Archive for September 2013 | Monthly archive page

Castro Street Fair – October 6, 2013

Always the first Sunday in October, the Castro Street Fair is a community celebration that was founded by Harvey Milk in 1974. Hundreds of local artists, vendors, craftspeople and organizations line the streets and celebrate the diversity of the neighborhood. Stages with live entertainment and dance stages can be found throughout the fairgrounds.

The Fair is a nonprofit 501 ( c ) (3) organization and all proceeds go directly to charitable causes important to the Castro community. Additionally, the Fair funds the rainbow flag that flies over the intersection of Castro and Market.

Sunday, October 6th, 2013 from 11:00 AM to 6:00 PM PST
Castro District, intersection of Market & Castro Streets and into the surrounding area
Free admission

For more information go to www.castrostreetfair.org

Special Report: 30 Years of SF Real Estate Cycles (Updated)

30 Years of Housing Market Cycles in San Francisco

Updated Report, September 21, 2013

Below is a look at the past 30 years of San Francisco Bay Area real estate boom and bust cycles. Financial-market cycles have been around for hundreds of years, all the way back to the Dutch tulip mania of the 1600′s. While future cycles will vary in their details, the causes, effects and trend lines are often quite similar. Looking at cycles gives us more context to how the market works over time and where it may be going — much more than dwelling in the immediacy of the present with excitable pronouncements of “The market’s crashing and won’t recover in our lifetimes!” or “The market’s crazy hot and the only place it can go is up!”

1982 – 2013: A Simplified Overview

Up, Down, Flat, Up, Down, Flat…(Repeat)

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Smoothing out the bumps delivers this overview for the past 30 years. Whatever the phase of the cycle, up or down, while it’s going on people think it will last forever: Every time the market crashes, the consensus becomes that real estate won’t recover for decades. But the economy mends, the population grows, people start families, inflation builds up over the years, and repressed demand of those who want to own their own homes builds up. In the early eighties, mid-nineties and in 2012, after about 4 years of a recessionary housing market, this repressed demand jumps back in (or “explodes” might be a good description) and prices start to rise again. It’s not unusual for a big surge in values to occur in the first couple years after a recovery begins.

Surprisingly consistent: Over the past 30+ years, the period between a recovery beginning and a bubble popping has run approximately 6 years. We are currently something less than 2 years into the current recovery. Periods of market recession/doldrums following the popping of a bubble have typically lasted about 4 to 5 years. Generally speaking, within about 2 years of a new recovery commencing, previous peak values (i.e. those at the height of the previous bubble) are re-attained — among other reasons, there is the recapture of inflation during the doldrums years. In this current recovery, those homes hit hardest by the subprime loan crisis — typically housing at the lowest end of the price scale in the less affluent neighborhoods, which experienced by far the biggest bubble and biggest crash — may take significantly longer to re-attain peak values, but higher priced homes are already doing so.

This does not mean that these recently recurring time periods necessarily reflect some natural law in housing market cycles, or that they can be relied upon to predict the future.

Mortgage Interest Rates since 1981

It’s much harder to decipher any cycles in 30-year mortgage rates over the same period. Despite the rate spike over the summer, rates remain very low by any historical measure, and this, of course, plays a huge role in the ongoing cost of homeownership.

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In the 2 charts below tracking the S&P Case-Shiller Home Price Index for the 5-County San Francisco Metro Area, the data points refer to home values as a percentage of those in January 2000. January 2000 equals 100 on the trend line: 66 means prices were 66% of those in January 2000; 175 signifies prices 75% higher.

1983 through 1995

(After Recession) Boom, Decline, Doldrums

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In the above chart, the country is just coming out of the late seventies, early eighties recession – huge inflation, stagnant economy (“stagflation”) and incredibly high interest rates (hitting 18%). As the economy recovered, the housing market started to appreciate and this surge in values began to accelerate deeper into the decade. Over 6 years, the market appreciated almost 100%. Finally, the eighties version of irrational exuberance — junk bonds, stock market swindles, the Savings & Loan implosion, as well as the late 1989 earthquake here in the Bay Area — ended the party.

