Note: Case-Shiller Home Price Indices for “San Francisco” are for a 5-county area, of which the city’s housing market is a very small part. Since they are published 2 months after the month of the Index, are 3-month rolling averages, and the time between offer acceptance and closed sale typically runs 4-8 weeks, Case-Shiller is generally 3-6 months behind the market itself, i.e. when offers are being negotiated in the present. Case-Shiller publishes 4 main indices for SF Metro Area houses: an aggregate index for all price ranges, and then one index for each third of unit sales – low price, middle price and high price tiers.
When the market fell from its peak in 2006-early 2008 (different areas and different market segments peaked at different times), the scale of the decline varied widely, mostly by price point. With the recovery that began in 2012 and accelerated in 2013, the magnitude of the price recovery, as compared to previous peak values, has also varied by price point and area.
The lowest price range (terribly affected by foreclosures and distressed sales) fell most dramatically – approximate 60% decline – and though recovering dramatically on a percentage basis, is still way below its peak. It simply has much more loss to make up.
The upper price range (the top third of unit sales) in the 5-county metro area fell much less during the bubble pop and with the recovery is getting close again to peak values:
This chart below illustrates the short-term changes in the C-S high tier index: the recovery in 2012 accelerating in 2013:
And then looking just atthe city of San Francisco itself, which has, generally speaking, among the highest home prices in the 5-county metro area: many of its neighborhoods are now blowing past previous peak values. Note that this chart has more recent price appreciation data than available in the Case-Shiller Indices and that the rate of appreciation accelerated in the March-May timeframe. This is also for both houses and condos combined, when the C-S charts used above are for house sales only.
I am trying to teach my son not to care too much about how he measures up to others. A little healthy competition is fine. (I can run faster!) But wondering who makes more money, who has a better house, who has a better car… not so much. It’s a process.
But we all wonder, don’t we? Here’s a chart you can have some fun with. Some of it will make you feel pretty good (greenest!) and some pretty bad (most homeless)… Have fun and try not to brag too much to your out of town friends and relatives.
There are a lot more statistics on the market in general below, but I wanted to take a moment to talk about the KINDS of properties I sold in 2012. Because it is different from what I sold in 2009 and 2010. The take away is that it really is a good time to sell just about any kind of property… If you have been sitting on the fence or think you are still stuck, please reach out and let’s talk!
Five of my 19 sales were TICs. Between 2008 and 2012, TICs were not moving at all. I listed three TICs this year. We sold one at asking in about three weeks, one just below asking in two weeks, and one 30k (5%) over asking price in about 10 days. That was OVER asking price folks. For a TIC. Haven’t heard that one in a few years.
Also, while I am hearing that the “distressed” market is in decline, 2 of the 19 sales were bank owned (REO) and 3 were short sales. (Though I am great at this stuff, it is painful, frustrating and I won’t mind when people are all making money again, so I hope the experts are right and distressed sales are on the way out!)
Three out of 19 were investment properties.
Eight out of 19 were listings. And all but one of my eight listings sold in 2 weeks or less.
Eleven out of 19 were buyer representations; and
Four of the eleven buyer representations were ones we saw prior to them being listed in the MLS. It was a fast paced market and getting the jump on the competition was the name of the game. Two I found out about by networking with other agents, one my buyers found scouring craig’s list, and one I found by knocking on the door of a distressed home because it fit the bill for a buyer I had in mind. This was a significant difference from past years where one or two sales would be pre-market opportunities.
If you want to look at specific closings, they can all be found here: http://jennifer.intersectmg.com/properties/sold/ read more →
I am going to take a moment at the beginning of this missive to say a BIG THANK YOU to each and every one of you. I had a fantastic year in 2012 and it is almost entirely due to you.
To be specific, I had my best year ever since starting in real estate (among many good ones). I closed 19 transactions, 15 of which were either CLIK readers or referred by CLIK readers. That is amazing and when I say I can’t do it without you this is what I mean. These transactions ranged from bargains like a little condo $348k in lower Pac Heights, and a 3 unit property in the Sunset for $848k to luxury single family homes like 372 Douglass. In 2013, with your very important help, I ranked in the top 3% of SF Realtors by number of transactions and top 8% by dollar volume. I am honored by your trust and I hope you will help me do it again in 2013 and beyond.
And, as a bonus, because you and your referrals are of such consistently high caliber, I enjoy my work more every year. Again, thank you!!!
read more →
The Epicenter of the High-Tech-Buyer
Market Surge in San Francisco
A statistical market overview by the Paragon Real Estate Group for Noe Valley, Eureka Valley & the Castro, Cole Valley, Mission Dolores, Haight Ashbury, Ashbury Heights, Clarendon Heights, Parnassus Heights, Corona Heights, Glen Park, Twin Peaks & the Duboce Triangle (more…) read more →
Inventory is as tight as it has ever been in “recorded” history. (That is, San Francisco MLS history, which is about 20 years.) We have buyers chomping at the bit with low great new jobs and relocation packages for the first time in years and not enough homes available to satisfy them. Contributing factors are that urban living hasn’t been this in style since the 1920s and interest rates are even lower than last time I wrote to you. Open houses are busy and well-priced homes are selling quickly in all market segments. Sales absorption is outpacing oncoming listings even in this early spring season. I am hearing this from colleagues in Wine Country as well as Sacramento. I don’t know what it means for the future, but I do think that 2012 may be the year that turns things around in the real estate markets less affected by distressed sales. Whatever happens, it seems like it’s going to be an exciting year full of multiple offer situations and where decisive and timely action will carry the day for buyers as well as sellers. And of course I have charts to back this up – to see them click here. read more →
Eric Nelson of Silicon Valley Funding writes:
In 2008, as a response to the collapse of the mortgage market, federal regulators created a new category of mortgage, the high-balance conforming loan. Since that time, loans have been available up to $729,750 in high-cost areas at rates lower than those for full “Jumbo” mortgages.
