Newsletter

What You Get for How Much Where

by Paragon Specific | Thursday, 3 May, 2012

Here are 3 mapped analyses of recent SF home sales by median sales price and average dollar per square foot. Even quarterly statistics can fluctuate within neighborhoods without great significance, because in every quarter a different basket of relatively unique properties sell. However, these maps still give an interesting overview of prices and values in the different areas of the city.

Under the maps, you will find a sampling of specific 2012 San Francisco home sales.

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Below is a sampling of specific 2012 San Francisco home sales closing before April 30. The short descriptions can only give a very general sense of the location, emotional appeal, quality, condition and amenities of each property, and the sales listed are not necessarily representative of typical values for the neighborhood and property type.

As always with real estate, the devil is in the details.

$10,000,000 & Above

$11,000,000. Pacific Heights on Broadway: 1904, 7 bedroom, 6 bath, Gold Coast mansion; 9744 square feet, $1129/sq.ft., spectacular views from almost every room, 120-seat home theater, 4 car parking. Sold off market.

$10,000,000. Presidio Heights on Washington: 1910, 8 BR, 7 BA, 4-story mansion; GG bridge, bay or Presidio views from almost every room, but “home is in need of work”, 3 car pkg. Original asking price of $15,000,000; 97 days on market.

$4,000,000 to $7,000,000

$7,000,000. Alamo Square on Fulton: 1904, 13 BR, 14 BA “Archbishop’s Mansion”; 20,000 sq.ft., $350/sq.ft., park and city views, 6-10 car parking, elevator. Original list price of $7,950,000; 164 days on market.

$4,980,000. Russian Hill on Green: 1928, 3 BR, 4.5 BA, full-floor co-op; almost 360 degree views, doorman building, 2 car pkg, $3200/month HOA dues. Original list price of $5,750,000; 98 days on market.

$4,795,000. Cow Hollow on Union: 5 BR, 4 BA house; 3962 sq.ft., $1210/sq.ft., large lot, pent-level with views, large south yard, 2 car pkg. Sold for 2% over asking price; 15 days on market.

$4,650,000. Telegraph Hill on Montgomery: 5-level, 2-condo building (4400 sq.ft. main residence; 1021 sq.ft. lower residence); $858/sq.ft., stunning views, 3 terraces, 3 pkg. Original list price of $7,000,000; 258 days on market.

$2,000,000 to $4,000,000

$3,800,000. Yerba Buena on Minna: 3 BR, 3.5 BA, St. Regis condo; 2573 sq.ft., $1477/sq.ft., spectacular views, doorman building, valet pkg, leased pkg, $2569/month HOA dues. 4% below asking price; 101 days on market.

$3,400,000. Noe Valley on Fair Oaks: 1908, 5 BR, 4.5 BA Edwardian; 4126 sq.ft., $824/sq.ft., decks, garden, double lot, 2 car pkg. 100% of asking price; 8 days on market.

$3,200,000. St. Francis Wood on Santa Clara: 1929, 4 BR, 5.5 BA, Spanish-Mediterranean house; 5707 sq.ft., $562/sq.ft., double lot, heated pool, 2 pkg. 8% below original price; 73 days on market.

$2,995,000. Dolores Heights on Cumberland cul de sac: 1916, 3 BR, 2.5 BA, Arts & Crafts Edwardian house; 2500 sq.ft., $1198/sq.ft., “breathtaking city and bay views”, 1 pkg. 100% of asking price; 10 days on market.

$2,875,000: Cole Valley on Cole: 1905, 12-room, 4 BR, 3.5 BA Edwardian home; 2850 sq.ft., $1009/sq.ft., 2 pkg. 1% over asking price; 25 days on market.

$2,850,000: Marina on Magnolia: year 2000, 5 BR, 4.5 BA, contemporary house; 3400 sq.ft., $838/sq.ft., water views, studio, roof deck, 2 pkg. 5% below original price.

$2,725,000. Lake Street on 25th Avenue: 1909, Thomas Churchill 4 BR, 3.5 BA Edwardian; 3700 sq.ft., $736/sq.ft., overlooking GG Bridge & Marin Headlands, plans for garage. 2% below asking price; 39 days on market.

