It’s safe to say that Mission Bay is San Francisco’s fastest-growing neighborhood. Empty Southern Pacific Railroad yards only 15 years ago, the district is now home to some of San Francisco’s finest apartment and condominium complexes, with more going up seemingly every day. Want to see the future of Mission Bay? Stand at the corner of Third Street and Mission Bay Boulevard and look back toward downtown. You’ll see no fewer than four cranes busy at work, lifting girders and beams into place on what will soon be two new mid-rise apartment complexes, Venue and MB 360. Google Maps still shows the two-block stretch of Fourth Street between Channel and China Basin as an unbroken string of parking lots; they need to catch up.
The neighborhood genesis is simple: once part of San Francisco Bay, Mission Bay was created over a period of time ending in 1910 when land excavated from other parts of the city – notably Rincon Hill – was dumped into the bay. The new real estate transformed a rough-and-tumble waterfront into a patchwork of utilitarian railroad yards and stayed that way for almost a century, until 1998, when Mission Bay was targeted for redevelopment by the City of San Francisco. Catellus, a real estate firm created when Southern Pacific merged with the Santa Fe Railroad, was charged with the job of creating the new neighborhood.
In 2003, Mission Bay’s first major commercial development, the 43-acre USCF Mission Bay Campus, was completed. Since then, Mission Bay has become a magnet for healthcare, pharmaceutical and biotechnology business, attracting the likes of Bayer, Nektar and Fibrogen. Residential development followed UCSF to the neighborhood, beginning on a corridor of Berry Street, across Mission Creek from the heart of Mission Bay. It has since spread throughout the area.
It’s not easy creating a neighborhood out of nothing but it is easy to see why Mission Bay was chosen for that task. Centrally located and within easy walking distance of downtown and AT & T Park, it offers easy access to Caltrain, MUNI and Highway 280, stellar new housing, great bay and city views and a long stretch of waterfront.
Its developers have anticipated residents’ tastes and needs by attracting a diverse group of restaurants and night spots – nearby King Street is lined with new businesses, restaurants like Umami Burger, Nama, a branch of Amici’s Pizza and, at the ballpark, the Public House and Momo’s – including a neo-classic bowling alley/night club, Lucky Strike Bowl. King Street is also where residents can go for everyday services like Safeway and Walgreens, maybe stopping on their way home at the city’s newest library branch (opened in 2006), at 960 Fourth Street.
Mission Bay has multiple parks, including the promenade behind AT & T Park and UCSF’s central Koret Quad, a large green space featuring multiple outdoor art installations. A section of the 500-mile San Francisco Bay Trail runs along the Mission Bay waterfront. Mission Creek, a venerable waterway at the western edge of the neighborhood, features green space and public walking paths on both shores.
Mission Creek is also where you’ll find evidence of Mission Bay’s funkier days. A group of 20 or so houseboats – “floating homes” – has been bobbing up and down on the creek since the early 1970s, a small anachronistic outlier surrounded by progress and growth of a distinctly 21st-century fashion.
Maybe Mission Creek’s funky houseboat settlement isn’t too much of an outlier, though. All along Terry Francois Boulevard, at Mission Bay’s eastern border, are reminders of a different time and place – weatherbeaten maritime buildings, no-nonsense working piers, ships in the Pier 54 dry dock and a bit of local color, the Bay View Boat Club. Home to an annual “Plastic Regatta,” the club’s modest yellow clubhouse was towed from Hunters Point to its present site at 489 Terry Francois Boulevard in 1962.
There it stays, in the shadow of the shiny new headquarters of clothier Old Navy, a fun reminder that even in San Francisco’s most dynamically changing, newest neighborhood, a little bit of the old city shines through.
There are a number of new developments in San Francisco that are being planned, in progress, and selling out as we speak. Here’s a selection of projects around the city to give you an idea of recent changes, ones that are currently happening, and ones that are just around the corner.
Status: In planning, approved, about to break ground, breaking ground.
