San Francisco Real Estate Market – New Year Report

San Francisco Real Estate Market

Looking Back on 2017

& Forward to 2018

January 2018

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The median SF house sales price in 2017 was $1,420,000 (up from $1,325,000 in 2016), and for condos, it was $1,150,000 (up from $1,095,000). Looking just at the 4th quarter, median prices were $1,500,000 for houses (up from $1,350,000 in Q4 2016) and $1,185,000 for condos (up from $1,078,000).


San Francisco, CA, National Home Price Trends

San Francisco Median Home Prices by Quarter


Additional chart: Bay Area Median Home Price Trends by County

The chart below, based on CoreLogic S&P Case-Shiller Index data, tracks general price appreciation trends of homes in the upper third of prices in the 5-county SF Metro Area. Case-Shiller does not base their calculations on median sales price changes but uses its own proprietary algorithm. This chart has been simplified to only reflect percentage increases and decreases from various points in real estate cycles. Since it covers 5 counties, it is a very generalized illustration.

Case-Shiller San Francisco Bay Area Home Price Trends

Link to our full report on the Case-Shiller Home Price Index

Link to our report on Bay Area real estate cycles

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Moving into 2018, there are a lot of spinning plates in the air – local, state, national and international factors that could affect markets. 2017 saw real estate markets surge and financial markets soar. After some cooling from mid-2015 to mid-2016, the Bay Area high-tech economy surged back into high speed, with companies leasing enormous spaces in newly built office buildings – which they will presumably fill with new hires. Unemployment rates have flirted with historic lows, and 2018 may see some major local IPOs, which could create great quantities of new wealth. The Bay Area still has probably the most dynamic, innovation-fueled economy in the world and indisputably remains among the great metro areas on the planet – but there are also social, economic, political and environmental challenges looming as well.

Congress delivered an unpleasant holiday present to many Bay Area residents in the form of federal tax law changes limiting the deductibility of mortgage interest and state and local taxes. The effect of these changes make living in an already high cost-of-living area more costly for many residents, and also reduce some of the financial incentives of homeownership, especially for more expensive homes. Predictions on the effect of these tax changes on local housing markets and the business environment range from one extreme (economic devastation) to the other (shrug), and the state legislature is currently working on bills that might blunt the negative financial impacts. It is too early to guess how it will all play out. We live in interesting times.

This report will range far and wide looking at real estate, and some economic and demographic issues that impact it. Most of the charts are self-explanatory, so we have kept the text to a minimum. A review of annual, year-over-year, real estate market trends in San Francisco are at the end of this report.

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San Francisco Home Sales by Property Type

San Francisco Probates Views Values

San Francisco New Home Listings Coming on Market


Link to our report on market seasonality

California Migration Trends in 2016


Link to our analysis of domestic and foreign migration trends

Link to our survey of SF and Bay Area demographics

San Francisco Employment Growth by Year

S&P 500 Index by Year

Annual Mortgage Rate Trends


Link to our report on economic context factors

San Francisco Housing Affordability Trends


Link to our report on Bay Area housing affordability

San Francisco Bay Area Rent Trends


Link to our report on the apartment building market

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San Francisco Luxury Homes Market

San Francisco Luxury House Sales by Year

San Francisco Luxury House Sales by Neighborhood

San Francisco Luxury Condo Sales by Year

San Francisco Luxury Condo Sales by Neighborhood

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SF Home Prices by Neighborhood


The following tables and charts are part of a larger survey, which can be provided upon request.

San Francisco Neighborhood & District Map

San Francisco houses under a million dollars

San Francisco 4-bedroom house prices

San Francisco 3-bedroom house prices

San Francisco 2-bedroom condo prices

San Francisco Condo Sales by Price Segment

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Annual Market Trends


Most of these annual trend charts show the market heating up again in 2017 after some cooling in 2016. Very generally speaking, since 2015, the house market has been hotter than the condo market, and the more affordable neighborhoods hotter than the more expensive. But 2017 was a strong year across virtually all market segments.


