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Rosen Consulting Group Forecasts Overall Positive Year for San Francisco Housing Market

Rosen Consulting Group Forecasts Overall Positive Year for San Francisco Housing Market

(Editor’s Note: Appearing below is the press release accompanying the Association’s Market Focus report for June. The report can be viewed by clicking on the link below the press release. A report is issued each month jointly by Rosen Consulting Group and the Association. The reports are intended to provide the media and REALTOR® members of the Association with monthly analyses of the state of the local economy and the housing and mortgage markets.

The reports are issued ahead of reports from CAR and NAR and, hopefully, will go a long way to dispelling the notion that the San Francisco residential real estate market is little different than other markets in the country experiencing stagnation and significant price declines.

Rosen Consulting Group is an economic and real estate consulting firm providing clients with high-level strategic consulting services. Founded in 1990 by Dr. Kenneth T. Rosen, he and Arthur Margon are currently the firm’s partners and active managers. Rosen Consulting Group consists of 20 research professionals based in Berkeley, CA and New York.)

“We are confident that the housing market in San Francisco is in the early stages of recovery and expect a sustainable but modest rise in San Francisco home prices for the balance of 2010,” says the most recent Market Focus report issued by the Rosen Consulting Group of Berkeley, California, and published by the San Francisco Association of REALTORS®.

Rising affordability levels, aided by already reduced housing prices and low mortgage rates are given credit for the growing demand for housing units in the city, particularly at the low and middle ends of the market.

The report says that the growing demand has had the effect of tightening market conditions in the city during the past 12 months and has caused prices to stabilize for more moderately priced homes, and for the luxury segment of the market to gain traction. These developments have contributed to home sales becoming more evenly distributed across price segments and for the median sales price to trend upward.

John Lee, president of the San Francisco Association of REALTORS®, agrees with the conclusions of the Rosen Consulting Group, saying that, “The overall underlying trend of the housing market in San Francisco should remain positive, resulting in price appreciation and a further tightening of market conditions into year-end 2010.”

The report states that the median single-family home sales price in San Francisco rose 4.6%, year-over-year, in June 2010 to $800,000 (Figure 1). And, while completed single-family home sales through the first half of 2010 showed a 24% increase for the same period in 2009, they showed a 14% decline in comparison to the last six months of 2009 (Figure 2).

Of the 219 completed single-family homes sales in June 2010, approximately 35% were homes priced at $700,000 or less in comparison to January 2009, when this proportion of the market accounted for more than 65% of all sales.

The number of single-family homes on the market, in comparison to the same period last year, remained unchanged. For-sale inventory stood at 707 homes in June, matching the number of homes for sale in June 2009. Coinciding with the steady level of for-sale inventory, at the current monthly contract sales rate, the months supply of single-family homes remained at 3.1 months, also unchanged from June 2009 (Figure 3).

Lee noted that, “Rising housing affordability resulting from attractive pricing and low mortgage rates has strengthened the demand for condominium units, particularly among first-time home buyers.”

The median condominium sales price in June 2010 increased 8.7% from June 2009 to $690,000. Completed sales totaled 230 units, an increase of more than 20% during this time.

Through the first half of 2010, condominium sales totaled 1,164 units, a 48% increase from total condominium sales during the same period in 2009. Despite the jump in sales in comparison to the trough of the market in the first half of 2009, condominium sales slipped 13% in comparison to total sales during the last six months of the year.

While cautioning that the eventual full recovery of San Francisco’s housing market is dependent on improvements to the job market, the Rosen Consulting Group forecasts an overall positive year: “While the elimination of government incentives, as well as stricter availability of credit will test the market during the second half of this year, the anticipated rebound in job creation into the end of this year and the resulting rise in demand combined with the pent-up demand for affordable, for-sale units in the market should result in an overall positive year for the San Francisco housing market.”

Rosen Consulting Group Report

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July 4th Impact on the Market?

These 3 charts show week by week activity for the past 6 months through July 11th . Obviously, the first two weeks of July were impacted by the 4th of July holiday slowdown, but it is interesting that a fair amount of inventory is coming on market – perhaps that is simply a reflection of agents holding listings until the holiday week was over. It does seem that opportunities for buyers must be increasing. The activity charts for the last 3 weeks of July will be interesting to see. Last year business didn’t really slow down during the summer, but perhaps this summer will be more typical?

