2011-2016 YTD

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    The condo market has generally softened more than the house market and most of the district condo markets have plateaued in average dollar per square foot values or dropped a little. Much of this has to do with both a cooling in the high-tech boom (lessening demand) and a surge of new-condo projects coming on market (increasing supply). The district with the most significant decline, 5%, has been District 9, a large district encompassing SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch and Inner Mission: A large majority of SF new-condo construction is occurring in this area, and thus more definitively shifting the supply and demand dynamic.

    On these charts, the only district showing a significant increase was District 2, Sunset-Parkside, but there are really too few condo sales in D2 for the data to be statistically reliable. District 7, Pacific Heights-Marina, saw a small percentage increase, but its 2016 average dollar per square foot value was affected by a sizable number of sales of newly-built, ultra-luxury condos, with very high values. If those sales were deleted, D7 would also have seen a small decline.

    None of the declines in either house or condo dollar per square foot values yet suggest anything approaching a market crash. So far the changes appear to be moderate adjustments to shifts in the local economy, increasing new construction, and/or affordability issues at the higher end of the market.

    Median House Price Trends by Neighborhood

    Substantial median house price appreciation has continued in more affordable San Francisco neighborhoods, as illustrated in the first chart below

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    Looking at the next chart for median house price changes in higher-price neighborhoods, some important caveats apply: First of all, some of these neighborhoods, such as St. Francis Wood, Cole Valley or Inner Richmond, do not see many house sales in any given year. This makes price fluctuations more common without necessarily relating to changes in fair market value. (Do we believe that Inner Richmond houses suddenly appreciated 20% in 2016? No.) In Pacific Heights, the issue is both not that many sales and that the range of MLS sales prices is so huge, from $2,000,000 to $22,000,000 in 2016. This can cause median prices to jump up or down without great meaningfulness: Sometimes, just one or two additional sales can make the median price in a given period change dramatically.

    Statistically speaking, the most reliable data in the chart below is for Noe & Eureka Valleys, which have a high number of sales: The median sales price there has basically plateaued from 2015 to 2016.

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    San Francisco Neighborhood Map
    with Realtor Districts Delineated

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    All our reports can be found here: San Francisco & Bay Area Market Reports

    These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value, and longer term trends are much more meaningful than short-term. It is impossible to know how value statistics apply to any particular home without a specific comparative market analysis.

    © 2016 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on Real Estate Cycles, Interest Rates & Neighborhood Appreciation Trends

  • Rising Interest Rates & Bay Area Housing Affordability

    Changes in interest rates affect local, national and international economies in a bewildering variety of positive and negative ways depending on the segment, and there is vehement disagreement as to what rate or rate movement is best, or most dangerous, for whom.

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    As of Friday, November 18, mortgage interest rates have jumped about 15% since the election, with many economists and analysts predicting more to come in the not too distant future. Federal Reserve Bank Chair Janet Yellen recently suggested that the Fed is close to lifting its benchmark interest rate. However, predicting interest rate changes; what factors might arise to cause movements up or down; as well as the direction, scale and speed of changes; is enormously difficult. Witness the thousands of incorrect expert predictions over the past 10 years. For that matter, rates actually went downafter the Fed last raised rates in December 2015.

    This report will focus on a single issue: Increases in interest rates raise the ongoing cost of housing and reduce housing affordability (unless there is a concurrent drop in prices). In the Bay Area, already experiencing significant social and economic ramifications from the high cost of housing at a time of historically low interest rates, this is a big concern, including how it might affect our real estate markets.

    The degree of the effect of any interest rate changes will, of course, depend on what actually occurs at what speed, which is beyond our ability to predict. The possible scenarios in this report do not imply any predictions on our part. The first charts below provide some useful context.

    Bay Area Home Price & Affordability Trends by County

    From 2012 through Q3 2016, Bay Area home prices in most counties soared to new peaks. Affordability percentages dropped dramatically since 2012, but without quite reaching the lows of 2006-2007.

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    In this report, affordability is calculated, under the C.A.R. Housing Affordability Index methodology, using 3 main criteria: 1) the county median house sales price, 2) the prevailing mortgage interest rate, and 3) county household income distribution percentages.

