Archive for August 2019 | Monthly archive page

San Francisco Bay Area Real Estate Markets Survey

Note that it is not unusual for median home sales prices to peak for the calendar year in spring (Q2). This is due not only to heightened buyer demand, but also to the extreme seasonality of the luxury home market – more luxury home sales (as a percentage of total sales) pull overall median sales prices up.

Year-over-Year Median Home-Price Appreciation (or Depreciation) Rates

Markets in late 2017 through spring 2018 were very hot virtually throughout the Bay Area – perhaps the hottest they’ve been since 2000, the height of the dotcom boom. In the second half of 2018, markets cooled considerably – besides issues of simple affordability, financial markets saw nerve-wracking volatility and large declines, and interest rates jumped dramatically. Then, in 2019, stock markets recovered to hit new peaks and interest rates hit multi-year lows, and markets heated up again.

However, generally speaking, except for those markets most affected by the slew of local high-tech IPOs – San Francisco and the greater Oakland market – most markets saw either no significant year-over-year appreciation or year-over-year declines in median house sales prices. (Santa Cruz County bucked this trend.) The next major indicator of market direction will come from autumn selling season data: The season runs from early-mid September to early-mid November. Markets then typically go into the mid-winter holiday doldrums for a couple months.

Bay Area & California Long-Term Median House Price Trends

Median House Sales Price Trends by Bay Area County

Compound Annual Home Price Appreciation Rates

When calculating these rates, results can vary enormously depending on the year the calculation begins with. These start with the year 2000 – if we started with 1995 – prices rapidly appreciated between 1995 and 2000 – the rates would jump; if we began with 2007 – the height of the subprime boom – then the rates would drop. (The same issue exists with calculating stock market returns.)

These very approximate calculations do not reflect any of the tax benefits that have applied at various times to home ownership and to the sale of one’s primary residence. And they are based simply on the all-cash purchase price and the sales price, without adjusting for closing costs (or the effect of not paying all cash upon purchase).

Bay Area House & Lot Sizes

Bay Area Median Condo Values

Bay Area Median Dollar per Square Foot Values

Bay Area Luxury Home Markets

Median Sales Prices for Large Homes in Expensive Bay Area Markets

High-end home markets in outlying counties – the four with the lowest percentages in the chart below – have softened considerably, and would typically be considered to be in buyer’s market territory – much more supply than demand. This doesn’t mean, however, that some luxury homes there don’t sell quickly at excellent prices. It does mean that many luxury homes don’t sell without price reductions, or don’t sell at all.

In many ways, average dollar per square foot values give a better indication of what one actually gets for one’s dollar in different counties.

Bay Area & U.S. Home Prices, Appreciation Trends & Affordability

The next chart illustrates the dramatic divergence since 2012 between Bay Area home price appreciation – supercharged by the high-tech boom – and the national trend line.

Median 3-Bedroom Home Sales Prices around the Country

Active Listings on the Market

Home Sales Volumes

Bay Area Home Sales by Price Segment

Bay Area Real Estate Market Indicators

Below are a wide variety of standard market statistics broken out by county or region to illustrate respective market conditions, as well as overall trend lines to illustrate the general market direction and the effect of seasonality on supply and demand.

Looking just at 2019 YTD stats, the greater Oakland-Berkeley market has been the strongest in the Bay Area. In San Francisco, the picture is muddied a little by the fact that the city’s house and condo markets have somewhat different dynamics: New-condo construction has increased supply in that segment, while the supply of house listings has declined markedly since 2010, making houses the scarce resource in a high-demand environment.

Price Reductions & Listings Expiring without Selling

San Francisco Bay Area Median House Sales Prices by City

Bay Area Median List Rents

Selected Economic & Demographic Factors

Behind the real estate boom is the stupendous boom in hiring, specifically in the high-tech fields.

Migration & Population Trends

Housing Affordability in the San Francisco Bay Area

Home Prices, Appreciation & Ownership Costs; Affordability Percentages, Household Incomes, Interest Rates, Rents & Homelessness. August 2019 Report – including 30 illustrative charts.

Housing affordability may be the largest social and political issue in the Bay Area, and the effects of low affordability also greatly impact the general economic picture in a wide variety of important ways – from hiring and business relocation, to the ability of “normal working people” (not enriched by the high-tech boom) to live here. Significant demographic shifts are also taking place as some groups move out and others move in.

