San Francisco Real Estate Agent
San Francisco Real Estate Agent
How many San Franciscans:
Trace their ancestry from China, Ireland, Mexico or the Philippines?
Are children under 5? Speak Spanish at home? Have their cars stolen?
Are heterosexual or gay? Divorced? Live alone? Give birth each year?
Vote Libertarian? Earn over $200,000/year? Have graduate degrees?
There is no city in the world quite like San Francisco – and here are some of the details.
Country of Origin
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Language Spoken at Home
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Place of Birth
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Miscellaneous Statistics
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Ethnicity/Race
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Degree of Education
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Sexual Orientation
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Employment
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Political Affiliation
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Commute
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Households
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Occupancy Rent vs Own
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Average Income by Zip Code
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San Francisco Fortune 500 Companies
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Of all the homes bought and sold in San Francisco in 2011:
We data-mined all of 2011′s MLS sales to answer these questions and more. We hope you find the details as interesting as we did.
Largest San Francisco Home Sales of 2011 – for Selected Neighborhoods
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San Francisco Home Purchased in 2011 – Architectural Styles
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San Francisco Homes Purchased in 2011 – Special Circumstances Sales
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San Francisco Home Sales by Property Type
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San Francisco Homes Purchased in 2011- Sales by Price Range
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San Francisco Homes Purchased in 2011 – House Amenities
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San Francisco Homes Purchased in 2011- Condo, Co-op & TIC Amenities
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San Francisco Homes Purchased in 2011 – Views, Views, Views
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San Francisco Homes Purchased in 2011 – Number of Sales by Parking Arrangements
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San Francisco Homes Purchased in 2011 – How Many Bedrooms?
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2011 San Francisco House Sales – By Selected Neighborhood & District
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2011 San Francisco – Median HOUSE Sales Price by Neighborhood
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2011 San Francisco Condo, Co-op & TIC Sales – By Selected Neighborhood & District
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2011 San Francisco Median CONDO Sales Prices by Neighborhood
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All data herein is from sources deemed (at least somewhat) reliable – i.e. the information input by listing agents regarding their own listings — but may contain errors and omissions, and is subject to revision. These charts do not include sales unreported to MLS.
It seems to be part of the human condition that financial and real estate markets go in cycles. What’s interesting is that when the cycle is on the upswing or a bubble is inflating, how vociferous the opinions are that the upswing will never end; and how after the crash, how many then insist, often with great virulence, that the markets will never improve again in our lifetimes. We see variations of this forecasting certitude constantly from those emotionally or financially invested in a certain viewpoint, not to mention bloggers and media with infinite white space to fill – and, of course, real estate agents often do this as well. However, most of the time, one must simply wait and see how the cycles turn in their own time and circumstances, and turning points are best perceived in retrospect.
All this leads to our point: absent some new natural or economic disaster – which is certainly possible – it appears that San Francisco real estate began turning the corner on the latest down cycle in 2011. Two and a half years following the financial markets crash, the dynamics in the city started to change early last year: prices seemed to have bottomed out and stabilized, Bay Area and city economic conditions started to markedly improve, distress home listings began to decrease, interest rates hit new lows, SF rents increased, vacancy rates dwindled, builders started moving forward on new projects, general optimism grew (most dramatically in the last quarter) – and optimism plays a huge role in turnarounds – and the financials of home buying made more sense than they had in many years.
Indeed in 2011, the biggest story regarding the SF homes market was the drastic lack of inventory – typically 35-45% below the previous year – which was inadequate to satisfy surging buyer demand. Historically, according to the laws of supply and demand, this begins to put upward pressure on prices – which is what we’ve been beginning to see in some of our neighborhoods.
It should be noted that San Francisco often behaves differently than other markets and recovers more quickly, and also that within the city itself, the markets in different neighborhoods can move at different speeds or even, for periods of time, in different directions. There is a link at the bottom of the newsletter to far more detailed analyses of the SF market by neighborhood, property type and bedroom count. There are also definitions and caveats regarding the statistics used below.
Statistics are generalities that may fluctuate for a number of reasons. All data herein is from sources deemed reliable but may contain errors and omissions and is subject to revision. These charts do not include sales not reported to MLS, such as occur in some new-development projects. How any statistic relates to the value of any specific property is unknown without further analysis.
2011 Unit Sales
The number of sales as reported to MLS climbed about 7% in 2011 from 2010, bouncing back from the trough of 2009, though still far below the peak years. All SF property types saw increases in sales. However, if inventory had not been so drastically low all year long, the increase in unit sales would certainly have been much greater.
S&P Case-Shiller Home Price Index
If Case-Shiller did an Index just for the city of San Francisco itself, instead of the 5-county “Metro Area,” we believe it would indicate a significantly greater recovery than indicated in this chart. San Francisco is strongly outperforming the markets in the other counties included in their local Index. (And SF itself only makes up a small percentage of that Index.) For a more detailed explanation of the S&P Case-Shiller Index:
Case-Shiller Deciphered
Average Dollar per Square Foot Values
Looking at the last 6 quarters, we see a very gradual increase from mid- 2010 of average-dollar-per-square-foot values for SF houses of $750,000 and above, except for the hiccup which occurred during the 3rd quarter of 2011 when the European debt crisis and the U.S. debt limit boondoggle greatly increased financial anxieties. The latest quarter saw the highest value, by a tad, since 2008. This chart also shows how the market is divided between the lower-priced housing segment (for SF) hard hit by distress sales and the mid-to-high priced segment which has been little affected by distress sales. Remember that quarterly fluctuations of average and median figures are not particularly meaningful – what are important are consistent longer term trends.
Percentage of Listings Accepting Offers
The main 3 residential property types in the city have been hitting their highest percentages in recent memory for listings going into contract (accepting offers). This is a very clear graphic of the dynamic of very strong buyer demand meeting a very low inventory of homes available to purchase. The dip in the third quarter was, as mentioned, probably due to the burst of financial markets anxieties that occurred over the summer.
Sales Price to Original List Price
This chart shows the enormous difference that proper pricing, preparation and marketing make in achieving the highest sales price in the lowest amount of time. Most of the homes that do sell actually accept offers relatively quickly at very close to, or even a little over, the list price. About half as many sell after price reductions, with big discounts on list price and large delays in closing the sale. And then, even in a market of strong buyer demand, about a third of listings expire or are withdrawn without selling, typically due to being perceived as overpriced.
Months Supply of Inventory (MSI)
MSI measures how long it would take to sell the entire inventory of homes currently for sale, at existing market-activity rates. The lower the MSI, the stronger the demand as compared to supply: We don’t recall ever seeing overall MSI rates this low. As a comparison, the MSI in the United States as a whole right now is 7 months. In certain SF market segments, the MSI is down to 1.5 months or lower. In the 4th quarter, there was a story of one listing, admitted egregiously underpriced, receiving 26 offers – which gives an idea of the level of unsatisfied demand in some neighborhoods.
Number of Homes for Sale
This chart tracks the number of homes listed as available on MLS on the last day of each month. It is true that inventory always plunges during the holidays and then starts to recover in January, but throughout 2011 the number of homes available to purchase in any given month has been far below the levels of previous years. And if one factors in the huge decline over the last few years in new-development condos on the market, it looks even worse. Inadequate to buyer demand, this has led to an increase in multiple offers and buyer stress — and increasing values in some of the city’s neighborhoods.
SF Luxury Home Sales in 2011
Homes selling for $1,500,000 and above make up about 10% of San Francisco’s sales and this is a snapshot of where they occurred by neighborhood and property type. For houses, the biggest prices still come in the Pacific/ Presidio Heights area, where one mansion on Broadway sold for $29,500,000. For condos, the highest dollar-per-square-foot figures are found in Russian Hill and South Beach for luxury units with astounding views: a penthouse in the St. Regis in South Beach/ Yerba Buena sold for $28,000,000. But in number of sales, the central Noe Valley/ Castro/ Cole Valley district has grown immensely over the past 10 years and is now firmly established for a particular type of affluent buyer, many of whom want easier access to Silicon Valley.