$2,250,000. South Beach: 2 BR, 2 BA, corner penthouse at The Infinity; 42nd floor, panoramic views, doorman building, private deck, 1 pkg. 10% below asking price; 13 days on market.

$1,500,000 to $2,000,000

$1,865,000. Potrero Hill on 18th: 3 BR, 2.5 BA, renovated Victorian house; 2600 sq.ft., $717/sq.ft., bay and city views, 1 pkg.

$1,749,000. West Portal on 15th: 2009, 4 BR, 3.5 BA house; 3321 sq.ft., $527/sq.ft., high Greenpoint rating, 2 car pkg w/charging station. 100% of asking; 6 days on market.

$1,739,000. Noe Valley on Day: 1909, 8-room, 3 BR, 2.5 BA Victorian home; 2218 sq.ft. $784/sq.ft., 2 car parking.

$1,693,000. Laurel Heights on Spruce: 5 BR, 3.5 BA, Historic Registry Victorian; 2662 sq.ft., $636/sq.ft., 2 pkg. Off-market sale.

$1,649,000. Jackson Square: 2006, 3 BR, 2.5 BA full-floor condo; 2040 sq.ft., $808/sq.ft., private terrace, 1 pkg, city views, $898/month HOA dues. 4% below asking price; 159 days on market.

$1,630,000. Golden Gate Heights on Ortega: 1974, 4 BR, 3.5 BA, contemporary house; 2900 sq.ft., $562/sq.ft., ocean-city-bridge views, 2 pkg. 4% below asking price; 147 days on market.

$1,625,000. Russian Hill on Larkin: 1914, 5-room, 2 BR, 2.5 BA condo in 13 unit building; 1273 sq.ft., $1277/sq.ft., panoramic GG Bridge views, 1 pkg, $394/month HOA dues.

$1,600,000. Inner Richmond on 10th: 3-level, 11-room, 4 BR, 3.5 BA house; 2577 sq.ft., $621/sq.ft., “massive contemporary remodel”, 1 pkg. 7% above asking price.

$1,600,000. NoPa on Shrader: 4 BR, 3.5 BA, top-floor Edwardian condo; 3169 sq.ft., $505/sq.ft., roof garden, 2 pkg. 100% of asking price; 24 days on market.

$1,595,000. Eureka Valley on Grandview: 1946, 3-story, 3 BR, 2.5 BA house; 2315 sq.ft., $689/sq.ft., bay and downtown views, 2 pkg. 11% above asking price; 17 days on market.

$1,565,000. Inner Mission on Hampshire: 2001, 2-story, 3 BR, 3BA, townhouse condo; 2870 sq.ft., $545/sq.ft., fantastic views, 2 terraces. 13% below original price; 65 days on market.

$1,529,000. Ashbury Heights on Clifford Terrace: 3 BR, 2.5 BA house; 2135 sq.ft., $716/sq.ft., deck, fish pond, 2 car pkg.

$1,500,000. Glen Park on Surrey: 2007, 3-level, 3 BR, 3 BA, contemporary house; 2521 sq.ft., $595/sq.ft., view deck, 1 pkg. 100% of asking; 40 days on market.

$1,000,000 to $1,500,000

$1,496,000. Corona Heights on Saturn: 1957, 4 BR, 3 BA, contemporary house; 1900 sq.ft., $787/sq.ft., city lights view, view deck, 2 pkg.

$1,465,000. Forest Hill on Taraval: detached, 4 BR, 2.5 BA, traditional house; 2426 sq.ft., $604/sq.ft., 1 pkg. Closed at 6% above asking price.

$1,450,000. Nob Hill on Jones: 1929, 7-room, 2 BR, 2 BA condo in Clay-Jones; 18th floor, panoramic bay and city views, 1475 sq.ft., $983/sq.ft., 1 pkg, $1142/month HOA dues. 100% of asking price; 16 days on market.

$1,365,000. Presidio Heights on Sacramento: 1912, 6-room, lower-level, 3 BR, 1.5 BA, Arts & Crafts condo; 1617 sq.ft., $844/sq.ft., deeded garden, 1+ pkg. 2% below asking price; 55 days on market.

$1,348,000. Eureka Valley on Hancock: 1924, 3 BR, 2 BA, Marina-style house; 2000 sq.ft., $674/sq.ft., 2 pkg. 3% below asking price; 15 days on market.

