Category Archives: SF Market Trends

1000+ Things to Do and Enjoy in San Francisco & the Bay Area

 


Paragon Real Estate Group
 

Paragon Real Estate Group


1000+ Things to Do and Enjoy
in San Francisco & the Bay Area

Out of town guests are arriving, the kids are hungry, the dog is restless, or you are just lying on the couch reading email and need something to motivate you to get up and out of the house.


Dinner, brunch, burritos, burgers, desserts, bars, music, dance, theater,
walking, biking, hiking, and things to do with visitors, children and dogs

Place Magazine

Paragon Real Estate Market Reports

Note: You will undoubtedly find yourself disagreeing vehemently
with one or more of the above lists: best burrito, brunch and dive bar are
particularly contentious, ferociously disputed issues in the Bay Area. We hope you will accept our apologies for any egregious errors.


© 2017 Paragon Real Estate Group
 
Pota Perimenis–helping you make the right moves in real estate.
Paragon Real Estate Group
www.paragon-re.com/

Pota Perimenis
Lic# 01117624
1400 Van Ness Avenue
San Francisco, CA 94109
Cell 415-407-2595
pperimenis@paragon-re.com
www.sfcityhomes.com

Income, Employment, Education, Poverty & Home Prices

 


Paragon Real Estate Group

Paragon Real Estate Group
 

Income, Employment, Education, Poverty & Home Prices

A Survey of San Francisco Bay Area
Real Estate Markets & Demographics

 

Which counties are most expensive or most affordable, have the highest overbidding and appreciation rates? Which are healthiest, most educated, have the highest incomes or worst poverty percentages? What cities have the biggest, most expensive homes? And where do Bay Area residents come from?

August 2017 Report

 


Median House Price Appreciation since 1990

 


Appreciation trend lines are largely similar across the Bay Area, but some counties have outperformed others. Solano is still well below its previous peak price ten years ago, and Sonoma and Napa are just now coming back up to their previous highs. However, most of the other counties have exceeded their 2006-2007 peaks, sometimes by very wide margins. As will be explored further below, proximity to the heart of the high-tech boom has been one of the major factors in recent appreciation rates. However, it is worth noting that in the past year and a half, appreciation rates in less expensive towns and neighborhoods have typically been higher than in more expensive areas, an indication of the sometimes desperate search for affordable housing – however that might be defined within the context of any given market.


————————————————————Average Dollar per Square Foot Values

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The Most Expensive Places in the Bay Area

By clicking on map, you can also access our full collection of home price
maps delineating current city home prices throughout the Bay Area.


Note: Diablo in Contra Costa with 6 sales at a median price of $2.73m, and Penngrove in Sonoma with 13 sales at a median price of $919,500, had higher prices than Alamo and Healdsburg in the period measured, but because of their very low number of sales, we highlighted the larger markets on the map above.


————————————————————Annual Home Price Appreciation Rates
since 1996 and 2011


This table below illustrates annual compound appreciation trends going back to the post-recession recovery that began around 1995, and also from the current post-2008-crash recovery which started in 2012. This is based upon someone purchasing their home all cash: If one had purchased with a 20% downpayment, then the annual compound rate of appreciation of that cash investment would be much, much higher.


 


There are 3 big factors behind local appreciation rates: 1) the emergence of the Bay Area in the past 20 years as an international, economic powerhouse, which generally lifted all markets, 2) how close the specific market is to the white-hot centers of the high-tech boom (SF and Silicon Valley), and, 3) how badly the county was hammered by the foreclosure crisis, since those markets whose prices fell 50% or more to unnatural lows bounced back more on a percentage basis than those counties less affected by the subprime catastrophe.

SF has had the highest compound annual rate since 1996: It is the epicenter of the Bay Area high-tech, bio-tech and fin-tech economic miracle. But Oakland soars above all other markets in appreciation since 2011, because of a combination of factors: It is the closest affordable alternative to much higher SF prices; it is a lively, multi-cultural urban area appealing to high-tech workers; and its housing prices dropped an astounding 60% after the 2008 crash, which set them up to fly upward once the heavy anchor of distressed property sales was removed.

Having complete confidence in our ability to predict what will happen in the past, we now recommend that all our clients go back in time to 1995 or 2011 and buy as many homes as possible.

