From our NorCal network : The Artisan Group

13345569

68 LAKEVIEW AVENUE
Zephyr Cove NV, 89448
Offered at $3,995,000

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

S&P Case-Shiller Home Price Index for San Francisco Metro Area

The S&P Case-Shiller Index for the San Francisco Metro Area covers the house markets of 5 Bay Area counties, divided into 3 price tiers, each constituting one third of unit sales. Most of San Francisco’s, Marin’s and Central Contra Costa’s house sales are in the “high price tier”, so that is where we focus most of our attention.” The Index is published 2 months after the month in question and reflects a 3-month rolling average, so it will always reflect the market of some months ago. The Index for July 2015 was released on the last Tuesday of September. In 2014, after a torrid spring selling season, the market plateaued during the summer and autumn, and a similar trend seems to be developing in 2015 as well, after its own white hot spring.

The 5 counties in our Case-Shiller Metro Statistical Area are San Francisco, Marin, San Mateo, Alameda and Contra Costa. Needless to say, there are many different real estate markets found in such a broad region, and it’s fair to say that the city of San Francisco’s market has generally out-performed the general metro-area market.

The first two charts illustrate the price recovery of the Bay Area high-price-tier home market over the past year and since 2012 began, when the market recovery really started in earnest. In 2012, 2013, 2014 and now 2015, home prices have dramatically surged in the spring (often then plateauing or even ticking down a little in the following seasons). The surges in prices that have occurred in the spring selling seasons reflect frenzied markets of huge buyer demand, historically low interest rates and extremely low inventory. In San Francisco itself, it was further exacerbated by a rapidly expanding population and the high-tech-fueled explosion of new, highly-paid employment and new wealth creation.

For more regarding how seasonality affects real estate: Seasonality & the Real Estate Market

Case-Shiller Index numbers all reflect home prices as compared to the home price of January 2000, which has been designated with a value of 100. Thus, a reading of 218 signifies home prices 118% above the price of January 2000.

Short-Term Trends: 12 Months & Since Market Recovery Began in 2012

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Longer-Term Trends & Cycles

The third and fourths charts below reflect what has occurred in the longer term (for the high-price tier that applies best to San Francisco and Marin counties), showing the cycle of recession, recovery, bubble, decline/recession since 1996, and since 1988. Note that, past cycle changes will always look smaller than more recent cycles because the prices are so much higher now; if the chart reflected only percentage changes between points, the difference in the scale of cycles would not look so dramatic.

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Different Bubbles, Crashes & Recoveries

This next 3 charts compare the 3 different price tiers since 1988. The low-price-tier’s bubble was much more inflated, fantastically inflated, by the subprime lending fiasco – an absurd 170% appreciation over 6 years – which led to a much greater crash (foreclosure/distressed property crisis) than the other two price tiers. All 3 tiers have been undergoing dramatic recoveries, but because the bubbles of the low and middle tiers were greater, their recoveries leave them below – a little bit for the mid-price-tier and well below for the low-price-tier – their artificially inflated peak values of 2006. It may be a long time before the low-price-tier of houses regains its previous peak values. The high-price-tier, with a much smaller bubble, and little affected by distressed property sales, has now significantly exceeded its previous peak values of 2007. Most neighborhoods in the city of San Francisco itself have now surpassed previous peak values by very substantial margins.

It’s interesting to note that despite the different scales of their bubbles, crashes and recoveries, all three price tiers now basically show the same overall appreciation rate when compared to year 2000. As of July 2015, Case-Shiller puts all 3 price tiers at 118% – 119% over year 2000 prices. This suggests an equilibrium is being achieved across the general real estate market.

Different counties, cities and neighborhoods in the Bay Area are dominated by different price tiers though, generally speaking, you will find all 3 tiers represented in different degrees in each county. Bay Area counties such as Alameda, Contra Costa, Napa, Sonoma and Solano have large percentages of their markets dominated by low-price tier homes (though, again, all tiers are represented to greater or lesser degrees). San Francisco, Marin, Central Contra Costa, San Mateo and Santa Clara counties are generally mid and high-price tier markets, and sometimes very high priced indeed. Generally speaking, the higher the price, the smaller the bubble and crash, and the greater the recovery as compared to previous peak values.