$1,340,000. Financial District on Market: 2 BR, 2 BA condo in Ritz Carlton; 23rd floor, 1660 sq.ft., $807/sq.ft., Union Square & bay views, 1 pkg, $2621/month HOA dues. 1% below asking price.

$1,310,000. Inner Sunset on 8th: 1922, 4 BR, 2.5 BA, Edwardian house; 2790 sq.ft., $470/sq.ft., 1 pkg. 2% over asking price; 17 days on market.

$1,300,000. Anza Vista on Fortuna: 1948, 7-room, 2 BR, 2 BA house; 2337 sq.ft., $556/sq.ft., downtown views, deck, 2 pkg. 4% over asking price; 19 days on market.

$1,262,000. Potrero Hill on Carolina: 2002, North-slope, 3 BR, 3 BA contemporary home; 1872 sq.ft., $674/sq.ft., stunning downtown views, 1 pkg.

$1,125,000. Central Richmond on 30th: 1927, 8-room, 4 BR, 2.5 BA, Marina-style house; 2500 sq.ft., $446/sq.ft., 2 pkg. 6% below original price; 55 days on market.

$1,120,000. South Beach at The Towers: year 2000, 2 BR, 2 BA condo; 1167 sq.ft., $960/sq.ft., bay and marina views, huge view terrace, $814/month HOA dues. 2% over asking price; 40 days on market.

$1,040,000. St. Francis Wood on Yerba Buena: 1924, 3 BR, 1.5 BA house; 1612 sq.ft., $645/sq.ft., 1 pkg. 5% below asking price; 118 days on market.

$1,030,000. Haight Ashbury on Masonic: top floor, 5-room, 2 BR, 2 BA, Victorian condo; “historically significant”, 1596 sq.ft., $645/sq.ft., 1 pkg. 8% over asking price; 5 days on market.

$1,020,000. Midtown Terrace on Midcrest: 1996, 6-room, 3 BR, 3.5 BA house; 1908 sq.ft., $535/sq.ft., 180 degree bay and ocean views, 2 decks, 1 pkg. 2% over asking price; 34 days on market.

$1,006,000. Lone Mountain on Anza: 3 BR, 2 BA, detached, Spanish-Med house; 2028 sq.ft., $523/sq.ft., trust sale, 1 pkg. 12% below original list price; 206 days on market.

$1,000,000. Noe Valley on Day: 3 BR, 2 BA, 6-room, Victorian house; 1286 sq.ft. with expansion potential, $778/sq.ft., 2 pkg. 26% over asking price; 28 days on market.

$1,000,000. Marina on Beach: top floor, 1929, 5-room, 2 BR, 2 BA, Spanish-Med condo; 1515 sq.ft., $660/sq.ft., 1 pkg, $650/month HOA dues.

$750,000 to $999,000

$985,000. Cow Hollow on Greenwich: 3 BR, 2 BA, TIC townhouse; 1650 sq.ft., $597/sq.ft., 1 pkg, $465/month HOA dues. 100% of asking; 45 days on market.

$940,000. Duboce Triangle on Henry: 1982, top-floor, 2 BR, 2 BA condo; 1391 sq.ft., $676/sq.ft., south deck, 1 pkg, $390/month HOA dues. 18% over asking price; 30 days on market.

$905,000. Hayes Valley on Buchanan: top-floor, 3 BR, 1 BA, Edwardian condo; 1578 sq.ft., $574/sq.ft., deck, 1 pkg. 3% over asking price; 41 days on market.

$873,000. Pacific Heights on Clay: 1962, top-floor, 3 BR, 2 BA condo in 12 unit bldg; 1300 sq.ft., $672/sq.ft., shared laundry, 1 pkg. 9% over asking price; 15 days on market.

$850,000. Bernal Heights on Coleridge: 1947, 3 BR, 2 BA house; 1358 sq.ft., $626/sq.ft., view deck, 1 pkg. 11% over asking price; 27 days on market.

$845,000. Miraloma Park on Rockdale: 3 BR, 3 BA, Spanish-Med house; 1770 sq.ft., $477/sq.ft., trust sale, 2 decks, $39,000 pest report, 2 pkg. 11% below asking price; 99 days on market.