San Francisco annual median house price percentage changes

 San Francisco annual condo price percentage changes

San Francisco Listings Selling Quickly

San Francisco Home Price Overbidding

San Francisco Days on Market by Year

San Francisco Months Supply of Inventory by Year

San Francisco Supply and Demand Trends


All our real estate analyses can be found here: Paragon Market Reports

Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

If you will forgive a little celebration on our part: In 2017, Paragon became the largest brokerage in San Francisco by dollar volume sales of residential and multi-unit residential real estate (as reported to MLS, per Broker Metrics). We opened our doors in 2004.


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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

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. Late-reported MLS activity may change certain statistics to some small degree.


© 2018 Paragon Real Estate Group

San Francisco Real Estate Market – Q3 report

Extremely Low Inventory + Continuing Strong Demand =

High-Pressure Q3 San Francisco Real Estate Market

October 2017, Q3 Review

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Year-over-year, a low inventory homes market dropped even lower, while buyer demand increased to keep the pot boiling in San Francisco through the third quarter, when activity typically cools down between the spring and autumn selling seasons. Since closed sales in each month mostly reflect the market heat in the previous month, when the offers are actually negotiated, we will not have hard data on September until October sales data becomes available in November. One thing we do know is that the number of new listings coming on market in September, which is usually the month of the year with the highest number of new listings, is down considerably from last year – but the number of listings accepting offers increased: Less inventory, but more demand.


Q3 SF Median Home Sales Price Changes since 2005

San Francisco Q3 Median Home Price Trends


The Q3 SF median house sales price was $1,365,000 and the median SF condo sales price was $1,175,000, considerable year-over-year increases over Q3 2016 prices: 7% and 11% respectively. It is not unusual for median prices to drop from Q2 to Q3, to a large degree due to the seasonal decline in luxury home sales, as well as the typical overall market cooling during the summer, and this occurred for houses, which dropped $75,000 from Q2, similar to drops in previous years. Condos bucked the trend and increased $40,000 quarter to quarter. (Q2 to Q3 change is not illustrated on this chart.) However, while the house inventory in the city has been relatively unchanged for 60+ years, tens of thousands of new condos have come into the market over recent decades, which means that comparing the basket of sales in different periods is not always apples to apples.

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Q3 San Francisco Market Trends since 2005
Comparing Q3 statistics for the past 12 years

Q3 New Listings Coming on Market since 2005


New listings hitting the market dropped appreciably year-over-year, doing no favors for buyers competing for homes in Q3 overall, and in September specifically.

San Francisco Q3 New Home Listings on Market

Months Supply of Inventory (MSI), Q3 since 2005


MSI compares demand to supply in one statistic: The lower the MSI, the higher the demand vs. the number of listings available to purchase. The MSI for the SF house market in Q3 2017 was as low as in any Q3 during the past 12 years. For San Francisco condos, the MSI was somewhat higher, but still historically low (but does not include the substantial inventory of new-project condo listings, not listed in MLS). Both are down significantly from Q3 of 2016: 2016 was a cooler market between two very hot markets in 2015 and 2017.

San Francisco Q3 Months Supply of Inventory

Average Days on Market, Q3 since 2005

San Francisco Q3 Days on Market

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Overbidding List Prices

 since December 2015


In the last 6 years, overbidding percentages have usually declined from the Q2 spring selling season to the quieter Q3 summer market. But not this year: This year overbidding increased in July and September to their highest points since mid-2015.

San Francisco Overbidding Home Prices

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Context Economic Factors to Bay Area Housing Markets


We recently completed a report placing the Bay Area housing market within the context of a wide variety of other economic and demographic dynamics, such as population growth, employment and hiring, the stock and the IPO markets, consumer confidence, interest rates, commercial lease rates, , aging homeowners (who sell less frequently), housing affordability and new housing construction. Because conditions, trends and cycles seen among them are, more often than not, closely interrelated. The full report is online here: Economic Context Report.


