Responding to requests, the Google IPO Effect chart (sent out last night, and again here below) is online here: http://www.paragon-re.com/Docs/General/SixtyFortyImages/Google-IPO-Effect.jpg

And here are two charts tracking supply and demand for houses and condos in San Francisco, by week, for the past 6 months, through 5/13/12:

Units for Sale: Inventory continues to drop in the face of enormous demand. We’re running about 50% below last year at this time. This chart is online: http://www.paragon-re.com/Docs/General/SixtyFortyImages/5-13-12_SFD-Condo_Units_FS.jpg

Percentage of Units Accepting Offers (in a given week): Keeps on climbing. This chart is online: http://www.paragon-re.com/Docs/General/SixtyFortyImages/5-13-12_SFD-Condo_Units_UC.jpg. In previous years, before the market started to heat up again, the percentage typically ran 4% – 6% per week. Now, we’re up to 14% to 17%.

Inventory of Active Available Listings: Declining when typically at this time of year it would be significantly climbing. Dramatically low levels of inventory – over 700 fewer (about 40%) active listings than the same time last year.

Active Listings Accepting Offers: Climbing, very high considering the amount of inventory available to buy – matching or exceeding numbers in the autumn high season.

Percentage of Listings Accepting Offers: Some of these percentages will drop a little as deals fall through, but even so recent weeks have seen percentages almost twice as high as one year ago, which themselves were significantly higher than in 2010.

New Listings Coming on Market: Many fewer (about 22%) new listings coming on market as compared to this time last year and since listings are now accepting offers as quickly as new listings come on market, inventory is remains terribly low, clearly inadequate to satisfy demand.

1) it’s like looking in the rearview mirror – December’s closed sales generally reflect market activity in October and November, i.e. the market 4-5 months ago,

2) It tracks house sales in a 5-county San Francisco “Metro Area”, of which San Francisco’s sales are only a relatively small percentage. So even as our market has begun what appears to be a strong recovery, the general results will be pulled down by the other counties’ market conditions which are not as positive as the city’s. Anyone working in SF real estate brokerage right now, knows that our market is certainly not declining: demand is ferocious right now.

3) Case-Shiller’s high-tier price index is the one that applies to the city best, but it doesn’t apply all that well. Case-Shiller divides all house sales into thirds: low price, mid-price and high price. The low and mid-price segments have been hit with value declines much greater than the high-price segment (See 3rd chart below) because they have been much harder hit by distress sales. For the 5 county San Francisco Metro Area, the top third in December 2011 starts at a sales price of $573,000. But if we divide the city’s house sales of the past 12 months into thirds, its lower third of sales ends at $570,000; the city’s upper third of sales doesn’t begin until $860,000. (And if we took our less affluent southernmost neighborhoods out of the equation, our upper third would start much, much higher than that.)

It should also be noted that tiny changes up and down would certainly be assumed to be within a margin of error by any statistician.

So sadly, for Case-Shiller to be of much use to us, it would have to concentrate on the city’s market conditions alone. Be that as it may here is an overview of the short-term and long-term trends as calculated by Case-Shiller for the 5-County SF Metro Area:

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The first group of statistics below (in table format) apply only to non-distress home sales with at least 1 car parking, as reported to MLS. Distress sales – bank-owned property sales and short sales – typically sell at a substantial discount due to condition-of-property issues and/or deal-aggravation issues, and if included in the analysis, would reduce the median sales price and average dollar per square ($/sq.ft.) figures in certain neighborhoods. (Distress sales, though occurring everywhere in the city, are generally clustered in less affluent neighborhoods and in the lower price ranges.)

The average size of homes vary widely by neighborhood: for example, the average size of a 4-bedroom house in Pacific Heights is much larger than one in Noe Valley. Besides affluence, the era and style of construction often play a large role in these disparities. Some neighborhoods are well known for having “bonus” bedrooms and baths built without permit (often behind the garage). These additions can add value, but being unpermitted are not reflected in average dollar per square foot ($/sq.ft.) figures.