$845,000. Diamond Heights on Gold Mine: 1966, 6-room, 3 BR, 2.5 BA house; 1964 sq.ft., $430/sq.ft., sweeping views, tenant occupied, 2 pkg. 108 days on market.

$844,000. Mission Dolores on 17th: 1993, 6-room, 1st floor, 3 BR, 2 BA, contemporary condo; 1242 sq.ft., $680/sq.ft., 1 pkg, $300/month HOA dues. 6% over asking price; 42 days on market.

$820,000. Lake Street on 25th: 1930, 5-room, 2 BR, 2 BA condo; 1300 sq.ft., $631/sq.ft., panoramic views, 1 pkg, $460/month HOA dues.

$806,000. Lake Shore on Berkshire: 1953, 6-room, split-level, 3 BR, 2 BA house; 1686 sq.ft., $478/sq.ft., trust sale, 2 pkg. 3% over asking price; 33 days on market.

$799,000. Central Sunset on 35th: 1932, 2 BR, 2 BA, Spanish-Med Rousseau house; 1740 sq.ft., $459/sq.ft., tenant occupied, 2 pkg. 100% of asking price.

$785,000. SoMa on Natoma: 1906, top-floor, 3 BR, 2 BA, Victorian condo; 1525 sq.ft., $515/sq.ft., 2 pkg, $200/month HOA dues. 1% over asking price; 35 days on market.

$780,000. South Beach on Beale: 2 BR, 2 BA condo at the BridgeView; bank sale, 1074 sq.ft., $726/sq.ft., outstanding views, 24-hour doorman, 1 pkg. 4% over asking price; 12 days on market.

$775,000. Noe Valley on Douglass: 1910, 2 BR, 1 BA, Victorian house; 1050 sq.ft., $738/sq.ft., expansion potential, deck, 2 pkg. 11% below original asking price; 171 days on market.

$765,000. North Beach on Francisco: 2001, 2-level, 2 BR, 2 BA, loft-style condo in the Malt House; 1033 sq.ft., $741/sq.ft., 1 pkg, $590/month HOA dues. 2% over asking price; 36 days on market.

$757,000. Parkside on 22nd: 1939, tunnel-entrance, 7-room, 3 BR, 2 BA house; 1509 sq.ft., $502/sq.ft., 1 pkg. 8% over asking price; 27 days on market.

$755,000. Outer Richmond on 37th: 1924, 6-room, 2 BR, 2 BA house; 1750 sq.ft., $431/sq.ft., 2 pkg. 2% over asking; 29 days on market.

$500,000 to $749,000

$700,000. Outer Richmond on 38th: 1925, 2 BR, 1 BA house; in-law apartment, 1450 sq.ft., $483/sq.ft., 1 pkg.

$660,000. Potrero Hill on Kansas: 2007, 4-room, 2 BR, 2 BA condo in 138 unit complex; 1077 sq.ft., $613/sq.ft., 1 pkg. 2% below asking price; 121 days on market.

$643,500. Inner Sunset on 17th: 1926, 6-room, 2 BR, 1 BA, Marina-style condo; 1550 sq.ft., $415/sq.ft., 1 pkg, $358/month HOA dues.

$620,000. Bernal Heights on Peralta: 1940, 6-room, 3 BR, 2 BA house; bonus room and bath, 1200 sq.ft., $517/sq.ft., 1 pkg.

$610,000. Pacific Heights on Scott: top-floor, 4-room, 1 BR, 1 BA, Edwardian condo; 748 sq.ft., $816/sq.ft., no pkg, $250/month HOA dues. 11% over asking price; 21 days on market.

$610,000. Merced Heights on Garfield: 2 BR, 1 BA house; in-law apartment, 1287 sq.ft., $474/sq.ft., ocean view, 1 pkg.

$605,000. Nob Hill on Broadway: 1982, 5-room, 2 BR, 2 BA condo; bank sale, 1097 sq.ft., $552/sq.ft., patio, 1 pkg, $631/month HOA dues. 5% over asking price.

$600,000. Sunnyside on Mangels: 1961, 8-room, 4 BR, 3 BA house; short sale, 1520 sq.ft., $395/sq.ft., 2 pkg.