SF Distress Home Sales
As a percentage of sales, distress home sales peaked in January 2011; overall, they made up about 20% of total unit sales last year, but were largely clustered in certain neighborhoods, often in the less affluent areas of the city, and in the lower price ranges. To a large degree, they have not impacted values in many of the city’s more affluent central and northern districts. As seen here, the number of such listings has been markedly declining in 2011. Compared to other areas of the Bay Area, state and country, SF has been relatively unaffected by foreclosures, and so far the much dreaded “shadow inventory” of foreclosed-upon home listings has never arrived in the city.
SF Home Sales by Price Range
The largest percentage of SF home sales occurs in the $500,000 to $750,000 range. One of the biggest changes over the past few years has been the enormous growth in unit sales in the under-$500,000 price segment, much of which has been driven by distress sales. Even from 2010 to 2011, the lower end price segment has increased as a percentage of sales – and this continues to impact overall median sales price, which is simply that price at which half the homes sold for more and half for less.
Average Days on Market (DOM)
This chart shows the large difference in how long it takes to sell distress homes as compared to regular homes (about a month longer); the effect that pricing, preparing and marketing the home correctly can make in days on market (over two months); and the different speeds of sale for the 3 main residential property types. (Distress sales are not broken out for TICs, because they have been relatively unaffected by foreclosures.) General appeal homes that are effectively priced, presented and marketed often receive offers within 2-3 weeks of coming on market.
How Buyers Find the Homes They Purchase
A simple graphic of how things have changed in real estate buying and marketing in the past 10 years. An effective marketing plan has to include very comprehensive components of high-quality online marketing and broker-to-broker marketing – this is what reaches by far the most buyers. Professionally taken real estate photos are now an absolute necessity since they are how most buyers and agents will first see and evaluate your home. (All Paragon listings are photographed by professional real estate photographers.) Effective neighborhood marketing and open houses come next. The value of print advertising in newspapers and real estate magazines has become negligible.
Mortgage Interest Rates
Between the decline in prices since 2007-2008 and the decline in interest rates, the monthly cost of owning the same home has generally declined 30-40% in San Francisco over the past 4-5 years. (Chart below is from Bankrate.com.) Conversely, SF apartment rents have been increasing lately (especially due to the growth of high-tech employment). One of the standard ways economists evaluate whether a real estate market is correctly priced or not is by comparing the cost of renting vs. the cost of owning the same home. This equation has gone through a huge change since 2008.
“There are three kinds of lies: lies, damned lies and statistics.”
Benjamin Disraeli
Statistics without informed context are usually worthless, easily manipulated and often misleading.
One can make virtually any case — positive or negative — by choosing a single average or median statistic relating to a short period of time and a small data set, and then cherry picking what you’re comparing today’s data to (last month, last year, or the peak of the market). Conversely, too large a data set may be misleading: the overall national trend may misrepresent California’s, and the state’s can be different from the Bay Area’s, the Bay Area’s from the city’s, and within San Francisco itself, distinct neighborhoods are often different markets going in significantly different directions.
In particular, absent some huge economic event, such as the September 2008 financial markets meltdown, monthly fluctuations in median home sales prices are usually meaningless. Median prices often fluctuate up and down within a 5 to 10% range from one month to the next, even in stable markets.
One can only be sure market values are trending up or down if that trend is consistent over the longer term, minimally 4 to 6 months. Any definitive trend in prices and values should also be reflected in other market statistics such as average dollar per square foot, days on market, months’ supply of inventory, percentage of listings accepting offers, percentage of distress sales, and so on.
When assessing market changes calculated by computerized algorithms using very general data sets – such as Case Shiller’s or Zillow’s — one should be clear on the details. For example, the Case Shiller Index for “San Francisco” reflects an analysis of a “metro area” comprising 5 counties with wildly varying markets (Pinole to Pacific Heights). And for the city of San Francisco, one should look at the Case-Shiller “High Tier” price Index, not the general Index. It also makes sense to assume a sensible margin in error. As an egregious example, Zillow’s property valuations usually build in a 10-25% margin of error on either side of their “Zestimate” of value. A 1-3% value change indicated by the Case Shiller overall home Index for the SF metro area, then applied by a commentator to condo values in SOMA or house values in the Marina, should be taken with a grain of salt.
Always look for consistent, longer term trends across a wide range of market quantifying statistics.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. The median sales price for homes (in all their infinite variety) is not like the price for a share of stock (all the same), and monthly fluctuations in median price are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.
AVERAGE SALES PRICE is calculated by adding up all the sales prices and dividing by the number of sales. It is different from median sales price, but like medians, averages can be affected by other factors besides changes in value, such as fluctuations in average unit size. Averages may also be distorted by a few sales that are abnormally high or low, especially when the number of sales is low. Average sales prices are usually higher than median sales prices.
DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market.
MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and above 6 months, a “Buyer’s market.”
DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. Generally speaking, about 60-80% of listings report square footage and dollar per square foot averages are calculated on these listings alone. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.
SAN FRANCISCO REALTOR DISTRICTS
District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain
District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights
District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview
District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands
District 5: Noe Valley, Eureka Valley (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights
District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights
District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina
District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin
District 9: SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena
District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission
Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.
In a world where market ups and downs are blared out every minute, often with great hysteria, it’s useful to pull back and look at the home market from a wider perspective. The longer time period and larger number of sales make statistics more reliable and less confused by normal, relatively meaningless fluctuations. The longer term also provides a valuable overview for an investment typically held for 5 to 10 years and often longer.
The UCLA Anderson Home Price Forecast, which has been bearish for years, has suddenly turned bullish and is now predicting a 50% gain in California median home prices over the next 6 years. (They are not the only pundits turning optimistic.) If that turns out to be true – of course, studies have found that “pundit” forecasts are about as reliable as coin tosses – that would make 2011 somewhat analogous to 1995. In 1996, after a big market drop and then years of market-value doldrums, appreciation started to pick up again. And anyone who purchased in 1992-1995 soon looked like a genius, as values then doubled by 2000.
Generally speaking, 2011 values in San Francisco are equivalent to those in the 2004-2005 timeframe. However, it’s important to remember that different neighborhoods within the city were affected differently by the bubble popping, and are now responding differently to existing conditions.
Based on the statistics, improving economic conditions in the Bay Area, and what we’re seeing in the hurly-burly of representing home buyers and sellers, we strongly suspect that SF home prices did hit bottom in 2010-2011. Indeed, some neighborhoods, but not all, appear to have begun their recovery – it is still too early to reach definitive conclusions.
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Note regarding charts below: Median and average sales prices are different statistics and their definitions follow the charts. In San Francisco with its huge variety of home types, conditions, views and locations, there is no such thing as a consistent “median” or “average” home: every statistic is a generalization based upon whatever basket of relatively unique properties happens to sell within a certain time period. Changes of a few percentage points may or may not be meaningful.
SF Houses: Median Sales Price since 1993
This chart separates out distress sales, which allows for an apples-to-apples comparison over the years. Distress houses (bank-owned and short sales) are clustered in the lower price ranges and the less affluent neighborhoods, and sell at a significant discount due to condition issues and the huge aggravation of dealing with banks. Distress sales make up 15-20% of the city’s sales, but in many neighborhoods, especially the more affluent ones, they are not a major factor and have not had a significant impact on values.
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SF Condos: Median Sales Price since 1993
While distress condo sales median prices continue to decline, non-distress condo median prices have been stable. Still, note how distress condo sales affect the overall median sales price, pulling it down by $77,000 from non-distress sales. To a large degree in SF, the distress and non-distress markets function as different markets with different buyers, locations and property conditions.