Remember that if a price drops by 50%, then it must go up by 100% to make up the loss: loss percentages and gain percentages are not created equal.

The numbers in the charts refer to January Case-Shiller Index readings, except for the last as labeled..

Low-Price Tier Homes: Under $579,500 as of 7/15

Huge subprime bubble (170% appreciation, 2000 – 2006) & huge crash (60% decline, 2008 – 2011). Strong recovery but still well below 2006-07 peak values.

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Mid-Price Tier Homes: $579,500 to $949,000 as of 7/15

Smaller bubble (119% appreciation, 2000 – 2006) and crash (42% decline) than low-price tier. As of July 2015, a strong recovery has put it back up to its previous 2006 peak.

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High-Price Tier Homes: Over $949,000 as of 7/15

84% appreciation, 2000 – 2007, and 25% decline, peak to bottom.
Now climbing well above previous 2007 peak values.

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In San Francisco, where many neighborhoods vastly exceed the initial price threshold for the high-price tier, declines from peak values in 2007 in those more expensive neighborhoods typically ran 15% – 20%, and appreciation over previous peak value has also exceeded the high-price tier norm.

San Francisco, Marin and Central Contra Costa

And then looking just at the city of San Francisco itself, which has, generally speaking, among the highest home prices in the 5-county metro area (and the country): many of its neighborhoods are now blowing past previous peak values. Note that this chart has more recent price appreciation data than available in the Case-Shiller Indices. This chart shows both house and condo values, while the C-S charts used above are for house sales only. Median prices are affected by other factors besides changes in values, including seasonality, new construction projects hitting the market, inventory available to purchase, and significant changes in the distressed and luxury home segments.

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Marin County

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Central Contra Costa County

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And this chart for the Noe and Eureka Valleys neighborhoods of San Francisco shows the explosive recovery seen in many of the city’s neighborhoods, pushing home values far above those of 2007. Noe and Eureka Valleys have become particularly prized by the high-tech buyer segment and the effect on prices has been astonishing.

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All data from sources deemed reliable, but may contain errors and is subject to revision. Statistics are generalities and how they apply to any specific property is unknown. Short-term fluctuations are less meaningful than longer term trends. All numbers should be considered approximate.

© 2015 Paragon Real Estate Group

The San Francisco Fall Antiques Show // Benefiting Enterprise for High School Students

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The San Francisco Fall Antiques Show, now in its 34th year, is the oldest and most prestigious art and antiques fair on the West Coast. Held at Fort Mason each fall, the FAS presents 60 of the finest art and antiques dealers from around the world and is fully vetted by the vetting committee, organized in cooperation with the Antiques Dealers Association of California (ADAC). It is a must-see destination show for collectors and enthusiasts of art, antiques and design.

Objects exhibited and sold on the show floor span the ages, from antiquity through the 20th Century, covering genres including Fine Art, Modern Art, Furniture, Textiles, Photography, Asian Art, Carpets, Ceramics, Porcelain, Sculpture, Rare Books, Works on Paper, Objets d’art, Jewelry and Metals.

The 4-day show offers the opportunity to immerse yourself in the world of great art and antiques with programming each day, including The Lecture Series, featuring 6 prominent speakers over 3 days, show tours, talks, designer events and the Young Collectors Evening.

The Fall Antiques Show opening night Preview Gala has been called “the highlight of the San Francisco Social Season” and opens the show with live music, caviar and vodka bars, flowing champagne, sumptuous buffets and the first glimpse of the best art and antiques from around the world, all available for purchase.

Please Visit Eventbrite for More Details

We Have The List: Dog Parks! [Infographic]

The best place to take your pup!