————————————————————Economic & Demographic Factors


Underpinning the Bay Area real estate market and general economy are often amazing, but sometimes worrisome statistics. Below are tables and charts ranking counties, zip codes and cities by a variety of parameters. The Bay Area ranks extremely high in income, education, employment rates and general health factors, often grabbing almost all the top rankings, but it is also unhappily high in income inequality, housing unaffordability and poverty.


Bay Area City & Zip Code Income Rankings


Atherton has the highest median household income and the highest median income per worker in the state, followed by a handful of other nearby, highly affluent, Silicon Valley communities. In San Francisco, South Beach and the Presidio zip codes make the top rankings, but note that several of the most expensive neighborhoods in SF are in zip codes that mix highly affluent with less affluent areas (such as Pacific Heights and Western Addition, or Russian Hill and the Tenderloin). SF also has much higher percentages of residents who are tenants, and generally speaking, renters have lower incomes than homeowners.

In Marin County, Belvedere, Tiburon, Kentfield and Mill Valley make the lists; in Contra Costa, the Diablo Valley & Lamorinda communities of Blackhawk, Alamo, Lafayette, Orinda and Moraga rank highest; in Alameda, Piedmont is in the top 10 cities for median worker earnings.


Bay Area zip codes utterly dominate the CA rankings for higher education, taking 14 of the top 15 spots out of about 2600 zip codes. Unsurprisingly, high positions in income usually correlate with the same in education (and having UC Berkeley and Stanford in our midst was a help): Top Zip Codes for Higher Education

If you wish to explore Bay Area rankings by other criteria: Top 25 Rankings in California

Employment & Unemployment

High-tech employment in SF & San Mateo Counties illustrates
broader trends in hiring: massive growth and some recent cooling.

Unemployment rates are bumping against historic lows.

Bay Area Poverty Rates & Housing Affordability

Beneath surging affluence, significant percentages of county populations
are living in poverty. High housing costs are a big factor.

Housing affordability percentages are approaching historic lows in some counties,
a huge Bay Area political, economic and social issue. If interest rates start to go up
considerably, the picture will worsen, but so far they have remained quite low.


Link to our mortgage interest rate chart

Link to our full report on Bay Area housing affordability

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Bay Area Luxury Home Markets


Santa Clara is by far the biggest luxury home market in the Bay Area by the number of homes selling for $2m+, but then its overall market is also the largest, more than 2½ times larger than that of San Francisco. Average dollar per square foot values for luxury house sales are surprisingly similar across Santa Clara, San Mateo and San Francisco, with Marin County just a notch lower. Moving further out, one gets considerably more luxury house for the money.

Generally speaking, SF luxury condos and co-ops command the highest dollar per square foot values in the Bay Area: Think fabulous units on high floors of prestige, ultra-amenity buildings with absolutely staggering views.

Calculating luxury markets by the top 10% of sales, the thresholds for the luxury designation vary widely: For example, in Sonoma, the threshold is about $1,125,000 for houses, while in San Francisco, it is about $3m.

————————————————————Other Angles on Bay Area Market Dynamics
Bay Area Condo Markets

Overbidding


Average Days on Market


Bay Area Market Sizes


Bay Area Rents

Rents are even more sensitive to hiring trends than home prices.

Link to our apartment building market report

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Additional Demographic Snapshots

 


The foundation of the Bay Area economy is a richly multi-cultural society constantly infused by many of the best and brightest from around the world.

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S&P Case-Shiller Home Price Index
for the San Francisco Bay Area


Case-Shiller charts are complicated, which is why we have put them at the end of the report, but they do give perspectives on home price appreciation by price segment. The different price tiers had bubbles, crashes and recoveries of very different magnitudes, with the low-price tier having an extravagantly enormous subprime bubble and a disastrous crash, while more costly home tiers having lesser bubbles and crashes. The end result now is that all three tiers are relatively close in their current prices as compared to 2000 values, but are in very different circumstances when compared to their 2006-2007 bubble peaks. Around the Bay Area, generally speaking, San Francisco, San Mateo, Marin, Santa Clara and Diablo Valley-Lamorinda have high-price tier markets with smaller mid-price segments; Alameda, Sonoma, Napa, Solano and non-central Contra Costa have mixes of low-price and mid-price markets (though there are, of course, pockets of high-price homes as well).

