San Francisco Median Sales

San Francisco Median Sales Prices, 1993 – 2014

Unit Sales Trends by Property Type

The first chart above graphs median sales prices by year. Looking only at the 4th quarter of 2014, house and condo median prices climbed to all-time highs of $1,125,000 and $999,250 respectively, and the TIC median price increased to $829,500.

The second chart above illustrates sales volume by property type. Houses turn over much less often than condos or TICs – i.e. house owners generally live in their homes longer before selling – and with virtually no new houses being built in the city, house sales as a percentage of total sales are declining, but this has also made them the market’s highest-demand, most competitive segment. Condos now dominate SF home sales and will continue to do so with the many new-condo projects being built. TIC sales are down almost 60% from 2007, probably due to financing conditions and changes in condo conversion and tenant eviction laws. The number of listings fell last year putting additional pressure on the market.

SF New Construction & Population Trends Since 1940

San Francisco New Construction & Population Trends since 1940 After reading our recent reports on new development and factors behind the market, one of our clients suggested graphing out the quantity of new housing built in the city over time. Based on census figures, the resulting (very approximate) chart illustrates the decline in new-home construction in the 1980’s and 1990’s, which helped exacerbate our current housing crunch.

Another note: the housing "units" built in 1940-1950 were not only much more numerous, but were typically 2-3 bedroom houses, while since 1980, the units built have generally been 1-2 bedroom condos and apartments (which makes sense with our changing demographics - more singles and couples, fewer families - but obviously hold fewer people per unit). And now a big topic in development is building urban “micro-units” of 250 to 350 square feet.

Our chart on SF population growth follows as a counterpoint.

Condo Values by Size and Era of Construction

Condo Values & Sizes by Era of Construction A previous condo construction boom ran from the end of the 1990’s until 2008, when it crashed for 4 years – and now we’re in the midst of a new boom.Condos built in the last 15 years are selling at higher dollar per square foot values, but average unit sizes have also been getting smaller – and all things being equal (they rarely are), the smaller the unit the higher the per square foot value. Of course, there are other considerations besides size that affect value: quality and graciousness of construction (i.e. Marina-style and Edwardian flats), views (most likely in high-rises), amenities (security, gyms, outdoor space, etc.) and neighborhood ambiance (Russian Hill vs. Noe Valley vs. SoMa). The average $/sq.ft. for new condos now exceeds $1000 in the city, and, according to estimates, at the new, luxury, South Beach development, Lumina, it is now running $1400 to $1500/sq.ft. on units going into contract.

As increasing quantities of “luxury” condos come on market in coming years, it will be interesting to see how the market reacts and absorbs the new inventory.

Home Appreciation vs Inflation

Home Appreciation vs. Inflation Since 1988, home price appreciation has hugely outpaced CPI inflation, though as seen below, the difference can swing dramatically depending on the exact point within a financial cycle.On a cash investment basis, if you had put $100,000 down on a $500,000 home purchase with a 30-year loan in 1988, by the end of 2014, per the Case-Shiller Index, your home would be worth approximately $1,900,000. After deducting 7% closing costs and paying off the remaining loan balance, your $100,000 down-payment turned into approximately $1.65 million in proceeds (if you didn’t continually refinance out your growing equity to buy new toys).

This is a very simplified calculation of a complex financial scenario that includes leverage, financing terms and interest rates, inflation, appreciation, multiple tax benefits and housing costs – you should talk to your accountant – but it still illustrates why a recent New York Times op-ed piece (11/30/14, “Homeownership & Wealth Creation”) said, “Renting can make sense as a lifestyle choice or because of income constraints. As a means to building wealth, however, there is no practical substitute for homeownership.”

Neighborhood Values

San Francisco Neighborhood Values We just updated our semi-annual breakdown of SF home values by property type, bedroom count and neighborhood. Below are the tables for 3-bedroom houses and 2-bedroom condos while the full report can be found here. If you want data on a neighborhood not included, please call or email.

Bay Area Rent Appreciation

Bay Area Rent Appreciation  This chart is from our January Commercial Brokerage report on Bay Area investment real estate. The full report has further detail on average rent rates and trends, and other apartment building financials.

Mortgage Interest Rates

Mortgage Interest Rates  One of the big factors underlying the market’s strength in recent years has been extraordinarily low interest rates, which have a tremendous effect on the ongoing, monthly cost of housing. In 2010, pundits almost universally predicted interest rates would rebound to 6% or higher, but instead rates dropped until hitting a low point in mid-2013 of about 3.5%. After fluctuating up and down a bit since, interest rates at the start of 2015 were somewhat below 4% - incredibly low by any historical standard.