Dog-Parks2

October 2015 San Francisco Real Estate Report

The autumn selling season started with a large surge of new listings right after Labor Day, but it will be another month or so before preliminary statistical data is available on home sales negotiated since then. However, it is clear that the recent volatility in national and international financial markets has not so far caused a severe adjustment to local home prices. While we wait for early autumn sales to close in quantity, we’ll review the market from a variety of angles.

A wide range of other reports pertinent to SF real estate values and trends can be found here: San Francisco Market Reports and San Francisco Neighborhood Values

Short-Term & Long-Term
San Francisco Home Price Appreciation

2011 – 2015, by Quarter
Median-Price_Bar-Chart_Qtr_SFD-Condo-Combined

It’s not unusual for median prices to drop in the 3rd quarter, which happened this year as well. This has less to do with fair market value, than with the fact that the market for higher priced homes slows down much more than that of the general market in summer.

1994 – 2015, by Year
1993-2010_SF_Median_Sales_Prices_Cycle-Labels

Return on Cash Investment
Comparing Buying a Home in San Francisco
to Inflation, Gold, the S&P 500 & Apple Stock

10-15_ROI-on-Cash-Invest_Comp-RE-Gold-Apple-SP500

For the purposes of this analysis, we’ve broken home ownership into 2 aspects, the first being ongoing housingcosts – mortgage interest, home insurance, property taxes, maintenance – which after tax deductions could be compared to the cost of renting a similar home. The second aspect, illustrated in the chart above, is the cash investment side of buying a home and the compound annual return on that investment, after closing costs and loan principal repayment are deducted, if one had purchased a median SF house in 1994.

For the San Francisco Median House calculation, we used the 1994 median price ($265,000), with a 20% downpayment ($53,000) and paying 1.5% in buy-side closing costs ($3975) for a total cash investment of $56,975. Net proceeds were calculated using the 2015 YTD median sales price ($1,250,000), deducting 6% in sell-side closing costs ($75,000) and the original 80% mortgage balance ($212,000), which equals $963,000. This equals an annual compound return on investment of 14.4% over the 21-year period.

All of us should have put every penny we had into Apple stock in 1994, but barring that, purchasing a home in San Francisco would have been a decent alternative – particularly if you’d bought in Noe Valley or the Mission. Three factors not included in the above analysis further increase the financial benefits of home purchase over the other investments graphed: 1) the $250,000/$500,000 capital gains tax exclusion on the sale of a primary residence (potentially saving up to $75,000 in taxes), 2) the “forced savings” effect of gradually paying off one’s mortgage (if one resists refinancing out growing home equity), which has a substantial wealth-building effect, and 3) over time, the ongoing cost of housing with a fixed rate loan, strategically refinanced when rates go significantly lower, will usually fall well below rental costs that continue to rise with inflation.

With financial assets subject to market cycles, changing the buy or sell dates in this analysis can dramatically affect the return. We picked 1994, because of the availability of MLS median price data going back to then.

Median Sales Prices by Neighborhood

2-Bedroom Condos in San Francisco

Median_Price-2BR_Condos_by-Neighborhood

3-Bedroom Houses in San Francisco

Median_Price-3-4BR-SFD_Comp

Market Dynamics

Sales Price to List Price Percentages
& Average Days on Market

DOM_by-Price-Reduction_by-Qtr SP-OP_Comp-by-Price-Reduction_by-Qtr

These two charts above illustrate both how competitive the market has been – the average SF home selling without a price reduction sold very quickly for 13.5% over asking price in the 3rd quarter – and the significant difference between homes that get an immediate market response and thosethat have to go through one or more price reductions before selling.

Months Supply of Inventory

Seasonality, Luxury and Non-Luxury Homes

MSI_Luxury-Homes_vs_Non-Lux

The lower the Months Supply of Inventory, the stronger the buyer demand as compared to the supply of homes available to purchase. This chart illustrates the seasonality of the real estate market – typically strongest in spring (especially) and autumn, and slowing down during the summer and especially the winter holidays. It also shows that the lower-priced home segment is generally hotter than the higher priced – as shown by the lower MSI readings – and finally, how much more the luxury home segment is affected by seasonality. The dramatic slowdown in the highest-priced segment during summer and winter is one of the big reasons why median home prices usually drop during those seasons.