All C-S data points refer to a January 2000 home price of 100. Thus a reading of 250 signifies a price 150% higher than in January 2000.

More affordable homes have been appreciating much more quickly
in the past 15 months than more expensive price segments.

Link to our full S&P Case-Shiller Index Report


All our reports, including dedicated analyses of the SF luxury home segment, and of the Marin, Sonoma and Diablo Valley-Lamorinda markets, can be found here: Market Trends & Analysis


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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. All numbers in this report are to be considered approximate.

© 2017 Paragon Real Estate Group
Pota Perimenis–helping you make the right moves in real estate.
Paragon Real Estate Group
www.paragon-re.com/

Pota Perimenis
Lic# 01117624
1400 Van Ness Avenue
San Francisco, CA 94109
Cell 415-407-2595
pperimenis@paragon-re.com
www.sfcityhomes.com

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Preliminary Indications of Market Direction


 

San Francisco Real Estate in Early 2017

 

Preliminary Indications of Market Direction

 

April 2017 Report

 


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In recent months, there have been multiple reports in local media about Big Drops in San Francisco Home Prices! But, umm, we are not seeing it, neither on the ground in the hurly burly of buyers and sellers making deals, nor in the year-over-year quarterly statistics of supply and demand. News articles often make a big deal regarding the median sales price in a single month, but monthly data is often gravely deficient as an indicator, fluctuating up and down without much meaningfulness due to a number of factors. January and February are particularly bad months to draw conclusions from: The lowest sales volumes of the year, reflecting deals negotiated during the December-January market doldrums, with weather issues sometimes thrown in besides (for instance, in early 2017). Last but not least, the media often mixes property types to come up with a single median sales price, and that is generally not a good idea either.

This chart above illustrates San Francisco quarterly median sales price movements since 2012, which, as one can see, is also prone to significant fluctuation. In Q1 2017, the median house price basically plateaued year over year, while the median condo price actually increased from Q1 2016. (Historically, it is not unusual for Q1 median prices to drop from Q4 due to seasonal reasons, mainly the characteristic big slowdown of luxury home sales in mid-winter.) Q1 is the quarter of the year with the least number of closed sales, so too much should not be made of its data, but we have summarized annual Q1 dynamics for the past 4 years in the 2 charts below. For context, remember that 2014 and 2015 were particularly feverish markets. A much better assessment of the direction of the 2017 market will be possible after Q2 data is in: March through June is usually the most active selling season of the year.

Year-over-Year Comparisons of Q1 Statistics
Chart 1: San Francisco House Market OverviewChart 2: San Francisco Condo Market Overview————————————————————

Annual Median House Sales Price Trends:
5 Selected San Francisco Neighborhoods, since 2004


Generally speaking, in higher priced areas, median house prices have been plateauing or dropping a little, while the more affordable neighborhoods have continued to appreciate: This is a relatively common dynamic around the Bay Area.

The only way to assess value or appreciation for a particular home is by performing a comparative market analysis tailored to its specific location, condition and circumstances. Of all the neighborhoods graphed above, the Marina has by far the fewest house sales and the widest range of individual home sales prices, so it is most susceptible to median price fluctuations caused by other factors besides changes in value – for example, a substantial change in the listings available to purchase in a given year. We do not believe that the same Marina house selling in 2015 would have sold for 15% less in 2016: something less, perhaps; 15% less, very unlikely. This is a good illustration of the dangers of making too much of median sales price changes.

If you would like median home price trends for another San Francisco neighborhood, please let us know.

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Average Sales Price to Original List Price Percentage

By Month: House, Condo, Co-op, TIC & 2-4 Unit Building Sales
As seen in this chart, overbidding typically heats up as the market moves into spring. So far, this year has been no exception, though the overbidding percentages are somewhat lower than in recent years.