Month's Supply of Inventory

Months Supply of Inventory (MSI)  Low inventory remains a huge issue in the San Francisco market. Typically, the year begins with the lowest number of listings, which then gradually increases into spring. In the past 3 years, buyers have woken up from the holidays much more quickly than sellers have put their homes on the market. This set the stage for the city’s early spring market frenzies in 2012, 2013 and 2014. In the second half of 2014, home prices plateaued or even dropped a little in the more expensive housing segments, while continuing to tick up in more affordable areas.

What 2015 has in store for the market will become clearer in the next few months.

How the Bay Area Spends It's Money

How the Bay Area Spends its Money On a lighter note, and to take a brief break from real estate, these two charts, which we’ve just added to our recent Bay Area Demographics Report, compare how we spend our money as compared to national averages.

New Construction in San Francisco

New Construction in San Francisco These 2 charts are from our San Francisco Development Report, excerpting the highlights of the SF Planning Department’s new Pipeline Report of residential and commercial real estate projects. Almost 7,000 residential units (sale, rental and social-project) and several million square feet of new commercial space are currently under construction in the city, with much more coming in the next few years (absent some large, negative economic event occurring).

Adding large quantities of new inventory should eventually affect the recent, high-appreciation dynamic for both sale and rental markets in the city, but so far, population, employment, wealth and buyer demand has continued to outpace supply. Also, the great majority of new-home construction intended for sale is for high-end, ultra-modern condos costing $1000 – and sometimes much more – per square foot, so how that surge in inventory will affect other segments of the SF market – such as for houses or Edwardian condos – is unclear.

San Francisco's Luxury Home Market

San Francisco’s Luxury Home Market Over the past 3 years, the luxury home market has outperformed the overall market as wealth dramatically surged in the Bay Area. In the last 15 years or so, the high-end market segment has been spreading from the classic, northern prestige neighborhoods – such as Sea Cliff, Pacific Heights, Russian Hill – to other districts of the city, such as those surrounding South Beach and Noe Valley.

Neighborhood Affordability

Neighborhood Affordability 

Below are 2 of 12 charts in our updated analysis of What Costs How Much Where in San Francisco. These are meant as a general guide for buyers as to where to find the greatest choice of home listings in their price range – and to open up neighborhood options they perhaps hadn’t been aware of.

3 Years into the Recovery- SF Real Estate Cycles

San Francisco Real Estate Cycles, 1984 - 2014

The 2 charts above look at the last 30 years of real estate cycles, and also compare percentage appreciation during the first 3 years of recent market recoveries (the light blue columns in the 2nd chart). Appreciation since 2012 has occurred somewhat faster than the other recoveries since 1980, but it is also coming off a much larger crash than earlier cycles. Typically, recoveries, and the upswings in appreciation they engender, have lasted 5 to 7 years – which is no guarantee how our current cycle will play out.

The chart below graphs the quarterly path of median house price appreciation in San Francisco since 2012, illustrating shorter-term seasonal cycles. Condo prices in the city followed a similar trajectory, though at somewhat lower values: In the latest quarter, the median condo sales price was just the tiniest bit under $1 million.

San Francisco Home Price Appreciation

San Francisco Home Price Appreciation Which Neighborhoods Have Appreciated Most and Why?

4th Quarter 2014, Paragon Special Report

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Percentage Appreciation Rates

2010/2011 – Present

This analysis is based upon review of both median sales price and average dollar-per-square-foot data. However, there is no San Francisco or Noe Valley median or average home that one can use as the unchanging basis for comparison year after year, only differing collections of unique homes selling in different times and circumstances. Please see notes at the end of this report regarding our methodology.

Adjusting your screen-view to zoom 125% or 150% will make the charts easier to read. A San Francisco neighborhood MAP can be found at the bottom of this webpage.

The above chart illustrates the approximate home value appreciation from the bottom of the market (2010-2011) to present (2014 YTD), as illustrated by the dark gray bars, and the overall appreciation or depreciation to date since the last market peak (2006-2008), as illustrated by the red numbers.

Over the past 3 years, in our latest market recovery, San Francisco neighborhoods have typically appreciated 40 – 50%, with an overall increase of approximately 44%. This correlates well with the Case-Shiller Index for the Metro Area, which estimates appreciation in the range of 42% - 46% for Bay Area mid and high-priced homes. As one can see in the percentages in red, most of the city’s neighborhoods have now exceeded, often by substantial margins, their previous peak values before the bubble popped. However, some of the neighborhoods hit hardest by the subprime crisis are still below their previous peaks.