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Northern Prestige Neighborhoods House Sales
Here is the type of data table that is used to create most of the charts in our reports. The established, highly affluent, northern neighborhoods included run from Telegraph Hill in the east, across North Beach, Russian & Nob Hills, Pacific Heights-Marina, Jordan Park-Laurel Heights, Lake Street to Sea Cliff. We’ve combined these neighborhoods to get a large enough number of sales, and sales reporting square footage, to create a somewhat meaningful analysis, however there are significant differences in value between them. Note how the average size of the houses sold can fluctuate from year to year, which impacts the average sales price. For our complete Luxury Home Report: SF Luxury Homes Report
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South Beach Condo Sales
Inventory has plunged in this area, especially as new-development sales have virtually ground to a halt: Months Supply of Inventory (MSI) has been running at under 3 months of inventory, which is quite low. In 2011, we’ve seen a bounce in average sales price and average dollar per square foot. The high-tech boom is probably fueling much of the market dynamic here. For our complete SoMa/ South Beach report: SoMa/ South Beach Report
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Noe & Eureka Valleys House Sales
Average dollar per square foot has been stable for the last three years, while average sales price has climbed as average size has climbed. Note the 40% drop in the number of sales since 2003 (a drop in volume common across the city). This is a very hot market right now and in the surrounding neighborhoods: inventory is incredibly low and demand is very, very strong for appealing, well-priced homes. One recent listing received 26 offers. (It was egregiously underpriced, but the response still gives you a clue to unmet demand.) Note also how prices more than doubled between 1995 and 2000, and the drop in values from 2008 to 2009 after the financial markets crash. For our complete report: Noe/ Castro/ Haight Market Report
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Potrero Hill
This neighborhood – with its proximity to city’s high-tech/ bio-tech districts and highways south to the peninsula and Silicon Valley – has been one of the first to see the signs of a significant recovery from the market drop of 2008. Demand is very strong here. When Zynga’s IPO occurs soon, demand and values will probably go higher.
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Russian Hill
This highly sought after neighborhood never has that many listings available and many of them have spectacular views. Statistical analysis is a bit difficult here because of the variety of sales amid a relatively low number of sales, but the average dollar per square foot trend seems reasonably accurate. This is an average: some condos here sell for way over $1,000 per square foot.
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Sunset/ Parkside/ Golden Gate Heights
This large district of the city, which has a very high number of sales (400 – 600 per year), has not yet shown signs of a bounce back in values, at least not in the statistics. The neighborhoods running across the south of the city from Bayview to Oceanview, which were hardest hit by foreclosures and saw the city’s largest percentage declines in value, have not shown significant signs of recovery either.
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Pacific & Presidio Heights/ Cow Hollow/ Marina Condos
One of the interesting things seen here is that the more affluent neighborhoods saw a drop in 2002 from the popping of the dot-com bubble, while most other neighborhoods were unaffected. Changes in statistics of a couple of percentage points may not be particularly meaningful in an area such as this one with such a wide range of condos sold.
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Cole Valley; Ashbury, Clarendon & Corona Heights
This area of the city has similar dollar per square foot house values as Noe & Eureka Valleys – for 2011 YTD, it’s the exact same – but since the houses are bigger here, the average sales price is quite a bit higher. Looking at the chart, you might ask why, if both the average dollar per square foot and average size both went up in 2011, the average sales price went down. That doesn’t make sense. However, dollar per square foot and average size are based only on those homes that reported square footage – typically 60-80% of sales – while average sales price is based upon ALL sales. This is a good example why statistics should not be considered exact delineations of changes in value.
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San Francisco Months Supply of Inventory (MSI)
Inventory levels as compared to demand is as low as we’ve ever seen them and this would typically begin to put upward pressure on prices. For just houses, the hottest segment of the SF market, the MSI is under 2 months, an incredibly low reading. As of November 30th, there were over 800 fewer listings on the market than in November of 2010. Inventory is clearly not meeting buyer demand right now.
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Percentage of Listings Accepting Offers
October and November have seen very high readings on this useful statistic that integrates the level of buyer demand (as measured by listings going under contract) and the number of listings for sale. Look at the difference between November of 2011 and November 2010. For just houses, the percentage that accepted offers in this past November was over 30%, certainly the highest reading in years.
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Statistics without informed context are usually worthless, easily manipulated and often misleading.
One can only be sure market values are trending up or down if that trend is consistent over the longer term, minimally 4 to 6 months. Any definitive trend in prices and values should also be reflected in other market statistics such as average dollar per square foot, days on market, months’ supply of inventory, percentage of listings accepting offers, percentage of distress sales, and so on.
DISTRESS HOME SALE can be one of two things: the sale of a bank-owned property typically pursuant to a foreclosure (also called an REO sale), or a so-called short sale, in which the seller-owner must get lender approval for a “short” payoff, a reduction in the loan amounts due on the property in order for the sale to close. These 2 kinds of distress sale are actually different animals, though both can be long, tiresome endeavors to close because one is dealing with bank bureaucracies. (In 2010 in California, about 40% of short sales fell through without closing sale.) However, in an REO sale, the seller is the bank (which may own hundreds or thousands of these properties), the property often looks “distressed” and the bank has very limited disclosure responsibilities (which is a liability to buyers). In a short sale, the seller is usually the individual owner-occupier, the property condition is and shows much better, and full seller disclosure laws apply (the buyer knows more about what he or she is buying). Both types of distress sale can be very good deals for savvy buyers and indeed investors are buying many of the REO properties around the country. But there are potentially greater risks and almost always much greater aggravation involved.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.
AVERAGE SALES PRICE is calculated by adding up all the sales prices and dividing by the number of sales. It is different from median sales price, but like medians, averages can be affected by other factors besides changes in value, such as fluctuations in average unit size. Averages may also be distorted by a few sales that are abnormally high or low, especially when the number of sales is low. Average sales prices are usually higher than median sales prices.
DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market.
MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and above 6 months, a “Buyer’s market.”
DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. Generally speaking, about 60-80% of listings report square footage and dollar per square foot averages are calculated on these listings alone. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.
All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is subject to revision. Sales not reported to MLS are not included in this analysis.
“Years of falling prices and falling mortgage rates have made home buying more affordable than it has been in decades. Moreover, home prices look downright cheap, not only from the perspective of mortgage rates and income, but also relative to the cost of renting or the cost of constructing a new home. Meanwhile, continued population growth, combined with lender and borrower caution, has increased pent-up demand.”
“Beyond the implications for the macro-economy and financial markets, the numbers on housing have an important message for American families today, and particularly younger families setting out on life’s great adventure: Five years ago, at the peak of the home-buying euphoria, it was emphatically a time to rent. Today, when home ownership is depreciated more than ever before, the numbers tell us it is a time to buy.”
From “Housing – a Time to Buy” by Dr. David Kelly, Chief Market Strategist for J.P. Morgan Funds, and David M. Lebovitz, Market Analyst, the J.P. Morgan Funds U.S. Market Strategy Team.
This view point is echoed by the latest Hanley Wood analysis, “Intel for a Changing Market,” which using data and projections from the Bureau of Labor Statistics, Moody Analytics, FHFA and the National Association of Realtors, predicts an accelerating recovery in employment and median household income in the Bay Area in 2012 through 2015; that national home prices have hit bottom and are beginning a recovery; and that new home sales in the Bay Area will start improving significantly in 2012.
We don’t know what the future holds, but certain signs point to a recovery in process: rising rents in the city; incredibly low interest rates, which impact the ongoing cost of housing enormously; increasing high-tech and bio-tech employment in the Bay Area; the beginning of an upswing in the Case-Shiller Index; and strong buyer demand and low inventory of homes for sale since the beginning of 2011. Of course, national and international economic conditions are still uncertain and fragile, and some pundits predict further declines. But if current circumstances continue, this might indeed turn out to be a very good time to buy, comparable to the early 1990’s when the market went through another huge correction, a flat lining in values that lasted several years, and then a return to significant appreciation. As always, it is up to you to come to your own conclusions.
Statistics are generalities, subject to fluctuation due to a variety of reasons. All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is subject to revision. Except for the Case-Shiller data, sales not reported to MLS are not included in this analysis.