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Annual Market Trends
For clarity and meaningfulness, we much prefer annual trend analyses, with their much bigger data sets, and have recently completed a comprehensive review of virtually every statistic we could think of on that basis. Doing so allows us to stand back to see the broader view of what is happening in the market, instead of getting obsessed by what happens to be in front of our shoe. Looking at annual trends, virtually all the market statistics illustrate the same general conclusion: The market became progressively stronger coming out of the 2009-2011 housing recession; the frenzy peaked in 2015; and the market cooled a bit in 2016, condos more so than houses. This is a generalization of the macro-trend: Different market segments have been going in somewhat different directions and speeds in the city and around the Bay Area in the past year or so.

Below are a few of the many analyses. The full review is here: Long-Term Annual Trends in San Francisco Real Estate

First 2 charts: The hotter the market, the greater the percentage of listings that sell quickly, and the more ferocious the competitive bidding on those listings.


Even with some cooling, the overbidding on appealing new listings has remained quite dramatic: Our current percentages over asking would stun anyone from almost any other market in the country. (However, underpricing has also become a more common strategy here than in other markets.)


Annual Trends Chart 3: As a market begins to cool, the number of listings that expire or are withdrawn without selling increases. This is typically due to increasing supply, softening demand, sellers looking for more money than buyers are willing to pay, or all three.


Annual Trends Charts 4 & 5: As new condos and new rental apartments came on the market in greater numbers in the past year, it cooled those two market segments, much more so than the house segment, of which hardly any are built new in the city anymore. (The more affordable house market in the city has remained remarkably hot.) The rental market was affected most as more new rental units came on market than at any time since WWII: Though SF still has the highest rents in the country, they have dropped from their peak in 2015.



Chart 6: To a large degree due to big changes in tenant eviction and condo conversion laws, the TIC market has gone through a large decline in sales volume. It is also true that after decades of turning multi-unit buildings into condos and TICs, the supply of such properties available to do so has declined. Generally speaking, TIC median sales prices plateaued from 2015 to 2016 at about 14% below the median condo price.


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San Francisco Luxury Home Market
Three sample charts from our big report on the high-priced home segment. Generally speaking, the luxury market has cooled more than the more affordable segments, and the luxury condo market has cooled more than the luxury house market. This is mostly due to the recent surge of new-construction luxury condos onto the market in the city.

The first two charts below are snapshots of either the house or condo segment of the luxury market in two of our major districts.



This next chart illustrates one of the bigger changes in SF high-end home markets. Many more listings, resale luxury condos in particular, are expiring or being withdrawn from the market without selling.



Our full report is here: Luxury Home Market of San Francisco

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Interest Rates
Constantly shifting economic and political factors continue to affect rates: Mortgage interest rates are significantly up since the election, fluctuating up and down since the year began, but still far below historical norms. This is a factor everyone is watching carefully because of its potential impact on affordability, already a big issue in the Bay Area.

Apartment Building (Multi-Unit Residential) Sales
We have also released our quarterly report on the multi-unit residential property markets of San Francisco, Marin and Alameda Counties: Bay Area Apartment Building Market. Below is one of its many analyses.


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All our reports can be found on our redesigned website: Paragon Market Reports

Using, Understanding and Evaluating Real Estate Statistics

If you will forgive a little celebrating on our part: In the last two quarters, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage (as reported to MLS, per Broker Metrics), even though we have far fewer agents than many of our competitors.

If you have any questions or comments regarding this report, or if assistance can be provided in any other way, please call or email.


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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.

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/

Pota Perimenis
Lic# 01117624
1400 Van Ness Avenue
San Francisco, CA 94109
Direct 415-738-7075
Cell 415-407-2595
pperimenis@paragon-re.com
www.sfcityhomes.com

 

 

Gold, Google and SF Real Estate

 


Paragon Real Estate Group

Paragon Real Estate Group
 

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

Pota Perimenis
Lic# 01117624
1400 Van Ness Avenue
San Francisco, CA 94109
Direct 415-738-7075
Cell 415-407-2595
pperimenis@paragon-re.com
www.sfcityhomes.com

 

San Francisco’s Hottest, Most Competitive Neighborhood Market

A Shift from Prestigious, Expensive, High-Tech and Hip
to Normal, Middle-Class, Working-People Affordable

October 2016 Paragon Market Report
Since the market recovery began in 2012, various districts have taken the lead as the hottest markets in San Francisco: The affluent and prestigious Noe-Eureka-Cole Valleys district and Pacific Heights-Marina district led the recovery out of recession. Later South Beach/SoMa, Hayes Valley and, especially the Mission, went white hot as the high-tech boom surged (though, honestly, high appreciation rates became general throughout the city). In mid-2015, price appreciation in many the more expensive and fashionable districts started to slow down and plateau.