$600,000. Outer Parkside on 48th: 1954, 6-room, 3 BR, 2 BA house; 1195 sq.ft., $502/sq.ft., ocean view, big deck, 1 pkg. 100% of asking price.

$595,000. Inner Richmond on 4th: 1907, 2 BR, 1 BA condo; bank sale, bonus rooms, 1314 sq.ft., $453/sq.ft., 1 pkg.

$580,000. SoMa on 8th: 1997, 1 BR, 2 BA, live-work loft/condo; probate sale, 1369 sq.ft., $424/sq.ft., 1 pkg.

$588,000. Outer Sunset on 43rd: 1954, 3 BR, 1.5 BA condo; 1235 Sq.ft., $476/sq.ft., ocean view, 2 pkg. 18% over asking price; 23 days on market.

$560,000. Lower Pacific Heights on Bush: 2 BR, 2 BA TIC; Smart Car included in sale, 1100 sq.ft., $509/sq.ft., $406/month HOA dues.

$536,000. Buena Vista Park on BV: 1986, 3-room, 1 BR, 1 BA condo; stunning downtown views, 734 sq.ft., $730/sq.ft., 1 pkg, $578 HOA dues.

$510,000. Crocker Amazon on Chicago: 1925, 5-room, 2 BR, 1 BA house; 1100 sq.ft., $464/sq.ft., large lot, 2 pkg. 3% over asking price; 30 days on market.

$510,000. Outer Mission on Alemany: 1940, 2 BR, 1 BA house; bonus room and bath, 1200 sq.ft., $425/sq.ft., 1 pkg. 3% over asking price; 33 days on market.

Up to $499,000

$488,000. South Beach on Berry: 2007, 1 BR, 1 BA condo at Park Terrace; short sale, 803 sq.ft., $608/sq.ft., 1 pkg, $468/month HOA dues.

$485,000. Excelsior on Dublin: 1944, 6-room, 2 BR, 2 BA house; trust sale, 1295 sq.ft., $375/sq.ft., 1 pkg. 22% over asking price.

$460,000. Bernal Heights on Nevada: 2 BR, 2 BA house; “contractor’s special”, bonus rooms, 1164 sq.ft., $395/sq.ft., 1 pkg.

$450,000. Ingleside Heights on Ramsell: 1961, 3 BR, 2 BA house; short sale, 1319 sq.ft., $341/sq.ft., 2 pkg.

$410,000. Oceanview on Montana: 1955, 5-room, 2 BR, 1 BA house; trust sale, 1050 sq.ft., $390/sq.ft., full basement, 2 pkg. 3% over asking price.

$380,000. Marina on Jefferson: 1991, 2-room condo; bank sale, 558 sq.ft., $681/sq.ft., no parking, $316/month HOA dues.

$380,000. Outer Richmond on La Playa: 1982, top-floor, 2 BR, 2 BA condo; 1043 sq.ft., $364/sq.ft., ocean views, 1 pkg. 9% over asking price; 29 days on market.

$348,000. Diamond Heights on Red Rock: 1972, 3-room, 1 BR, 1 BA condo in 396 unit complex; 830 sq.ft., $420/sq.ft., 1 pkg, $437/month HOA dues.

$329,000. Downtown on O’Farrell: 1930, 1 BR, 1 BA, Art Deco condo in The Hamilton; 945 sq.ft., $348/sq.ft., large bonus room, no parking, $723/month HOA dues. 11% below original asking price; 246 days on market.

$295,000. Bayview on Innes: 1927, 6-room, 2 BR, 1 BA house; bank sale, 1413 sq.ft., $209/sq.ft., 1 pkg. 16% over asking price; 24 days on market.

BR = bedrooms, BA = baths, days on market = the days between going on market and being designated “pending sale, contingencies removed”. Homes that sold at or over asking price will typically have accepted offers within 7 to 14 days of going on market (commonly after receiving multiple offers), even if it may have taken additional weeks to remove contingencies of sale and be designated “pending”.

Median price is that price at which half the sales occurred for more and half for less. It may be and often is affected by other factors besides changes in value, such as changes in buying patterns or available inventory.

Square footage is based on “livable space”, which may be measured in different ways, but should not include decks, patios, yards, garages, unfinished basements and attics, or rooms built without permit (“bonus rooms” and “in-law apartments”). Square footage figures are often unreported or unreliable. All median and average statistics should be considered approximations, and it is unknown how they apply to any specific property.