Listings Accepting Offers, by week, through July 11.

New Listings Coming on Market, by week, through July 11

Percent of Listings Going Under Contract, week by week, through July 11

Paragon Market Update: July 2010, Mid-Year Review

Median prices and average dollar per square foot figures are generalities, which may be affected by other market factors besides changes in value. All information contained 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 these analyses.

Median Sales Prices
The Median Sales Price is that price at which half the properties sold for more and half for less. Many agents believe that SF homes values started to climb in the last quarter, and, as shown below, houses and condos did hit their highest median prices since 2008. However, they’re only about 1% above late 2009, and still within 3-4% of prices 15 months ago. The new quarter will show whether an established upward trend in prices has begun, instead of the recent zigzaging up and down. Remember that sales prices are 30-60 days behind the market: closed sales in June
generally reflect offers accepted in April and May.

Homes Accepting Offers
Despite all the news reports about declining home sales, in San
Francisco at least, though we have seen a drop from the unusual spike in April (expiring Federal tax credits), activity in June was still the 4th strongest month in the last 2 years, 7% above June 2009, and almost equal to June 2008 (before the market downturn in September 2008). Last year, sales did not significantly slow in the summer.

Median HOUSE Price by Neighborhood
Besides the values pertinent to different neighborhoods, house sizes often vary enormously: average house size in Pacific Heights and St. Francis Wood is much larger than in Noe Valley, which is larger than that of Miraloma Park. Pacific & Presidio Heights are almost always at the top of the chart and Bayview (terribly affected by foreclosure sales) at the bottom.

Median CONDO Price by Neighborhood
Russian Hill has been consistently at the top of median condo prices. Of course, condos in different neighborhoods may have widely divergent sizes, quality of finish and age of construction. One reason for the gap between the Marina and Pacific Heights is that the former has a much larger average condo size.

Average HOUSE Dollar per Square Foot
Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, decks or yards. These figures are usually derived from appraisals or tax records, but can be unreliable or unreported altogether. Note that in Pacific Heights/Marina (Realtor District 7), less than half the houses sold specified square footage, which makes the figure below a wild approximation.

District 5: Average House $/Sq.Ft.
District 5 is one of San Francisco’s largest and most homogenous
districts and includes the following neighborhoods: Noe & Eureka
Valleys; Ashbury, Clarendon & Corona Heights; Haight Ashbury; Duboce Triangle; Glen Park; Mission Dolores. The average dollar per square foot for houses in District 5 has been creeping up over the past 4 quarters, but it is still 14% below the height of the market in the first half of 2008. Note that average dollar per square foot may be affected by other issues than simply changes in value, such as the size of the homes being purchased.

Average CONDO Dollar per Square Foot
Only half the condo sales in Russian Hill specified square footage, so its figure, in particular, is a wild approximation. Still, Russian Hill is almost always at the top of the scale. The Nob Hill average, in particular can fluctuate enormously depending on where within Nob Hill the sales are taking place, but all averages are gross generalities that may fluctuate for a number of reasons (besides changes in value).

SF Luxury Home Sales by Neighborhood
We generally define the luxury home market in the city as house sales of $2,000,000 plus, and condo/co-op sales of $1,500,000 plus. The northern prestige neighborhoods — such as Sea Cliff, Pacific & Presidio Heights, and Russian & Nob Hills — dominate luxury home sales, but some also occur in District 5 (Noe, Castro and Haight Ashbury) and in St. Francis Wood, as well as in the new condo developments in South Beach and SOMA.

Homes $1,000,000+ Accepting Offers
Sales of homes of $1,000,000 plus strengthened this past spring. Such higher-end sales typically make up 15% – 20% of the overall home market in San Francisco by unit sales.

Home Sales by Realtor District
The district with the greatest number of house sales is District 10, which has been hit hardest by foreclosure sales. The district dominating condo sales is District 9 with all the recent condo developments (and this chart does not include new development sales not reported to MLS, of which there are many in District 9). District 5 in the center of the city has the second highest number of overall sales after District 9.

Homes For Sale
The inventory of homes for sale is creeping upward, which is good news for buyers.

New Home Listings Coming on Market
The number of new listings in the city are up 19% over June of last year, but down from the peaks of the spring selling season.