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

 

 


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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Link to our updated San Francisco neighborhood home-price map

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.



Chart: Overbidding Condo Prices

Chart: Condo % Sales over List Price

Chart: Condo Average Days on Market


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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/

Pota Perimenis
Lic# 01117624
1400 Van Ness Avenue
San Francisco, CA 94109
Direct 415-738-7075
Cell 415-407-2595
pperimenis@paragon-re.com
www.sfcityhomes.com

 

San Francisco Home Sales by Price Segment

San Francisco Home Sales by Price Segment

San Francisco Home Sales by Price Segment

In thinking about the market, it seems that lower-priced home sales (especially houses) were still quite hot and sales under $1 million were clearly decreasing in volume as prices rose in more affordable areas. And sales of higher priced homes were decreasing as that segment cooled off, which would suggest that sales between $1m and $2m would be increasing, i.e. sales volume was increasingly being concentrated in the middle of the market.

It appears that median prices have generally been plateauing, but that disguises other changes and varying conditions in the market.

When adjusting 2016 numbers to compensate for a year-over-year decline in unit sales of 7.8%. After doing so, one sees unit sales below $1m and above $2m both dropped by about 9%, while sales of homes in between jumped 12%.

bay area median house appreciation

Bay Area Real Estate and Demographics

What Bay Area markets had the biggest bubble or crash?
Where are homes selling fastest for the most over asking price?
What county sells the most homes over $2 million?
Is most affordable? Most educated? Has the most Republicans?
Why do San Francisco, Oakland & Berkeley have rent control?

A San Francisco Bay Area Survey
including 20 custom charts and tables
August 2016

While waiting for the autumn market to begin, we thought we would step back and look at the Bay Area from a variety of angles. If you are tired of reading about real estate, there are some interesting demographic analyses at the bottom of this report.



Paragon Real Estate Group
 

Paragon Real Estate Group

What Bay Area markets had the biggest bubble or crash?
Where are homes selling fastest for the most over asking price?
What county sells the most homes over $2 million?
Is most affordable? Most educated? Has the most Republicans?
Why do San Francisco, Oakland & Berkeley have rent control?

A San Francisco Bay Area Survey
including 20 custom charts and tables
August 2016

While waiting for the autumn market to begin, we thought we would step back and look at the Bay Area from a variety of angles. If you are tired of reading about real estate, there are some interesting demographic analyses at the bottom of this report.


Ups & Downs in Bay Area Real Estate Markets


All Bay Area markets saw large surges in home values from 2000 to 2007; all went through significant or even terrible declines after the 2008 financial markets crash, typically hitting bottom in 2011; and all have made dramatic recoveries since. But there are big differences in how these events played out in distinct markets, with 4 main factors behind price changes over the past 16 years:

  • BUBBLE: Generally speaking, the lower price ranges and the less affluent areas saw much bigger, crazier bubbles than other segments, inflated in the years prior to 2007 by predatory lending, subprime loans and the utter abandonment of underwriting standards.
  • CRASH: In 2008-2011 distressed-property sales devastated the lower price segments, which suffered the biggest declines in home prices. When the recovery started in 2012, they began from unnaturally low points, which had little to do with fair market values. Other market segments were affected but to much lesser degrees.
  • PROXIMITY to the high-tech boom: SF and Silicon Valley have been the white-hot hearts of economic expansion. Oakland and the rest of Alameda County were the closest, significantly-more-affordable housing options. Then, as one moves further away, the electrifying effect on home prices gradually lessened.
  • AFFORDABILITY: The more affluent areas led the recovery in 2012-2014, but then the highest pressure of demand started shifting to less expensive, comparatively more outlying neighborhoods, cities and counties. Buyers desperately searched for affordable housing options, or simply wanted more home for the dollar. Now, some of the most expensive markets are beginning to cool, while less expensive ones remain very competitive.

