SF Neighborhoods Median Home Prices, Reflecting MLS Sales Reported 10/01/2015 – 05/21/2016

May 2016 SF Market Report: Are you in the market for a condo? Great time to be a buyer.



Paragon Real Estate Group
 
Paragon Real Estate Group

San Francisco Real Estate Market Report

Midway through the Spring 2016 Selling Season

May 2016 Update

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


As seen in the first chart below, the combined house-condo median sales price hit a new high in April. However, as the second chart illustrates, so far this year, while median house prices continued to appreciate, condo and TIC prices appear to have generally plateaued. 2012-2015, spring was the most dynamic, high-demand/low-supply selling season of the year.


————————————————————

Market Dynamics by Property Type & Price Segment


As mentioned in our April report, different segments of the market appear to be diverging. The below charts separate the San Francisco homes market into house and condo/co-op/TIC segments, then further subdivide each into 4 price segments. The lowest, most affordable, price segments are defined by the median sales prices for the first 4 months of the year. The highest price segments (or luxury home sectors) are defined, approximately, by the top 10% of sales.

Very generally speaking, the house market has remained hotter than the condo market, which appears to have cooled to some degree (but nothing remotely approximating a crash), and more affordable homes are seeing significantly more demand than luxury homes, where the pool of potential buyers is much smaller. The luxury condo market, in particular, may be being impacted by an increase in large, new, luxury-condo projects arriving on market, especially in those districts where they are mostly being built. The number of resale luxury condo listings in San Francisco hit an all-time high in April.

These analyses do not include new-project condo activity unreported to MLS, which is now a significant portion of the market: Unfortunately, our access to definitive data regarding current activity in new condo sales is limited.



More on the luxury market: SF Luxury Home Market Analytics


————————————————————

Percentage Changes in Median Sales Prices
& Average Asking Rents, 1994 to Q1 2016


The first chart tracks year-over-year changes in annual median sales prices for San Francisco houses. The year of greatest percentage appreciation was 2000 at the height of the dotcom bubble (though on a dollar appreciation basis, recent years far exceeded earlier periods). This is a generalized overview: Homes in different neighborhoods and in different price segments often saw wide variations in annual appreciation rates.



More on real estate cycles: 30+ Years of Bay Area Real Estate Cycles

This second chart illustrates appreciation in average asking rents. Note how much rents declined after the dotcom bubble ended, while the effect of the 2008 financial markets crash was much milder. We have heard from multiple city sources that available rental inventory has significantly increased and renter demand significantly decreased in recent months, which may reflect a possible softening in new, high-tech hiring. We shall see if this begins to show up more definitively in upcoming rent and employment statistics. Or it may simply be a temporary lull in the market.



More on SF & Bay Area Rents: Rent Trends Report

Our Q1 report on the apartment building market: Bay Area Apartment Market

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. New construction condos not listed or sold on MLS are not counted in these statistics, though they often affect market dynamics. Sales statistics of one month generally reflect offers negotiated 4 to 6 weeks earlier. Last but not least, different analytical systems sometime calculate standard real estate statistics differently, which can deliver variable results.


© 2016 Paragon Real Estate Group
 
No one knows San Francisco real estate better than Paragon.
Paragon Real Estate Group
www.paragon-re.com/
Irina Luck
Lic# 01927187
350 Rhode Island Street
San Francisco, CA 94103
Direct 415.738.7206
Cell 415.722.4461
iluck@paragon-re.com
 

New Case Shiller Report for San Francisco Bay Area is released

The new S&P Case-Shiller Index for November 2015 for the 5-county, San Francisco Metro Statistical Area was published today. According to C-S, home prices continued to tick up a small bit through the autumn market.

Most of these charts track the “high-price tier” of homes (the upper third of home sales by price), which apply best to San Francisco, southern Marin, San Mateo and central Contra Costa counties. However, note that appreciation rates do vary by market area.