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San Francisco Luxury House & Condo Markets


In September, we issued 2 detailed reports on the San Francisco luxury house market, and the SF luxury condo, co-op and TIC market. Above are 2 of many updated analyses. The complete reports can be found here:

Link to our SF luxury house market update

Link to our SF luxury condo and co-op market update


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San Francisco Investment Property Market


After dropping in 2016, SF residential rents appear to be making a small recovery, though the data is still very short-term, and there are thousands of new apartments in the new construction pipeline in the city. This chart is from our latest report on the San Francisco, Alameda and Marin multi-unit residential markets:

Link to our apartment building market report


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Trends in Selected San Francisco Neighborhoods


We have dozens of analyses of appreciation trends within specific SF neighborhoods and districts, and below is a sampling, some by median sales price and others by average dollar per square foot value. Some city neighborhoods plateaued or saw declines in values in 2016, when segments of the market distinctly cooled: Generally speaking, these were more expensive home segments, and condo markets most impacted by new-project condos coming on market with major new supply. Affordable house markets largely continued to appreciate in 2016. In 2017 to date, most areas of the city have experienced further appreciation.

Changes in these statistics do not necessarily correspond exactly to changes in fair market value, as they can be affected by a variety of factors. Neighborhoods with relatively few sales and broader ranges in individual sales prices are most prone to fluctuations unrelated to changes in fair market value. Longer-term trends are always more meaningful than shorter term. If you are interested in a neighborhood not included below, please let us know.



Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

SF neighborhood home price tables: Median Sales Prices by Bedroom Count

All our real estate analyses can be found here: Paragon Market Reports

Over the past 12 months, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage. (Dollar volume sales reported to MLS per Broker Metrics.)


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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

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

How Hot is San Francisco?



Paragon Real Estate Group
 
Paragon Real Estate Group

San Francisco Real Estate:
Another Hot Autumn Market?

September 2017 Report

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Generally speaking, late summer market dynamics (or, for that matter, during the mid-winter doldrums) are not of great significance and do not tell us much about where the market is heading. September, however, is usually the single month with the greatest number of new listings hitting the market in San Francisco, and that surge fuels sales through mid-November, when activity begins to plunge. The coming two months will be the next major indicator: Will the SF market continue to maintain the intense high-demand, low-supply heat of this past spring, or will it cool? While the entire market is affected by seasonality, the luxury home segment is fiercely so, and the next couple months will be the peak selling period for high-end homes until spring 2018 rolls around.


City-Wide Home Appreciation Trends since 2005
Median Sales Prices & Average Dollar per Square Foot Values


As of September 1, the 3-month-rolling median sales price was $1,418,000 for SF houses, and $1,160,000 for condos. The average dollar per square foot value was $907 for houses and $1056 for condos.

San Francisco Median Home Sales Price Trends

San Francisco Average Dollar per Square Foot Trends

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San Francisco Neighborhood Appreciation Rates
2011 to 2017 YTD, Median Sales Price Change


Median sales prices are not perfect indicators of changes in values for specific homes: They can be and often are affected by factors other than changes in fair market value, and shorter-term anomalies are not uncommon. What is certainly true is that every part of the city has seen tremendous appreciation since the recovery began in 2012, however the percentages on the charts below should be considered very approximate indications of the scale of change.

These charts delineate 2011 and 2017 YTD median sales prices by neighborhood, as well as the percentage change between the two. The 2 charts on house appreciation are followed by 2 on condo appreciation. If you wish information on a neighborhood not included in the charts below, please let us know.