If a price is followed by a “k” it references thousands of dollars; if followed by an “m”, it signifies millions of dollars. Sales unreported to MLS are not included in this analysis, and where abnormal “outliers” were identified that significantly distorted the statistics, these were deleted as well. Please see the definitions and caveats at the end of this report.

Trends in Dollar per Square Foot Values for Houses in Selected San Francisco Neighborhoods

Trends in Median Sales Prices for 2-Bedroom Condos in Selected SF Neighborhoods

The MEDIAN SALES PRICE is that price at which half the properties sold for more and half for less. It may be affected by “unusual” events or by changes in buying trends, or seasonal trends, as well as by changes in value.

Low Price & High Price are self-explanatory, but the low price might be for a property that needs significant work just to be habitable. Within a single neighborhood, it is possible for the low and high prices to be millions of dollars apart – the difference between a small, dark 2-bedroom condo above a Laundromat, and a lavishly appointed, full-floor, 2-bedroom penthouse with spectacular views in a prestige high-rise.

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.

DOLLAR PER SQUARE FOOT is based upon the home’s interior living space and does not include garages, storage, unfinished attics and basements; rooms and apartments built without permit; decks, patios or yards. These figures are typically derived from appraisals or tax records, but can be unreliable, measured in different ways, or unreported altogether: thus consider square footage and $/sq.ft. figures to be very general approximations. Generally speaking, about 60-80% of listings report square footage, and dollar per square foot statistics are based solely on those listings. All things being equal, a house will have a higher dollar per square foot than a condo (because of land value), a condo will have a higher $/sq.ft. than a TIC (quality of title), and a TIC’s will be higher than a multi-unit building’s (quality of use). All things being equal, a smaller home will have a higher $/sq.ft. than a larger one. The highest dollar per square foot values in San Francisco are typically found in upper floor condos in prestige buildings with utterly spectacular views.

The AVERAGE SIZE of homes of the same bedroom count may vary widely by neighborhood: for example, the average size of a 4-bedroom house in Pacific Heights is much larger than one in Noe Valley; and the average of a Marina 2-bedroom condo is larger than one in South Beach. Besides the affluence factor, the era and style of construction often play large roles in these disparities.

Some neighborhoods are well known for having additional ROOMS BUILT WITHOUT PERMIT, such as the classic 1940’s Sunset house with “bedrooms” and baths built out behind the garage. These additions often add value, but being unpermitted are not reflected in $/sq.ft. figures.

Many aspects of value cannot be adequately reflected in general statistics: curb appeal, age, condition, views, amenities, outdoor space, “bonus” rooms, parking, quality of location within the neighborhood, and so forth. Thus, how these statistics apply to any particular home is unknown.

In real estate, the devil’s always in the details.

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.

Statistics such as these are generalities, subject to fluctuations due to a variety of reasons (besides changes in value). Average figures in particular may be distorted by a few sales substantially higher or lower than the norm, especially where the sample size is small. Generally speaking, the fewer the sales, the less reliable the statistics. New-development condo sales not reported to MLS – of which there are quite a few in San Francisco – are not included in this analysis.

All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is subject to revision.

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San Francisco Luxury Homes: Percentage of Listings Accepting Offers

This statistic is one of the clearest expressions of buyer demand vs. inventory of luxury homes for sale. Three of the last 4 quarters rank as the highest percentages since the peak of the market in 2007-2008. The decline in the 3rd quarter of 2011 was probably due to the heightened sense of crisis over the summer regarding the national debt limit increase and the Euro Zone debt crisis — both of these bringing up fears of national defaults. Typically, we’ve found that the wealthiest are those most psychologically sensitive to these financial-markets events.

Percentage of Listings Accepting Offers by WEEK for 6 Months ending February 5, 2012

Look how demand in the SF luxury home market blasted off in the beginning of 2012.