At this point, the next real indication of where the homes market is heading will come after the beginning of the 2016 spring selling season (which can begin as early as mid-late February) and sales begin to close in March and April.
Case-Shiller_High-Tier_since-2012_V2-bar-chart



Paragon Real Estate Group
 
Paragon Real Estate Group

The San Francisco Real Estate Market in 2015

Illustrating the Year in 20+ Charts

Architecture, views, probates, penthouses, lofts, TICs, luxury homes, mortgage rates, sales prices, market cycles, and everything else we could think of in a look back on 2015.

A neighborhood map of San Francisco is included at the bottom of this report for your convenience.


Quarterly Median Price Chart & Monthly Case-Shiller Chart

Despite anxiety about interest rates, financial markets, housing affordability, unending international crises, and possibly over-valued high-tech unicorns, the Q4 2015 San Francisco median house sales price, at $1,250,000, is up about 11% from Q4 2014. That dovetails nicely with the S&P Case-Shiller Home Price Index for the Bay Area, which measures appreciation in a different way, but also calculated 11% annual appreciation (through October, its last report). The Q4 condo median price, at $1,125,000, is up 13% year over year, but that is influenced by the greater percentage of more recently built, and more expensive, units in the sales mix.

We have also updated our popular price maps of San Francisco neighborhoods and the greater Bay Area: Home Price Maps

——————————————————————–


San Francisco has seen 3 extended periods of home construction: The first ran from the Gold Rush to the 1906 earthquake, when 28,000 buildings were destroyed. The second went from the post-quake rebuilding, with the construction of thousands of Edwardian houses and multi-unit buildings, through the big WWII population surge. Many districts such as the Marina and Sunset/Parkside were built out in the period from 1920 to 1950, with Spanish Mediterranean (in many variations), Marina-style and Art Deco being common architectural styles.

The city population then went into major decline during the subsequent 3 decades and construction plunged. The third era of homebuilding is all about new condo construction, which began around 1980, ebbed and flowed dramatically with the economy, and is currently booming once again.

——————————————————————–


A look at a few of the distinctive niches of the market.

——————————————————————–


San Francisco is famously a city of gorgeous views. For the simple reason of verticality, more condos have views and, generally speaking, more panoramic and spectacular views, than houses. Of course, many other lovely views add to SF home value as well: sweeping city views; park views; marina views; views of Alcatraz, Marin and Mt. Tamalpais; and of the East Bay and Mt. Diablo. A few lucky (typically, very affluent) condo owners have sensational views from the windows on all 4 sides of their high altitude units.

——————————————————————–


After being bludgeoned in 2015 by thousands of articles, predictions and warnings regarding interest rates, here is a look at how much they actually changed over the course of the year: Approximately one seventh of one percent. Per recent signals from the Fed, presumably mortgage rates will rise in 2016, but expectations over the last 6 years have been confounded far too often to be sure. Significant increases would certainly worsen the affordability equation for homebuyers financing their purchases.

——————————————————————–

Seasonality: Waiting for Spring


The 2 charts above illustrate the extreme seasonality of the market, both in the numbers of new listings coming on market, and the percentage of listings that accept offers (a measurement of supply vs. demand). The second chart also shows that the market for homes under $2 million has been hotter than the luxury home market: There are fewer buyers at the very high end, and luxury homes are also most prone to significant overpricing.

The spring selling season, which actually started in February last year, is typically the most feverish, and this is especially true for luxury homes: Notice, in the 2nd chart, the huge spike in demand for luxury homes last spring.

——————————————————————–

Average Dollar per Square Foot Values

——————————————————————–


Luxury home sales hit new peaks in spring 2015, but with the stock market volatility in late August and September, the market softened, inventory grew (to its highest point ever) and sales dropped by about 17% in October, year over year. (Affluent buyers and sellers are most influenced by financial market volatility.) However, the stock market then recovered and stabilized in October and buyer confidence improved, which is reflected in the year over year increase in sales that occurred in November and December.

Remember that sales in one month generally reflect the state of the market 3 to 6 weeks earlier, when the sale terms were negotiated: Stock market angst in September meant a weaker luxury home market in October; the stock market recovery in October brought about a stronger real estate market in November and December. Q4 2015 sales ultimately ended slightly up from Q4 2014.