SF Bank & Short Sales
The percentage of distressed home sales has stayed mostly in the 12% – 16% range since late 2008. Bank sales are typically pursuant to foreclosure. Short sales are those sales in which the lender’s agreement to reduce the outstanding mortgage balance is necessary for the sale complete – that is, the house is worth less than the loan and other financial liens on the property.

Listings Sold to Listings Expired/Withdrawn
The green bars denote sold homes and the purple bars denote expired and withdrawn listings. Even in a relatively hot spring home-selling season, a large percentage of listings do not sell, generally due to being perceived as overpriced.

Months-Supply-of-Inventory (MSI)
MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: the lower the MSI, the greater the demand. MSI has stayed relatively stable at 3-4 months of inventory since February, which is considered relatively low.

Average Days-on-Market (DOM)
Days-on-Market measures the number of days between a property going on market and the acceptance of an offer. The average number of days on market for those houses and condos accepting offers continues to decline and is now at its lowest level in over two years.

150th Anniversary of Market Street Rail Line

Great article to share from SFGate.

150th anniversary of first Market St. rail line
cnolte@sfchronicle.com (Carl Nolte, Chronicle Staff Writer)

The Fourth of July is famous for other reasons, but today also is the 150th anniversary of the first run of the first street railway on the Pacific Coast – a two-car steam train that ran up San Francisco’s Market Street.

The Market Street Railroad, which ran from Third and Market out to Valencia Street and then to 16th Street, was dirty, noisy and ultimately a financial flop, but it was the start of something big.

Rail cars have run on or under Market Street ever since, and the first rail line turned Market Street from an unpaved and undeveloped cow path through towering sand dunes into the city’s main stem.

Surveyor Jasper O’Farrell had laid out Market as a grand boulevard in the 1850s, but the infant San Francisco grew up around Portsmouth Square not far from Telegraph Hill. If San Francisco had a main street it was Montgomery, where all the best businesses were located.

Emiliano Echeverria, who has co-written eight books on San Francisco transit, said that in 1860 Market Street had nothing but potential.

It was “off the beaten path,” he said. It petered out around Third Street, and west of Third there were only a few houses, and a number of sand hills, some 50 to 60 feet high.

The only public transportation conveyances in the city were horse-drawn omnibuses, which could seat 10 or 12 passengers, jolting along potholed and muddy streets. The omnibuses charged what the traffic would bear – at first the fare was $1 a ride, which was a fortune in those days.

The route of the pioneering Market Street rail line went through “wild country, the middle of nowhere,” Echeverria said.

The rail line changed all that. “It set the wheels in motion, if you’ll pardon the expression,” Echeverria said.

The Market Street train wasn’t much – a steam engine that was part locomotive and part passenger car, and a trailer car. If the cars were crowded, passengers could ride on the roof. There was a single track down the middle of Market and up Valencia.

In a couple of years, there were new houses rising on Market Street extending west out to about 12th Street, and the Mission District started to build up. By then, the city had outgrown the two-car steam trains, which were noisy and dirty and took three men to operate.

By 1867, the steam trains were replaced with a new invention: rail cars drawn by horses. Then came a building boom and horse-car lines were built out Valencia, out Hayes, Haight, McAllister and Castro streets. All lines fed into Market.

By 1883, the horse-car lines were converted to cable cars, with a cable slot down the middle. Old-timers used to call everything on the other side of Market Street “South of the Slot.”

The cables ran on tight headways; by the turn of the 20th century, a cable car was at the Ferry Building at rush hour every 15 seconds, transit historians say.

The 1906 earthquake and fire finished the Market Street cables, replaced by electric streetcars – on four tracks. The cars made so much noise that “The Roar of the Four” could be heard for miles.

BART built a subway later, and then came the Municipal Railway’s Muni Metro system. On a weekday, there are close to 290,000 boardings on the Market Street subway, bus and streetcar systems, the equivalent of the entire population of Buffalo, N.Y.

“Market Street has had rail transit on its surface longer than any other main street in America,” says Rick Laubscher, president of the nonprofit Market Street Railway, a partner of the Muni system that operates a streetcar museum at Mission Street and the Embarcadero. It will offer a free exhibit on the old steam railroad starting July 15.

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Buyer Use & Effectiveness by Media Type
From the NAR 2009 Profile of Home Buyers & Sellers