Market Conditions

New Case-Shiller: Bay Area Home Prices Tick Up a Little

After the feverish spring 2014 market, home prices in the high-price tier – which applies best to San Francisco and Marin counties – flattened and then ticked down a little, while more affordable home segments continued to tick up: It’s not unusual for the market to cool off and plateau during the summer months. The October 2014 Case-Shiller Index just released (on December 30), begins to reflect the autumn selling season, which starts after Labor Day: The market typically begins to heat up again in autumn. (Note that transactions negotiated in September generally start closing in October.)

According to the newest Index, all Bay Area home price segments ticked up in October by about 1%, plus or minus depending on segment. Note that small monthly fluctuations are not particularly meaningful until substantiated over a longer term.

This chart tracks the high-tier-price market since the recovery began in 2012 using Case-Shiller data. The C-S numbers refer to a January 2000 value of “100”, thus 198 signifies a value 98% higher than that of January 2000.

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This chart below looks at the last 3 market cycles:

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And this chart show median San Francisco house and condo sales prices by quarter (reflecting sales reported by 12/26/14, so it contains newer data than Case-Shiller):

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San Francisco New Construction/Development Report

Highlights from the Q3 2014 Pipeline Report by the SF Planning Department

December 2014, compiled by Paragon Real Estate Group

On December 19th, the San Francisco Planning Department issued its excellent Q3 2014 Pipeline Report, which tracks new residential and commercial development in the city. There is a wealth of data within its 36 pages: Below is simply an excerpt of some highlights.

The Pipeline includes projects in every stage of the approvals, permits and construction process, and being listed in the pipeline doesn’t indicate when or even if the project will be completed. Changes and additions to the pipeline occur on an ongoing basis: Indeed, it seems rarely a day goes by nowadays without a big new project being announced. Last but not least, changes in economic and political circumstances can suddenly and dramatically impact new development plans and construction.

  • 50,600 residential units are in the current pipeline, including condos, houses and apartments, as well as affordable and social-project housing. Houses constitute far less than 1% of the total units. (There are currently approximately 381,000 housing units in San Francisco, per 2013 U.S. Census data.)
  • 18,700,000 square feet of commercial space are in the pipeline, including office, retail, medical, hotel, cultural, institutional and educational uses. 12 million of the square footage in the pipeline are for office use. (As of 2013, there were approximately 75.6 million square feet of office space in the city.)
  • 3090 residential units and 280,000 square feet of commercial space have been added in the past 4 quarters. “The median time to completion for these projects from the first filing was 43 months.” For smaller projects of less than 10,000 square feet, the median time dropped to 30 months.
  • 6700 new residential units and 5,400,000 square feet of commercial space are currently under construction.
  • Approximately 25,800 of the pipeline’s residential units are comprised of the Bayview/Hunter’s Point/Candlestick, Park Merced and Treasure Island projects. “Full realization of the projects will be decades into the future.” The Bayview/Candlestick and Treasure Island developments are situated on parcels designated as “Public Land.”
  • Not counting the 3 big projects mentioned above, the great majority of both residential and commercial pipeline projects are currently clustered in the greater South Beach/South of Market/Mission Bay area, the Market Street corridor, the Potrero Hill/Dogpatch area, and the Mission.
  • Approximately 800,000 square feet of manufacturing, distribution and repair use space would be lost in the course of existing pipeline development, to be replaced by housing or other commercial uses.

The full Planning Department Pipeline Report can be downloaded here. There’s also a nifty interactive map illustrating projects in the pipeline. Our sincere gratitude to Aksel Olsen and Teresa Ojeda of the SF Planning Department for compiling this useful and comprehensive report.


The first and third charts below come straight from the Planning Department Pipeline Report. We created the two district-breakdown charts to separate out residential and commercial projects and to reflect more common neighborhood and district names as used in the real estate business (but even then, the names should be considered gross generalizations). And we added a snapshot of the Planning Department map to give an idea of the number of development projects in the city.