    Long-Term Interest Rate Movements

    The drop in interest rates from 2007, the last peak of market before the 2008 crash, through early November 2016 has been incredible. And the rates prevailing prior to the 2008 crash, in the 6% range, were themselves quite low by prior historical standards. The average annual rate from 1990 through 2007 was 7.4%. Just prior to the recent 2016 election, rates were between 3.5% and 3.6% (with an all-time low of 3.3% hit in 2013). The chart at the top of this report illustrates the sudden post-election pop in rates to 4.125% (11/18/16).

    30-year_rates_11-20-16-report

    Interest Rate & San Francisco Median Price Changes since 2007

    Home prices and interest rates dropped precipitately after the financial markets crisis of September 2008. Once the real estate recovery began in 2012, home prices skyrocketed while interest rates generally continued to bump along at or near all-time lows.

    median-sfd-price_vs_interest-rates-sf_since-2007

    In effect, the big reductions in interest rates subsidized much of the surge in Bay Area home prices: Since the last peak of the market prior to the 2008 crash, to just before the 2016 presidential election, the interest rate for 30-year, conforming, fixed-rate home loans, fell about 43%, from roughly 6.3% to 3.6%.According to the S&P Case-Shiller Home Price Index, overall Bay Area home prices have appreciated approximately 82% since 2012, though, please note, appreciation rates vary widely by specific location and home-price segment. The above chart shows SF median price changes only.

    The decline in interest rates was not the only or even the primary factor in the appreciation of Bay Area home prices. The massive increase in employment, much of it high-paid, and the resultant surge in population (without a parallel increase in housing supply), along with the local explosion of new wealth from our high-tech boom, were the primary factors. Still, there is no arguing that plunging interest rates made increasing home prices much more affordable.

    These interest rate rise scenarios below do not imply predictions on our part: A top interest rate scenario of 6.3% was chosen simply because that was the rate in 2007, the peak of the last cycle.

    Short-Term Interest Rate Movements since December 2015
    The same chart that began this report

    Post-election increase: Short-term spike
    or beginning of a longer-term ascent?

    affordability_sf-piti_median-price-sfd_by-interest_rate

    Monthly Housing Cost Scenarios
    Illustrated Using the San Francisco Median House Price

    Approximate monthly principal, interest, taxes and insurance costs for the purchase of a Q3 2016, median-priced San Francisco house at $1,300,000, using an 80%, 30-year fixed rate loan, at a number of interest rate scenarios.

    As seen below, the 15% increase in interest rate from 11/10/16 to 11/18/16 added almost $4000 to the annual housing cost of purchasing a $1,300,000 home. If the rate goes to 4.5%, the increase is about $6700, and if it goes up to 5%, the additional annual cost of housing is over $10,000. Illustrating how declining interest rates help subsidize increasing home prices, the Q3 2016 SF median home price was 45% higher than the previous peak price in 2007, however the increase in monthly housing costs (PITI) was only 14% higher than in 2007 due the big drop in mortgage rates.

    affordability_sf-piti_median-price-sfd_by-interest_rate

    Minimum Qualifying Household Income

    The below chart tracks approximate household income needed to qualify for the purchase of a Q3 2016, median-priced San Francisco house at $1,300,000, using an 80%, 30-year fixed rate loan, per associated PITI costs, at various interest rates.

    As interest rates increase, household income requirements increase. Before the election, buyers needed an approximate income of $251,000 to qualify for financing their purchase of a median priced SF house, with a 20% down-payment. By Friday, November 18, the income requirement increased by $13,000. And if the interest rate goes up to 5% (and again, we are not saying it will), an additional $35,000 in annual income would be required.

    affordability_sf-income-required_by-interest-rate_hai

    Housing Affordability Trends for San Francisco

    If housing costs increase, then housing affordability declines. In Q3 2016, the percentage of San Francisco households who could afford to purchase a median priced house, at 14%, was 6 points higher than the all-time low of 8% in Q3 2007. The recent interest rate increase through 11/18/16 drops that another percentage point. If additional rate increases occur, then, all things being equal, San Francisco will continue to move closer to the historic low hit at the peak of the last market cycle. And, of course, the affordability percentages of other Bay Area counties will also drop. (San Francisco, San Mateo and Marin have the 3 lowest percentages in the state, and must be in the running for lowest percentages in the country.)