Looking at the 3 neighborhoods with the highest appreciation rates from the bottom of the market to present, there are distinctly different reasons why they stand out:

• Bayview: Up 75% from 2010/11; but still down 12% from its market peak in 2006. Due to subprime lending, Bayview’s bubble was so big, its market crashed terribly when it popped. During the downturn, its housing market became dominated by distressed sales and it fell so far that now, with the disappearance of the subprime effect, its recovery has been equally dramatic. But because its bubble was so large, it is still below its 2006 peak value. The markets in the Bayview and nearby neighborhoods are quite strong, because they contain the most affordable houses in the city.

• Inner Mission: Up 63% from 2010/11; up 46% from 2007 (pre-crash peak). The Mission’s appreciation rate is explained by a huge change in its buyer demographics over recent years: Though it had been slowly gentrifying since the nineties, more recently it became a highly sought-after home location for young, hip, affluent, high-tech buyers. They love the Valencia Street corridor, being close to Dolores Park, the sunny weather and the (disappearing) edginess – and the speed of gentrification shifted into a feverishly high gear. This change has also entailed the construction of expensive, new, condo projects (typically selling for $1000 per square foot and up), which is also pushing up average and median values.

• Bernal Heights: Up 57% since market bottom; up 24% from its previous market peak in 2007. Bernal Heights has become one of the most popular, more affordable, go-to neighborhoods for house buyers who like the neighborhood ambiance of the general Noe Valley area, but were priced out there by its rocketing prices. Bernal Heights’ houses – with a median price about 45% lower than Noe Valley’s – have looked likeextremely good values in comparison. Buyer competition for new listings became particularly fierce in the past year or so.

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To give context to the appreciation rates, this next chart delineates actual 2014 YTD median home sales prices. In the second half of 2014, after a frenzied spring market, appreciation generally flattened or even ticked down a little in the more expensive areas of the city, but continued to tick up in the more affordable districts. On the other hand, the more expensive neighborhoods began their recoveries in late 2011 and early 2012, much earlier than the less affluent districts.

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Dollar Appreciation Rates

Whether you are a buyer, seller or real estate agent, dollars are more real than percentages: Hearing that a home has jumped hundreds of thousands of dollars in value in a relatively short time period grabs the attention more than a percentage change. The higher priced neighborhoods sometimes have lower percentage appreciation rates than less expensive areas in a given time period, but the dollar-amount changes can make the eyes pop:

In Pacific & Presidio Heights, the theoretical “median house” now costs over $1.3 million more than it did 3 years ago. In Noe, Eureka & Cole Valleys, the increase is over $700,000.

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Boom, Bust, Recovery

2000 – 2014

Different neighborhoods and price segments experienced bubbles, crashes and now recoveries of significantly different magnitudes. The city’s less affluent neighborhoods – on this chart illustrated by Bayview, Excelsior & Portola – had much bigger bubbles and subsequently much bigger crashes, both inflated by subprime lending issues. Bayview saw an astounding 136% appreciation from 2000 to 2006, followed by a huge 50% drop from 2006 to 2010/2011. Excelsior and Portola were an order of magnitude behind with 90% appreciation and 30% decline. Generally speaking, the mid and high-end segments of the city’s market appreciated 60% - 70% from 2000 to pre-crash peak, and then dropped by 15% to 20% subsequent to the 2008 market crash. And, as mentioned earlier, on average the city’s home values have now increased 40% - 50% over the past 3 years, with some neighborhoods outperforming the general range.

According to the Case-Shiller Home Price Index, Bay Area homes of all price segments are now, regardless of their different ups and downs over the past 15 year, about 96% above their prices in year 2000 (as of late 2014). This may suggest that an equilibrium is being achieved in the market.

Note that the tremendous burst in home price appreciation actually began in 1996, subsequent to the early nineties recession. Prices approximately doubled in the 5 years 1996 to 2000. This earlier period is not included in these charts, nor is the smaller, short-term decline following the dotcom bubble bursting in 2001 broken out.

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Housing Cost: Today vs. Previous Peak Values 

Comparing current San Francisco home values to previous peak values before the 2008 financial markets crash, we estimate general home-price appreciation in San Francisco of approximately 15% to 20% over the past 7 years. However, mortgage interest rates are now about 35% lower than in 2007 and there has been inflation of approximately 15% over the same period. Thus, we estimate that, adjusting a normal 20% - 25% down-payment plus resulting loan expense to 2007 dollars, the current cost of housing – mortgage and property taxes – is about 12% lower now than it was in 2007. This is a back-of-the-envelope calculation based on a number of basic assumptions – and it would obviously vary widely by neighborhood – but we believe it to be generally valid.

The Bay Area’s current market recovery has lasted about 3 years now. Over the past 35 years of cycles, recoveries have typically lasted in the range of 5 to 7 years, which doesn’t guarantee that this one shall follow past patterns.

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Important notes regarding this report:

The estimates in this analysis should be considered very approximate since there are different ways to evaluate home value movements – such as median price and average dollar per square foot – and they don’t always agree, nor are they perfectly reliable. Besides which, other factors can affect these statistics besides changes in values, such as big changes in the distressed, new-construction or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets.

Different San Francisco neighborhoods peaked in value at varying times before the bubble popped on 9/15/08: Generally speaking, the least affluent areas peaked in 2006; the mid-price segment in 2007; and the high-end market hit peak prices in late 2007/early 2008. We use the 2-year period of 2010-2011 as the basis for “bottom of the market” values, and we use aggregate 2014 YTD values (as of mid-late November) for “present” values. If one cherry-picked specific months or quarters for the absolute lowest and highest values in each neighborhood, the percentage and dollar swings illustrated would be much more dramatic than with the broader periods used in this report, but, we believe, no more meaningful.

This map of neighborhoods is according to the San Francisco Association of Realtors,

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 includes both Russian Hill and the Tenderloin.

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Statistics are generalities that may fluctuate for a number of reasons, including but not limited to changes in home values. There is no San Francisco “median home” or “average home,” that one can use as the unchanging basis for analysis year after year, only differing collections of unique homes – and how these general statistics apply to any particular property is impossible to say without a custom market analysis. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. All numbers should be considered approximate. Please contact us with any questions or concerns. © 2014 Paragon Real Estate Group

Bay Area Real Estate Prices

Bay Area Real Estate Prices

These two charts come from our recent report on Bay Area Demographics, covering issues such as ancestry, income, housing and education.

Square Footage for $1,000,000: At average county values, you’ll get double the square footage in Sonoma and Contra Costa as you will in San Mateo and San Francisco, and, of course, in other parts of the country, that can double or triple again.

Average Asking Rents: In terms of rental-rate appreciation, the Bay Area has 3 of the 4 hottest rental markets in the country in Oakland, San Jose and San Francisco. High rents, of course, are one of the big factors behind high home prices.

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San Francisco Neighborhood Snapshots

A look at long-term home-value trends in selected city districts. Please call or email if you’d like information on another neighborhood. Median and average statistics are generalities which summarize a huge range of underlying, individual sales.

 

San Francisco Luxury Home Market

San Francisco Luxury Home Market

Luxury Home Sales Soar Again: October saw a big autumn surge in luxury home sales: It was by far the biggest month ever for SF house sales of $2m+, with 61 sales. Luxury condo sales were also quite high at 55 sales, a figure which doesn’t include market response to the new “ultra-luxury” Lumina project in South Beach, where 80 to 100 very expensive condos went into contract amid almost frenzied bidding – these units won’t close escrow until construction is completed in 2015 or early 2016.

The average days-on-market (DOM) for luxury houses sold in October was 21 days, and for luxury condos, it was 28 days: These are very low DOM figures, indicating quick market response to the listings purchased.

Luxury House Values: House sales of $2,500,000 and above, charted here by average dollar per square foot, cluster in a handful of areas in the city. The Pacific Heights-Marina district has the most sales and the highest median sales price for such sales: Historically, this district has been the city’s nexus for big, luxury houses. However, the greater Noe, Eureka & Cole Valleys district now sees a substantial (and growing) number of sales in this segment, though at a significantly lower price point. This area is becoming popular with the young, high-tech, ultra-wealthy (such as Mark Zuckerberg) and record prices are being achieved. Russian & Telegraph Hills have very few house sales, but very high values, as seen below. And the greater St. Francis Wood-Forest Hill area is by far the best value for big homes (often on big lots) by how much house you get for your money.

Average house size varies from approximately 2700 square feet in Russian & Telegraph Hills to 3260 in Noe, Eureka & Cole Valleys to 4200 in Pacific Heights-Marina. All things being equal (which they rarely are), a smaller home will typically sell at a higher dollar-per-square-foot than a larger one.

Luxury Condo & Co-op Values: The Pacific Heights-Marina district currently has the most luxury condo and co-op sales – but not for long: With all the new, high-rise condo construction in the greater South Beach-Yerba Buena district – already featuring the highest average dollar per square foot values in the city – this new residential area will soon dominate sales volume too. The prestigious condo and co-op neighborhoods of Russian, Nob and Telegraph Hill also feature some of the most expensive units in San Francisco. With new, luxury condo construction surging across the city, such sales – at very high dollar per square foot prices – are growing in neighborhoods such as the Mission, Hayes Valley, Duboce Triangle, Mission Dolores and Potrero Hill – and there’s a lot more coming.

