3rd Quarter 2014 Market Report

San Francisco House & Condo Values

Which Neighborhoods Dominate Home Sales?

Who Is Buying the City’s Luxury Condos and Why?

September saw the largest surge of new listings coming on market in the past 2 years, which led to a big jump in deal-making, but data on transactions negotiated in September won’t be available until most close escrow in October and early November. In the meantime, we’ll look at the last 2 quarters.

Median Sales Prices
& Average Dollar per Square Foot

The following 2 charts look at current and longer-term trends in home values. As is common, median house sales prices dropped a bit in the 3rd quarter – this is due mostly to seasonality issues – though condos have held steady for 3 quarters now at $950,000. Dollar per square foot values have continued to increase to new peaks: This metric is particularly being impacted by new-development condo sales, which are breaking dollar per square foot records virtually everyplace they’re being built.
If you wish to drill down on values in very specific city neighborhoods, we recently updated our interactive map, which can be found here: SF Home Price Map



Where Home Sales Occur at What Prices

These 2 charts illustrate where the greatest quantity of house and condo sales occur in San Francisco. House sales are dominated by the districts running along the southwest and south borders of the city, from Sunset-Parkside down to Ingleside and across to Excelsior, Portola and Bayview. These areas are also among the most affordable in the city. With 25% of sales, the South Beach-SoMa-Mission Bay district has the biggest concentration of condo sales: Virtually the only place where high-rise, high-density projects can be built in the city, the latest to begin selling is the ultra-luxury, 656-unit Lumina development. Realtor district 5, the greater Noe-Eureka-Cole Valleys area, sees a large number of both house and condo sales: This area has appreciated ferociously since the early 1990’s.

Note that the median sales prices delineated on these charts combine neighborhoods of differing values and are generalities for the larger areas described.


Besides the neighborhoods in the chart above, the Lake Street, Sea Cliff and Jordan Park area had 35 house sales in the past year and a median sales price of $3,000,000 over the past six months, and Potrero Hill had 34 house sales and a median price of $1,460,000.


Who Is Buying San Francisco’s Luxury Condos & Why?

A report just published by 48HillsOnline analyzed the SF Assessor’s Office owner mailing records for 23 condo buildings comprising 5212 units, most built in the last 10 years and/or qualifying for the description “luxury real estate.” It found that 39% of owner mailing addresses were not those of the property, with percentages over 50% for ultra-prestige buildings such as the St. Regis, Four Seasons and Millennium – some of the most expensive real estate west of Manhattan. The article’s basic thesis is that building condos for the rich to use as second or third homes does virtually nothing to alleviate the city’s shortage of housing. Without agreeing with their conclusion, the analysis does confirm an interesting insight, i.e. the city is increasingly becoming a destination for wealth, as well as a location for the creation of new wealth.

As to the article’s anti-development case: First of all, 61% of owners appear to be owner-occupiers – working professionals, empty nesters, famous ballplayers and so on – and are clearly helping to address local home-buyer demand. Of the 39% with different mailing addresses, there may be a number of explanations: 1) units are indeed being used as second homes or pied e terres by the ultra-affluent who like to visit the city (and spend money in the local economy), 2) the units are being used as investments by local or, often, foreign buyers: to buy and hold, as long-term rental properties (which help alleviate the housing shortage), or as short-term Airbnb type rentals (which don’t), and 3) units are being occupied by dependents, such as children attending college. It’s also possible some mailing addresses are for services handling financial matters for owners.

Additionally, it’s true that developers of these condo projects, under city law, must build a certain number of affordable housing units or contribute funds to do so. Last but not least, the sale and ownership of these high-end condos contribute huge sums to the county’s transfer tax and property tax revenues, which help support city services.


Home Listings Selling over Asking Price

Average Days on Market

This next chart illustrates three points: 1) the remarkable heat of the city’s real estate market as buyers bid up home prices, 2) how seasonality impacts demand – with spring and autumn being the big, highest-demand, selling seasons, and 3) because of supply issues, the SF house market is somewhat hotter than the condo market (though it too, by any standard, is very hot).

Remember that because of the time lag between listings coming on market and offers negotiated, and the actual close of escrow – upon which these statistics are based – September’s market is not reflected on these charts.


Days on market statistics still indicate a high-demand market and, again, that the house market is a bit hotter than those for condos and TICs. New condo development is helping to meet buyer demand, while new house construction barely exists in San Francisco. TIC sales, whose numbers have been dwindling in recent years, are impacted by a number of legal, political and financing issues.


San Francisco Employment

We recently illustrated our report on the main factors behind our market, charting employment, seen below, city population, city rents, interest rates and the S&P 500. Taken together, one clearly perceives the inter-connectedness between them and with SF home price trends as well. The full report, with all the new charts, is here: 10 Factors behind the Market


Neighborhood Snapshots

If you’d like information on home-value trends for other property types or other neighborhoods than shown below, please let us know. We cover all of them.