Sales Price to List Price Percentage, Days on Market,
Price Reductions & Expired Listings

Most of the luxury homes that do sell, sell quickly at very close to asking price. Those going through price reductions spend a much longer time on market and sell at an average discount of 18% off original list price. And many listings still expire without selling, usually because the market deems them overpriced.

San Francisco Luxury House & Condo Sales

San Francisco Luxury Homes: Average Dollar per Square Foot

Dollar per square foot values, even in the high-end, vary widely from neighborhood to neighborhood. The absolute highest are typically paid for luxury condos in prestige buildings with staggering views. Remember that short-term fluctuations are relatively meaningless — they occur naturally since the “basket” of homes sold varies from month to month, quarter to quarter. In 2011, one Pacific Heights mansion sold for $29.5 million at almost $3000 per square foot, but that must be considered an “outlier” even for prestige luxury homes.

Longer-Term Trends in Values

Sometimes it’s useful to take a step back and look at longer term trends. These charts delineate average sales price (which is different from median sales price) and average dollar per square foot by neighborhood, by year, going back to 1995. Annual statistics are typically more reliable and meaningful than quarterly or monthly stats, because the body of data is so much larger and the normal fluctuations of smaller time periods get flattened out. Even then, some of these neighborhoods do not have that many sales and of the sales, many do not report square footage — thus these statistics must be considered generalities with a fairly large margin of error.

Luxury Home Sales by San Francisco Realtor District

The older prestige neighborhoods running across the north of the city from Sea Cliff through Pacific Heights to Russian & Telegraph Hills still dominate sales, but high-end sales in the greater Noe Valley/ Castro/ Haight Ashbury district have soared since the late nineties, and luxury condos in new developments in South Beach, SOMA and Yerba Buena are also a major part of this market now. St. Francis Woods has been an enclave for sales of big houses for quite some time.

Largest San Francisco Home Sales by Neighborhood

Inventory of SF Luxury Homes for Sale

Inventory declines rapidly as the holiday season begins. The high-end market usually, to a large degree, hibernates between Thanksgiving and mid-January and then starts to pick up again.

San Francisco Luxury Homes: Months Supply of Inventory (MSI)

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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. For example, averages may be distorted by a few sales that are abnormally high or low, especially when the number of sales is low.

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.

Median and average statistics are generalities subject to fluctuation due to a variety of reasons (besides changes in value): how they apply to any specific property is unknown. Averages may be distorted by one or two sales substantially higher or lower than the norm, especially when sample size is small. Sales not reported to MLS – such as many new-development condo sales — are not included in this analysis. All figures should be considered approximate and are derived from sources deemed reliable, but may contain errors and omissions, and not warranted. We are happy to provide or direct you to the original data upon which each chart is based.

Listings Accepting Offers: Accepted offer activity is staying surprisingly strong, picking up after the short, slow Thanksgiving week. Buyers are clearly still engaged in the market.

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Listings for Sale: inventory, which has been low all year, is now very, very low.

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Percentage of Listings Accepting Offers: Strong buyer demand + very low inventory = very high percentage of listings accepting offers, the highest in a long time.

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New Listings Coming on Market: As is typical for December, the number of new listings coming on market is very low, but considering the demand, sellers and agents might want to rethink the usual dynamic of waiting for the new year.

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Closed Sales: The week ending 12/4 had the highest number of closings since early summer. Closed sales now reflect accepted-offer activity in October and early November.

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Expired & Withdrawn Listings: As is common for December, the number of listings expiring or being withdrawn from the market is rapidly climbing. Many of these will be re-listed in mid-January, often at a lower price.

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Over Asking

Houses – 41

Condos/TICs – 21
2
4 Unit Bldgs – 6
Total 68

Under Asking

Houses – 31

Condos/TICs – 33
2
4 Unit Bldgs – 5
Total 69

At Asking

Houses – 3

Condos/TICs – 13
2
4 Unit Bldgs – 0
Total 16

The following are weekly market activity charts for the past 6 months through the week ending November 13, 2011. They reflect activity reported to MLS for houses, condos, TICs and 2-4 unit buildings.

