Recent Sales

Home(s) of the Week: A Tale of Two Houses

The first house is done to the “9s” in dwell-magazine perfection and presented with professional panache. The 2nd house is smaller and in somewhat dated condition and presented with underlit photos and so-so marketing. They are a block apart and both 3 bedrooms, 2.5 bathrooms.

Guess which one sells for more? The smaller, less polished one. In fact it sold in 8 days on the market, while the other home took nearly six months before garnering an acceptable offer. Why? I’ll get to that. But first, so you can be even more amazed, take a look at the houses (click on the pictures to view more photos):

House #1 – 701 3rd Avenue: Larger and Stylish

House #2 – 726 4th Avenue: Smaller and Dated

In this case, it all came down to pricing strategy and a realistic attitude on the part of the sellers. The first home was priced 17.25% higher than the price it actually sold for. The 2nd home was also over-priced, but by just about 5%. The first home was marketed for a full 2 months at a whopping $1,885,000 before it was reduced by 90k to $1,795,000. Then 2 months later it was reduced by another 100k to $1695,000 before finally selling 2 months after that for about 135k less ($1,560,000). By the time it finally sold, the phrase “motivated seller” was on all the marketing materials. This is a tragic story of a seller’s failure to listen to what the market is telling them and potentially, the failure of their agent to forcefully tell them. They likely would have gotten one of their intermediary prices if they had only started there in the first place. In any event, anyone who’se ever had their house on the market knows how hard it is to live always at the ready for a showing.

The story of the 2nd home is much happier. It was initially priced at $1,649,000 and accepted an offer six days later for $1,566,000. This shows that the seller was accepting market facts, like the fact that the average sale price for a 3br home in the neighborhood was $1,430,857 in that time frame. And the fact that if you get an offer or two in your first two weeks of marketing, these are likely to be as good as it gets.

Although our example doesn’t perfectly fit, houses that sell quickly are closing, on average, for a little over asking price. (Quick-selling Condos & TICs average 98% of asking.) As time on market increases, the discount off original list price grows dramatically. Interestingly, whatever the time on market, homes sell on average within about 4% of final list price (after price reductions) – indicating that buyers generally won’t make offers on homes they consider significantly overpriced.

If you would like an estimate of your home’s value and my analysis of how to price it to get it sold for the highest possible price, please just let me know. Paragon has the highest performance statistics for original list price to sale price of any major brokerage in San Francisco, and I am proud to be part of that team.

Recent Sales (Over, Under or At ask)

As I mention in my article on volume, more activity puts pressure on prices. As you can see in the table below, the number of transactions where the property is selling for more than the asking price, is sharply up from earlier this year, where even for single family homes, under 20% of transactions were yeilding a sales price over asking. We’re at a whopping 54% of single family home transactions closed in the last two weeks coming in over asking price.  To see more about earlier in the year, click see “Have we found the Floor?” from July 31, 2009

How Much Have San Francisco Home Values Declined Since their Peak?

A burning question for most of us, to be sure.  The below analysis should help to shed some light.  However, a friend of mine says that statistics are like bikinis (they can cover up the crucial bits while exposing only what they intend to expose) and I couldn’t agree more.  If you want a detailed analysis of the value of your home, don’t be shy about asking.  Your situation is likely a bit different than the “big picture.”

This analysis of San Francisco neighborhoods compares dollar per square foot ($/sq.ft.) at what is estimated to be the time when peak value was reached, to what the $/sq.ft. was for sales occurring 10/15/08 – 1/30/09. (Sales occurring after 10/15/08 reflect the impact of the 9/15/08 financial meltdown on the SF market.)

The neighborhoods below were chosen because enough sales occurred in the comparison periods to generate what appeared to be reliable statistical results. (Many areas of the city did not have sufficient sales.) We have chosen $/sq.ft. because it is more trustworthy than median prices when trying to assess changes in value for specific properties.  Indeed, median prices have dropped significantly more than $/sq.ft. because less expensive homes now make up a much larger proportion of sales than they did previously (for a variety of reasons, especially financing conditions).

Different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales included were chosen because we felt them to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high end and the ultra low end, which often distort averages.

Important note: the changes delineated probably understate the actual decline in values for 3 reasons:

1. In a declining market, sales data – which typically shows up 30 to 45 days after acceptance of offers – will always be a step behind current activity, i.e. offers being accepted right now.
2. The market has definitely shifted to smaller, less expensive homes (less expensive as to total sales price). All things being equal, a smaller home will have a higher dollar per square foot value than a larger one, therefore skewing current values higher than they ought to be in an apples-to-apples comparison.
3. In a sellers’ market, virtually everything sells, but in a buyers’ market, typically just the best homes sell – best appearing, best condition and/or best value. So the $/sq.ft. for the recent period applies to the “best homes” while the $/sq.ft. for the peak period applies to homes of a much wider range of quality.