Markets Can Turn With A Vengeance

by Paragon Specific | Thursday, 5 April, 2012

April 2012 San Francisco Update

Several times in the past 30 years, the San Francisco real estate market has turned up or down very quickly and very dramatically: in the mid-eighties – up; early nineties – down; 1996 – up (and up and up, except for the dotcom hiccup); 2008 – way down; and now we believe another dramatic turn up has begun.

By virtually every statistical measure of supply and demand, the city’s market is experiencing major acceleration. Multiple-offer, competitive-bidding situations have hit levels not seen in many years and this is putting strong upward pressure on values in many of San Francisco’s neighborhoods. The more affluent areas of the city – never much impacted by distress sales and now highly sought after by buyers – are leading the recovery.

We know this runs contrary to the Case-Shiller Index, but the city, and especially its higher-end segments, make up only a very small part of the Case-Shiller 5-county SF Metro Area, and currently the Index does not reflect the city’s market conditions and trends.

A new war or financial crisis might derail the upturn, but absent such an event, and considering the city’s improving economic conditions, we expect it will continue.

Two thirds of the city’s home sales now average a sales price over the original
list price. The competition between motivated buyers has heated up enormously.

SF is now seeing the highest percentages of listings accepting offers in memory.
For all property types. TICs have made a particularly dramatic turnaround recently,
probably due to the severe shortage of new and resale condos available to purchase.

The lowest ratio of expired and withdrawn listings – i.e. homes that do not sell,
typically due to being perceived as overpriced – in many years.

The lowest Months Supply of Inventory (MSI) readings in memory. For all property types.

An incredibly low level of properties available to purchase. Right now, properties are actually selling more quickly than new listings are coming on market.

Average Days on Market have crashed for all property types. A substantial percentage of listings is selling virtually immediately upon coming on market (i.e. within 7-10 days).

We’re starting to see upward movement in values in some San Francisco neighborhoods, especially those most popular with affluent high-tech buyers. Remember that market demand may take a while to translate into changes in values, and that different city neighborhoods are recovering at different speeds. San Francisco’s market is definitely recovering much more quickly than most other areas of the Bay Area, state and country.

The luxury home market is also seeing significant increases in demand and upward pressure on values.

The number of distress home listings is markedly decreasing (and, in any case, they are generally clustered in the less affluent neighborhoods and in the lower price ranges). If the recovery continues, fewer and fewer homes will require transfer as distress sales.

In case you missed it, here is a chart from our recent analysis of San Francisco demographics.

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

April 2012 © Paragon Real Estate Group

2012: An Accelerating Real Estate Market in San Francisco

by Paragon Specific | Sunday, 4 March, 2012

“If I knew where I was going to live for the next five years or 10 years, I’d buy a home and I’d finance it with a 30-year mortgage. It’s a terrific deal — If I had a way of buying a couple hundred thousand single-family homes — I would load up on them. And I would take mortgages out on them at very low rates — [With] a 30-year mortgage — it’s a leveraged way of owning a very cheap asset now. That’s as attractive an investment as you can make.”

Warren Buffet, February 27th CNBC Interview on Investing

In January, we suggested that the San Francisco real estate market turned a corner in 2011, and indeed that we might be at a point similar to 1996, when the market began to accelerate after the 4-5 years of down market in the early nineties. (See the Case-Shiller chart below.) Consumer confidence, buyer demand and general economic conditions in the city improved markedly last year, and we also experienced surging high-tech employment and wealth (which looks likely to continue), skyrocketing rents, climbing stock market values and the lowest interest rates in history.

Everything we’ve seen since 2012 began only reinforces January’s conclusion. The major statistical measures of supply and demand – which constitute the dynamics that ultimately result in changes in value – show a market dramatically accelerating. Besides the statistics, this is also what we’re viscerally experiencing on the street, in the day-to-day business of representing our clients buy and sell real estate.

San Francisco often performs differently from other markets in the Bay Area, state and country, and this is the case now: our market is recovering sooner and more rapidly than most. (Though we do see signs of recovery in other markets as well.) However, the city itself is full of neighborhood micro-markets, which are recovering at widely varying speeds — or in some cases, not yet recovering. In real estate, generalizations only take one so far: ultimately, it always boils down to the specific home in its specific location with its specific conditions and circumstances, and the buyer demand for such a property.
All data herein is from sources deemed reliable but may contain errors, and is subject to revision.

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Months’ Supply of Inventory (MSI)
MSI is a measure of how long 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 supply. For every property type in San Francisco, MSI is either at its lowest reading ever, or very, very close to it. Any reading below 3-4 months of inventory is typically considered a “Sellers’ market.” All SF property types now register as strong Sellers’ markets, though conditions do vary by neighborhood. Nationally, MSI has also fallen, but it is still over 6 months of inventory.

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Percentage of Listings Accepting Offers (by MONTH)
This is another excellent measure of demand vs. supply – the higher the percentage, the stronger the demand as compared to the supply of homes available to purchase. This measure increased dramatically in 2011 when compared to previous years, but since 2012, it has skyrocketed to levels we can’t remember ever seeing. The competition for reasonably priced, general-appeal homes is ferocious in many areas of the city, and multiple offer situations are more common now than they’ve been in at least 5 years.

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Percentage of Listings Accepting Offers (by WEEK)
Typically, in the first 6 -8 weeks of the new year, the market just starts to wake up. Not in 2012. This chart looks at the market WEEK by WEEK for the six months ending February 26th. In mid-January, demand exploded. And remember that the percentages for the last 4 months of 2011 were already much higher than in previous years. Many properties are selling immediately upon coming on market and the number of new listings is not coming close to meeting demand. This creates upward pressure on prices.

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SF Homes for Sale
On any given day, the inventory of listings available to purchase is dramatically below the levels of previous years, typically by 30%-50%. And yet the number of highly qualified and motivated buyers entering the market is increasing. Year over year, February’s closed unit sales were up about 14%, but on a hugely reduced inventory of available listings. If inventory was nearer normal levels, the number of sales would be much higher. In the meantime, the market has become very competitive in many parts in the city.

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Case-Shiller High-Tier Home Price Index
This Index ended 2011 pretty much where it began. The Index tracks house sales in a 5-county SF “Metro Area”, of which the city’s sales are only a small percentage. Even as our market has begun a recovery, the Index is pulled down by the other counties’ market conditions (not as positive as the city’s). The C-S High-Tier Price Index applies to the city best, but it still doesn’t apply all that well: for the 5-county Metro Area, the top third tier of sales in December 2011 started at $573,000; the city’s top third last year started at $860,000. (And it’s much higher in the city’s central and northern districts.) The higher the price segment, the less affected it is by distress sales; such sales cluster in the less affluent segments and significantly depress market conditions there. The 2012 SF market may be in a similar place to that of 1996, i.e. starting to accelerate after 4-5 years of decline or doldrums.

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Noe Valley-Castro-Cole Valley Market
Realtor District 5, in the center of the city, is one of the areas where the market has changed most dramatically – to some extent, due to being highly sought after by high-tech employees working both inside and outside the city. Though median sales price is an imperfect signifier of changes in values, and can fluctuate for a number of reasons, we believe in this case it generally reflects market reality. Huge buyer demand and extremely low inventory in District 5 are pushing prices higher: the median sales prices for both houses and condos have risen to their highest points since 2008. Click here for our full report.

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SoMa-South Beach-Yerba Buena-Mission Bay
The greater South of Market area is another one of the city’s markets that is noticeably heating up – again, to a large extent, due to surging high- tech employment and wealth. The supply of brand new condos for sale has dwindled since 2008, helping to create the biggest inventory crunch since this area started to be developed in the mid- nineties. This is exerting upward pressure on prices. For our complete report:
SoMa-South Beach Market Analysis

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Average Days on Market (DOM)
This statistic is easily distorted by a relatively small number of sales that sell after being on the market for a long time, and large fluctuations are not unusual. It certainly doesn’t reflect the average days on market for well-priced, well-prepared, well-marketed, general-appeal homes, which often accept offers within 1 or 2 weeks of going on market. Still, for what it’s worth, average DOM fell to its lowest point in years in February.