    housing-affordability-trends_sf-only_bar-chart

    To what exact degree interest rate changes would affect local real estate markets is unknown. Much would depend on the scale and speed of change as well as other economic trends in the Bay Area – such as high-tech hiring and IPOs coming to market – as well as macro-economic trends in the nation. But it could include a slowing of transaction activity and new construction projects, possible adjustments to home prices, or the continued pushing of buyers from more expensive areas to less expensive ones (including, possibly, those outside the Bay Area). High housing costs are not an easy problem to fix, and increasing interest rates, if they continue, are unlikely to help.
    All the statistics and numbers used in this analysis are based on data deemed reliable but should be considered approximations and generalities, most useful in illustrating comparative values and broad trend lines. By definition, half of the homes sold cost less than the median sales price, and greater percentages of households could afford their purchase. Also other property types such as condos are typically significantly less expensive than houses, so they would be more affordable as well. Our gratitude to the California Association of Realtors, and in particular, its analyst Azad Amir-Ghassemi, for all their work on the Housing Affordability Index (HAI). For analyses and scenarios after Q3 2016, the numbers reflect our best estimates based upon our understanding of the CAR HAI methodology, and/or housing cost calculators. None of the interest rate increase scenarios included imply any predictions on our part that such increases will occur. Anyone contemplating purchasing a home with financing should confer with a qualified loan agent and their own financial planners. This report was written in good faith, but may contain errors and is subject to revision.

    © 2016 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on Rising Interest Rates & Bay Area Housing Affordability

  • San Francisco Holiday Events Calendar

    sf-2016-holiday_topsf-2016-holiday_lower

    Categories: Market Statistics | Comments Off on San Francisco Holiday Events Calendar

  • Multiple Angles on a Changing San Francisco Market

    Median sales prices usually jump in autumn, to a large degree because of the seasonal increase in luxury home sales, and that is what happened in October. The combined house and condo median sales price was up 6% from October 2015, but substantially unchanged from the previous peak median prices achieved in spring 2015 and spring 2016.

    San Francisco Median Home Sales Prices

    median-price_combined-sfd-condo_by-month_bar-chart

    Median sales prices usually jump in autumn, to a large degree because of the seasonal increase in luxury home sales, and that is what happened in October. The combined house and condo median sales price was up 6% from October 2015, but substantially unchanged from the previous peak median prices achieved in spring 2015 and spring 2016.

    Click on the map below to access our updated Bay Area & SF home price maps
    bay-area-home-price-map_screenshot_v2

    Overview

    The six weeks from mid-September to Halloween constitute the heart of the relatively short autumn selling season, with the market typically going into semi-hibernation from Thanksgiving through mid-January. (Sales still occur during this period and it can be an excellent time to buy with the big drop in competition.) Generally speaking, this autumn experienced further cooling in SF market conditions: October saw significant year-over-year declines in accepted-offer and closed-sale activity, and significant increases in price reductions and listings expiring without selling. Condos appear to be most affected on all these counts, with some decline in condo values: This situation is certainly being exacerbated by new condo projects coming on market at the same time that buyer demand has been softening.

    The house market has continued to see declines in listing inventory and to shrink as a percentage of total home sales, thus becoming a scarcer commodity. It has performed much better, especially in more affordable neighborhoods. And sales of luxury houses suddenly spiked dramatically in October, though this appears to have been mostly driven by a huge surge in such listings in September. This jump in expensive house sales drove the median house sales price to its highest point ever in October, to just over $1.4 million. The condo median sales price in October, at $1,150,000 was above that of October 2015, but a tad below its all-time high in June. Please note that median sales prices are not perfect measures of changes in fair market value, since they fluctuate for a number of reasons, including seasonality and significant changes in the inventory of homes for sale.

    Bay Area Case-Shiller Home Price Index
    Recent price changes by property type and price segment

    Case-Shiller Index numbers all refer to a January 2000 price of 100, and track appreciation since then. Thus 243 on the chart signifies a price 143% above that of January 2000.

    case-shiller_low-mid-high_short-term

    As mentioned in earlier reports, the highest pressure of buyer demand has shifted in the past year toward more affordable homes, and that is now showing up in the different price movements of low, middle and high-price tier houses. The Case-Shiller Index does not measure median sales price changes, but has its own special algorithm to determine same-home appreciation. This short-term chart illustrates how lower-priced houses have continued to appreciate rapidly, while mid-price and high-price houses have recently more or less plateaued, and condo prices have declined. The Bay Area Index for August 2016 was published in late October.