Key to Estimated Peak-Value Period for the Chart Below:

*             Peak values estimated to have been reached 1/1/06 – 6/30/06
**           Peak values estimated to have been reached 1/1/07 – 6/30/07
***        Peak values estimated to have been reached 1/1/08 – 6/30/08

Only homes with parking were included in the below analysis. SFD = single family dwelling (house)

Averages are generalities and cannot account for the varieties in location, condition and amenities found in SF homes. Averages may be affected by unusual events or anomalous short-term trends, and do not necessarily reflect values for specific properties.  

2008 SF Largest Sales by Neighborhood

BR = # of Bedrooms
H = House, C = Condo

Pacific Hghts 8BR H $18,000,000

Sea Cliff 6BR H $14,500,000*

Russian Hill 4BR H $ 9,500,000*

SOMA 4BR C $ 8,975,000*

Russian Hill 4BR C $ 6,700,000

Nob Hill 3BR H $ 6,400,000

Noe Valley 5BR H $ 5,818,000

Clarendon Hts 4BR H $ 5,625,000

St Francis Wd 5BR H $ 5,400,000*

Marina 4BR H $ 4,700,000*

Nob Hill 2BR C $ 4,625,000

South Beach 3BR C $ 3,500,000

Lake District 5BR H $ 3,100,000

Financial Dist 2BR C $ 3,020,000

Ashbury Hts 3BR H $ 2,850,000

Glen Park 4BR H $ 2,800,000

Richmond 4BR H $ 2,420,000

Mission Bay 2BR C $ 2,350,000

North Beach 3BR H $ 2,250,000

Bernal Hts 4BR H $ 2,150,000

N. Panhandle 4BR H $ 2,125,000

Balboa Ter 5BR H $ 2,100,000

Alamo Square 4BR H $ 2,050,000

Sunset 4BR H $ 1,900,000

Hayes Valley 3BR H $ 1,875,000

W. Portal 5BR H $ 1,850,000

Parkside 5BR H $ 1,555,000

Mission 4BR H $ 1,509,000

Excelsior 4BR H $ 1,300,000

Miraloma 4BR H $ 1,275,000

Bayview 3BR H $ 710,000

Ingleside 4BR H $ 685,000

2008 sales reported to MLS by 12/10/08
* Final list price (confidential sale)

Market Update – and I appear in print!

Since I’ve skipped a few weeks, I wanted to present a contrast in market activity in San Francisco between the two week period ended July 9 and the two week period ended July 23. Closed sales for the two week period ended July 9:

                               Over      Under   At

SFD                        31           36           13

Condo                   37           38           31

2-4 Units              6              7              1

Closed sales for the two week period ended July 23:

Over      Under   At

SFD                        50           26           13

Condo                   30           39           17

2-4 U                     5             7             1

Suffice to say that the news would have us believe that the trend is for things to look like the two week period ended July 9,  but then look at all those homes that sold OVER ask.  It can be a bewildering market for in which to buy and sell.  I wrote an article for this month’s Castro Courier where I discuss the best ways to get what you want in the current market.  You can read the article here.

Market Update Part II

So negotiation seems to be the name of the game right now. Among these sales there were some very big sales closed in the last couple weeks: District 7 saw 5 SFD sales between $5.5m and $18m.

Recent Sales Statistics for May 8, 2008

Recent statistics continue to show that our market is at least resisting national trends.  In fact, for March 2008, District 5 (think central SF from Glen Park through the Haight) reach a new median sale price for single family homes.  For single family homes, 32 sold over asking price, 30 sold under asking price and 16 sold at asking price. The Condo/TIC category shows a bit more of a skew toward buyers, with 22 selling above asking price, 38 selling below and 19 selling at asking price.  In 2 to 4 units, there continued to be very few sales, with just 6 selling above asking price, 7 selling below and 3 closing at asking.  

If you are interested in more in-depth analysis of the 1st Quarter (and I know many of you are), here’s a great report prepared by Paragon’s in-house statistician, Patrick Carlisle.

In these trying times, it can be good to reassure ourselves of the general direction fo things.  To that end, here’s another report that summarizes home price growth in San Francisco since 1994.  If you’ve owned your home a while, it will make you feel a whole lot better.  And even if you haven’t, this could be you in a few years, so cheer up!