Condo Average-Dollar-per-Square-Foot Values
by Era of Construction

AvgDolSqFt_Condo-by-Era-Built

The Most Expensive Condo Buildings in San Francisco
Condos_Most-Expensive-Buildings

This doesn’t include brand new luxury condo developments – some of which are selling at very high prices – nor many very expensive and very prestigious condo and co-op buildings which simply have too few sales for meaningful statistical analysis.

3rd Quarter Market Snapshot
New-UC-Expired-DOM-Median_by-Property-Type

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. How any median or average statistic applies to a particular home is unknown without a specific comparative market analysis. We are not qualified to render legal or tax advice of any kind. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.

© 2015 Paragon Real Estate Group
 

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35 Beideman Street

Seller Represented
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4339 California Street, No.1

Seller Represented
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Months Supply of Inventory, Seasonality, and its Relationship to Pricing

We’ve always known that seasonality plays a big role in real estate, but this Months Supply of Inventory (MSI) chart shows:

1) The lower-priced (under $2m) market has the most competitive supply and demand dynamic.

2) How much more seasonality affects the luxury home end of the market. Homes under $2m ebb and flow by season, but the fluctuations are much more dramatic in the luxury home segment.

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172 Divisadero - 1

172 Divisadero Street

Seller Represented
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Autumn SF Home Selling Season Begins Against Backdrop of Market Volatility

Real estate markets are essentially determined by the balance – or imbalance, as is often the case – between buyer demand and seller supply of homes to purchase. Underlying that dynamic are economic, political and demographic factors – some local, some not – such as population growth, employment, new home construction, high-tech booms, consumer confidence, interest rates, affordability, IPOs, stock market movements, shenanigans in Congress, and SF ballot proposals, to name a few. Even environmental factors, such as droughts and earthquakes, can jump in and affect the market. These factors are all jostling for effect, ebbing and flowing, sometimes appearing out of nowhere to shake things up, or suddenly shrinking and quickly forgotten.

We are neither blithe optimists, for whom boom times will never end, nor inveterate pessimists, who see bubbles and crashes behind every shrub. For what it’s worth, based on our survey of current economic fundamentals, we don’t expect an imminent crash in the U.S. stock market or in Bay Area real estate values. (This short New Yorker article is excellent on recent market volatility: Drop in the Bucket) However, economies and markets naturally experience fluctuations – short-term ups and downs, times of slowing and flattening – and it’s certainly possible that the balance between buyers and sellers might shift, that the frenzy in our market may subside, and that home prices may plateau or even tick down to some degree. On the other hand, due to the scale of our high-tech boom (another area of exuberantly conflicting predictions) and our deeply inadequate supply of housing, demand may continue to exceed supply, and the pressures of recent years may continue until new-home construction makes a more significant contribution to inventory.

New Listings Coming on Market

Seasonality_New-Listings

September is usually the single month with the greatest number of new listings, and those that hit the market in the 4 to 5 weeks after Labor Day feed the vast majority of autumn sales activity until the market goes into hibernation mode in mid-late November. Preliminary indications are that this may be a very big new-listing month, even for a September. If this is true, and especially if it marks the beginning of a trend of more listings coming on market, that could cool the ferociously competitive, low-inventory, “seller’s market” of recent years. If buyers are more hesitant due to recent financial-market volatility, that would also cool the market. But, in our opinion, neither factor is likely to flip us into a crashing or recessionary market.

Percentage of Listings Accepting Offers

Percent_UC_SFD-Condo_by_Quarter

This chart illustrates the surge in buyer demand from the end of the last recession through the 2012 – 2015 recovery. Having the percentage of listings accepting offers over 50% and sometimes well over 60% in a given quarter – extremely high percentages historically – has applied consistent upward pressure on home prices. Demand usually peaks during the spring and autumn selling seasons, i.e. in the 2nd and 4th quarters.