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Houses and condo sales make up the large majority of overall property sales in San Francisco. Stock cooperatives, or co-ops, are a very small and distinct market segment in SF, mostly found in the most expensive neighborhoods (though very common in Manhattan). TIC sales have picked up in recent quarters as financing conditions have stabilized. The multi-unit market is divided into 2-4 unit buildings, in which buyers typically plan to owner-occupy at least one unit, and 5+ unit buildings, where the buyers will most likely use the property as a rental income investment.
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Sales by Price Range
An overview of the price breakdown of home sales in San Francisco. The vast majority of distress sales (bank-owned property and short sales) occur in the lower price points (and generally speaking, the less affluent neighborhoods), and that is where they affect values the most. Once you get above the overall median price, distress sales make up a very small percentage of sales and have little effect on values. What is called the luxury home market usually constitutes just under 10% of the market.
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Percentage of Listings Accepting Offers
This statistic is an excellent one to measure demand vs. supply, and ever since February the percentage has been running at its highest in years. October had a very high percentage of listings going under contract, 23%, versus the 14% of October 2010. Typically, the market will start slowing down soon for the holidays.
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Months Supply of Inventory (MSI)
MSI has been bumping along at what are historically very low levels of inventory since the beginning of the year, reflecting high demand and low inventory. On October 31st, there were almost 700 fewer listings on the market when compared to the same day of 2010, a huge reduction in supply.
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House Sales: Average Dollar per Square Foot
This chart is not proportional to the timeline but it gives a sense of value trends in various neighborhoods since the year 2000. The city’s southern district 10, running from Bayview to Crocker Amazon, has been most affected by distress sales and has thus seen the greatest percentage drop in values, over 30%. The central and northern districts, where distress house sales have not played a large role in the market, have seen declines more in the 15% – 22% range since peak values.
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Median Condo Sales Prices
This graph is not proportional to the timeline, but it gives a good idea of trends in value over the past 11 years. As new-development condo sales have dwindled, the SoMa and South Beach area have seen a steady increase in median sales prices in the last 2 years. For our complete report on values by neighborhood:
Values by Neighborhood
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Prestige Northern Neighborhoods
The neighborhoods across the very north of the city are its most expensive: running from Telegraph Hill through Russian Hill and Pacific Heights through to Sea Cliff. This is a very general snapshot because values vary between the many neighborhoods (and sometimes the actual number of sales is relatively small), but if you ignore the quarterly fluctuations up and down, and look at the general trend lines, you get the idea of the decline in values from 2008 and the relative stability for the last couple years. For our luxury home report:
Luxury Home Report
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Noe Valley/ Castro/ Haight District
The months supply of inventory here has been bumping along at historically very low levels for the last 12 months, reflecting the strong buyer demand and the limited supply of homes for sale in this area of the city. For our complete report:
Noe/ Castro/ Haight Report
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Sunset/ Parkside
112 houses sold in the Sunset/ Parkside district in the 3rd quarter; 14% of those sales were distress sales. Taken separately, the median sales price for distress houses was $610,000 and for regular, non-distress house sales, $714,000. The average days-on-market for all house sales in the last quarter was a relatively low 50 days. In October, the months-supply-of-inventory was a very low 2 months, and those homes selling without price reductions have been averaging a sales price a tiny bit over the asking price.
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SF Richmond District
There were 34 house sales in the Richmond district in the 3rd quarter, of which 15% were distress sales. If we strip out distress sales, the median price soars to $935,000, the highest in years (but the data set of sales is small and the variety of homes selling is large). In October, the days-on-market number was a very low 30 days, the lowest in years; and the months-supply-of-inventory was extremely low at 1.7 months.
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SoMa/ South Beach/ Mission Bay
There is an enormous difference between the median sales prices of distress condos and non-distress condos in this area, where the huge majority of new condo construction occurred over the past 15 years. Distress condo median prices continue to fall, while non-distress prices have been relatively stable within a $50,000 range for years now. Distress sales made up over 30% of sales here for the last 4 quarters, but distress and non-distress typically act as different markets. For our complete report:
SoMa/ South Beach Report
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Case-Shiller High Tier Home Price Index
In the most recent Index, for August 2011, the low and middle price tiers for the 5-county SF Metro Area showed small declines in values, while the high price tier pretty much leveled off, after 5 months of consecutive increases. (Actually, the high price tier went up the tiniest bit in August, but not enough to change the rounded-off reading from 144.3.) It is the high price tier that is most applicable to the city of San Francisco. For our complete report on the Case-Shiller Index:
Case-Shiller Deciphered
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“There are three kinds of lies: lies, damned lies and statistics.”
Benjamin Disraeli
Statistics without informed context are usually worthless, easily manipulated and often misleading.
One can make virtually any case — positive or negative — by choosing a single average or median statistic relating to a short period of time and a small data set, and then cherry picking what you’re comparing today’s data to (last month, last year, or the peak of the market). Conversely, too large a data set may be misleading: the overall national trend may misrepresent California’s, and the state’s can be different from the Bay Area’s, the Bay Area’s from the city’s, and within San Francisco itself, distinct neighborhoods are often different markets going in significantly different directions.
In particular, absent some huge economic event, such as the September 2008 financial markets meltdown, monthly fluctuations in median home sales prices are usually meaningless. Median prices often fluctuate up and down within a 5 to 10% range from one month to the next, even in stable markets.
One can only be sure market values are trending up or down if that trend is consistent over the longer term, minimally 4 to 6 months. Any definitive trend in prices and values should also be reflected in other market statistics such as average dollar per square foot, days on market, months’ supply of inventory, percentage of listings accepting offers, percentage of distress sales, and so on.
When assessing market changes calculated by computerized algorithms using very general data sets – such as Case Shiller’s or Zillow’s — one should be clear on the details. For example, the Case Shiller Index for “San Francisco” reflects an analysis of a “metro area” comprising 5 counties with wildly varying markets (Pinole to Pacific Heights). And for the city of San Francisco, one should look at the Case-Shiller “High Tier” price Index, not the general Index. It also makes sense to assume a sensible margin in error. As an egregious example, Zillow’s property valuations usually build in a 25% margin of error on either side of their “Zestimate” of value. A 1-3% value change indicated by the Case Shiller overall home Index for the SF metro area, then applied by a commentator to condo values in SOMA or house values in the Marina, should be taken with a grain of salt.
Always look for consistent, longer term trends across a wide range of market quantifying statistics.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. The median sales price for homes (in all their infinite variety) is not like the price for a share of stock (all the same), and monthly fluctuations in median price are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.
DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market.
MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and 7 months and above, a “Buyer’s market.”
DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.
SAN FRANCISCO REALTOR DISTRICTS
District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain
District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights
District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview
District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands
District 5: Noe Valley, Eureka Valley (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights
District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights
District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina
District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin
District 9: SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena
District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission
Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.
We are often asked why our analyses seem so out of whack from media reports, so much more positive than the general drumbeat of doom. There are several reasons: the media usually deals with more general data (national, state, Bay Area) while we focus on the city of San Francisco itself or even its specific neighborhoods (which of themselves are often very different markets); there is also the grievous lack of context in the media (a polite way of saying that they often don’t know what they’re talking about); and their unfortunate preference for bad news. But perhaps the biggest reason is that San Francisco and to some extent, much of the Bay Area, is simply an exceptional market. Though subject to the greater economic conditions other places are, the city is often not as negatively impacted to begin with and then recovers sooner.
Here is a good quote from the chief economist for Wells Fargo, John Silvia, formerly chief economist for the Senate Banking Committee: “San Francisco is becoming more like London / Paris and a lot less like Denver…It’s a city that doesn’t add a lot of people, but the people it’s adding to the metropolitan area are very well-paid people…The city will grow good paying jobs in health care, education, leisure, hospitality and information technology, which will cause property values and rents in San Francisco to go up.”