Average unit size for luxury condos ranges from about 1650 square feet in South Beach/Yerba Buena to 1900 - 2100 square feet in the older, northern neighborhoods such as Pacific Heights. Older buildings usually feature larger units.

Perhaps as many as 30-40% of luxury units in the city are being purchased as pied e terres and second homes by the very affluent, or even as investments (often by wealthy foreign buyers).

San Francisco Autumn Real Estate Market Dynamics

San Francisco Autumn Real Estate Market Dynamics

November 2014 Market Report

The San Francisco market definitely cooled after the overheated feeding frenzy of the first half of the year. The competition between buyers for new listings declined to more rational levels: Homes that might have received 5 to 10 offers earlier in the year received 1 or 2 or 3. Values in many of the city’s neighborhoods plateaued or even ticked down a bit after spring’s big spike - the exception being districts with the most affordable house prices (under $1.2 million) where prices generally continued to tick up. The number of expired and withdrawn listings jumped 18% August through October when compared to last year, to over 460 listings, as buyers decided many sellers were pushing the envelope on prices too far.

On the other hand, as seen in the charts below, the autumn market has been very strong by any reasonable measure, just not one of utterly crazed competition. The number of house and condo sales was a little higher in October 2014 than October 2013, and that doesn’t include a very large number of high-end, new-development condos that went into contract. Most of the city’s listings have continued to sell quickly for well over the asking price and luxury home sales hit their highest number ever.

The market for multi-unit buildings did decline dramatically, but that was due to Prop G fears. Since the proposition failed on November 4, that effect should quickly dwindle. Meanwhile, buyers have a large inventory of 2-4 unit buildings to choose from.

---------------------------------------------------------------------General Market Dynamics 

Median Sales Price by Month: Median prices are affected by other factors besides just changes in home values, such as seasonality, inventory available to purchase and significant changes in the luxury market. It often jumps up and down by month and season: It is the longer-term trend which is most meaningful. In this chart above, the spring spike, summer decline and early autumn increase are clear. Among other factors, luxury home sales usually jump in spring and autumn and drop in summer and mid-winter, and this rise and fall affects the overall median price. For the last 3 years, the general trend line has been dramatically up.

---------------------------------------------------------------------Homes Selling Over & Under List Price: As seen in the 2 charts below, an astounding percentage of San Francisco home listings continue to sell over, and sometimes far over asking price. However, an increasing percentage of listings aren’t selling at all: A hot market doesn’t mean buyers will pay any price sellers dream up.

This first chart looks at SF houses, condos, co-ops, TICs and 2-4 unit buildings, breaking down sales by those that sell with and without price reductions, and the difference that makes in sales price and average days on market. Pricing correctly right from the start reaps significant rewards for sellers.

This chart breaks down SF house and condo listings by the percentage of list price achieved upon sale. Even if the autumn market isn’t as white-hot as last spring’s, these are incredible statistics. It should be noted that some of this phenomenon is certainly due to strategic underpricing of homes by some listing agents, which became increasingly popular in 2014. Months Supply of Inventory (MSI): At just under 2 months of inventory, San Francisco’s MSI is up from spring 2014, but still indicates a very strong seller’s market.

Neighborhood Snapshots

Neighborhood Snapshots

If you’d like information on home-value trends for other property types or other neighborhoods than shown below, please let us know. We cover all of them.

 

San Francisco Employment

San Francisco Employment

We recently illustrated our report on the main factors behind our market, charting employment, seen below, city population, city rents, interest rates and the S&P 500. Taken together, one clearly perceives the inter-connectedness between them and with SF home price trends as well. The full report, with all the new charts, is here: 10 Factors behind the Market 

Home Listings Selling Over Asking Price

Home Listings Selling Over Asking Price

Average Days on Market

This next chart illustrates three points: 1) the remarkable heat of the city’s real estate market as buyers bid up home prices, 2) how seasonality impacts demand – with spring and autumn being the big, highest-demand, selling seasons, and 3) because of supply issues, the SF house market is somewhat hotter than the condo market (though it too, by any standard, is very hot). Remember that because of the time lag between listings coming on market and offers negotiated, and the actual close of escrow - upon which these statistics are based - September's market is not reflected on these charts.

Days on market statistics still indicate a high-demand market and, again, that the house market is a bit hotter than those for condos and TICs. New condo development is helping to meet buyer demand, while new house construction barely exists in San Francisco. TIC sales, whose numbers have been dwindling in recent years, are impacted by a number of legal, political and financing issues.