SF HOUSE Median Sales Price Appreciation Rates

SF Neighborhood House Price Appreciation


NOTE: A perfect example of how median price changes can misrepresent changes in fair market value can be seen above: Typically, Noe Valley and Eureka Valley (Castro) have very similar median house prices, but in 2017 YTD, the Eureka Valley median price unexpectedly jumped by an astonishing $500,000 (23%), putting it far above Noe, and giving it a much higher overall appreciation rate. However, the average size of houses sold in Eureka Valley so far in 2017 suddenly jumped by 22% from 2016: That is, its houses did not just suddenly and inexplicably have a tremendous jump in value: the average size of homes sold changed, probably temporarily. Monthly median price changes in particular, trumpeted everywhere in the media as vitally important, are often unreliable due to seasonality and the small size of the data set.


SF Neighborhood Home Price Appreciation

SF CONDO Median Sales Price Appreciation Rates


Thousands of newly constructed condos, which typically sell for higher prices than resale condos, have hit the market in recent years, which means year-over-year comparisons are not always apples to apples. Generally speaking, comparable-condo appreciation rates have been well below house appreciation rates since 2015, because of the difference in the supply available to purchase.

San Francisco Neighborhood Condo Price Appreciation

SF Neighborhood Condo Price Appreciation

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The September Rush of New Listings

General Market

San Francisco New Listings

Luxury Home Market


For some reason, September 2016 saw a stupendous rush of luxury home listings coming on market, which among other effects led to the highest monthly number of luxury house sales ever in October 2016. (As an aside, luxury condo and co-op sales hit their highest sales volume this past June.)

San Francisco New Luxury Home Listings

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Where to Look in Your Price Range


In August, we updated our complete series of charts delineating where one is most likely to find a home in a specific price range. Below are 2 of the charts, and the entire series can be found here: SF Neighborhood Affordability.


San Francisco Condo Prices by Neighborhood

San Francisco House Prices by Neighborhood

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National Housing Affordability


This next chart illustrates home affordability for selected metro areas across the country as calculated by the National Association of Realtors. The 7 Bay Area counties, in our 2 metro areas, are the least affordable in the nation – not the happiest of distinctions, except for those planning to sell and move out of the area.


U.S. Metro Area Housing Affordability

San Francisco, California & the United States


The appreciation of home prices in San Francisco since 2011 has out-performed overall state and national markets by a substantial margin.

San Francisco, California and US Home Price Trends

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County House Markets


Since San Francisco is considered the big city in the Bay Area (though San Jose is actually larger), it seems counter-intuitive that its house market is one of the smallest, but this is a major part of its ruling dynamic: Very little supply compared to intense demand. Owners in the city (and the nation) are getting older, and selling their houses ever more infrequently. And virtually no new houses are being built within SF itself.

SF Bay Area House Markets


Condo sales significantly outnumber house sales in SF, and the supply of condos available to purchase has surged with new project construction. This has made that market segment somewhat less heated; condo owners also tend to sell more frequently than house owners. However, the condo market in the city is much more expensive than in other counties.

Bay Area Condo Markets

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Ultra-Luxury House Sales in San Francisco
Houses Selling for $5 Million & Above


A quick look at the very highest end of the SF market. Though other districts, such as the greater Noe-Eureka-Cole Valleys district, have increasingly surged into the luxury home segment, when it comes to the realm of the really big, most expensive houses, the district comprised of Pacific & Presidio Heights, Cow Hollow and Marina dominates with 75% of sales. House sales there can exceed $30m, though that is still very rare.

Most expensive houses in San Francisco

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Bay Area Home Price Appreciation
per the S&P CoreLogic Case-Shiller Index


Earlier in this report, it was mentioned that median price changes can sometimes be unreliable as indicators of actual appreciation. However, the S&P Case-Shiller Home Price Index measures appreciation using its own special algorithm tracking resales of the same home, and it does not use median sales prices. This first chart below, based on Case-Shiller, is a simplified, smoothed-out look at the up and down cycles over the past 33 years in the higher end of the Bay Area real estate market, which predominates in most of the city, Marin, San Mateo and areas like Piedmont, Diablo Valley and Lamorinda. Because it covers 5 counties, it merges the differences between their separate markets into a single trend line.