    Chart: Long-Term, Case-Shiller Bay Area Home Price Trends

    Link to our complete S&P Case-Shiller Index report

    San Francisco Luxury Home Sales
    Houses of $3 million+/ Condos, Co-ops & TICs of $2 million+

    luxhome_sfd-3m_condo-etc-2m_sales_by-month

    This report will generally consider houses selling for $3m or more, and condos, co-ops and TICs selling for $2m or more, as constituting the luxury home segment in the city. They total just under 10% of total home sales. For the ultra-luxury designation, houses are bumped up to $5m or more, and condos, co-ops and TICs to $3m or more. These price segments total 2.6% of total home sales.

    Pursuant to a big jump in new high-end home listings in September, luxury house sales in October, suddenly hit their highest point in many years, if not ever. This is illustrated in the red line in the chart above. Luxury condo sales reported to MLS, as seen in the blue line, were higher than in October 2015, but far below peaks hit in previous spring selling seasons. However, this does not count new-project luxury condo listings unreported to MLS, which are playing an increasingly large role in the market and creating substantial competition for resale luxury-condo listings.

    Below are 2 charts breaking out luxury home sales by city district.

    lux-house-sales_3m-plus-by-neighborhood

    lux-condo-co-op-tic-sales_2m-plus-by-neighborhood

    Additional Chart: New high-end listings coming on market

    Further Perspective

    The past 14 months has seen the Chinese stock market crash, the oil price crash, Brexit, high U.S. financial market volatility, a slowdown in the Bay Area high-tech boom, and enormous election-related anxiety. It is difficult to tell exactly how these events may have affected real estate markets. However, despite significant affordability issues and the transition to less heated market conditions – as illustrated in the analyses of this report – so far, we have seen no sign of anything approaching an impending crash in our local market.

    Selected Real Estate Market Statistics
    Year-over-year changes by property type and price segment

    Listings vs. Sales: The overall inventory of house listings has persisted in declining, while house sales are basically even year-over-year. Condo inventory continues to climb (without including new project condos not listed in MLS), while sales have been dropping.

    fs-sold_sfd-condo-etc-yoy-comparison

    Percentage of Sales over Asking Price: Condos saw dramatic drops in this metric, illustrating a significant decline in buyer demand and competition. Overall, houses have seen a negligible decline, maintaining a very high percentage of sales over asking price. Luxury houses, as mentioned before, experienced a stronger October market than last year.

    over-asking-percentage-of-listings_sfd-condo_lux-reg

    Median Percentage of Sales Price over Final List Price: All market segments saw year-over-year drops as buyers refused to overbid list prices on the scale of previous years. However, the general house segment still saw a 9.3% median overbid of list price, which is huge, even considering that some agents are consciously underpricing their listings. The other segments, with overbid percentages shrinking toward zero, are seeing a much greater quantity of sales negotiated below list price. And this does not include the increasing number of listings that are simply expiring, i.e. with no sale taking place.

    sp-lp_percentages_sfd-condo_reg-lux_yoy-comp

    Sales Price to Original List Price Percentage Overview
    All San Francisco residential sales

    sp-op_all-sales-combined_by-month-bar_chart

    Months Supply of Inventory (MSI): MSI measures how long it would take to sell the current inventory of listings for sale at the average annual rate of sale. All segments ticked up, indicating some market softening, but the general house market is still well within seller market territory. The biggest change is in the luxury condo market, where inventory has been hitting new highs, while sales have generally been declining, thus putting the segment in buyer market territory. Again, these figures do not include the large number of new-project listings and sales unreported to MLS, which would probably increase the condo MSI readings.

    msi-yoy-comparison

    Average Condo Dollar per Square Foot Values by Era of Construction: Newer condos sell for higher average dollar per square foot values than older condos. Generally speaking, in 2016 there has been a tick down in this measure of value, which, as seen in the chart at the beginning of this report, correlates with the conclusion of the Case-Shiller Index as well. According to The Mark Company, which specializes in the marketing of new-construction condo projects (for which statistics are usually not available), average dollar per square foot values for brand new condos have dropped about 8% over the past year. This would presumably reflect the fierce competition between projects to sell out their inventories of units.

    condo_avgdolsqft_by-era-of-construction_2007-present_bar-chart

    The two following charts are from our recent report on the Bay Area Apartment Building market, mostly focusing on San Francisco, Alameda and Marin Counties.

    Median Sales Prices for Multi-Unit Properties
    by building size and submarket

    10-16_invest_median-sales-price_2-4_5-15_by-submarket

    Average Asking Rents by Bay Area County

    avg-asking-rent_bay-area-counties-cities

    Rent rates in San Francisco have been dropping in 2016 after peaking in 2015, with estimates of the decline generally running in the range of 3% to 6.5%, but with some city rental agents saying that certain districts have seen slumps of more than 10%. We believe there are 3 big factors at work: a rush of large, newly built apartment buildings coming on market; a softening of demand as hiring trends have fluctuated; and affordability issues that have caused more prospective renters to simply turn away from living in the city, their first choice, and look elsewhere. However, even with the recent decline, the city still has the highest rents in the country.

    Link to our full Apartment Building Market report

    Link to our full Rent Trends report

    Our Best Autumn Ever

    We hope you will forgive our celebrating the fact that Paragon, which opened its doors in 2004, represented buyers and sellers in closing more in San Francisco home sales in October than any other brokerage. [Total dollar volume residential sales reported to MLS, per Broker Metrics.]

    These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices can be and often are affected by other factors besides changes in fair market value, and longer term trends are much more meaningful than short-term. It is impossible to know how value statistics apply to any particular home without a specific comparative market analysis.

    © 2016 Paragon Real Estate Group

    Categories: About San Francisco | Comments Off on Multiple Angles on a Changing San Francisco Market

  • Updated S&P Case-Shiller Home Price Index for San Francisco Metro Area

    IMPORTANT: Since Case-Shiller Indices cover broad areas – 5 counties in the SF Metro Area – which themselves contain communities and neighborhoods of widely varying home prices, the C-S chart numbers do not refer to specific prices, but instead reflect home prices as compared to those prevailing in January 2000, which have been designated as having a value of 100. Thus these charts are really generalizations about appreciation (or depreciation) trends: for example, a reading of 228 signifies that home prices have appreciated 128% above the price of January 2000. For data on actual median home prices for specific locations, please access our Market Reports page, or for San Francisco, our Neighborhood Values page, by clicking on the links in the upper left hand corner. Alternatively, at the very bottom of this report, there are a few charts on overall median home prices in SF, Marin and Lamorinda/Diablo Valley.

    Long-Term Appreciation Rates by Price Segment
    Case-Shiller divides all the house sales in the SF metro area into thirds, or tiers. Thus the third of sales with the lowest prices is the low-price tier; the third of sales with the highest sales prices is the high-price tier; and so on. (The price ranges of these tiers changes as the market changes.) As seen in this first chart, the 3 tiers experienced dramatically different bubbles, crashes and recoveries over the past 12 years, though the trend lines converged again in 2014 – this is discussed in detail later in this report.

    1

    Short-Term Appreciation Rates by Price Segment
    In recent months, prices for more affordable houses has continued to appreciate rapidly,
    while condo prices have dropped a little, and high-priced homes have basically plateaued.

    2

    Longer-term trends are always much more meaningful than short-term fluctuations.

    The S&P Case-Shiller Index for the San Francisco Metro Area covers the house markets of 5 Bay Area counties, divided into 3 price tiers, each constituting one third of unit sales. Most of San Francisco’s, Marin’s and Central Contra Costa’s house sales are in the “high price tier”, so that is where we focus most of our attention.” We’ve also included some data on the Case-Shiller Index for metro area condo values, but unless otherwise specified, the charts pertain to house prices only. The Index is published 2 months after the month in question and reflects a 3-month rolling average, so it will always reflect the market of some months ago. The August Index was published on October 25.