    • A fifth factor just beginning to impact some markets now (such as the SF condo market) is the significant increase in new home construction, most of which is on the more, or much more, expensive end.



    The chart above illustrates median sales price changes, from 2007, the approximate peak of the bubble, to 2011, the approximate bottom after the crash, to the present, after 4-plus years of recovery. The table below summarizes the percentage changes charted above.



    OAKLAND had a very large subprime bubble, a huge crash, and then a sensational recovery highly pressurized by being just across the bridge from SF (and much more affordable). The Oakland median house price is up a staggering 178% since 2011, partly because it crashed so low. However, because its subprime bubble was so big, it is only 10% above its inflated 2007 price. Alameda County as a whole has experienced much the same market. Other comparatively lower-priced Bay Area markets, such as northern Contra Costa, Solano, Napa and Sonoma, more distant from the high-tech boom, saw similar dynamics, but are still below their 2007 peaks despite substantial recoveries.

    Price-change percentages up and down are not created equal: If a price drops 60%, it then has to go up 150% to get back to where it started.

    SAN FRANCISCO, more expensive and affluent, had a much smaller bubble and much smaller crash with far fewer distressed sales (and those mostly concentrated in its least expensive districts). The high-tech boom then supercharged its recovery: Its median house price is up 93% from the bottom hit in 2011 (much less than Oakland), but is 51% higher than its 2007 peak, the biggest increase over the 10 years of any of the markets measured. Silicon Valley has similar statistics, and other high-price markets like Marin and the Lamorinda/Diablo Valley area of Contra Costa County, saw comparable, if somewhat less dramatic, dynamics.

    These county market descriptions are gross generalizations, as each county has both very affluent and less affluent communities, with their own unique dynamics.

    Additional chart: Bay Area home price trends since 1990

    Additional chart: Bay Area dollar per square foot values

    Additional chart: Average Bay Area house sizes


    ------------------------------------------------------------

    Trends in Home Values since 1988
    per the S&P Case-Shiller Home Price Index


    Instead of looking at different locations in the Bay Area, Case-Shiller analyzes its entire market by low, mid and high-price tiers, each tier equaling one third of sales. For any Bay Area home, whatever its price in January 2000, Case-Shiller assigns it a value of 100. All other values on the chart below refer to percentages above or below the January 2000 price, i.e. 150 equals 50% price appreciation since that date. Case-Shiller does not use median sales price data, but instead uses its own custom algorithm to reach its conclusions.



    Two things stand out: As mentioned before, different price segments had bubbles, crashes and recoveries of vastly different magnitudes. Secondly, all the price tiers are now roughly the same percentage above their January 2000 prices, each showing about 130% appreciation over the past 16 years.

    Note how much higher the peak of the bubble in 2006-2007 was for the low-price tier of homes (light blue line): Prices jumped an incredible 170% from 2000 vs. 119% for the mid-price tier and 84% for the high-price tier. Then came a correspondingly gigantic crash.

    Our full report: 30+ Years of San Francisco real estate cycles


    ------------------------------------------------------------

    San Francisco Home Prices by Neighborhood,
    Property Type and Bedroom Count


    Below is one of 7 tables in our updated breakdown of SF home prices. The full report:
    SF Home Values Analysis by Neighborhood


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    Selected Bay Area Market Dynamics


    A selection of relatively self-explanatory snapshots measuring Bay Area real estate markets.


    San Francisco dominates the news, but it is a relatively small
    real estate market by number of sales.

    Virtually no place else in the country has seen competitive
    overbidding comparable to the inner core of the Bay Area.
    (Though some of it is caused by strategic underpricing.)


    Additional chart: Average days on market by county

    Additional chart: Median condo sales prices by county

    Additional chart: Comparative Bay Area rents

    Additional chart: Housing affordability in the Bay Area


    ------------------------------------------------------------

    Selected Demographic Snapshots


    A few angles on how the Bay Area is different from other places, and how Bay Area counties differ from one another.


    All Bay Area counties have been growing in population. San Francisco
    in particular is very densely populated and getting denser.

    In the spirit of the times, a look at Bay Area political party demographics.

    Along with Washington DC and Seattle, the Bay Area ranks among
    the best educated metro areas in the country.