In one category after another, SF or the Bay Area ranks at or near the very top: degree of education, number of world-class universities, affluence, quality of life, environmental consciousness, places people want to visit, culture and sheer natural beauty. In a recent study of innovation (patents per population), 4 of the top 6 cities in the country were in the Bay Area. Recently, 5 Bay Area counties have accounted for almost 50% of all the new jobs in the entire state. San Francisco’s foreclosure rate is among the lowest in the nation. Venture capital investment remains strong. The roster of high-tech and bio-tech companies headquartered around us is unparalleled – many of which are growing rapidly and many of whose employees want to live in San Francisco, a small city with a very limited supply of housing. And now, with apartment rents climbing rapidly, interest rates at their lowest in history, and prices generally 15% – 25% off their peaks, the buy vs. rent equation is at its most attractive in many years.
And that makes San Francisco and its real estate market different from the rest of country.
Statistics are generalities, subject to fluctuation due to a variety of reasons. All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is subject to revision. Except for the Case-Shiller data, sales not reported to MLS are not included in this analysis.
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Case-Shiller High Price Tier Index
As David Blitzer of S&P said, “Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery.” But we’ve now seen the 5th consecutive monthly increase in the SF MSA High Tier Price Index, which is a good sign. July’s index was released in late September. For a complete analysis:
Case-Shiller Deciphered
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San Francisco Homes Market: September Snapshot
Many fewer listings than last year, but more listings accepting offers: the supply and demand dynamic has tightened significantly – a situation that began earlier this year. The current supply of new listings is simply not keeping up with buyer demand and multiple offer situations are not uncommon. Typically, this would apply upward pressure on prices – which it is in some, but not all, of the city’s neighborhoods. (Different neighborhoods can have very different market conditions.) MLS sales in the third quarter were up 7% from last year, with 16% fewer homes for sale: sales are clearly being constrained by low inventory. Closed sales lag accepted offer-activity by 4-8 weeks.
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SF Median House Sales Prices
Distress sales (bank-owned and short sales) make up about 20% of the house market in SF, but they’re clustered in the less affluent neighborhoods and in the lower price ranges. Even as the median sales price for distress houses has bottomed out, that of regular, non-distress houses has increased in the past 2 quarters. Please see the definition of and caveats about this often misunderstood statistic at the bottom of this newsletter. One wants to see consistent long-term trends before jumping to conclusions about changes in home values.
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SF 3-Bedroom House Values
Low, high and median sales prices; average size; and average dollar per square foot. For our complete report:
Values by Neighborhood & Property Type
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SF Median Condo Sales Prices
The median sales price of distress condos (about 18% of the SF condo market) has bottomed out, while the median for non-distress condos has fluctuated up and down by quarter, generally within a relatively narrow 5% band since the 2008 market adjustment. Since median prices are often affected by other factors besides changes in value, this probably represents a general stability in prices more than anything else. One would wish to see a consistent long-term trend to come to any conclusions about changing condo values.
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Percentage of SF Listings Accepting Offers
This is one of the clearest statistics of supply vs. demand and for virtually every SF property type the percentage is hovering around its highest level since 2008.
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Sales Price to Original Price, Days on Market, Price Reductions
Well-priced, well-prepared, well-marketed homes are selling quickly at, a little over or very near their asking prices. Properties that go through 1 or more price reductions take much longer (typically over 2 months longer) to sell and sell at a large discount (average 12%) off original price. And though expired listings are at historical lows, for every 2 listings that sell, another listing expires without selling. Even in high demand/ low supply market, many listings still do not sell, typically because they’re perceived as overpriced.
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Months Supply of Inventory (MSI)
The lower the MSI, the hotter the market. Since the year began, the MSI for SF houses and condos has been bumping along at virtually their lowest levels ever. For houses, the hottest market segment, the MSI in September was an incredibly low 2.6 months (in some specific neighborhoods, it’s even lower); for condos, it was 3.3 months; for TICs, 4.6 months; and for 2-4 unit buildings, 3.9 months.
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Average Days on Market (DOM)
This statistic can easily be distorted by distress sales and deals that fall through. For example, for non-distress houses the DOM was 57 days in September, while distress houses had an average DOM of 81 days; distress condos had an average DOM of 112 days. For what it’s worth, the overall average DOM in September, after climbing during the summer months, was about 60 days, which is as low as it’s been for quite some time. However, the majority (of sold listings) sells without price reductions and typically accepts offers within 2 to 3 weeks of going on market.
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SF Distress-Home Market
The number of distress home listings has been generally declining since the 4th quarter of 2010. Because of a number of factors – location, condition, price, the aggravation of making the deal – the distress home and regular home markets are generally different markets in SF, and often don’t affect one another’s values. Though distress home listings can now be found throughout the city, they are concentrated in particular neighborhoods hit hard by the foreclosure crisis, where they dominate the lower price ranges.
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Mortgage Interest Rates
Defying all predictions, interest rates fell to yet another historic low in early October, going below 4%. This has huge ramifications for the ongoing cost of home ownership, and along with rising rents in San Francisco, has been altering the rent vs. buy equation significantly. To perform your own rent vs. buy calculations:Rent vs. Buy Calculator
DISTRESS HOME SALE can be one of two things: the sale of a bank-owned property typically pursuant to a foreclosure (also called an REO sale), or a so-called short sale, in which the seller-owner must get lender approval for a “short” payoff, a reduction in the loan amounts due on the property in order for the sale to close. These 2 kinds of distress sale are actually different animals, though both can be long, tiresome endeavors to close because one is dealing with bank bureaucracies. (In 2010 in California, about 40% of short sales fell through without closing sale.) However, in an REO sale, the seller is the bank (which may own hundreds or thousands of these properties), the property often looks “distressed” and the bank has very limited disclosure responsibilities (which is a liability to buyers). In a short sale, the seller is usually the individual owner-occupier, the property condition is and shows much better, and full seller disclosure laws apply (the buyer knows more about what he or she is buying). Both types of distress sale can be very good deals for savvy buyers and indeed investors are buying many of the REO properties around the country. But there are potentially greater risks and almost always greater hassle factors involved.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.
DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market.
MONTHS SUPPLY OF INVENTORY (MSI)reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and 7 months and above, a “Buyer’s market.”
DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.
September 2011 Update
August 2011 Market Snapshot
As compared to August of 2010, we had 25% fewer listings for sale as of 8/1; 6% fewer new listings; 28% more listings accepting offers; 7% more closed sales; 30% fewer expired/ withdrawn listings; and 28% fewer listings for sale as of 8/31. Every statistic points to a market with too little inventory to satisfy buyer demand. It is now common for appealing, well-priced homes to receive multiple offers within 1 or 2 weeks of coming on market. (Note that closed sales lag accepted offers by 4-8 weeks, so August’s closed sales mostly reflect accepted offers in late June and July.)
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SF Homes for Sale
The inventory of SF homes available to purchase continued to decline in August. There were approximately 550 fewer MLS listings for sale in August of 2011 as in August of 2010 – and that does not factor in the large parallel reduction in new-development condos on the market. Last year in September, we saw the biggest burst of new listings of the past 2+ years, which helped power sales volume through the autumn. A good many buyers (and their agents) would be grateful to see a similar surge in listings this September.
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Percentage of Listings Accepting Offers
One of the clearest statistics of the current (low) supply and (high) demand dynamic is the percentage of listings which accept offers within a given month. August, which is typically a slow month, continued the trend begun earlier in 2011 with a very high percentage of listings going under contract. August’s 22% – 23% is a tremendous jump from the 14% of August 2010, and is among the highest of recent years.
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Average Dollar per Square Foot for SF Houses
Most of the distress house sales in San Francisco are in the lower price ranges (lower for the city) and in the less affluent neighborhoods, and that is where they impact values. Once one gets above $750,000, distress house sales are relatively rare and impact values very little. Here we see the huge difference in average dollar per square foot values between homes above and below $750,000. Two different markets: higher priced houses gaining in values, while lower priced houses (with a large percentage of distress sales) so far continuing to decline.