    The 5 counties in our Case-Shiller Metro Statistical Area are San Francisco, Marin, San Mateo, Alameda and Contra Costa. (And we believe the Index generally applies to the other Bay Area counties as well.) There are many different real estate markets found in such a broad region, moving at different speeds, sometimes moving in different directions. San Francisco’s single family dwelling (SFD) sales, which are what Case-Shiller measures, are only 7% to 8% of the total SFD sales in the 5-county metro area, while Alameda and Contra Costa make up over 70% of SFD sales.Therefore, the Index is always weighted much more to what is going on in those East Bay markets than in the city itself. (Marin’s percentage is about 7% and San Mateo’s about 14%.) SF makes up a larger proportion of condo sales in the metro area.

    These first 2 charts below illustrate the price recovery of the Bay Area high-price-tierhome market over the past year and since 2012 began, when the market recovery really started in earnest. In 2012 – 2015, home prices dramatically surged in the spring (often then plateauing or even ticking down a little in the following seasons). The surges in prices that have occurred in the spring selling seasons reflect frenzied markets of high buyer demand, low interest rates and extremely low inventory. In San Francisco itself, it was further exacerbated by a rapidly expanding population and the high-tech-fueled explosion of new, highly-paid employment and new wealth creation. The markets in the Bay Area are starting to go at somewhat different speeds, depending on the price segment: the high-price tier has declined very slightly over the past 4 months, while the low-price and mid-price tiers have continued to appreciate. As clearly seen in the second chart above, the low-price tier has been seeing the most dramatic movement. In San Francisco itself, dominated by high-price tier homes, the market has been cooling and plateauing, though there too, its more affordable house market is clearly outperforming the market for more expensive homes (and in some neighborhoods, such as the Sunset, it remains fiercely competitive).

    For more regarding how seasonality affects real estate: Seasonality & the Real Estate Market .

    Short-Term Trend: Past 12 Months
    Note that short-term fluctuations are much less meaningful than longer-term trends.

    3

    This chart below highlights the highly seasonal nature of home price appreciation over the past 5 years.

    4

    Longer-Term Trends & Cycles
    The charts below reflect what has occurred in the longer term (for the high-price tier that applies best to San Francisco, Marin, San Mateo and the most affluent portions of other counties), showing the cycle of recession, recovery, bubble, decline/recession since 1988. Note that, past cycle changes will always look smaller than more recent cycles because the prices are so much higher now; if the chart reflected only percentage changes between points, the difference in the scale of cycles would not look so dramatic (as seen in the third chart below).

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    6

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    Different Bubbles, Crashes & Recoveries
    This next 3 charts compare the 3 different price tiers since 1988. The low-price-tier’s bubble was much more inflated, fantastically inflated, by the subprime lending fiasco – an absurd 170% appreciation over 6 years – which led to a much greater crash (foreclosure/distressed property crisis) than the other two price tiers. All 3 tiers have been undergoing dramatic recoveries. The mid-price-tier is just now back to its previous peak values, but the low-price-tier is still below its artificially inflated peak value of 2006 (though recently, it has been appreciating quickly). It may be a while before the low-price-tier of houses regains its previous peak. The high-price-tier, with a much smaller bubble, and little affected by distressed property sales, has now significantly exceeded its previous peak values of 2007. Most neighborhoods in the city of San Francisco itself have now surpassed previous peak values by very substantial, and sometimes astonishing margins.

    Different counties, cities and neighborhoods in the Bay Area are dominated by different price tiers though, generally speaking, you will find all 3 tiers represented in different degrees in each county. Bay Area counties such as Alameda, Contra Costa, Napa, Sonoma and Solano have large percentages of their markets dominated by low-price tier homes (though, again, all tiers are represented to greater or lesser degrees). San Francisco, Marin, Central Contra Costa, San Mateo and Santa Clara counties are generally mid and high-price tier markets, and sometimes very high priced indeed. Generally speaking, the higher the price, the smaller the bubble and crash, and the greater the recovery as compared to previous peak values.

    Remember that if a price drops by 50%, then it must go up by 100% to make up the loss: loss percentages and gain percentages are not created equal.

    Low-Price Tier Homes: Under $619,000 as of 8/16
    Huge subprime bubble (170% appreciation, 2000 – 2006) & huge crash (60% decline, 2008 – 2011). Strong recovery but still somewhat below 2006-07 peak values. Currently appreciating more quickly than other price tiers.

    8

    High-Price Tier Homes: Over $999,000 as of 8/16
    Much smaller bubble/ much smaller crash:
    84% appreciation, 2000 – 2007, and 25% decline, peak to bottom.
    Has been climbing well above previous 2007 peak values.