Charts: Luxury House Sales by District & Luxury Condo Sales by District

——————————————————————–

Details, Amenities & Size


The above details are as described in MLS by listing agents, so the numbers are very approximate. Also note that what most people might see as a unit above a laundromat, an enthusiastic listing agent might see as a rarely available luxury penthouse.



One of the reasons the Pacific Heights district has by far the highest house prices in the city is that its average house size is so much larger. However, its mansions also command a very high dollar per square foot value, as seen in one of the earlier charts.


——————————————————————–


The sales of condo shall continue to make up a larger and larger share of overall home sales in San Francisco, as new condo construction continues apace. (Condos also turn over more often than houses.) Very few new houses are built in the city and they are usually big, high-tech, beautiful and costly.

——————————————————————–

Where the Most Home Sales Occur

——————————————————————–


San Francisco is very much a boutique market for multi-unit buildings: Our apartment buildings are generally much smaller, older and, for that matter, more gracious than those found in the suburbs. These properties are often at the heart of fierce controversies pertaining to rent control, tenants’ rights, tenant evictions, and condo conversion rules. There has been an immense increase in market rate rents over recent years (SF is the most expensive rental market in the country), though rules restrict increases for existing tenants of buildings built before 1979 (i.e. almost all of our apartment buildings).


The tenancy-in-common unit with an exclusive right to occupy, aka the TIC, is a property type rarely found outside of San Francisco. It was originally created as a way for sellers of multi-unit properties to get significantly more money: The individual unit sales adding up to more than the purchase of the entire building by one buyer. However, they also provided a lower cost alternative for homebuyers, since TICs typically cost 10% to 15% less than comparable condos. (The TIC phenomenon also generated significant legal fees for the lawyers who came up with the idea.) Because of changes in tenant eviction law and condo conversion rules, financing and other issues, the number of TIC sales has plunged since its peak in 2007. On the other hand, some TIC units are now selling for jaw-dropping prices: In 2015, 4 sold for over $5 million. The median TIC sales price last year was $947,000.

Map of San Francisco Neighborhoods

Please call or email if you have any questions.

————————————————————————–

Some 2015 totals are projections based on MLS data available within the month of December. 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.


© 2015-2016, Paragon Real Estate Group
 
Wishing you and yours a safe, healthy, prosperous and happy New Year.
Paragon Real Estate Group
www.paragon-re.com/
Irina Luck
Lic# 01927187
1400 Van Ness Avenue
San Francisco, CA 94109
Direct 415.738.7206
Cell 415.722.4461
iluck@paragon-re.com
 

http://www.irinaluck.com/2016/01/08/586/

San Francisco Real Estate Update: Interesting Autumn Market


Paragon Real Estate Group
Paragon Real Estate Group
 

San Francisco Real Estate Report

 

Heading into the Holiday Slowdown
after an Interesting Autumn Market

 

December 2015 Update, including 11 custom charts

Median home prices, over-bidding, housing affordability,
luxury home sales, the new-home construction pipeline,
and comparing the Shanghai and S&P 500 stock indices

————————————————————

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

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

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

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

Our full report is here: S&P Case-Shiller Index for SF Metro Area

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

————————————————————

San Francisco Luxury Home Market

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

————————————————————

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

————————————————————

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

————————————————————

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

Bay Area Housing Affordability & Market Corrections

San Francisco New-Housing Pipeline Update

Information regarding San Francisco neighborhood prices and trends can be found here: San Francisco Neighborhood Values

————————————————————

 

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. How any median or average statistic applies to a particular home is unknown without a specific comparative market analysis. Sales statistics of one month generally reflect offers negotiated 3 – 6 weeks earlier. Short-term fluctuations are much less meaningful than longer-term trends.© 2015 Paragon Real Estate Group

No one knows San Francisco real estate better than Paragon.
Paragon Real Estate Group
www.paragon-re.com/
Irina Luck
Lic# 01927187
1400 Van Ness Avenue
San Francisco, CA 94109
Direct 415.738.7206
Cell 415.722.4461
iluck@paragon-re.com

 

New Case-Shiller Released

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

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

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

Case Shiller High Tier

image001

 

Top 20 Overbids!

Check out the top 20 overbids of the last two weeks. I wrote an offer for my client on one of them: a small 1 bedroom cottage on Wisconsin street in Potrero Hill. The house was listed at $899k and ended up selling for $1,230,000, whooping 37% over asking with “only” 6 offers…This little cottage on the top of the hill has a lot of potential, located on the northern slope with eastern exposure and views of the Bay Bridge and downtown. See more here:

See the latest top 20 overbids here

722 wisconsin

October 2015 San Francisco Real Estate Market Report.



Paragon Real Estate Group
 
Paragon Real Estate Group

The San Francisco Real Estate Market

Home-Buying vs. Gold & Apple Stock – as an Investment,
Median Home Price Appreciation & Neighborhood Values,
the City’s Most Expensive Condo Buildings

October 2015 Report, including 11 Custom Charts

————————————————————

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

————————————————————

Short-Term & Long-Term

San Francisco Home Price Appreciation

2011 – 2015, by Quarter


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

1994 – 2015, by Year

————————————————————

Return on Cash Investment

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


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

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

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

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

————————————————————

Median Sales Prices by Neighborhood

2-Bedroom Condos in San Francisco

3-Bedroom Houses in San Francisco

————————————————————

Market Dynamics

Sales Price to List Price Percentages
& Average Days on Market


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


Months Supply of Inventory

Seasonality, Luxury and Non-Luxury Homes


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

————————————————————

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

The Most Expensive Condo Buildings in San Francisco


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


————————————————————

3rd Quarter Market Snapshot

————————————————————

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. How any median or average statistic applies to a particular home is unknown without a specific comparative market analysis. We are not qualified to render legal or tax advice of any kind. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.


© 2015 Paragon Real Estate Group
 
No one knows San Francisco real estate better than Paragon.
Paragon Real Estate Group
(415)738-7000 | (415)565-0500 | www.paragon-re.com/
Irina Luck
Lic# 01927187
1400 Van Ness Avenue
San Francisco, CA 94109
Direct 415.738.7206
Cell 415.722.4461
iluck@paragon-re.com
 

Interactive San Francisco Neighborhood Median Home Price Map (sales 3/1/15-9/7/15)

Autumn Home Selling Season and Market Volatility

Autumn Home Selling Season Begins
against Backdrop of Market Volatility

September 2015 Report for San Francisco
Including 12 custom charts

————————————————————

Real estate markets are essentially determined by the balance – or imbalance, as is often the case – between buyer demand and seller supply of homes to purchase. Underlying that dynamic are economic, political and demographic factors – some local, some not – such as population growth, employment, new home construction, high-tech booms, consumer confidence, interest rates, affordability, IPOs, stock market movements, shenanigans in Congress, and SF ballot proposals, to name a few. Even environmental factors, such as droughts and earthquakes, can jump in and affect the market. These factors are all jostling for effect, ebbing and flowing, sometimes appearing out of nowhere to shake things up, or suddenly shrinking and quickly forgotten.

We are neither blithe optimists, for whom boom times will never end, nor inveterate pessimists, who see bubbles and crashes behind every shrub. For what it’s worth, based on our survey of current economic fundamentals, we don’t expect an imminent crash in the U.S. stock market or in Bay Area real estate values. (This short New Yorker article is excellent on recent market volatility: Drop in the Bucket) However, economies and markets naturally experience fluctuations – short-term ups and downs, times of slowing and flattening – and it’s certainly possible that the balance between buyers and sellers might shift, that the frenzy in our market may subside, and that home prices may plateau or even tick down to some degree. On the other hand, due to the scale of our high-tech boom (another area of exuberantly conflicting predictions) and our deeply inadequate supply of housing, demand may continue to exceed supply, and the pressures of recent years may continue until new-home construction makes a more significant contribution to inventory.

————————————————————

New Listings Coming on Market


September is usually the single month with the greatest number of new listings, and those that hit the market in the 4 to 5 weeks after Labor Day feed the vast majority of autumn sales activity until the market goes into hibernation mode in mid-late November. Preliminary indications are that this may be a very big new-listing month, even for a September. If this is true, and especially if it marks the beginning of a trend of more listings coming on market, that could cool the ferociously competitive, low-inventory, “seller’s market” of recent years. If buyers are more hesitant due to recent financial-market volatility, that would also cool the market. But, in our opinion, neither factor is likely to flip us into a crashing or recessionary market.

————————————————————

Percentage of Listings Accepting Offers


This chart illustrates the surge in buyer demand from the end of the last recession through the 2012 – 2015 recovery. Having the percentage of listings accepting offers over 50% and sometimes well over 60% in a given quarter – extremely high percentages historically – has applied consistent upward pressure on home prices. Demand usually peaks during the spring and autumn selling seasons, i.e. in the 2nd and 4th quarters.

Additional market indicator analyses can be found here: SF Market Overview Analytics

————————————————————

S&P Case-Shiller Home Price Index


An updated Case-Shiller Index chart for the 5-county San Francisco Metro Area, outlining the real estate market cycles going back to the 1980’s. (The June Index was released on August 25th.) It is noteworthy that over the past several decades, we’ve never seen a crash or significant “correction” in our real estate market that was not in conjunction with a major, sustained, national economic event. This chart also suggests that SF buyers who purchase homes 1) they can afford in the first place, 2) using fixed-rate mortgages, and 3) for longer-term ownership, usually come out all right, and often fabulously well, despite periodic market declines.


“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.” 


Homeownership & Wealth Creation, 11/30/14, NYT op-ed article


The Case-Shiller chart above reflects sales in the upper third of Bay Area home sales (i.e. “high-price-tier”) – which applies best to SF homes. Even in the high tier, the city has generally outperformed the Bay Area in home price appreciation. The numbers on the graph refer to a January 2000 price of 100; thus, the number 217 signifies a price 117% above then. It is interesting to note, that as of the June Index report, all three Bay Area home-price tiers – low, mid and high – have readings of 117% appreciation since 2000, which may be a sign of an equilibrium being reached in the market. Our full report: Case-Shiller for SF Bay Area

————————————————————

Bay Area Housing Affordability


The California Association of Realtors recently released its Housing Affordability Index (HAI) for the 2nd quarter of 2015. All Bay Area counties saw declines in their affordability index reading – which measures the percentage of households that can afford to buy the median priced single family dwelling (house) – and San Francisco is now only 2 percentage points above its all-time low of 8%, last reached in Q3 2007.

VERY LOW AFFORDABILITY AT A TIME OF VERY LOW INTEREST RATES IS CERTAINLY A CONCERN, BUT HOUSING AFFORDABILITY IS A COMPLEX SUBJECT AND THERE ARE OTHER FACTORS AT PLAY IN SAN FRANCISCO. OUR FULL REPORT, which also charts median home prices, rents, interest rates, inflation-adjusted housing costs and household income by county is here: Bay Area Housing Affordability

————————————————————

Where to Buy at What Price Point


We’ve recently updated our report on where one is most likely to find a house or condo in one’s price range. The chart above is 1 of 7 delineating San Francisco neighborhoods with homes from under $1 million to over $5 million: San Francisco Neighborhood Affordability

————————————————————

Median Home Prices and Economic Indicators


A glance at recent movements in San Francisco’s median home sales price, as well as at a few longer-term local and national economic indicators.


Monthly fluctuations – often seasonally related – have been common since

2012, but home prices have consistently climbed higher over the longer term.

National and San Francisco unemployment trends: Very positive.

Over 100,000 new SF jobs – many of them very well paid – have been created since 2009.

(The housing supply has increased by less than 15,000 units.)

Household debt to GDP and mortgage debt service ratios – huge issues

 in the 2007-2008 crash – have significantly declined since then.

Sustained movements in the S&P 500 Index largely correlate to SF home-

price trends. Short-term financial-market fluctuations typically have no effect.

Price to Earnings (PE) Ratios of the S&P 500 Index climbed a bit high

 in mid-2015, but not egregiously so compared to historical averages.

Our goal is not to convince you of a certain position, but to provide you with what we believe to be reliable data, so that you can make your own informed decisions.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.


© 2015 Paragon Real Estate Group