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Average Dollar per Square Foot for SF Condos
Lower priced condos are often heavily impacted by distress sales, while higher priced condos are not. In the second quarter of 2011, dollar per square foot values for condos $650,000 and above were at their highest since 2008. Average dollar per square foot is a very general statistic of a large basket of very different properties in very different locations. As always, sustained longer term trends are what are meaningful.
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4-Bedroom House Values
We just completed our semi-annual analysis of SF home sales by neighborhood, property type and bedroom count, looking at the number of MLS sales; low, high and median prices; average size and average dollar per square foot. For the complete report:
Values by Neighborhood & Property Type
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2-Bedroom Condo Values
The number of MLS sales; low, high and median prices; average size and average dollar per square foot. For our complete report:
SF Values by Neighborhood & Property Type
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S&P Case-Shiller Index
The Case-Shiller Index that most applies to SF is their “High Tier” Home Price Index. (Indeed, an Upper High Tier Price Index would be even more applicable.) This Index for the 5-county San Francisco Metro Area recorded its fourth increase in as many months. We put much less stock in monthly fluctuations than in longer term trends – right now the trend is mildly upward. The chart numbers reflect price changes based upon an assumption of January 2000 values equaling 100. Thus 144 = a value 44% above January 2000. A change from 184 to 144 reflects a 22% decline. For more information about Case-Shiller:
Case-Shiller Index Deciphered
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Months’ Supply of Inventory (MSI)
MSI in San Francisco is as low as it has been in years, reflecting motivated buyers snapping up homes in a low-inventory environment. For just houses, MSI is lower still, and in some hot neighborhoods, MSI is under 2 months of inventory, which is considered very, very low.
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Average Days on Market (DOM)
This statistic lines up with all the others. The hotter the market, the faster buyers act to buy appealing listings. And the current average of 58-60 days, while historically low, is distorted by distress sales (a much longer process), sales that fall through (and come back on market, typically to sell to a second buyer), and especially distress sales that fall through, all of which raise the average DOM significantly. For example, the average days-on-market figure for distress condo sales is now 95 days. In fact, most of the homes selling today are accepting offers within 2 to 3 weeks of going on market.
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30-Year Mortgage Interest Rates
The upside of all the financial markets turmoil is incredibly low interest rates, which, of course, make a huge difference in the ongoing cost of home ownership. Along with rising rents in the city, this is one of the big reasons why the Rent vs. Buy equation is changing so dramatically. In early 2010, pundits predicted that 30-year rates would be over 6% by now, but instead we’re hitting new lows. Rates can fluctuate dramatically. Chart by Bankrate.com. To make your own Rent vs. Buy calculations:
Rent vs. Buy Calculator
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DISTRESS HOME SALE can be one of two things: the sale of a bank-owned property typically pursuant to a foreclosure (also called an REO sale), or a so-called short sale, in which the seller-owner must get lender approval for a “short” payoff, a reduction in the loan amounts due on the property in order for the sale to close. These 2 kinds of distress sale are actually different animals, though both can be long, tiresome endeavors to close because one is dealing with bank bureaucracies. (In 2010 in California, about 40% of short sales fell through without closing sale.) However, in an REO sale, the seller is the bank (which may own hundreds or thousands of these properties), the property often looks “distressed” and the bank has very limited disclosure responsibilities (which is a liability to buyers). In a short sale, the seller is usually the individual owner-occupier, the property condition is and shows much better, and full seller disclosure laws apply (the buyer knows more about what he or she is buying). Both types of distress sale can be very good deals for savvy buyers and indeed investors are buying many of the REO properties around the country. But there are potentially greater risks and almost always greater hassle factors involved.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.
DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market.
MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and 7 months and above, a “Buyer’s market.”
DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.
In real estate, sustained longer term trends across a variety of statistical measurements are the meaningful ones – and these are what we try to provide in our analyses. The fluctuations of monthly statistics — often quoted without context in news articles — are usually virtually meaningless (but make dramatic headlines).
Statistics are generalities, subject to fluctuation due to a variety of reasons. All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted. Sales not reported to MLS are not included in this analysis.
August 2011 Update
As the world wrestles with debt crises, the San Francisco economy and home market continue to improve, at least for the time being. (Knock on wood.) According to the Center for Continuing Study of the California Economy, of the 28,800 jobs the state added in June, 12,800 were in just 5 Bay Area counties – many of them well-paying. The city and Bay Area have a number of major high-tech companies growing quickly and/or going public, creating a burst of brand new wealth. Since SF typically sees only 5000 to 7000 home sales per year, these changes can have an outsized impact on its real estate market.
San Francisco’s unemployment rate dropped from 10.1% in February to 8.4% in May; both residential and commercial rents are rising in the city; mortgage interest rates remain near historic lows; and we have a limited inventory of homes for sale when compared to strong buyer demand: all these factors appear to be applying upward pressure on prices. It’s still too soon to draw definitive conclusions about a market turnaround, but the S&P Case-Shiller Index for high-price-tier homes in the Bay Area (houses over $580,000) did show price increases in March, April and May (their latest report). Some pundits believe these increases are merely short-lived seasonal bumps, but considering the strength of our early-summer market — what we’re experiencing on the street and what’s showing up in the statistics — we suspect that is not the case.
Remember that San Francisco (as well as the Bay Area, state and country) is full of micro-climate home markets and these different markets can and do move in different directions or at different speeds.
Median Prices for 2-Bedroom Condos
This is a snapshot of median prices for 2 bedroom condos in a number of SF neighborhoods in selected years since year 2000, ending with year-to-date 2011. One can clearly see the peak period for values in 2007/ 2008, the large decline after September 2008, and the relative price stability in most neighborhoods in the last 18 to 30 months. Median prices often fluctuate up and down 3-5% without great significance. Consistent trends over the longer term are indicative of genuine changes in market values. For our detailed report on the SOMA/ South Beach/ Mission Bay condo market:
SOMA/South Beach Report
Average Dollar per Square Foot
Fluctuations of 1 to 2% are not particularly meaningful for a general statistic like this one – and indeed are more an indication of basic value stability than anything else. As with any general statistic, real market changes will show up consistently over the longer term. Some neighborhoods have been seeing monthly increases in average dollar per square foot figures since March or April, perhaps reflecting value increases in a strengthening market. For our detailed update on Realtor District 5 (the greater Noe/ Castro/ Haight area):
Noe Vly/ Castro/ Haight Market Report
S&P Case-Shiller Home Price Index
The Case-Shiller High Tier Price Index for May (published in late July) for the 5-county San Francisco Metro Statistical Area showed its third consecutive monthly increase. It is the “High Tier Price” Index that most applies to the city of SF itself with its high-priced housing inventory. Its latest price reading is now less than one half of one percent below that of January 2009. Considering the supply and demand dynamic in San Francisco this spring and early summer, it is quite possible, even likely, the Index will show further increases in its June and July reports. For more information about Case-Shiller:
Case-Shiller Index Deciphered
Percentage of Home Listings Accepting Offers
This chart shows how the market began to dramatically strengthen in early 2011. In July 2011, the percentage of listings going under contract was about 22%, a huge change from July of 2010, when the percentage was 15%.
Median House Sales Price
This chart clearly indicates how the regular, non-distress house market – where the median sales price is climbing (to $850,000 in July) – is distinct from the distress house (bank and short sales) market – where the median sales price is declining. Distress house sales are clustered in the city’s less affluent neighborhoods and at the lower price ranges, and are often actually in distressed condition: they generally do not affect values of non-distress houses in most other SF neighborhoods. And the current luxury home market in SF is another world altogether:
SF Luxury Home Market Report
Price Reductions, Time on Market, Sales Price
Most of the SF homes that sell, accept offers relatively quickly at a price very close to asking price. Those homes that go through 1 or more price reductions take much longer to accept offers and sell at a substantial discount to original list price. And a fair proportion of listings are withdrawn from the market without selling, typically due to being perceived as overpriced. Homes that are priced correctly right at the start, prepared carefully to show at their best, and marketed comprehensively typically achieve the highest sales prices in the shortest times.