Status: Under Construction, almost complete, pre-sales.
Status: Selling, almost sold-out, sold-out.
Click the top right to view full screen
February 2014 San Francisco Market Report
It is far too early in the year to reach definitive conclusions regarding substantive changes in the market, but there are indications of a number of shifts. From the hurly burly on the street, the word is that the quantity of offers coming in on new listings is declining. Where a new listing might have attracted 10 or 12 offers last spring, 3 or 4 are coming in now; where 3 or 4 offers would have arrived, the seller is getting 1. And, according to Broker Metrics, for every 2 listings that accepted offers in December and January, another listing expired or was withdrawn without selling.
The amount of competition deeply affects home price increases.
There are still a very large number of buyers looking at listings online and at open houses. But more of them appear to be first-time buyers and they are proceeding more cautiously. Some buyers are burned out on the multiple-offer bidding frenzies of last year and are reluctant to participate in them. Though the market remains hot by any reasonable standard, by some statistical measures it is cooling. This may reflect a transition or only a lull before the spring sales season begins.
Recently, the investment-property analysis firm Reis speculated that SF apartment-rent growth — which has been extraordinary by any measure, especially in a period of low inflation — will slow despite intense demand and very low vacancy rates, simply because people can’t pay any more. It’s an idea which may or may not be correct or apply to other types of housing costs. Rent rates do play a role in purchase prices as buyers often compare the net housing costs of the two options.
Median Sales Price Appreciation by Neighborhood
In San Francisco, some of the most affluent neighborhoods — such as the Pacific Heights-Marina district and the Noe, Eureka and Cole Valleys district — started their recoveries in the second half of 2011, well before virtually every place else in the city or country. When 2012 began, prices in these districts soared, while other areas played catch up. In 2013, that dynamic flipped: Appreciation rates in comparatively less expensive neighborhoods surged, while slowing in the most affluent areas.
A big part of this is simple affordability: Priced out in one neighborhood (or city), buyers focused on others, similar in ambiance but less costly. Home prices there looked so good in comparison that buyers were willing to bid them up. The huge decline of distressed sales in areas severely affected, such as in Bayview, has had an outsized effect on median sales prices there. Continuing gentrification, as in the Mission, and increasing “luxury” condo construction in less affluent areas have also played parts in this trend. It’s not as if demand plunged in the Pacific Heights-Marina district (or Noe Valley, for that matter). Quite the contrary: its 9% appreciation rate in 2013 translated into the city’s largest median price increase in dollar terms ($300,000). However, in the previous year, this district saw year over year median price appreciation of 25%.
Note that median price appreciation does not perfectly correlate to changes in home values, as it can be affected by a variety of market factors. It does give an approximate sense of market trends.
Percentage of Sales Price above Asking Price
As the market turnaround began in earnest in early 2012, two trends emerged: 1) increasing percentages of sales without any previous reductions in list price, hitting a whopping 90% of sales in May 2013, and 2) sales prices exceeding asking prices by escalating percentages, hitting an incredible average of 9% over list price in June of last year. Both of these highs reflect the ferocious spring 2013 market frenzy. Since then, these statistics dropped, stabilized and have now dropped some more. One shouldn’t make too much of a month or two of data, and it must be noted that the January numbers — 81% of sales occurred before any price reductions, at an average of about 4% over list price — would signify a red hot market at any other place or time, but they are significant drops from those predominating last year. We won’t know whether it’s a seasonal blip or the beginning of a major shift until the spring selling season gets underway.
Case-Shiller Home Price Index: 2012-2013 Appreciation
This chart is updated through November 2013, reflecting the last Index report published by Case-Shiller: It illustrates approximate Bay Area home price appreciation for higher priced homes, which San Francisco’s generally are, over the past 2 years. Spring 2012 and especially spring 2013 saw very large upswings in values, but prices then stabilized and basically plateaued since last summer began. Will this spring bring another increase in prices or has the market exhausted its appreciation momentum for now? We shall soon know. Note that chart numbers refer to January 2000 values designated as 100: 181 signifies home values 81% above that of January 2000.