This snapshot from the interactive map on the Planning Department’s Pipeline report webpage indicates current projects in the greater South Beach/South of Market/Mission Bay district, Hayes Valley and the Market Street corridor.


*All information included herein is from sources deemed reliable, but may contain errors and is subject to revision.

New Case-Shiller Index Report

The Case-Shiller Index for September was released today. Note that it will mostly reflect sales negotiated in August or before, during the slower summer sales season. (The next Index, published in late December, will begin to reflect transactions negotiated in September and the start of the autumn sales season.) These 2 charts pertain to the upper third of sales for 5 Bay Area counties – upper third by price range. The majority of home sales in San Francisco, Marin and San Mateo are in this upper price tier.

As noted in recent Paragon reports, after the feverish market and home price appreciation of spring 2014, home values in the higher-end neighborhoods typically flattened or ticked down a bit, while more affordable homes generally continued to tick up in price.

Short-term fluctuations are not particularly meaningful until confirmed over the longer term, since markets fluctuate for a variety of reasons including seasonality.

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August Case-Shiller Index Report

The August Case-Shiller Index report released today showed a small home price decline for the 5 counties of the SF Metro Area. Autumn’s numbers will give us a clearer indication as to whether this is the beginning of a flattening or declining price trend or simply the not untypical indication of a summer adjustment from the spring frenzy. PDFs are attached.

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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

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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.

House_Unit-Sales_by-District

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.

Condo-Unit-Sales_by-District

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.

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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.

SP-OP_All-SF-Sales_by-Month

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.

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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

Employment_SF-by-year

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.

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Freshly updated map of what’s going up around town

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

http://www.parascopesf.com/development-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.

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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:

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Longer-term overview of real estate cycles:

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New Case-Shiller report: new jump in Bay Area home prices

The new S&P Case-Shiller Home Price Index for April 2014 came out today and it showed another bump in home prices for the 5-county San Francisco Metro Statistical Area. For homes in the upper tier of home values – as most of San Francisco’s are – prices are up approximately 17% in the past 12 months and up 41% since the recovery began in early 2012. 

Based upon what we are seeing on the ground in the market, we expect another bump in the May Index, which will come out at the end of July.

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New Case Shiller Index

The new February S&P Case-Shiller Index for high-price-tier homes in the 5-county San Francisco Metro Area increased almost 1% from the January reading. This puts the Index up about 20% over the past 12 months, and up about 34% since the recovery began in earnest in early 2012. Based upon what we are seeing in the market, I expect another increase in the March Index. (The Case-Shiller Index is published 2 months after the month specified.)

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New Case-Shiller report: SF Metro Area bumps up again

While the nation as a whole saw a tiny decrease in the S&P Case-Shiller Home Price index in the January report released today, the San Francisco Metro Area Index (for 5 northern counties) bumped up again. The C-S Index for higher priced houses has now completely re-attained the previous market peak set in 2006, as measured by January data points. The city of San Francisco itself has exceeded the rise in the 5-county area and has generally surpassed previous peak values – many SF neighborhoods by substantial margins.

Based upon what we are seeing on the ground, we expect to see further increases once the late winter/early spring selling season is reflected in the Index.

This first chart shows market cycles over the past 30 plus years. The second chart shows appreciation since our current market recovery began.

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This chart tracks the most recent market recovery which began in earnest in early 2012. In both 2012 and 2013, the spring seasons saw substantial jumps in home values. We recently thought the likelihood of yet another significant jump in 2014 to be relatively low, but the market we’re seeing on the ground – a very high demand/very low supply dynamic – is leading us to suspect otherwise.

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Case-Shiller measures a 5-county metro area comprised of San Francisco, San Mateo, Marin, Alameda and Contra Costa counties. The numbers used relate to a January 2000 value of 100; thus 184 signifies 84% home price appreciation over the past 14 years. The Index is published 2 months after the latest monthly reading, i.e. the January Index has just been published today, March 25th.

The full report can be found online here.