How Buyers Find Homes
The large majority of buyers now find the home they purchase through their real estate agent or online (or most often, a combination of the two). Open houses and signage come a distant third, and newspapers and real estate magazines only play a tiny role. All of which is a huge change from the way it was only 10 years ago. Since most agents and buyers first evaluate a home from its photos, professional photography of a well-prepared home is critical. Then those photos must be used in effective broker-to-broker and online marketing campaigns — to get buyers and agents inside the property.
Renting vs. Buying
One of the standard ways to evaluate if a home market is valued correctly is to compare what it costs to rent a home versus to buy it. The Economist magazine, one of the earliest to predict the housing bubble, recently stated that based upon current rent vs. buy costs, U.S. homes are now slightly undervalued. In SF, rents have been climbing. This analysis compares the average asking rent for a 2 bedroom SF apartment ($3350 per Rentbits.com), to the median price for a 2 BR, 2 BA condo in Noe Valley ($850k). (There is a full report that accompanies these charts.) Calculations vary hugely depending on assumptions regarding down payment, mortgage rate, future inflation & appreciation, closing costs and other financial criteria. Perform your own calculations at:
Rent vs. Buy Calculator
Inventory of Homes for Sale
There were approximately 600 fewer listings for sale in the city during the month of July 2011 as compared to July 2010, yet unit sales were actually a bit higher and the number of listings which accepted offers was up about 20% from last year. Fewer listings but many more listings accepting offers = a much hotter market. Last year, the market went into a huge slowdown after the springtime double tax credit expiration — nothing comparable has occurred in 2011. Indeed, right now, the main thing holding back the market is simple lack of inventory.
Months’ Supply of Inventory (MSI)
Part and parcel of everything indicated in earlier charts also shows up in this supply and demand statistic. MSI is very, very low — as low as it has been years, since well before the peak of the bubble.
Average Days on Market (DOM)
Average DOM before acceptance of offer is as low as it was in the bubble years. Motivated buyers in a low-inventory market are snapping up attractive new listings quickly, often in multiple-offer situations. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on market.
DISTRESS HOME SALE can be one of two things: the sale of a bank-owned property typically pursuant to a foreclosure (also called an REO sale), or a so-called short sale, in which the seller-owner must get lender approval for a “short” payoff, a reduction in the loan amounts due on the property in order for the sale to close. These 2 kinds of distress sale are actually different animals, though both can be long, tiresome endeavors to close because one is dealing with bank bureaucracies. (In 2010 in California, about 40% of short sales fell through without closing sale.) However, in an REO sale, the seller is the bank (which may own hundreds or thousands of these properties), the property often looks “distressed” and the bank has very limited disclosure responsibilities (which is a liability to buyers). In a short sale, the seller is usually the individual owner-occupier, the property condition is and shows much better, and full seller disclosure laws apply (the buyer knows more about what he or she is buying). Both types of distress sale can be very good deals for savvy buyers and indeed investors are buying many of the REO properties around the country. But there are potentially greater risks and almost always greater hassle factors involved.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.
DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market.
MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and 7 months and above, a “Buyer’s market.”
DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.
SAN FRANCISCO REALTOR DISTRICTS
District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain
District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights
District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview
District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands
District 5: Noe Valley, Eureka Valley (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights
District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights
District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina
District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin
District 9: SOMA, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena
District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission
Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.
The Paragon July 2011 Quarterly Update
As shown in the charts below, by virtually every statistical measure of supply and demand and value, the real estate market in San Francisco strengthened in the 2nd quarter, and by some measurements dramatically so. Paragon is celebrating its 7th anniversary, and if you can forgive us some horn tooting, we are now the 3rd largest brokerage in the city – and closing in on #2. In the past 6 months, our overall percentage market share increased over 25% (and for homes over $2m, over 40%). According to Real Trends 500, we are #5 in the nation in average sales per agent. And for the past two years, of the 10 largest SF brokerages, we have the highest average Sales-Price-to-Original-List-Price percentage and the lowest average Days-on-Market figure when acting as listing agent.
Percentage of Home Listings Accepting Offers
This is one of the purest measurements of buyer demand vs. the supply of homes for sale, and for every home type in San Francisco, the 2nd quarter showed the highest percentage of listings accepting offers in over 3 years. In May and June, 20% more listings went under contract (accepted offers) over last year, with 15% fewer listings for sale — a huge shift in the supply and demand dynamic.
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The S&P Case-Shiller Index
Based upon media reports of the C-S Index, one might be forgiven for thinking the San Francisco market is crashing, but that is not the case. First of all, they report the WRONG Index for the city of San Francisco, and then they usually sensationalize monthly fluctuations. Below is a chart of the longterm performance of the C-S “High Tier” Price Index most applicable to SF itself, showing a very small decline over the past 26 months. Though not shown in this chart, the Index ticked up in March and April (the latest published) and is likely to show further increases in May and June.
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Average Dollar per Square Foot
Houses, condos and 2-4 unit buildings all recorded increases in the average dollar per square figure in the 2nd quarter. Since closed sales lag market activity (offer acceptance) by 4 to 8 weeks, and offer acceptance activity was so strong in May and June, it will be interesting to see if this trend continues in the third quarter.
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SF Median House Sales Price
The median price for non-distress house sales is up to within a percent or two of the average for the past 2+ years, while distress house prices have been generally declining. Distress house sales are concentrated in the less affluent neighborhoods, at the lower price ranges, and generally do not significantly impact values in most SF neighborhoods. Median sales can be and often is affected by other factors besides changes in values. For example, there is almost always a decline in the 1st quarter of the year, which reflects not a decline in value, but holiday market dynamics, mid-November to mid-January.
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SF Median Condo Sales Price
The 2nd quarter saw the highest median sales price for non-distress condos (by a tad) since 2008, while the median for distress condos continues to decline. The chief market analyst for Moody’s recently pointed out that though distress sales are pulling down overall median prices, the values for non-distress homes have NOT been declining.
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SF Homes for Sale
The inventory of homes for sale is far below that of previous years at the same time of year. The main thing holding back unit sales right now is the low supply of inventory. High demand plus low inventory will typically exert an upward pressure on values over time.
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Average Days on Market (DOM)
The lower the average days on market before acceptance of offer, the faster buyers are snapping up new listings and the hotter the market. The average DOM is now the lowest in years for the 3 main home types in San Francisco.
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Months’ Supply of Inventory (MSI)
The lower the MSI, the stronger the buyer demand is as compared to the supply of homes for sale. For the past few months, MSI for all SF home types has been bumping along at its lowest level in years. Houses and condos are in what would typically be called “Seller’s Market” territory.
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Expired/Withdrawn vs. Sold Listings
The ratio of those listings that expire or are withdrawn from the market (without selling) to those listings that do sell is at its lowest in over 3 years – another indicator of high buyer demand. Roughly, speaking, for every 2 listings that closed escrow in the 2nd quarter, 1 listing expired or was withdrawn — typically due to being perceived as overpriced. Looked at another way, about a third of listings expired or were withdrawn, though many are or will be re-listed (at a lower price) and then sold.
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SF Luxury Home Sales
Luxury home sales are climbing rapidly and the percentage of luxury home listings going under contract (accepting offers) is at its highest level since 2008. For luxury homes over $2,000,000 (not broken out in this chart), the percentage is actually higher than at the peak of the market in 2008. New high-tech money, in particular, has been pouring into this market recently, and right now it is hard to envision a reversal of this trend in the near future. We will be issuing our newsletter dedicated to the luxury home market in the next few weeks.
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Homes Lost to Foreclosure
A clear graphic of how little the city has been impacted by foreclosures when compared to other California and Bay Area counties.