Generally speaking, affordability percentages – the percentage of county households who could afford to purchase a median-priced house – ticked up in Q2 2019 as compared to Q2 2018: Median home sales prices were relatively stable year-over-year – some counties up a bit, some down a bit, some the same – but interest rates dropped very significantly over the 12 month period. However, affordability percentages remain low by historical standards – and the Bay Area typically has among the lowest in the nation.

Note: Counties contain cities, and cities contain neighborhoods of varying values, market conditions and trends.

Calculations on affordability percentages, home payments and household incomes are based upon the California Association of Realtors Housing Affordability Index, measuring the percentage of county households able to afford to buy a median priced house with a 20% down-payment at prevailing mortgage interest rates.

The next 2 charts are excerpted from the very in-depth report, “Bay Area Homelessness: A Regional View of a Regional Crisis” put out by Bay Area Council Economic Institute, published April 2019.

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

San Francisco Real Estate August 2019 Report

Sales & Values by District and Price Segment, Special Circumstance Sales, Market Seasonality, the Luxury Home Market & Foreign Buyers. The May Case-Shiller Home Price Index was released in late July for the 5-county SF metro area. This chart illustrates the difference in appreciation rates between the Bay Area (higher price markets) and the entire country. Case-Shiller does not use median sales prices but its own algorithm to calculate appreciation. January 2000 home price = 100; 250 = a home price 150% above that of Jan. 2000.

Needless to say, there are many factors behind home sales and values in different communities. Home size is one of them, and median sales prices are not apples to apples comparisons: For example, in Pacific Heights, the average house size is over 4000 square feet, while in Sunnyside, it runs about 1500 square feet.

Note that it is not uncommon for median sales prices to peak for the year in Q2.

Market Dynamics by Realtor District

Q2 is commonly the hottest market of the calendar year, and the statistics below generally reflect a very strong spring 2019 market.

Home Sales by Price Range

Of homes selling for under $1,000,000, over 80% were condos, co-ops and TICs, and most of those were smaller units.

Tenants, Fixer-Uppers, Homes without Parking, Homes with Golden Gate Bridge Views

Market Seasonality: The Autumn Spike,
Then the Winter Doldrums

Though spring is the biggest overall selling season in San Francisco, the single month with the highest number of new listings is typically September. This big surge fuels the relatively short autumn selling season – highlighted by the dramatic spike in sales in October. In November, activity begins to plunge for the mid-winter holidays – though homes continue to sell in every season.

Seasonality: New Listings by Month

New Listings – Long-Term Trends,
12-Month Rolling Figures

Seasonality: Listings Going into Contract
by Month

Higher-Price Home Sales

The central greater Noe-Eureka-Cole Valleys district now has the highest number of home sales over $2 million, but the northern Pacific Heights-Cow Hollow district dominates sales of $5 million and above.

The SF luxury home market is even more dramatically driven by seasonality than the general market. September often sees a tremendous burst of new listings. October is sometimes the single month with the most luxury house sales.

Long-Term Appreciation Trends by District

Though prices vary, appreciation trend lines since the recovery began in 2012 are often relatively similar.

In the next chart, we combine house sales across the swathe of older, prestige neighborhoods that run across the north of the city – generally speaking, a region of larger houses and higher prices. (Putting them on the chart above would flatten the other trend lines due to issues of scale.) None of these neighborhoods have that many sales – and some have very, very few – so we combine them to increase statistical reliability. Though they are all high-price, prices do vary considerably between them.

Median Two-Bedroom Condo Prices
by Realtor District

There is significantly less variation in condo prices in most of the neighborhoods of SF than there is with houses. Much of this has to do with all the new construction that has occurred in the last 20 years. Probably the greatest differences in condo values are between those on lower floors and those on higher floors of new luxury high-rises.

Percentage of Sales Selling for Over List Price
by Property Type

Median Percentage of Sales Price to List Price
by Property Type

Foreign National Home Buying Tumbles

According to a new report by the National Association of Realtors – based on a survey of its member agents – the purchase of U.S. homes by foreign nationals plunged in the 12 months through March 2019. The drop was particularly steep for Chinese nationals, for whom California (and the Bay Area, in particular) has been the top destination.

Stock Market Hits New High

The last 12 months have been an extremely dramatic time for financial markets as illustrated below. The alternating confidence and fear generated by its swings have been considerable factors in Bay Area real estate markets. A parallel dynamic has occurred with the swings in interest rates.

The spring burst in high-tech IPOs in San Francisco also played a role in the heat of the Q2 market.