Additional market indicator analyses can be found here: SF Market Overview Analytics

S&P Case-Shiller Home Price Index

Case-Shiller_from_1990

An updated Case-Shiller Index chart for the 5-county San Francisco Metro Area, outlining the real estate market cycles going back to the 1980’s. (The June Index was released on August 25th.) It is noteworthy that over the past several decades, we’ve never seen a crash or significant “correction” in our real estate market that was not in conjunction with a major, sustained, national economic event. This chart also suggests that SF buyers who purchase homes 1) they can afford in the first place, 2) using fixed-rate mortgages, and 3) for longer-term ownership, usually come out all right, and often fabulously well, despite periodic market declines.

“Renting can make sense as a lifestyle choice or because of income constraints. As a means to building wealth, however, there is no practical substitute for homeownership.”
Homeownership & Wealth Creation, 11/30/14, NYT op-ed article

The Case-Shiller chart above reflects sales in the upper third of Bay Area home sales (i.e. “high-price-tier”) – which applies best to SF homes. Even in the high tier, the city has generally outperformed the Bay Area in home price appreciation. The numbers on the graph refer to a January 2000 price of 100; thus, the number 217 signifies a price 117% above then. It is interesting to note, that as of the June Index report, all three Bay Area home-price tiers – low, mid and high – have readings of 117% appreciation since 2000, which may be a sign of an equilibrium being reached in the market. Our full report: Case-Shiller for SF Bay Area

Bay Area Housing Affordability

Housing-Affordability-Index

The California Association of Realtors recently released its Housing Affordability Index (HAI) for the 2nd quarter of 2015. All Bay Area counties saw declines in their affordability index reading – which measures the percentage of households that can afford to buy the median priced single family dwelling (house) – and San Francisco is now only 2 percentage points above its all-time low of 8%, last reached in Q3 2007.

Very low affordability at a time of very low interest rates is certainly a concern, but housing affordability is a complex subject and there are other factors at play in San Francisco. Our full report, which also charts median home prices, rents, interest rates, inflation-adjusted housing costs and household income by county is here: Bay Area Housing Affordability

Where to Buy at What Price Point

8-15-House-Sales_1m-1499k-by-Neighborhood

We’ve recently updated our report on where one is most likely to find a house or condo in one’s price range. The chart above is 1 of 7 delineating San Francisco neighborhoods with homes from under $1 million to over $5 million: San Francisco Neighborhood Affordability

Median Home Prices and Economic Indicators

A glance at recent movements in San Francisco’s median home sales price, as well as at a few longer-term local and national economic indicators.

Monthly fluctuations – often seasonally related – have been common since
2012, but home prices have consistently climbed higher over the longer term.

Median-Prices_Short-Term

National and San Francisco unemployment trends: Very positive.

Unemployment-Rates_US-SF_since-1990

Over 100,000 new SF jobs – many of them very well paid – have been created since 2009. (The housing supply has increased by less than 15,000 units.)

Employment_SF-by-year

Household debt to GDP and mortgage debt service ratios – huge issues
in the 2007-2008 crash – have significantly declined since then.

Household-Debt-to-GDP-Ratio_US-since-1990

Mortgage-Debt-Ratios_US_since-1990

Sustained movements in the S&P 500 Index largely correlate to SF home-
price trends. Short-term financial-market fluctuations typically have no effect.

8-26-15_SP-Stock-Market

Price to Earnings (PE) Ratios of the S&P 500 Index climbed a bit high
in mid-2015, but not egregiously so compared to historical averages.

SP500_PE-Ratio_since-1986

Our goal is not to convince you of a certain position, but to provide you with what we believe to be reliable data, so that you can make your own informed decisions.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.

© 2015 Paragon Real Estate Group