    9

    Case-Shiller Index for SF Metro Area CONDO Prices

    10

    High Price Tier vs. Low Price Tier Appreciation
    2012 to Present

    The more affluent neighborhoods led the city and the Bay Area out of recession in 2012, surging quickly, while the lower priced tier, still trying to recover from the huge distressed property/foreclosure crisis, lagged well behind. That dynamic shifted: the low-price tier caught up in 2014, and lately, as affordability has become an ever more pressing concern, it has become the greatest focus of buyer demand and has been appreciating significantly more quickly than than more expensive home segments. (Even though many of the more affordable houses in San Francisco, Marin, San Mateo and Lamorinda/Diablo Valley would actually qualify as high-price tier houses by overall Bay Area standards, the underlying dynamics are similar to Bay Area low-price tier homes, i.e. each market area’s dynamics reflect its own division into most affordable (low), mid-price, and more expensive (high) home segments).

    11

    In San Francisco, where many neighborhoods vastly exceed the initial price threshold for the high-price tier, declines from peak values in 2007 in those more expensive neighborhoods typically ran 15% – 20%, and appreciation over previous peak value has also exceeded the high-price tier norm.

    San Francisco, Marin and Central Contra Costa
    Median Sales Price Trends

    Looking just at the city of San Francisco itself, which has, generally speaking, among the highest home prices in the 5-county metro area (and the country): many of its neighborhoods are now blowing past previous peak values. Note that this chart has more recent price appreciation data than available in the Case-Shiller Indices. This chart shows both house and condo values, while the C-S charts used above are for house sales only. Median prices are affected by other factors besides changes in values, including seasonality, new construction projects hitting the market, inventory available to purchase, and significant changes in the distressed and luxury home segments.

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    Marin County

    13

    Central Contra Costa County

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    Bay Area Counties Median Price Trends

    15

    And this chart for the Noe and Eureka Valleys neighborhoods of San Francisco shows the explosive recovery seen in many of the city’s neighborhoods, pushing home values far above those of 2007. Noe and Eureka Valleys became particularly prized by the high-tech buyer segment and the effect on prices was astonishing for the first 4 years of the recovery, but in 2016 it started to see small declines in values.

    16

    All data from sources deemed reliable, but may contain errors and is subject to revision. Statistics are generalities and how they apply to any specific property is unknown. Short-term fluctuations are less meaningful than longer term trends. All numbers should be considered approximate.

    © 2016 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on Updated S&P Case-Shiller Home Price Index for San Francisco Metro Area

  • San Francisco’s Hottest, Most Competitive Neighborhood Market

    Since the market recovery began in 2012, various districts have taken the lead as the hottest markets in San Francisco: The affluent and prestigious Noe-Eureka-Cole Valleys district and Pacific Heights-Marina district led the recovery out of recession. Later South Beach/SoMa, Hayes Valley and, especially the Mission, went white hot as the high-tech boom surged (though, honestly, high appreciation rates became general throughout the city). In mid-2015, price appreciation in many the more expensive and fashionable districts started to slow down and plateau.

    With the search for affordable homes, and houses in particular, becoming ever more challenging (or desperate), the greatest pressure of buyer demand moved to a large, lopsided curve of historically less expensive neighborhoods running along the western-most edge of the city from Outer Richmond south to Lake Merced, then east across the southern border with Daly City, and up through Bernal Heights and Bayview. Of these, we believe Realtor District 2, Sunset/Parkside, with its quiet streets and low crime rates; its closeness to the beach, GG Park and highways south to Silicon Valley; and its attractive, modest-sized houses built mostly in the 1930’s and 1940’s, is now the hottest, most competitive market in San Francisco.

    san-francisco-neighborhood-district-map

    In the charts below, notice how year-over-year statistics have generally cooled somewhat in most areas of the city from the frenzied market prevailing in the first part of 2015: higher days on market, lower percentages of listings selling over asking price, higher months-supply-of-inventory figures, and so on. The most affordable districts are those generally showing the least, or even no, change year over year, and some of them are still sizzling. However, the 2016 statistics for SF house sales in no way suggest what would be described as a weak market in any of the city’s districts. (Some of the condo markets have cooled more significantly.)