New Listings Coming on Market: as is typical as we get closer to the holidays, the number of new listings hitting the market went into significant decline. This situation will probably not turn around until mid-January. However, considering the number of active buyers out there looking right now, it might not be a bad time to bring new listings on the market.

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Listings For Sale: as has been the case for most of this year, inventory is very low. At this time last year, there were about 700 – a whopping 42% — more listings.

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Listings For Sale: as has been the case for most of this year, inventory is very low. At this time last year, there were about 700 – a whopping 42% — more listings.

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Listings For Sale: as has been the case for most of this year, inventory is very low. At this time last year, there were about 700 – a whopping 42% — more listings.

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Listings Expiring or Withdrawn: the numbers of expired and withdrawn listings will typically continue to increase as we enter the holiday season. The higher end of the market in particular tends to check out for the holidays. Many of the listings expiring or being withdrawn will come back on the market in January.

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Homes Sold: low inventory affects the number of closed sales. The surge of new listings that the market usually sees in September and early October was much lower than last year, but the number of closed sales is almost the exactly the same as in 2010. Considering the level of demand, more inventory would almost certainly have led to much higher sales numbers.

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Listings Accepting Offers: The week ending 10/23/11 had 155 listings accepting offers, but that number will go down as some of these deals fall through – probably to the low 140’s. Still, that is well above the 100 listings that accepted offers in the corresponding week in 2010.

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New Listings Coming on Market: The number of new listings since Labor Day has been well below the number last year. Insufficient new inventory is not meeting buyer demand.

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Listings for Sale: Inventory continues to decline and still reflects the situation for much of this year. Inventory is very low. At this time last year, there were almost 700 more listings on the market. On a percentage basis there were over 35% more listings on the market.

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Percentage of Listings Accepting Offers (going under contract): the percentage for the week ending 10/23/11 will probably decline to somewhere in the 7.7% range from the 8.4% showing today as it is adjusted for deals that fall through. Still, that would be among the highest rates we’ve seen in many years – last year at this time, the percentage was about 4%. Strong demand + very low inventory = very high percentage of listings accepting offers.

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Median House Sales Price: Weekly fluctuations in median price are not particularly meaningful, but for what it’s worth, the last 3 weeks have been above and sometime far above the average median for the past 6 months ($712,000). The week ending 10/23/11 saw a median house price of $749,000; the week before saw $841,000. (But frankly, we prefer to look at median prices for entire quarters or longer periods, as opposed to individual weeks.)

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Units Sold: Last year, reflecting the huge burst of new inventory in mid-September, the week corresponding to last week saw a huge burst of closed sales (150 closings). That compares to a number for the week ending 10/23/11 that will probably end up in the mid-nineties when all sales are entered into the system. Low inventory is certainly constraining the number of sales, and appraisal issues are probably increasing the number of deals that fall through now.

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Expired/ Withdrawn Listings: For about every 2 listings that sell, another listing expires or is withdrawn without selling, usually due to being perceived as overpriced. Many of these expired listings will be eventually re-listed at a lower price and ultimately sold – though they probably would have sold for more money if more aggressively priced to begin with.

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Jobs/Income forecast for multi-county San Francisco MSA projecting a recovery in employment to gain traction in 2012:

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Forecast of national home price recovery puts us at bottom right about now:

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Buyer profile for San Francisco multi-county metro area (the East Bay affects the median prices dramatically):

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Increase in cash buyers by property type, especially in the REO market, for greater Bay Area:

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Forecast of household aging for greater Bay Area:

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Recovery of new-home sales in greater Bay Area – this chart puts us at bottom right about now:

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Note that when they refer to “San Francisco” they mean a multi-county metro area.