San Francisco Bay Area Home Price Cycles


This second Case-Shiller chart illustrates how homes in different price segments around the Bay Area have recently been appreciating at considerably different rates. C-S divides all the Bay Area house sales into thirds by number of sales: low-, mid- and high-price. As illustrated in the lower green line, the higher-priced segment went flat in appreciation in 2016, but then jumped back to life in 2017. The most affordable price segment (top blue line) has been experiencing the highest pressure of buyer demand and competitive bidding, and since April 2016, has out-appreciated the most expensive segment, 12.4% to 4.3%, i.e. almost triple the rate of increase. The middle price segment (gold line) has been in between, appreciating by 7.8%.

These dynamics are generally true within each county, as buyers, somewhat desperately, search for homes they can still afford, in the area they wish to live.

The numbers on this chart all refer to a January 2000 home price of 100. Thus 262 signifies a price 162% higher than in 2000.

Case-Shiller SF Home Price Trends by Price Tier

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Months Supply of Inventory (MSI)


The lower the months supply of inventory, the higher the demand as compared to the supply of homes available to purchase, i.e. lower MSI equals a hotter market. The entire Bay Area has been experiencing very, very low MSI figures recently, with San Mateo at rock bottom. (Its median house sales price has just recently been exceeding the median price in the city.) Alameda and Contra Costa Counties, generally offering considerably more affordable home prices than Silicon Valley, San Francisco and Marin are also at extreme lows.

Within SF itself, the MSI for houses alone, and especially in the more affordable neighborhoods, is substantially lower than the MSI for condos, though both have been very low since spring began.


SF Bay Area Months Supply of Inventory

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Mortgage Interest Rates


Since the election, interest rates have seen a wild ride, first up and then down. As of the end of August, rates hit their lowest point so far in 2017, a significant financial advantage for buyers.

Mortgage Interest Rate Trends


Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

All our many Bay Area real estate analyses can be found here: Paragon Market Reports

Over the past 12 months, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage. (Sales reported to MLS per Broker Metrics.)


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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

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
 
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
 

Gold, Google & the San Francisco Real Estate Market



Paragon Real Estate Group
 
Paragon Real Estate Group

Gold, Google, Facebook & San Francisco Homes
Return on Investment Rates since 2011

Penthouses, Probates, Fixer-Uppers & Panoramic Views
A Survey of the SF Real Estate Market in 2016

January 2017 Report
including over 20 custom charts


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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.

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.

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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


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.



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.


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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


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


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


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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.



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

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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.


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.


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.

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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
 
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
 

Could you guess the hottest neighborhood in San Francisco right now?



Paragon Real Estate Group
 
Paragon Real Estate Group

The Hottest Neighborhood Market in San Francisco
and Other Real Estate Analyses

October 2016 Paragon Market Report


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Before jumping to neighborhood market dynamics and the hottest market in the city, here are a few overview analyses:


San Francisco Median Home Prices by Quarter
2012 – 2016


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 above that of Q3 2015, while the condo median price has stayed essentially flat.

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San Francisco Median Home Prices by Year
1993 – 2016

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Biggest Surge in New Luxury Home Listings Ever


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.

The Hottest, Most Competitive Market in San Francisco

A Shift from Prestigious, Expensive, High-Tech and Hip

to Normal, Middle-Class, Working-People Affordable


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 of 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; its closeness to the beach, GG Park and highways south to Silicon Valley; and its attractive, modest-sized houses built mostly in the decade before and decade after WWII, is now the hottest, most competitive market in San Francisco.



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 districts. (Some of the condo markets have softened more significantly.)


Overbidding Asking Prices: SF House Sales

Percentage of House Sales Selling over Asking Price

SF House-Price Appreciation Rates

Average Days on Market

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

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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 cooling 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.

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District Sales Overview
Sales Volumes and Sales Prices


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.



25 years ago, the greater South Beach/ SoMa/ Mission-Bay area did not 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 old-prestige 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.


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


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.

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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
 
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
 

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.


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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


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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