    Overbidding Asking Prices: SF House Sales

    1

    Percentage of House Sales Selling over Asking Price

    2

    SF House-Price Appreciation Rates

    3

    Average Days on Market

    4

    Months Supply of Inventory:
    Buyer Demand vs. Supply of Listings for Sale

    5

    San Francisco District Condo Markets

    For a number of reasons, including a significant increase in new-construction projects, the condo market in San Francisco is not as strong as its house market, but without any hint of an impending crash: The median SF condo price has simply plateaued after years of feverish appreciation. Based upon our analyses of underlying market dynamics shown via the charts below, we believe the condo markets of the Noe, Eureka and Cole Valleys district, and the Richmond/Lake Street district are currently the most dynamic in the city. It is probably no coincidence that these areas are seeing comparatively little new condo construction adding to inventory.

    The softening of the condo market is clearly reflected in the 2016 vs. 2015 statistics. The first chart also illustrates, as mentioned in earlier reports, how the luxury condo segment ($2m+), especially in District 9 (greater SoMa/South Beach/ Yerba Buena) where the majority of new, luxury condo construction is occurring, has softened the most. These charts do not include the many hundreds of newly built or under construction condos listed, accepting offers or sold, which are not reported to MLS, as exact data on that activity is hard to verify.

    6

    Chart: Overbidding Condo Prices
    Chart: Condo % Sales over List Price
    Chart: Condo Average Days on Market

    District Sales Overview
    Sales Volumes and Sales Prices

    7

    Chart: Average San Francisco House Sizes by Neighborhood

    As illustrated above, the 3 most affordable districts for buying a house in San Francisco are also 3 of the 4 districts with the most house sales.

    8

    25 years ago, the greater South Beach/ SoMa/ Mission-Bay area didn’t even have an appreciable amount of residential housing. Now, if we add new-condo sales not reported to MLS (which are not reflected in the chart above), it is the area with the greatest number of condo sales in the city, more than twice as many as the second ranking district. It is also now the foremost area for luxury condo sales, having leapt ahead of the Pacific Heights and Russian Hill districts. This is the only place in the city where high-rise construction is currently allowed, and there is much new construction in the works.

    San Francisco Median Home Prices by Quarter
    2012 – 2016

    9

    Median sales prices typically fall in Q3 from Q2 due to seasonal inventory and demand issues, and that occurred in 2016 as well. Year over year, the Q3 2016 house price is running somewhat above that of Q3 2015, while the condo median price has stayed essentially flat.

    San Francisco Median Home Prices by Year
    1993 – 2016

    10

    Biggest Surge in New Luxury Home Listings Ever

    11

    Even more so than the general market, the luxury home market is fiercely seasonal, with spring and autumn being much more active than summer and, especially, the mid-winter holiday doldrums. September is typically the single month with the highest number of new listings, which fuels the relatively short autumn selling season before the luxury market starts to go into hibernation in mid-late November. This year saw a particularly large jump in the number of new listings of homes of $2.5 million and above to by far the highest level ever.

    Because the time between listings coming on market, offers being negotiated and accepted, and then the transactions actually closing sale is 4 to 6 weeks or more, it will be a little while before we have hard data on how the market responded to this feast of expensive homes hitting the market.

    New Bay Area Hiring Surge?
    Employed Resident Count in 4 Central Bay Area Counties

    12

    Hiring and the population growth it engenders play a huge role in buyer and renter demand. After peaking in December 2015, the number of employed residents in the 4 middle Bay Area counties fell by 6000 through June 2016, the largest sustained drop in 5½ years. This seemed to correlate with an apparent cooling in the high-tech boom. Then in July & August 2016, a sudden, new hiring surge added almost 38,000 to the employment numbers, hitting a dramatic new high. We will have to wait for the data of future months to see if this is part of a sustained second wind in Bay Area hiring (especially in high-tech), or simply an unusually large, short-term fluctuation.

    These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices can be and often are affected by other factors besides changes in fair market value, and longer term trends are much more meaningful than short-term. It is impossible to know how median prices apply to any particular home without a specific comparative market analysis.

    © 2016 Paragon Real Estate Group

    Categories: Market Statistics | Comments Off on San Francisco’s Hottest, Most Competitive Neighborhood Market