Recession arrived, home prices sank, sales activity plunged and the market stayed basically flat for 4 to 5 years. Still, even after the decline, home values were 70% higher than when the boom began in 1984.

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1996 to Present

(After Recession) Boom, Bubble, Crash, Doldrums, Recovery

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This next cycle looks similar but elongated. In 1996, after years of recession, the market suddenly took off and became frenzied — actually quite similar to what we’re experiencing today. The dotcom bubble pop and September 2001 attacks created a market hiccup, but then the subprime and refinance insanity, degraded loan underwriting standards, mortgage securitization, and claims that real estate never declines, super-charged a housing bubble. Overall, from 1996 to 2006/2008, the market went through an astounding period of appreciation. (Different areas hit peak values at times from 2006 to early 2008.) The air started to go out of some markets in 2007, but in September 2008 came the market crash.

Across the country, home values fell 15% to 60%, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco got off comparatively lightly with declines in the 15% to 25% range. The least affluent areas got hammered hardest by distressed sales and price declines; the most affluent were typically least affected. Then the market stayed flat for about 4 years, albeit with a few short-term fluctuations. Supply and demand dynamics began to change in mid-2011, leading to the market recovery of 2012.

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San Francisco from 2010 to 2013

A Strong Recovery

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In 2011, San Francisco began to show signs of perking up. An improving economy and growing buyer demand coupled with a low inventory of listings began to put upward pressure on prices. In 2012, as in 1996, the market abruptly grew frenzied with competitive bidding. The city’s affluent neighborhoods led the recovery, and those considered particularly desirable by newly wealthy, high-tech workers showed the largest gains. However, virtually the entire city soon followed to experience similar rapid price appreciation.

San Francisco median home sales prices increased dramatically in 2012 and then accelerated further in the first half of 2013. (Note that third quarter figures will probably show a typical seasonal decline from second quarter median prices. There are also seasonal cycles in real estate.) By all appearances, San Francisco and the Bay Area are in the midst of a healthy recovery. Among other positive signs, new home construction is soaring.

All data from sources deemed reliable, but may contain errors and is subject to revision. Copyright 2013 Paragon Real Estate Group.

July Case-Shiller Index Increases 25%, Year over Year

For the 5-County San Francisco Metro Statistical Area, all price segments showed increases, though the lowest price tier jumped the most – 4% — reflecting the rapid decline in distressed property sales. Overall, for all price segments, the jump over June was about 2.3%, which translates into an increase from 12 months ago of approximately 25%. Compared to the 19 other major metro areas Case-Shiller tracks, that puts our recovery as the strongest in the nation behind that of Las Vegas (which was perhaps the city hit hardest by the distressed property crisis and is still far below previous peak values).

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Six Months of Sales in District 7

Hard to believe we’re nearing the end of the third quarter here in 2013, but we are. Here’s a look back at the previous six months of sales in District 7 which covers Cow Hollow, the Marina, Pacific Heights, and Presidio Heights.

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411402

1551 Filbert Street, No.2


Buyer Represented
(more…)

30 Years of Real Estate Cycles chart

Case-Shiller_Simplified_from-1984

Neighborhood/District Sales by Price Range

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From our NorCal network : The Artisan Group

2_40630534_00_New_Front_entry

221 Sandringham Road
Piedmont, CA 94611
Offered at $2,975,000

For more information about this property or a referral to other areas of Northern California, please contact me.

411871_15

1205 4th Avenue, Unit C


Buyer Represented
(more…)

Mapping Late Night Eats in San Francisco

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So much to do, and so much to eat in San Francisco. But where does one go for a bite after a long evening? Recently, the good people at The Bold Italic did us all a favor and broke down some late night dining options. We’re visual types so we mapped ‘em, and then because we do it with everything, we Yelped ‘em. Where do you go for after-hours eats?

(please note restaurant locations are approximate)

(based on The Best Late Night Bites (Between 10 p.m. and 6 a.m.), the Bold Italic, August 2013)