Conforming loans are those that have a loan balance under $417,000 which can be re-sold by an originating lender on the Fannie Mae and Freddie Mac federally sponsored mortgage markets. This allows the lender to re-lend the same funds over and over again and is important to the liquidity of the lending market. The high balance conforming limits applies to mortgages between $417,001 and $729,750. This program was created to support the economy by assisting high-balance borrowers during the financial crisis and was temporary.
Starting October 1, 2011, the high balance conforming loan limit will drop to $625,500. This in turn means that interest rates on these loan amounts between $625,500 and $729,750 will be HIGHER starting October 1, since they will no longer be backed by the government. After October 1, any mortgage over $625,500 will officially be a “Jumbo.”
Interest rates this week are among the lowest we’ve seen in 2011 and it is not expected that the federal government will extend the high balance conforming loans up to the $729,750 level again in the near future. Fixed rate loans have seen the largest drop and are currently the lowest interest rates we have had in the past 40 years.
If you are planning a purchase or refinance and you will need a loan amount between $625,500 and $729,750 you should get the process started immediately.
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000.”
Business Week 1969
“Housing experts predict price rises in the future won’t be that great…”
National Business Review of 1977
“The median price of a home today is approaching $50,000.”
Money Magazine 1985
“The golden age of risk free run-ups in home prices is gone”.
San Francisco Examiner 1996
“A home is where the bad investment is.”
San Francisco Examiner 1996
Some of this seems just good for a laugh, but I think that the overall message is that in whatever time you live, housing seems like it can never get more expensive than it is right at that moment. It always seems like an uphill battle. I think these quotes point out it’s important to keep things in perspective: that while things go up and they come down, the overarching picture is a hopeful one. Whatever doom and gloom you read about, the proof is right there in the unrealized predictions of the past.
As I quote the media to discredit it with one hand, I’d like to point out this very interesting article from the Wall Street Journal with the other:
Why It’s Time To Buy: The Clouds Haven’t Quite Parted, But the Long-Term Case for Home Ownership Is Looking Stronger
Some thoughts on why the SF Market may be finally turning upward:
- Strong demand/ low supply: It appears that the decline in values has bottomed out: median prices and average dollars per square foot are beginning to climb (though it’s too soon to know if it’s the start of a longer term trend)
- Interest rates continue to be incredibly low.
- Rents in San Francisco have been rising for the past year. When rents rise, the financials of home-buying improve.
- High-paying high-technology employment is soaring in the Bay Area and many of those people want to live in the city, whether their company is in SF or outside of SF. And then there is the beginning of the surge in new high-tech IPO-enriched employees.
- SF has always had a low foreclosure rate and distressed-home percentage when compared to the rest of the Bay Area, state and country, and now that market appears to be declining in the city. (Again, it’s too soon to be absolutely sure that the decline in distressed home listings and sales in the city is the beginning of a longer term trend.)
- New-development home inventory – mostly condos, since the city has very limited space for new home construction — has been steadily declining and probably won’t significantly increase anytime soon because of the multi-year time-cycle for large development projects in SF. This will further constrain supply in the face of buyer demand.
- General improvement in consumer confidence and optimism regarding the direction of the economy.
- The recent run up in the stock market has improved the financial condition of the affluent more than that of the general population. Because of our prices, our buyers are almost always at the upper end of affluence.
Despite mostly negative reports from other parts of the country, the San Francisco home market has performed relatively well since the autumn market began after Labor Day. Indeed, the number of listings accepting offers in November was well above last year’s and the median home price is at its highest since the April tax-credit crush. Typically the market slows down dramatically from mid-November to mid-January, but so far it is slowing far less than usual.
Generally speaking, 30-40% of San Francisco new home listings accept offers within 30 days of going on market (i.e. quickly). They are perceived as good values, often attract multiple offers, and the sales prices for such homes are still, on average, slightly above the list price. (Houses perform better than condos, and condos perform better than TICs and multi-unit buildings.) Another 20% of new listings sell after 1 or more price reductions: on average, they’re on the market for over 100 days before offer acceptance, and sell at a sales price to original list price percentage that is 10-14% lower than that of homes selling quickly. And then 30-40% of listings expire without selling, typically due to being perceived as overpriced. The San Francisco home market is active, but buyers aren’t buying everything (as it seemed they did in the bubble years) – they’re buying only those properties they consider fair or, better yet, compelling values.
Statistics are generalities, often subject to surprising fluctuations due to a variety of reasons. Median prices may be affected by other factors than changes in value. Averages may be distorted by a small number of sales substantially higher or lower than the norm, especially where the sample size is small. New-development condo sales not reported to MLS are not included in this analysis. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted.
Homes Accepting Offers
The number of SF homes – houses, condos, TICs & 2-4 unit buildings – accepting offers is remaining generally stable. Though the market typically starts to slow markedly in November, this has not occurred this year, and the number of listings accepting offers in November was only slightly reduced from October, and was 17% above November of 2009, and 90% above November 2008 (the market crash era).