    The single biggest factor behind strong rent control laws:

    ------------------------------------------------------------

    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 Bay Area real estate better than Paragon.
    Paragon Real Estate Group
    www.paragon-re.com/

    Pota Perimenis
    Lic# 01117624
    1400 Van Ness Avenue
    San Francisco, CA 94109
    Direct 415-738-7075
    Cell 415-407-2595
    pperimenis@paragon-re.com
    www.sfcityhomes.com
    		 

    A Soft Landing after 4 Years of Market Frenzy?

    A Soft Landing after 4 Years of Market Frenzy?

    The San Francisco Real Estate Market Report
    including 15 custom charts, July 2016


     


    Paragon Real Estate Group

    Paragon Real Estate Group
     

    A Soft Landing after 4 Years of Market Frenzy?

     

    The San Francisco Real Estate Market Report
    including 15 custom charts, July 2016————————————————————


    San Francisco Median Sales Prices by Quarter 


    Since median sales prices fluctuate so much by season, the most useful metric is year over year, i.e. comparing Q2 2016 to Q2 2015. In Q2 2016, the year-over-year appreciation rate was 4% for houses and less than 1% for condos, as compared with 2014 to 2015 rates of 20% and 18%.


    Link to long-term median home price chart


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    Transition
    By virtually every measurement of supply and demand, the SF real estate market cooled in Q2 2016 when compared to the 4 previous, often wildly overheated spring selling seasons. Listing inventory is up significantly, while the number of sales is down; the number of listings that expired without selling jumped by over 50%; and, as seen above, median sales prices for houses and condos increased year over year, but at much smaller percentages than the torrid rates of previous years. On the other hand, to keep perspective, the months supply of inventory is still under 3 months of inventory, which typically denotes a seller-advantage market in the rest of the country; the median days on market was a relatively low 24 days in Q2; and almost 70% of SF home sales went for over the asking price. Many homes are still selling quickly for very high prices.

    Within the city, different market segments are experiencing varying realities. Very generally speaking, the market for more affordable homes is stronger than that for luxury homes; the market for houses stronger than that for condos; and the market for luxury condos cooling most distinctly. Districts with the most new construction, i.e. adding more supply, are usually softening more quickly. It also appears that the city is cooling before other, more affordable Bay Area County markets. San Francisco led the way out of the market recession as the recovery began in 2012 and now may be leading the way in the transition to a less frenzied market. It is also true that transitional markets often send mixed signals in their data.

    In any case, it is typical for the market to slow down appreciably during the mid-summer months and then pick up again after Labor Day. Which does not necessarily mean it is not a good time to either buy or sell. For buyers in particular, there is usually greatly reduced competition for listings and thus greater scope to negotiate purchase prices.


    ————————————————————
    Average Sales Price to Original List Price Percentage
    Trends in Overbidding


    As the market has cooled, competitive bidding has declined, thus this past June saw an average sales price 3% over original asking price as compared to the crazy 11% seen in June 2015, when it hit an all-time peak.

    Link to our updated report on market seasonality


    ————————————————————
    Appreciation Trends, 2011 to 2016 YTD, by Neighborhood
    These four charts below track median sales price appreciation from 2011 to 2015, generally the period of rapid increases, and then from 2015 to the first half of 2016, when prices started to stabilize for most areas. Areas that were hit hardest by the distressed property crisis, such as Bayview, often have the highest appreciation rates because they were bouncing back from unnatural lows in 2011. Median condo price appreciation is iffier as a measurement of change because the surge of new construction condos, which are typically more expensive than older units, have substantially impacted values in some neighborhoods. (House inventory in SF has barely changed in many decades, so year-over-year sales are closer to apples to apples.) There are also neighborhoods that have gone through both substantial gentrification and lots of new construction in recent years, such as the Mission and Hayes Valley.


    Houses

    Condos


    Generally speaking, neighborhoods were chosen because they had higher numbers of sales, which usually makes the statistics more reliable. However, median prices can sometimes fluctuate dramatically without great meaningfulness when different baskets of relatively unique homes simply closed in different periods. This is especially true in the most expensive districts: As an example, 20 house sales closed in Pacific Heights by 6/29/16 for a 2016 YTD median price of $5,675,000. Then, one more closed on 6/30/16 and the median price jumped to $6 million. A reminder not to take specific median price appreciation percentages too seriously: They illustrate general trends, not exact measurements of changes in home values.


    ————————————————————
    Context
    Anyone who reads real estate news, blogs or newsletters knows that there are 2 particularly vehement camps, each with emotional and sometimes financial attachments to diametrically opposed positions: One never stops insisting that the market is great and getting better (and apparently always will, for both buyers and sellers), and the other never stops shouting, usually gleefully, that the market is crashing or about to crash. Both marshal and exaggerate selected statistics and ignore others. The truth is that there are cycles, lulls and fluctuations in real estate markets and no market can go up 20% a year forever (nor should we want it to). On the other hand, we do not currently see local or macro-economic conditions suggesting any imminent crash. While it is true that economic, political or even environmental crises of various magnitudes can erupt suddenly (such as, in the past 12 months, the Chinese stock market plunge, the crash in oil prices, and Brexit), the impact of these crises can vary enormously, and it is very difficult to predict when the next one will hit.

    The SF market is clearly in some kind of transition, currently at a relatively moderate pace, hopefully signifying what is called a soft landing from an over-exuberant state. The speed and scale of any further adjustment should become clearer over the second half of the year.


    ————————————————————
    San Francisco Luxury Home Market

    A Breakdown of Expensive Home Sales by City District

    Luxury Home Sales Trends, by Quarter
    Luxury house sales were basically the same year-over-year in Q2 (though listing count was up almost 25%), however luxury condo sales saw a significant year-over-year drop, even while the number of expensive condo listings on MLS jumped to its highest level ever. The resale luxury condo market is clearly being impacted by an increase in new, luxury condo projects coming on market, especially in those areas where most of the new construction is occurring.

    Some of the new projects coming on line or expected soon will be the most expensive ever seen in San Francisco, estimating average dollar per square foot values for their units over, and sometimes well over, $2000. It will be interesting to see the match up of supply and demand for these condos, since such values in the existing resale market are relatively rare, as illustrated in the third chart below.


    Condo Sales by Average Dollar per Square Foot Values
    2012 to 2015 Trends, for Condo Sales Reported to MLS

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    Home Sales Breakdown by District
    Underlying the median sales prices commonly quoted is commonly a huge range of prices in the specific home sales that go to make them up. We have updated our breakdowns for every district in San Francisco. Below are 2 of 15 charts which can be found here: SF District Sales by Price Segment.


    ————————————————————

    San Francisco Residential Construction Pipeline
    Projects of 60+ Units, per San Francisco Business Times Analysis


    The San Francisco Business Times performed a superb in-depth analysis of the many housing projects, rental and sale, market rate and affordable, currently in the Planning Department new construction pipeline, breaking out and describing major projects of 60 units or more, and mapping them as well. Above is our attempt to boil down much of that information into one chart. Please note that projects are constantly being added, revised, sold to new developers, or even abandoned, and the median time from filing a plan to building completion is 3 to 6 years depending on the size of the project. Our full report is here: SF Housing Inventory and Pipeline Report.

    Hundreds of condos under construction have already been pre-sold to buyers, with close of escrow and occupancy to occur upon final building completion, sometimes well in the future. These sales of units not yet built still have a significant impact on market supply and demand dynamics.

    It is also interesting to note that of projects either under construction or approved by Planning (and leaving aside the long-term mega-projects such as Treasure Island), rental units outnumber sale units by about 2 to 1. This is a very recent development in SF housing construction, which has long been dominated by condo projects (though there are plenty of those too). This expected rush of new rentals, most of which are at the high end of rental cost, is coming just as the rental market is dramatically softening in the city. Indeed, the rental market appears to have cooled much more quickly than the sale market.

     

    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. Statistics are generalities, longer term trends are much more meaningful than short-term, and we will always know more about what is actually going on in the present in the future. New construction condos not listed or sold on MLS are not counted in these statistics, though they often affect market dynamics. 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/

    Pota Perimenis
    Lic# 01117624
    1400 Van Ness Avenue
    San Francisco, CA 94109
    Direct 415-738-7075
    Cell 415-407-2595
    pperimenis@paragon-re.com
    www.sfcityhomes.com