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SF Statistics by Neighborhood
We recently completed our semi- annual review of non-distress home sales by neighborhood; property type; bedroom count; low, high and median price; average size and average dollar per square foot. (Mixing distress and non- distress sales creates misleading statistics for both categories, so we separate them out.) This is just one of eight charts. For our complete report:
San Francisco Neighborhood Values

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What SF Buyers Bought in 2011
If you didn’t see our data-mining analysis of 2011 home sales in San Francisco, here is one panel of 14. You can find the full report, full of surprising details, here:
What Buyers Bought in 2011

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Mortgage Interest Rates
The impact that lower interest rates have on the ongoing cost of home ownership, especially when doing a rent vs. buy analysis in a city of soaring rents, can’t be overstated. Here, once again, is a graph of just how dramatic the changes have been in recent years. Courtesy of Julian Hebron of RPM Mortgage.

Who is San Francisco? Who We Are, How We Live, What We Do, How We Rank

by Paragon Specific | Tuesday, 21 February, 2012

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.

From Penthouses to Fixer-Uppers – What Did San Francisco Home-Buyers Purchase in 2011?

by admin | Tuesday, 31 January, 2012

Of all the homes bought and sold in San Francisco in 2011:

• How many had Golden Gate, Bay Bridge, downtown or ocean views?
• How many were Victorian, Edwardian, Art Deco, Spanish Mediterranean or brand spanking new?
• How many had elevators or pools, wine cellars, doorpersons or in-law apartments?
• How many were probate sales, bank sales or short sales?
• And what were the biggest sales in the Sunset, Noe Valley, SoMa and Pacific Heights?

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.

January 2012 Update: Real Estate Cycles and Turning Points

by admin | Thursday, 12 January, 2012 Inventory is so tight it’s squeaking.  Open houses are overrun and we are seeing properties disappear quickly that might not have sold last spring at all.  If you have a property you are thinking of selling, or know someone who is, it might be a good idea to push the plan up.  I would not be surprised at all if the highest sales of the year occur in February and March.  Despite the continued iffy news nationally, we have a strengthening job market in San Francisco and, as always when that happens, housing is in short supply.  The open houses at my new listing at 175 Bluxome #215 are fully of excited young people who have decided that buying is a better choice than renting even just based on the money.  They are right, and it does not long before that kind of pressure bumps up into other price brackets. 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.

December 2011 – San Francisco Real Estate: A Longer-Term View

by admin | Sunday, 4 December, 2011

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.

November 2011 Market Update

by admin | Tuesday, 8 November, 2011 “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. In addition, the Economist was virtually the first major business publication to foresee the housing bubble (actually years in advance per their world home values index), and is not known for starry-eyed optimism or boosterism regarding housing markets. “There are two things everyone knows about American economic recoveries. The first is that the housing sector traditionally leads the economy out of recession. The second is that there is no chance of the housing sector leading the present economy anywhere, except deeper into the mire….Home prices languish near post-bubble lows, over 30% below peak….Housing markets are far from healthy. Yet current pessimism seems overdone. A turnaround in sales, prices and construction may be closer than many imagine. The potential for a strong housing recovery lies in the depths of the bust… [which] dragged new construction to unprecedented depths. At the current rate, fewer homes will be added to the housing stock this year than in  any year since records began in 1968. America therefore has only a minor problem of excess housing supply…Rental markets…look far stronger…Vacancy rates in some cities are strikingly low…[for instance] 3.6% in San Francisco—which translates into rising rents…Rising rents help housing markets heal…by encouraging renters to consider buying…Rental market strength is also rousing a long-dormant building industry. New housing starts rose 15% from August to September… The convalescence [of the housing market] may be complicated…Yet once the housing sector finds its footing it may quickly gain momentum…Such hopes for housing would smack of an effort to reanimate a corpse, had the bust not so far outpaced the boom. But a turnaround now seems probable on many measures.” 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. click to enlarge 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. click to enlarge 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. click to enlarge 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. click to enlarge 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. click to enlarge 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. click to enlarge 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 click to enlarge 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 click to enlarge 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 click to enlarge 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. click to enlarge 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. click to enlarge 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 click to enlarge 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 ************************** “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.

San Francisco: An Exceptional Real Estate Market

by admin | Monday, 10 October, 2011

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.

The San Francisco Residential Real Estate Market – The Story is Still Low Inventory

by admin | Wednesday, 7 September, 2011

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.