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SF Distress Sales by Price Range
Distress home sales have had a huge impact on some of the less affluent neighborhoods in SF and at the lowest price ranges, but usually no significant impact on the majority of home values in the city’s more affluent central and northern neighborhoods, which make up 8 out of SF’s 10 Realtor districts. The median house price in these 8 districts in the 2nd quarter was $851,000, and for condos and co-ops, $695,000. As a percentage of total home sales, distress sales declined from an all-time peak of 23% in the 1st quarter to a relatively normal 16% in the 2nd.
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In real estate, longer term trends across a variety of statistical measurements are the meaningful ones — which is what we try to provide in our analyses. The fluctuations of monthly statistics — often quoted in news articles — are, sadly, virtually meaningless (but can make dramatic, if often misleading headlines).
Statistics are generalities, subject to fluctuation due to a variety of reasons. All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted. Sales not reported to MLS are not included in this analysis. We can supply the raw data behind any of our charts, if you are so interested.
Last year, in May of 2010, the market began its hangover from the exuberance of the double-tax credit rush (which expired in April 2010), a hangover that generally continued through summer of 2010. In contrast, in San Francisco, May of 2011 continued the dynamic of strong buyer demand and limited inventory that began earlier this year. May’s accepted offer activity was up over 25% compared to May of 2010, with an inventory of homes for sale that was 11% below last year’s. Distress-home sales in the city, which climbed to their highest levels ever in early 2011 (and hammered the overall median price), declined significantly in April and May.
Median sales prices and average dollar per square foot figures in SF climbed significantly in the last 2-3 months — which, to some degree, is what one would typically expect from our supply and demand situation. We will have to wait to see if these trends continue or are simply normal (and relatively meaningless) statistical fluctuations.
SF unit home sales are up about 4% YTD over 2010 — without any tax credits — but more importantly, the strong demand that collapsed last year after April shows no sign yet of collapsing this year.
According to the Case-Shiller Index, prices for the 5-county San Francisco “Metro Area”, declined 5% from March 2010 to March 2011 (the latest C-S data available), but in the city itself, and certainly in its better neighborhoods, we are not generally seeing the value declines that appear to be occurring elsewhere. This may be because of our unique circumstances: being a financial center, high affluence and education, comparatively low foreclosure rates, the resurgence of high-paying high-tech employment in the Bay Area (and new IPO money), the lack of room to expand and/or simply being one of the most appealing and beautiful cities of the world.
It will be interesting to see what the summer holds, but right now, neither the statistics nor the view from the street currently supports the view of a declining-value market in San Francisco.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months.
Statistics are generalities, subject to fluctuation due to a variety of reasons. All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted. Sales not reported to MLS are not included in this analysis.
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SF Homes Accepting Offers
In April of 2010, buyers rushed to take advantage of last year’s double tax credit — and then business slumped. This year, the strong market that began in the spring has continued in May. Even if we calculate that 6% of the accepted offers now showing for May ultimately fall through, the year over year increase in deal-making is over 25%. With significantly lower inventory than last year.
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SF Home Sales by Price Range
The big increase has been in the number of lower-priced home sales. To a large degree, this is a function of the surge in distress-home sales in the first 3 months of 2011. Which has since tapered off.
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Inventory of Homes for Sale
The first chart graphs the number of new listings coming on market by month: May 2011 had 12% fewer new listings than May 2010, which has a large impact on the market. The second chart graphs the total number of home listings available for sale within a given month: inventory this spring has been well below the levels of 2010. May of 2011 had over 300 fewer listings on the market than May 2010, and yet the number of accepted offers this year was much higher.
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SF Median House Sales Price
This chart shows the median house sales price by quarter over the past 3 years by distress house sales, regular (non-distress) houses, and all house sales. In SF, the distress house market and the regular house market are generally two different markets: different price ranges, often different neighborhoods and condition, different buyers. The median sales price plunged in January and February because distress home sales soared as a percentage of sales, and the higher end market usually shuts down for the holidays (affecting closed sales in January/ February). In March, the median sales price for regular homes started to bounce back, which accelerated in April and May. We are still well below peak values in 2007 – 2008. Though things look positive, it is much too early to draw definitive conclusions about value trends: median prices often jump up and down without any great significance to values.
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SF Median Condo Sales Price
While the median sales price for distress-sale condos has continued to decline, the median sales price for regular condos has bounced up dramatically over the past couple months, and is now higher than it has been in years. Whether this is a temporary anomaly or the beginning of a trend is unknown at this point. There has been a large squeeze on the inventory of condos for sale as the remaining new condo developments have sold out (and not been replaced by new developments). We are still well below peak values in 2007 – 2008.
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Average Dollar per Square Foot
One can assess value not only through median prices (which can be affected by other things besides changes in value) but by what buyers pay on a dollar per square foot basis. In the last couple months, the average dollar per square foot has increased for houses, condos and 2-4 unit buildings. (TICs are not included because the sales data rarely contains their square footage.) The fact that all these property types are showing parallel increases may indicate a market trend toward higher values — which is typical of the combination of high demand and limited inventory — but it is too early to tell.
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Percent of SF House & Condo Listings Accepting Offers
This chart clearly shows the dynamic of strong buyer demand and low inventory. A much higher percentage of house and condo listings have been going under contract (accepting offers) in the last 3-4 months than at any time in the past year.
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Average Days on Market (DOM) & Months’ Supply of Inventory (MSI)
The top chart shows the average number of days between a house or condo listing going on market and accepting an offer (for those homes accepting offers). The lower chart graphs MSI: how long it would take to sell the existing inventory of houses and condos for sale at existing market conditions. As a buyer demand heats up, one expects to see that properties are accepting offers more quickly and that the months’ supply of inventory is decreasing. That is what we’ve been seeing in San Francisco since spring began: in each case, the statistic is lower or about as low as it has been for the past 2 years.
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SF Luxury Home Sales
In this chart, a luxury home is a house, condo or TIC selling for $1,500,000 or more.
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SF Unit Home Sales since 1994
After the years of decline, the number of home sales in SF started to recover in 2010 and 2011 from their low points in 2009. The exception is in TIC sales, which have continued to decline due to issues with financing, tenant eviction and condo conversion.
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New-Condo Construction & Sales
With the financial blow-up of 2008, new condo construction declined hugely, which, of course, led to the large decline in new development condos on the market. This is another factor of decreased inventory available for buyers to purchase. Since large developments take years from breaking ground to going on market, no significant reversal of the recent decline in new-condo inventory is expected soon.
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SF Distress-Home Listings & Sales
Distress home listings peaked at the end of last year, which created a peak in the number of sales in early 2011. (Distress sales often take much longer to close than regular sales due to issues with bank bureaucracy.) The surge in low-end distress home sales in early 2011 depressed the city’s overall median sales price (while not necessarily affecting values). However, for the time being, both the numbers of distress home listings and sales have declined markedly from their peaks.
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Home Sales & Distress Sales as Percentage of Total Sales
The number of closed sales in May 2011 was lower than that of May 2010, mostly due to the frenzy of buyer activity in April 2010 to qualify for the double tax credit. The lower hash-marked areas delineate the number of distress sales, and the percentages at the top of the bars show the percentage of distress home sales as a percentage of total sales. These percentages peaked in early 2011 (again, hammering the overall median sales price) but have since declined significantly in April and May. Overall unit sales of all SF homes are up about 4% YTD as compared to 2010 – with no tax credit and significantly lower inventory of homes available to purchase.
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SF Distress House Sales by Realtor District
Though distress house sales (bank-owned properties and short sales) can now be found throughout the city, the large majority continue to be located in the two, less affluent, southern border districts running from Bayview to Oceanview (which have been hammered by foreclosures). In many of the other districts, distress house sales as a percentage of sales is too low to impact the values in those areas. The median price for distress house sales in the city typically runs in the $450,000 to $500,000 range.
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SF Distress Condo Sales by Realtor District
Distress condo sales can be found throughout the city, but are clustered in the greater SOMA/ South Beach area, where most of the huge new condo developments were built in the last 10 years. Distress condo sales are generally at the lower end of prices.
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Interest Rates (from Bankrate.com)
Interest rates have been declining again recently and are incredibly low by any historical standard.
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