From our NorCal network : The Artisan Group


2700 Claremont Blvd
Berkeley, CA 94705
Offered at $1,650,000

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

Freshly updated map of what’s going up around town


Interested in what’s happening with new developments in San Francisco? Click the link below to view the interactive map…


Source : Parascopesf.com

Case-Shiller sees small drop in Bay Area home prices in July – 3 charts included

The S&P Case-Shiller Home Price Index for July 2014 was released today, and indicated a small – less than 1% – dip in high-price-tier houses. (The Case-Shiller aggregate Index for all Bay Area home price tiers dropped even less, about 4 tenths of a percent.)

For the past 3 years, home prices have surged in the spring and then plateaued during the summer. It is too early to speculate whether home prices are trending down a bit after the spring market frenzy, which is certainly possible. For any definitive sense of home price trends, we will have to wait until the autumn-selling season numbers are in. Autumn this year began with a big surge in the number of new listings in September.

Remember that the C-S Index covers not just San Francisco, but 4 other Bay Area counties and is a 3-month rolling average. San Francisco makes up a very small part of all the house sales being surveyed by the Index and C-S home prices reflect offers negotiated in previous months – thus the June 2014 peak reflects the heat of the market in the heart of the spring 2014 selling season.

The last 13 months, July to July:

The small dip in July 2014 from the spring peak can be seen. Small fluctuations up and down are not particularly meaningful until substantiated by longer term data.

Since the recovery began in earnest in early 2012.

One can see the two previous summer price plateaus (and, now perhaps the beginning of a third) after spring surges:

Longer-term overview of real estate cycles:


From our NorCal network : The Artisan Group


2950 Trinity Road
Glen Ellen, CA
Offered at $1,695,000

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

From our NorCal network : The Artisan Group


333 Corrie Place, Alamo
Offered at $7,499,000

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

From our NorCal network : The Artisan Group


687 Tyner
Incline Village, 89451
Offered at $1,950,000

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

Autumn Selling Season Begins & New Listings Surge in San Francisco

Coming out of the summer slowdown, the last big sales season of the year runs from early September to mid-November (when the market usually retreats into semi-hibernation until mid-January). September is typically the single month with the highest number of new listings and this year, it started out with a bang: 300 new listings hit the market in the first week after Labor Day. As a point of comparison, May, the biggest new-listing month YTD, had a total of 720.

A list of San Francisco’s most recent listings can be found here, easily sortable by neighborhood, property type and price: New Home Listings

This year’s summer slowdown was bigger than usual: Compared to 2013, the number of listings coming on market dropped 12% and the number of sales fell 16% – these are large drops. Median sales prices also declined significantly from the spring peak, but summer price drops are normal due to seasonal factors. We’ve found it difficult and risky to make confident assessments of market trends during the summer or winter holiday slowdowns: One really has to see what happens in spring and autumn when sellers and buyers jump back in.

San Francisco, California & United States Markets


This chart compares Months Supply of Inventory (MSI) – a measurement of buyer demand against the supply of homes for sale; median Days on Market (DOM) – how quickly new listings go into contract; and median home sales prices, for the city, state and country. Typically, an MSI under 3 to 4 months is considered a seller’s market; at an average of 1.5 months of inventory over the summer, San Francisco would typically be considered an extreme seller’s market (which puts upward pressure on prices). San Francisco’s median days-on-market figure is also extraordinarily low, and of course, our home prices are significantly higher than most places on the planet.

Not shown on the chart, but another dramatic indicator of market conditions: Over the last 3 months the average SF home sale closed for 7% over the original asking price. (It hit 10% in May at the height of the spring frenzy.)

10 Factors behind the San Francisco Real Estate Market


San Francisco Home Sales by Property Type & Price Range



Unlike the vast majority of other counties, condos and condo-like homes such as co-ops and TICs now predominate in the SF homes market, a trend that will only accelerate as dozens of (expensive) new-condo projects come on line in coming years. The difference in median sales prices between houses and condos has also narrowed to less than 12% – when condos used to be the significantly cheaper alternative. Condos also play a huge role in luxury home sales, often selling for the highest dollar per square foot figures in the city. TIC sales, almost an exclusively SF phenomenon, have been dwindling, but now sometimes command prices in excess of $1,500,000.

The relatively small quantity – and declining percentage of sales – of house listings in San Francisco has put significant competitive pressure on house prices. This effect has been cascading through the city’s neighborhoods, from most desirable to historically less desirable, as families search for affordable options in a rapidly appreciating market. Very, very few new houses are being built in the city and those that are, are typically very costly.


Seasonality & the SF Real Estate Market



In August we completed an analysis of how seasonality affects inventory, buyer demand and median sales prices. These 2 charts illustrate its effect on listings accepting offers and prices. Please note that other factors besides changes in values can affect median price fluctuations. For the complete report: Seasonality & Real Estate


San Francisco Neighborhood Home Prices


We recently issued our semi-annual breakdown of San Francisco home sales by neighborhood, property type and bedroom count. This table is for 3-bedroom houses. For our complete analysis (8 tables): SF Neighborhood Values

For our updated map of home values around the Bay Area: Bay Area Map


Selected Neighborhood Snapshots

Long-term Trends in San Francisco Home Values




From our NorCal network : The Artisan Group


167 Arends Drive
Danville, CA, 94506
Offered at $1,829,900

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

From our NorCal network : The Artisan Group


1657 Via Romero
Alamo, CA
Offered at $2,449,950

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