What Costs Where in San Francisco


What Costs How Much Where in San Francisco
& Other Angles on the City Real Estate Market

March 2017 Report


————————————————————

Where to Look to Buy

 for the Price You Want to Pay

Below are 3 charts from our updated 9-chart report that breaks down which neighborhoods one is most likely to find a home within a specific price range, whether house or condo. The report covers homes from under $1 million to over $5 million.

If you want to buy a house under a million dollars, one is now mostly limited to the neighborhoods that run across the southern border of San Francisco.



The full report is here: San Francisco Neighborhood Affordability


What Can I Buy for $1,200,000 or $2,000,000?


Below are illustrations of the wide range of homes (and, to some degree, lifestyles) one might buy at two different price points in the city. The higher a home is located on the vertical axis of the charts, the greater its square footage. (Note that the bathroom specifications can be a little screwy, for example 1.3 or 1.7 baths, because these are averages of homes sold at these approximate price points.)

$1,200,000 is approximately the median home price in San Francisco if one combines both houses and condos. For that price, one could buy a 4-bedroom, 2135 square foot house in Ingleside or Oceanview, or a 3-bedroom, 1566 square foot house in Outer Parkside, or a 2-bedroom, 1070 square foot condo in Pacific Heights.



For $2 million, one could purchase a gracious 4-bedroom, 2650 square foot, detached house on a large lot in Forest Hill, or a classic 2-level, 3-bedroom, 1900 square foot condo with a garden in the Marina, or a 2-bedroom, 1350 square foot, luxury high-rise condo with spectacular views in South Beach.


————————————————————

Quick Market Update


December through February constitute the slowest sales months of the year and are subject to significant seasonal issues, so coming to definitive conclusions about where the market is heading based on their data is difficult. However, for what it is worth, comparing the 3-month period to the same period a year ago, the median house sales price at $1,290,000 is up 4.5% and the median condo sales price at $1,050,000 is down 4.1%. As mentioned in earlier reports, the big dynamic affecting the condo market has been the surge of new-construction inventory hitting the market in the past year, just as demand started to soften. The inventory of new condos for sale is now at its highest level in 7 years, and, not surprisingly, this is impacting the supply and demand dynamic for condos, especially in those districts where new construction is concentrated. On the other hand, the inventory of house listings continues to remain at record lows, keeping that market, especially its more affordable segments, quite competitive.

This chart below reflects the latest Case-Shiller Home Price Index for the 5-county metro area house market, going through the end of 2016. It illustrates how in 2016, more affordably-priced houses continued to appreciate significantly, while the most expensive segment basically plateaued. Generally speaking, this is a common dynamic around the Bay Area.


San Francisco Median Home Price Trends since 1994
For a longer-term perspective

New Listings Begin Pouring onto the Market Again


The period from March through May is usually the most active selling season of the year, and we will soon have more conclusive indications of where the 2017 market is headed. This next chart illustrates the typical, dramatic surge of new inventory that fuels sales during this season.


————————————————————

San Francisco Home Sales with Views


SF is a city known for its wide variety of gorgeous views, which can add substantially to the value of a home so graced. Of all the house sales in 2016, only 88 reported having a Golden Gate Bridge view, and some of those were peek-a-boo views (i.e. if you lean out the bathroom window on the top floor) or roof deck views. A full-on, panoramic view of the GG Bridge from Pacific Heights adds over $1 million to the median house price there. Unsurprisingly, condos have the most, and most spectacular, views due to high-rise condo projects.

San Francisco Home Sales by Bedroom Count

————————————————————

Renting vs. Buying in San Francisco

Comparing the purchase, with 20% down, of a 2-bedroom/2-bath condo

 with the rental of a comparable apartment in San Francisco


Every year or so, we like to update this analysis using current median sales prices and average rents for comparable 2-bedroom condos and apartments. Rent vs. buy calculations can be performed a wide variety of ways, and results will depend on your own financial circumstances and economic projections, which you should review with your accountant. There is a versatile calculator published by The New York Times, where one can play with all the financial factors involved: NYT Rent vs. Buy Calculator. Our analysis represents simply one scenario, which is meant to be more of an invitation to perform your own calculations than a definitive conclusion on the subject.

Depending on your circumstances, plans and predictions for the future, renting may well be the best choice for you. However, low interest rates, high rents, loan principal pay-down over time, inflation and appreciation rates, and the large tax benefits that accrue to homeownership typically give a large long-term financial advantage to buying, if you have the funds for the cash down-payment. (Of course, as with any investment, financial results will ultimately depend on your purchase and sale dates.) This next chart compares net monthly housing costs between renting and buying after tax deductions and principal repayment are accounted for. Our full report goes into much greater detail, such as the accumulation of wealth, in the form of home equity, over time. Please contact me if you would like a copy.


————————————————————


Other recent Paragon reports you might find interesting:

Comprehensive Survey of the 2016 Market in San Francisco

San Francisco Luxury Homes Market Report

A Survey of Real Estate Markets around the Bay Area

Bay Area & San Francisco Home Price Maps


————————————————————

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.

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


© 2017 Paragon Real Estate Group

SF February Real Estate Market Report



Paragon Real Estate Group
 
Paragon Real Estate Group

The San Francisco Real Estate Market

Sales Price Trends, Neighborhood Values, Seasonality & Demand,
Condo Construction, the New SF “Airbnb” Law, Appreciation vs. Inflation

February 2015, Paragon Real Estate Group

The market just begins to wake up in January, so its statistics are not particularly illuminating. The last 3 springs in San Francisco saw frenzied markets, which took its home values to new heights. While waiting to see what develops in 2015, this report will drill down on other angles of our distinctive real estate market.

Note: On February 1st, San Francisco’s new short-term residential rental ordinance, the so-called “Airbnb law,” went into effect. In order to legally rent out your home for less than 30 days, there are a number of requirements pertaining to registration, insurance, advertising and taxes, as well as limitations on such rentals. Information and forms can be found here: SF Planning Department.


————————————————————

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.

————————————————————

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 & 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 progressively 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


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 vacations and 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.”


————————————————————

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.


————————————————————

Seasonality & Demand


This graph from our updated report on market seasonality measures the ebb and flow of buyer demand as compared to the supply of homes available to purchase. For the last 3 years, spring has been the highest demand season of the market, leading to significant home price appreciation.


————————————————————

Bay Area Rent Appreciation


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


————————————————————

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 how they apply to any specific property is unknown without a tailored comparative market analysis. All numbers should be considered approximate. Please contact us with any questions or concerns.


© 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