This link goes to a chart looking at the past 18 years of home price appreciation, illustrating longer term cycles in real estate:
Case-Shiller Index since 1996
Inventory of Homes for Sale
One thing that has not changed in the market is the very low level of homes available to purchase. Historically, inventory usually surges in spring, declines somewhat during the summer, jumps again in autumn (September is typically the single month with the greatest number of new listings) and then plunges dramatically for the holidays and mid-winter. Agents and buyers are desperately hoping for a major surge of new inventory in the next couple months. Generally speaking, low inventory puts upward pressure on prices when buyer demand is healthy.This link looks at Months Supply of Inventory. While still very low — anything under 3 months is typically considered a Sellers’ market — it is climbing. The lower the MSI, the stronger buyer demand is as compared to the supply of homes available to buy, and the more likely prices are to rise.
Months Supply of Inventory
Updated Neighborhood Price Charts
We’ve updated long-term market value charts for several dozen San Francisco neighborhoods. This one is for Bernal Heights, a neighborhood which experienced feverish appreciation in 2013. This link below goes to the webpage containing all these neighborhood charts. Let us know if you can’t easily find one for the neighborhood or property type you’re most interested in.
SF Neighborhood Home Values
Mortgage Interest Rates
Confounding “expert” predictions once again, interest rates in the first week of February fell to their lowest point in almost 3 months, though they were still about 1 percentage point above the historic lows of one year ago. Interest rates play an enormous role in homeownership affordability, and the incredibly low rates of recent years have been a significant factor in the market recovery. They are expected to rise, but then they were expected to jump to 6% or more in 2010 and fell dramatically instead. Where they will go this year is one of the wild cards of the real estate market.
Unusual Spike in Condo Median Sales Price
January is not a high-sales quantity month as its sales mostly reflect accepted-offer activity in December, the slowest month of the year, and monthly median price data is not that reliable as it can fluctuate without great meaningfulness. However, an odd data point came up for median sales prices in January: The median price for SF houses dropped an insignificant amount, from $938,000 in the 4th quarter of 2013 to $928,000 in January (down from a brief spike to $976,000 in the 2nd quarter). However, the median sales price for SF condos made a very big leap from $835,000 in the 4th quarter to $927,500 in January, the highest monthly condo median price ever. Of the 144 January condo sales reported to MLS as of 2/8/14, 45 sold for $1,200,000 or more. This is an unusually high percentage of high-end condo sales, especially for a January — January 2013 had 19 such transactions — and is probably just one of the anomalies we sometimes see in monthly sales data. (We much prefer longer-term data.) We’ll have to watch what happens in future months.
One can never take for granted exactly what is going to happen next in the San Francisco real estate market.
Earlier this week, San Francisco was named the third least affordable major metropolitan area, behind only Vancouver and Hong Kong, according the globe Annual Demographia Housing Affordability Survey of 360 housing markets worldwide. Our market snapshot of Russian, Nob & Telegraph Hills and North Beach support that with the median sales price for a condo in Russian Hill at $1,300,000 in 2013 and average sales price at $1,612,000. Take a look:
No matter your price point, California really does have it all.
Source: Parascope Social
The November Case-Shiller Index report was released this week. Below are three looks at what has happened in Bay Area “high-tier-priced” houses (currently delineated as those selling for more than $801,000) since 2013 began, over the past 2 years – as the recovery really began in early 2012 – and since 1996, to show market cycles. Right now, ignoring small fluctuations up and down, home prices are basically continuing on the plateau they reached after the huge spring surge in appreciation.
Case-Shiller measures a 5-county metro area, not just the city of San Francisco. The numbers used relate to a January 2000 value of 100; thus 181 = 81% home price appreciation over the past 14 years.
2012 – 2013:
1996 – 2013:
Here’s a look at the average sales price, dollar per square foot and median house sales price beginning in 1995. Last year we saw records highs in all three categories, take a look: