Santa Clara Q2 Real Estate Market – Compass

Santa Clara County saw a rebound in buyer demand, luxury home sales and in median home sales prices in Q2, assisted by stock markets hitting new peaks and interest rates falling to multi-year lows. However, its market remains distinctly cooler than the white-hot period running from late 2017 through mid-2018 – when it was perhaps the hottest metro market in the country, seeing stupendous year-over-year appreciation rates.

Median Home Sales Prices

Home Sales by Property Type & Bedroom Count

Luxury Home Sales

Within the Bay Area, Santa Clara County still has the highest number of home sales at prices of $3 million and above, but they are down from the peak sales volume hit in Q2 2018.

Selected Supply & Demand Statistics

In the next series of market trend charts, generally speaking, one can see the rebound in demand during the spring selling season, but also the general softening of the market that has occurred over the past year.

Overpricing: Negative Effects for Sellers
& Opportunities for Buyers

We performed longer-term analyses of the effects of overpricing – as indicated by the need for price reductions before the property sold – on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also very substantial differences in the average dollar per square value realized upon sale.

So, overpricing lowers values for sellers, which also signifies opportunities for buyers who keep an eye out for price reductions and react accordingly.

Mortgage Interest Rates Drop to Multi-Year Lows

San Francisco Bay Area Home Prices by City, Town & Selected City Neighborhoods

An interesting 2019 so far: Stock markets have hit new peaks; interest rates hit multi-year lows; the SF unemployment rate dropped to a historic low; Bay Area unicorn IPOs have rolled out one after the other; SF residential and office rents have ticked up; and SF median house and condo prices hit new peaks in Q2.

In the 2-4 unit market, as seen below, some of the market indicators were somewhat mixed, but overall, SF saw a strong spring market.

Though this report focuses primarily on San Francisco’s 2-4 residential unit market, it will sometimes pull in data from other Bay Area counties to add further context.

12 Months Sales Reviews

Sales Breakdown by Number of Units

Sales Breakdown by Building Square Footage

Annual Trends in Values
with Year-to-Date Updates

Partial year data should be considered preliminary until full year data is in.

Legislative Update – New Limitations on Selling 3+ Unit Residential Buildings

SF has enacted a new law called the Community Opportunity to Purchase Act (COPA) impacting Sellers listing or selling buildings with 3+ residential units and lots zoned for 3+ units. It is designed to provide certain “Qualified Nonprofit Organizations” (QNOs) preemptive opportunities to purchase such properties. AS of 9/3/19, Sellers of such properties will have to provide formal notice to these organizations of their decision to sell before they solicit offers or place such properties on the market.

COPA applies to SF multi-family residential buildings on which (1) 3+ residential units exist, including mixed use properties; (2) lots on which 3+ residential units are under construction; and (3) vacant lots on which 3+ residential units could be built. By September 3, 2019, the Mayor’s Office of Housing and Community Development plans to publish the list of QNOs and to issued rules pertinent to implementing COPA. Buyers and sellers having any questions should consult a qualified San Francisco real estate attorney. Your agent can provide you with a more detailed outline and list of FAQs which the SF Association of Realtors has created.

Selected Supply & Demand Statistics

Average & Median Rent Rate Statistics

Long-Term Trends in Mortgage Interest Rates

Demographic Snapshots

Market Share by Broker

San Mateo Real Estate Q2 Report – Compass

High stock markets, low interest rates, surging luxury home sales, a spring full of local IPOs, and San Mateo County hit a new high in median house sales price (by a nose).

July 2019 Report

San Mateo County real estate saw a strong Q2 market, though, generally speaking, not quite as competitive as the white-hot market in the first half of 2018. The median house sales price bounced back up to slightly exceed the previous peak in Q2 2018, and thus return to positive year-over-year appreciation after the small decline in Q1 2019.

The luxury home market was very strong – the stand out segment – surging to dramatic new highs in sales volumes this spring, mirroring a similar dynamic in San Francisco.

The market typically begins to slow down for summer after the spring selling season ends, though homes certainly continue to sell.

Median Home Prices

San Mateo Luxury Home Sales

Selected Supply & Demand Statistics

Sales volume jumped back up from its mid-winter nadir, but remained somewhat lower than volumes seen in the previous 2 springs.

The next four charts generally indicate solid buyer demand in Q2, but also illustrate the differences between this past spring and the extremely heated demand seen from spring 2017 through spring/early summer 2018.

Overpricing: Negative Ramifications for Sellers
& Opportunities for Buyers

We performed longer-term analyses of the effects of overpricing – as indicated by the need for price reductions before the property sold – on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also very substantial differences in the average dollar per square value realized upon sale – and the hotter the market, the larger the percentage decline in dollar per square foot value that accompanied price reductions. This is almost certainly due to missing out completely on the sales-price-enhancing effects of overbidding.

So, overpricing typically lowers values for sellers, which also signifies opportunities for buyers who keep their eyes open for price reductions and react accordingly.

Mortgage Interest Rates Hit Multi-Year Lows

A Critical Dynamic in Affordability & Buyer Demand

San Francisco Median Home Prices Hit New Peaks – Compass Q2 Market Report

High stock markets, low interest rates, surging luxury home sales, limited inventory, a spring full of unicorn IPOs, and San Francisco – once again -hits new highs in median home sales prices.

July 2019 Update

After 2 quarters of no or negative year-over-year home price appreciation, a confluence of positive economic factors sent San Francisco median home sales prices to new peaks in Q2. On a quarterly basis, the median house sales price hit $1,700,000 – $80,000 above the previous peak in Q2 2018 – powered by a monthly high of $1,770,000 achieved in June. For condos, the new quarterly median price peak was $1,250,00 – slightly above last year’s $1,235,000 – fueled by a new monthly high of $1,300,000 in June.

The market typically slows down significantly in San Francisco for the summer holidays through August before picking up again in September for a busy, though relatively short autumn selling season running through mid-November.

Median Home Sales Price Trends

Sales & Prices by Property Type & Bedroom Count

Average Dollar per Square Foot Analyses

San Francisco Luxury Home Sales
Hit New Peaks in Q2 2019

The first chart below breaks out luxury homes as defined by houses selling for $3 million and above, and condos, co-ops and TICs selling for $2 million or more.

The second chart looks at all home sales of $5 million plus.

Selected Supply & Demand Statistics

Average days on market – all sales (chart 1), then broken out by property type and price segment (chart 2). Changing a pattern seen in recent years, Q2 2019 often saw the strongest buyer demand in higher price segments, instead of the more affordable price ranges.

Sales price to original list price percentages by property type and price segment – these statistics generally mirror those seen above in the days on market analysis. Some of these percentages are stupendously high, reflecting torrid bidding competitions between buyers for appealing new listings.

Percentage of Listings Accepting Offers
(i.e. Going into Contract)

Percentage of Active Listings
with 1 or More Price Reductions

The effect of over-pricing – as signified by price reductions prior to sale – on the average sales price to list price percentage, average days on market, and average dollar per square foot values.

Mortgage Interest Rate Trends since 1981

San Francisco Bay Area Home Prices
by City, Town & Selected City Neighborhoods

June U.S. Jobs Report: Continued strength lowers expectations of Fed cut in July


  • As all eyes are on the Federal Reserve andtheir anticipated actions in the upcoming July, September and Decembermeetings, including President Trump’s. This monthly job report has become oneof the most observed monthly economic indicators. Consequently, strength inJune’s hiring suggests some analysts may have rushed to push for a case ofcutting the interest rates.
  • However, while the markets have beenaggressive in trying to drive Federal Reserve’s actions, Federal Reserve is ina precarious position at the moment. Fed Chair Powell has suggested thatdeteriorating inflation expectations and slowing global growth may provide acase for cutting the rates, though the Fed does not want to appear to be bowingto short-term political interests. Further, premature rate cuts may leaveFederal Reserve with fewer tools when the economy indeed hits the brake. Analystsare sticking with the 25 basis points cut expectation for the July FOMCmeeting.
  • In terms of housing, however, it is not clearhow much further decline in rates would boost the demand. The 30-year fixed mortgage rates have beenoscillating about 70 to 100 basis points below this time last year, but thenumber of homes sold in California still trends below last year.
  • In looking at the BLS report, the unemploymentrate inched up to 3.7 percent as 2019 graduates and summer workers entered thelabor force. Consequently, wage growth also also posted a relatively weakermonthly growth of 0.2 percent though it is still up 3.1 percent from last year.Again, these numbers suggest that there is a little risk of inflation which isactually one of the primary reasons Federal Reserve would cut the rate as theyare concerned with lack of inflationary pressures amid lowest unemployment ratein the last 50 years.
  • Further, while the rate of job growth hasgenerally slowed from last year, as anticipated, it’s not very clear if tradeuncertainty has started to weigh on key trade-related sectors, such as manufacturingand transportation & warehousing, which added a combined 41,000 jobs, an uptickfrom the trend in the last few months. However, while trade uncertainty is likelyto weigh most heavily on investment spending, uncertainty in general is neverseen as a positive when comes to businesses’ hiring plans.
  • Notable gains continue in professional and businessservices which added 51,000 jobs, and health care, up 35,000 jobs, while retailcontinued on the losing streak with a 5,800-jobs cut in June.
  • According to a new CompTIAreport, the information-technology sector added 13,500 jobs in June, withsolid gains in technology services, custom software development and computersystems design, up 7,200 jobs, and computer and electronics productsmanufacturing, up 6,500. The bulk of the new hiring in manufacturing occurredin two areas, electronic instruments and semiconductors and electroniccomponents. Software and application developers continue to be the mostin-demand occupation companies are looking to hire, with 83,700 job postings inJune.


California on track for longest job expansion in recorded history


  • California added 19,400 jobs in May bringing theunemployment rate down to 4.2 percent, according to the latestreport from the state Employment Development Department. The lowestunemployment rate, 4.1 percent, was seen in second half of 2018.
  • Current job growth is at a 111-month expansion —the second-longest since 113-month expansion of 1960s.
  • With 282,700 jobs added over the last year, the1.6 percent pace of employment growth lines up with the growth rate nationally.Still, California’s 19,400 jobs gain accounted for a lion’s share of nationalmonthly job growth, contributing 26 percent.
  • While the state’s unemployment rate declinedslightly in May, the driver is unfortunately declining labor force whichdeclined by 49,800 in May, following a 51,800 decline in April. On an annualbasis, labor force showed only a small improvement of 136,400 or 0.7 percentgrowth.
  • In May, 7 out of 11 industries added jobs, withlargest gain in construction (12,800), suggesting increase in new homeconstruction. The second largest gain was in leisure and hospitality, up 4,500jobs, and government, up 1,800 jobs. In annual comparison, there is arelatively consistent growth in education health services followed byprofessional and business services, and a loss in financial services.
  • Regionally, Los Angeles continued with thelargest job gains adding 8,200 between April and May, with gains largely inleisure and hospitality, a seasonal gain that also reflects the strength of thearea’s tourism industry. Employment services reflected another large gain, up4,600 jobs. Within construction’s gains, the largest relative increase wasamong building finishing contractors, up 4 percent over the month, and 15.2percent over the year. Information sectors, mostly driven by motion picture andsound recording, showed the largest monthly declines, while finance andinsurance have seen the largest overall annual declines, down 3,400 jobs intotal year-over-year. The region’s employment growth over the year remainsfocused in health care and social assistance, which account for about 30percent of the growth.
  • In the Bay Area, gains were broad based acrossthe regions, and most regions saw the unemployment rate decline again fallingbelow the year-ago bottom. In San Francisco-San Mateo region, up 7,100 jobs, monthlygains were led by accommodation and food services, construction, and financialservices, with a loss in private education and health services. Over the year,the region gained 44,900 jobs.
  • In Santa Clara-San Benito region, up 4,900 jobs,gains were also led by leisure and hospitality as summer seasonal hiring kickedin. The region also saw strong gains in information and professional services.Over the year, job gains in information and computer and electronic productmanufacturing suggests the area continues to be a big draw for tech innovation.
  • Alameda and Contra Costa counties added 6,100jobs in April, with construction’s specialty trade contractors leading thegain. Over the year, the area added 19,100 jobs with over a third in healthcare and social assistance, followed by a similar gain in professional andbusiness services
  • In Marin, Napa and Sonoma counties, unemploymentrate also declined dropping to lowest rates since May 2018. However, fallingunemployment rates are due to declining labor force which was down 0.6 percentin Sonoma year-over-year, down 1.2 percent in Napa, and mostly flat inMarin.
  • Figure 1 summarizes annual changes inemployment, number of jobs added in high-income sectors, and the share of totaljobs that were high income jobs by region.
  • Column titled Percent in High Income Sectorsillustrates how many of the jobs added in each region were in high incomesectors, which include financial activities, professional and businessservices, and information sector. In San Francisco and San Jose metropolitanareas, about 50 percent of job growth is in high-income sectors which contrastnotably other regions, particularly Los Angeles where the diverse economy stillhasn’t gained traction with higher-income employment growth.

Figure 1


East Bay Area includes Alameda and Contra Costa counties

Los Angeles includes Los Angeles County

San Francisco incudes San Francisco, Marin, and San Mateo counties

San Jose includes Santa Clara and San Benito counties


Plenty of Bay Area buyers, but why are they hesitant?



Executive Summary:

  • While April’s momentum is slightly slower inMay, May sales are still only 2 percent below last year’s highs afterdouble-digit declines earlier in the year.
  • Home sales momentum remains solid in East Bay.Napa sales finally jumped 6 percent after a 6-month losing streak, averaging 20percent annual declines.
  • Affordable sales picked up again with sales ofhomes priced below $1 million up 3 percent year-over-year, the first two-monthconsecutive annual increase in the last four years.
  • For-sale inventory growth is slowing after thewinter jump with homes averaging seven days longer on the market.
  • San-Francisco continues to see significantinventory declines with May down 19 percent YOY (four months of declinesaveraging 20 percent).
  • Buyer competition picks up again with 58 percentof homes selling over the asking price.
  • Bay Area housing market correction resembles “TableTop” with prices remaining flat, compared to “Mountain Top” seenin the last cycle when prices fell significantly following the peak.

Following a solid improvement in the Bay Area housing marketsin April, May homes sales activity continued with the momentum, albeit slower.Total home sales were 2 percent below last May, following April’s upwardlyrevised 1 percent year-over-year decline. The rate of declines has slowedconsiderably after double-digit declines seen in the first few months of 2019. Takingthe first five months of the year together, sales are 5 percent below lastyear.

However, while declines continue to be driven by slowersales in Santa Clara and San Mateo, East Bay home sales are keeping themomentum. Napa sales jumped 6 percent after a 6-month losing streak, averaging20 percent annual declines. San Francisco, the spotlight of expectations aroundIPO impacts, remained relatively flat with last year, down 1 percent, thoughSan Francisco sales peaked last May at the highest numbers of May sales in atleast the last four years. Overall, most all markets except Sonoma sawimprovement in sales in at least one price range. Table 1 summarizesyear-over-year changes in the number of homes sold by price range.

Table 1

Source: Source: Terradatum, Inc. from data provided by local MLSes,June 7, 2019

As noted in last month’s analysis, the most encouragingimprovement considering Bay Area’s affordability concerns is the increase insales of homes priced below $1 million, which showed its first two-monthconsecutive annual increase in the last four years. Figure 1 illustrates thetrend of year-over-year changes in home sales by price range.  As Table 1 suggests, the increase in lowerpriced sales is mostly driven by East Bay, but also Santa Clara where lowerpriced sales have been increasing since the beginning of the year after dropsaveraging 40+ percent in 2018.  Incontrast, San Mateo, San Francisco and Marin continued to see declines in lowerpriced sales as that inventory has largely disappeared – for example, in thethree regions, less than a third of homes available for sale are priced below$1 million.

Figure 1 Year-over-year change in the number of homes sold

Source: Source: Terradatum, Inc. from data provided by local MLSes,June 7, 2019

The increase in lower priced homes has been helped byraising inventories of lower price ranges. Figure 2 traces out the trends ininventory growth over the last couple of years. Currently, available inventorylevels are on average 15 percent above last year with inventories priced over$3 million continuing to increase at a relatively faster pace, followed byincrease in inventory priced between $1 million and $2 million. Inventory ofhomes below $1 million has slowed from the winter jump, but still remain atdouble-digit growth. Nevertheless, while inventory growth is steady, it’slargely due to homes taking longer on the market rather than new listings becomingavailable. The rate of new listings has fallen significantly since the winterjump, particularly for lower priced homes. To see the aging of for-sale inventories,Table 2 summarizes average days on market for homes that were still availablefor sale on May 31.  On average, currentinventory has been on the market for 47 days, or at least 7 days longer thanlast.

Figure 2 Year-over-year change in number of homes for sale by price range

Source: Source: Terradatum, Inc. from data provided by local MLSes,June 7, 2019

Table 2

Source: Source: Terradatum, Inc. from data provided by local MLSes,June 7, 2019

Furthermore, while buyer competition is not at the samelevel as last summer, when housing market activity peaked, it continues to rampup from slower start to 2019. Seasonally, buyer competition peaks in May with thehighest rate of homes selling over the asking price in a given year. This May,almost 6 in 10 homes sold over the asking price, which is below the last threeyears when about 7 to 8 in 10 homes sold over the asking price, but stillsuggest solid buyer demand. Figure 3 illustrates the trend in the share ofhomes selling over the asking price. Regionally, the difference from last Mayhas been smallest in San Francisco, where 72 percent of homes are still sellingover the asking price, down from 75 percent last May. The most notable declinein buyer competition remains in Santa Clara where 56 percent of homes areselling over the asking price, down from 89 percent.

Figure 3 Share of homes selling over the asking price

Source: Source: Terradatum, Inc. from data provided by local MLSes,June 7, 2019

As noted in the last month’s analysis, San Francisco’shousing market resilience remains further evident in absorption rates ofavailable inventory, which is up 8 percent points compared to last May and isthe only area where absorption rate has increased on an annual basis. Granted,San Francisco is also the only region where inventory continues to decline,down 19 percent in May. This brings us to the question around the impact of recentand anticipated IPOs. While it doesn’t appear that San Francisco housing isbubbling out of control, it is difficult to say where it would be in thecounterfactual. In other words, would the market currently be worse off orsimilar to where it is if it wasn’t for the IPO expectations?

In the least, it is clear that the strength of the Bay Area economy and continued job growth is driving solid demand from buyers across the region, both for affordably priced homes as well as higher-priced homes. And while the number of sales is lower than last year, it is important to keep in mind that last summer housing market activity peaked, and current conditions are suggesting leveling off or normalization of those unsustainable trends, particularly in areas in Silicon Valley or post-fire Sonoma. Further, buyers, may are holding off fearing that housing market correction is inevitable and are waiting for sellers to yield further and lower their expectations. And while recent softening of price growth suggest correction is under way, it is unlikely that it will be the correction that we saw in the last housing cycle. Credit conditions are significantly different than in the last cycle. The current housing boom was driven by exceptionally solid underwriting and significant share of all-cash purchases, coupled with almost negligible new construction growth, both of which suggest that the correction path is looking notably different. In the Pacific Union Real Estate Economic Forecast 2020. “Table Top” is unlike the “Mountain Peak” seen during the last housing cycle in 2004 to 2017 when home prices rapidly declined as much as 60 percent following the peak.

Figure 4  John Burns Home Value Index

Source: Pacific Union International Real Estate Economic Forecast, San Francisco Bay Area to 2020


Compass May 2019 Bay Area Real Estate Update

While overall Bay Area pace of sales in May still trends 2 percent below last year’s levels,some regions are starting to see sales pace pick up ahead of last year. Sales below $1 million are up for the second month in a row after more than 20 months of annual declines.


At $1.3 million, May median sales price in Contra Costa County retrieved from the previous month’s high, but still continues to trend ahead of last summer. Days on market continued to trend lower with homes selling as fast as they did at the same time last year, averaging 18 days on the market. See Contra Costa County market statistics for May.

Defining Contra Costa County: Our real estate markets in Contra Costa County include the cities of Alamo, Blackhawk,Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San Ramon, andWalnut Creek. Sales data in the adjoining chart includes single-family homes in these communities.


While retrieving slightly from the previous month’s peak, median home prices in the East Bay in May remained ahead of last year, at $1.2 million. The pace of sales activity also picked up again with homes selling on average in 17 days, only a day longer than the 16-day average seen last spring. See East Bay market statistics for May.

Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609,94610, 94611, 94618, 94619, and 94705; Alameda; Albany; Berkeley; El Cerrito;Kensington; and Piedmont. Sales data in the adjoining chart includes single-family homes in these communities.


At $1.45 million in May, Marin County median home prices continued the recent trend of monthly increases but still fall slightly short of last May. Pace of sales also picked up slightly from previous months though taking a few days longer at the same time last year. See Marin County market statistics for May.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera,Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the adjoining chart includes single-family homes in these communities.


After a slow winter season, Napa County‘s May median sales price picked up pace again and increased 2.8 percent above last year, to a median of $725,000. Homes continued to sell at a faster pace, averaging 56 days before entering into a contract, only 2 days longer than last May. See Napa County market statistics for May.

Defining Napa County: Our real estate markets in Napa County include the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the adjoining chart includes all single-family homes in Napa County.


Median home prices for single-family homes continued with a strong upward trend, bringing San Francisco‘s May median prices to $1,697,500. Number of homes under contract also continued to accelerate with almost 50 percent of homes available for sale being under contract. See San Francisco single-family-home market statistics for May.


At $1,250,000 median sales price, San Francisco condominiums trended only slightly below last year’s median price mostly reflecting the change in types of units being sold. Buyer activity remains strong and the share of units under contract picked up again, up 8.1 percent points year-over-year to 37.7 percent. See San Francisco condominium market statistics for May.


Silicon Valley median prices picked up in recent months and reached $3,350,000 in May, 1.5 percent ahead of last May. Buyers otherwise remain more restrained than last year, taking longer to decide to purchase, leading to an average of 27 days on market. See Silicon Valley market statistics for May.

Defining Silicon Valley: Our real estate markets in Silicon Valley include the cities and towns of Atherton, LosAltos (excluding county area), Los Altos Hills, Menlo Park (excluding east ofU.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the adjoining chart includes all single-family homes in these communities.

Mid-Peninsula Subregion

The median sales price in the Mid-Peninsula continued to trend lower in May compared to last year. Homes under contract were down 6.3 percent with average days on market 10 days slower. See Mid-Peninsula market statistics for May.

Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion include the cities of Burlingame(excluding Ingold Millsdale Industrial Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore Cavanaugh area). Sales data in the adjoining chart includes all single-family homes in these communities.


Sonoma County’s median homes prices continued their monthly increase after some bumpy winter months reaching $665,000 in May, or 4.4 percent below last year. Pace of home sales also continues to improve averaging 54 days in May, 9 days more than last year. See Sonoma County market statistics for May.

Defining Sonoma County: Sales data in the adjoining chart includes all single-family homes and farms and ranches in Sonoma County.


Median home prices in Sonoma Valley picked up in May after relatively flat at the beginning of the year, reaching $905,000. The pace of home sales also improved notably bringing the average days on market to 45 days. See Sonoma Valley market statistics for May.

Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the adjoining chart refers to all residential properties– including single-family homes, condominiums, and farms and ranches – in these communities.


Median prices of single-family homes in Lake Tahoe/Truckee has been oscillating over the last year and reached almost $727,000 in May, down 2.1 percent from last year. Pace of sales has slowed somewhat averaging 75 days, 13 days more than last year. See Lake Tahoe/Truckee single-family-home market statistics for May.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities of Alpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, NorthShore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee,and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes single-family homes in these communities.


Median home prices of condominiums in Lake Tahoe/Truckee has trended slightly lower in recent months bringing the May median sales price to $423,500, about 1.4 percent below last year. The pace of condominium sales has slowed more significantly, averaging 104 days in May, though these sales vary considerably throughout the year. See Lake Tahoe/Truckee condominium market statistics for May.

Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region include the communities ofAlpine Meadows, Donner Lake, Donner Summit, Lahontan, Martis Valley, NorthShore Lake Tahoe, Northstar, Squaw Valley, Tahoe City, Tahoe Donner, Truckee,and the West Shore of Lake Tahoe. Sales data in the adjoining chart includes condominiums in these communities.


30+ Years of Housing Market Cycles in the San Francisco Bay Area

Below is a look at the past 30+ years of San Francisco Bay Area real estate boom and bust cycles. Financial-market cycles have been around for hundreds of years, from the Dutch tulip mania of the 1600’s through today’s speculative frenzy in digital-currencies. While future cycles will vary in their details, the causes, effects and trend lines are often quite similar. Looking at cycles gives us more context to how the market works over time and where it may be going — much more than dwelling in the immediacy of the present with excitable pronouncements of “The market’s crashing and won’t recover in our lifetimes!” or “The market’s crazy hot and the only place it can go is up!”

Note: Most of these charts generally apply to higher-priced Bay Area housing markets, such as those found in much of San Francisco, Marin, Central Contra Costa (Lamorinda & Diablo Valley) and San Mateo Counties. (Different market price segments had bubbles, crashes – or adjustments – and recoveries of differing magnitudes in the last cycle, which is addressed at the end of this report.)

Regardless of how recent cycles have played out, it is vital to understand how extremely difficult it is to predict when different parts of a cycle will begin or end. Case in point: In late 2015, when financial markets entered into a period of volatility, IPO activity stopped in its tracks, and high-tech hiring slowed, a well-respected Berkeley economist prophesied there would soon be “blood in the streets” of San Francisco: Median SF house prices have gone up over 20% since then. Boom times can go on much longer than expected, or get second winds. Even when the financial markets enter a period of “irrational exuberance,” that period can go on longer than seems possible, with huge jumps in home and/or stock values.

On the other hand, negative shocks can appear with startling suddenness, triggered by unexpected economic, political or even ecological events that hammer confidence. This leads to other market dominoes falling, the reversal of positive trends in growth, investment and employment, which then balloons into a period of decline, recession, stagnation. These negative adjustments can be of varying scale, in the nature of a crash or bubble popping, the slow deflation of an over-pumped football, or a combination of the two.

Going back thousands or even tens of thousands of years, human beings have tried to predict the future, and whether using priests, oracles, astrologers, pundits, economists, analysts or “experts” of every stripe – and currently having their “authoritative” forecasts headlined every day in the media – we show no aptitude as a species for having the ability to do so with any accuracy. We can’t even remember the mistakes of the recent past – which is one reason why we don’t seem to be able to escape cycles – much less foretell what’s going to happen tomorrow.

Confidence plays an enormous role in financial and real estate markets, and in every period of irrational exuberance, there are many who vociferously argue that the exuberance is NOT irrational. Unfortunately, it can be very challenging to determine the point at which rational confidence shifts into irrational exuberance, but when irrational exuberance abruptly shifts into fear, a stampede for the exits can follow – as an old English saying puts it: “They run all away, and cry, ‘the devil take the hindmost’.” In retrospect, the duration of periods of irrational exuberance, when market gains often accelerate into the stratosphere, seems utterly incomprehensible. Such are the pleasures of hindsight.

All the major recessions in the Bay Area in recent decades have been tied to national or international economic crises, which can take a wide variety of forms. Absent a natural disaster, it is unlikely that a sudden, major, negative, market adjustment (or “crash”) would occur due simply to local issues. However, local issues could certainly lead to less dramatic market adjustments, or exacerbate a downturn caused by a macro-economic event. The SF earthquake of 1989 intensified the national recession that began at that time; our greater exposure to dotcom start-ups did the same with the national dotcom-bubble/Nasdaq crash.

Market Cycles: Simplified Overviews
Up, Down, Flat, Up, Down, Flat…(Repeat)

The chart below graphs ups and downs by percentage changes in home prices at each turning point.

Smoothing out the bumps delivers the simplified overview above for the past 30 years.

Whatever the phase of the cycle, up or down, while it is going on people think it will last forever. Going up, “The world is different now, the rules have changed, and there’s no reason why the up-cycle can’t continue indefinitely.” And then when the market turns and goes down: “Homeownership has always been a terrible investment and the market probably won’t recover for decades” (or even “in our lifetimes” as one Nobel-Prize-winning economist said in 2012). But the economy mends, the population grows, people start families, inflation builds up over the years, and repressed demand of those who want to own their own homes builds up. In the early eighties, mid-nineties and in 2012, after about 4 years of a recessionary housing market, this repressed demand jumped back in (or “explodes” might be a good description) and prices started to rise again. (The dotcom bubble adjustment caused no lasting recession in home values.)

The nature of cycles is to keep turning.

All bubbles are ultimately based on irrational exuberance, runaway greed, criminal behavior or, not uncommonly, all three mashed together. Whether exemplified by junk bonds, stock market hysteria, gorging on untenable levels of debt, a corporate ponzi-scheme mentality, an abandonment of reasonable risk assessment, and/or incomprehensible or dishonest financial engineering, the bubble is relentlessly pumped bigger and tighter. And since human beings appear utterly unable or unwilling to learn the lessons of past cycles, it is kind of like the movie “Groundhog Day,” except that in the movie at least, Bill Murray actually grew wiser over time.

The 2008 crash was truly abnormal in its scale, and much greater than other downturns going back to the Great Depression. The 2005-2007 bubble was fueled by home buying and refinancing with unaffordable amounts of debt on a staggering level, promoted by predatory lending practices, promises of endless appreciation, and an abysmal decline in underwriting standards – and then eagerly facilitated by smug, rapacious, Wall Street flimflammery and self-abasing credit ratings agencies. Millions came to own homes they could never afford to pay for and the rot was distributed throughout the financial system. The market adjustments of the early 1990’s and early-2000’s saw declines in Bay Area home values in the range of 10% to 11%, which were bad enough, but nothing compared to the terrible 2008 – 2011 declines of 20% to 60%.

This is important context when contemplating the next adjustment: It doesn’t have to be a devastating crash. It can be more like some air being let out of an over-pressurized tire instead of a blowout on the highway at high speed. It depends on many different factors.

This Recovery vs. Previous Recoveries

The gold columns above chart the appreciation of past recoveries from the beginning of the recovery to peak value for each cycle (except for the latest cycle, for which the peak has not yet been defined), and the red bars delineate the percentage declines from those peaks, pursuant to the market adjustments that occurred. As always, note that market appreciation and depreciation rates can vary widely by county, community and neighborhood.

Over the past 30+ years, the period between a recovery beginning and a bubble popping (or a lesser adjustment occurring) has run 5 to 7 years. We are currently about 5 years into the current recovery, which started in early 2012 (in San Francisco; later in outlying Bay Area counties). Periods of market recession/doldrums following the popping of a bubble have typically lasted about 3-4 years. (The 2001 dotcom bubble/ 9-11 crisis drop being the exception.) Generally speaking, within about 2-3 years of a new recovery commencing, previous peak values (i.e. those at the height of the previous bubble) are re-attained — among other reasons, there is the recapture of inflation during the doldrums years. In this current recovery, those homes hit hardest by the subprime loan crisis — typically housing at the lowest end of the price scale in the less affluent neighborhoods, which experienced by far the biggest bubble and biggest crash — are appreciating quickly now, and just beginning to re-attain previous peak values. However, communities with higher priced homes — such as in San Francisco, Marin, San Mateo and Central Contra Costa Counties (Diablo Valley & Lamorinda) — have surged well past their previous peaks.

This does not mean that these recently recurring time periods necessarily reflect some natural law in housing market cycles, or that they can be relied upon to predict the future. Real estate markets can be affected by a bewildering number of local, national and international economic, political and even natural-event factors that are exceedingly difficult or even impossible to predict with any accuracy.

As long as one doesn’t have to sell during a down cycle, Bay Area homeownership has almost always been a good or even spectacular investment (though admittedly if one does have to sell at the bottom of the market, the results can be very painful). This is due to the ability to finance one’s purchase (and refinance when rates drop), tax benefits, the gradual pay-off of the mortgage (the “forced savings” effect), inflation and long-term appreciation trends. The best way to overcome cycles is to buy a home for the longer term, one whose monthly cost is readily affordable for you, ideally using a long-term, fixed-rate loan.

In the 2 charts below tracking the S&P Case-Shiller Home Price Index for the 5-County San Francisco Metro Area, the data points refer to home values as a percentage of those in January 2000. January 2000 equals 100 on the trend line: 66 means prices were 34% below those in January 2000; 250 signifies prices 150% higher.

1983 through 1995
(After Recession) Boom, Decline, Doldrums

In the above chart, the country is just coming out of the late seventies, early eighties recession featuring terrible inflation, stagnant economy (“stagflation”) and incredibly high interest rates (hitting 18%). As the economy recovered, the housing market started to appreciate and this surge in values began to accelerate deeper into the decade. Over 6 years, the market appreciated about 100%. Finally, the late eighties “Greed is good!” version of irrational exuberance — junk bonds, stock market swindles, the Savings & Loan implosion, as well as the late 1989 earthquake here in the Bay Area — ended the party.

Recession arrived, home prices sank about 11%, sales activity plunged and the market stayed basically flat for 4 to 5 years. Still, even after the decline, home values were 70% higher than when the boom began in 1984.

1996 to Present
(After Recession) Boom, Bubble, Crash, Doldrums, Recovery

This next cycle looks similar but elongated. In 1996, after years of recession, the market suddenly took off and continued to accelerate til 2001. The dotcom bubble pop and September 2001 attacks created a market hiccup (a short-term 10% decline, but only for high-price tier houses, and for condos), but then the subprime and refinance insanity, degraded loan underwriting standards, mortgage securitization, and claims that real estate values never decline, super-charged a housing bubble. Overall, from 1996 to 2006/2008, the market went through an astounding period of appreciation. (Different areas hit peak values at times from 2006 to early 2008.) The air started to go out of some markets in 2006-2007, and in September 2008 came the financial markets crash.

Across the country, home values typically fell 20% to 60%, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco, with relatively few foreclosures, got off comparatively lightly with declines in the 15% to 25% range. The least affluent areas got hammered hardest by distressed sales and price declines; the most affluent were usually least affected. Then the market stayed flat for about 4 years, albeit with a few short-term fluctuations. Tied to a rapidly recovering economy, supply and demand dynamics began to significantly change in San Francisco in mid-2011, leading to the market recovery of 2012.

The Recovery since 2012 (per Case-Shiller)

This chart above looks specifically at home price appreciation since 2012 when the current market recovery began. Generally speaking, the spring selling seasons have seen the most dramatic surges in appreciation. It’s not unusual for appreciation to slow or flatten in the second half of the year.

Short-Term Changes – last 13 to 14 months

Short-Term Trends by Price Segment (Tier)

In late 2015 and 2016, the greatest pressure of buyer demand started moving to more affordable home segments, as seen in this following chart. In summer 2018, trends started to change, trending down. Then in early 2019, they started to spike up again.

The Panorama: From the late 1980’s to Present
S&P Case-Shiller Index, 5-County SF Metro Area

In the chart below showing percentage year-over-year changes, each January percentage change mostly reflects the market in the previous year, i.e. the January 2002 percentage decline reflects the change in 2001 after the dotcom bubble popped.

Comparing San Francisco vs. United States
Home Price Appreciation Trends since 1987

Really quite similar except for the 1989 earthquake, the dotcom phenomenon, and the recent Bay Area high-tech boom. Of course, the huge difference is in the median house sales prices: The city’s is now over 5 times higher than the national median price.

San Francisco Median Sales Price Appreciation

The charts below look at median sales price movements in San Francisco County itself over the shorter and longer terms. These do not correlate exactly with Case-Shiller – firstly because C-S tracks a “metro area” of 5 Bay Area counties, and secondly, because C-S uses its own proprietary algorithm and not median sales prices. Median sales prices are often affected by other factors besides changes in fair market value (such as significant changes in the distressed, luxury and new-construction market segments; seasonality; buyer profile; and so on).

The Current Recovery: 2012 – Present

In 2011, San Francisco began to show signs of perking up. An improving economy, soaring rents, low interest rates and growing buyer demand coupled with a low inventory of listings began to put upward pressure on prices. In 2012, as in 1996, the market abruptly grew frenzied with competitive bidding. The city’s affluent neighborhoods led the recovery, and those considered particularly desirable by newly wealthy, high-tech workers showed the largest gains. However, virtually the entire city soon followed to experience similar rapid price appreciation.

San Francisco median home sales prices increased dramatically in 2012, 2013, 2014, and then again in the first half of 2015. In 2016, the SF market clearly cooled compared to the competitive frenzies of previous spring selling seasons, but in 2017 and so far, in early 2018, the market came roaring back again for perhaps its hottest market since 2000. In summer 2018, things cooled down significantly through the end of the year – this coincided with extremely volatile stock markets and sharply rising interest rates. The spring 2019 has been strong, but not as hot as spring 2018. So far, as of April 2019, median prices have not surpassed the highs hit in 2018.

Median Sales Price Changes – Longer-Term: 1993 – Present

Comparing San Francisco, California & National
Median Price Appreciation

Since 2012, San Francisco has been out-performing the overall state and national markets.

San Francisco Rents

Besides, home prices, home rental rates are major indicators of what is occurring with housing costs and the local economy. If anything, rents have appreciated even more extremely than home prices in San Francisco (and other areas of the Bay Area) – and, of course, renters get no advantages from low interest rates, multiple tax deductions and advantages, or home-price appreciation over time. One classic indicator of an overpriced home market is when prices outpace rents. Recent changes to federal income tax laws limiting the deductibility of state and local taxes (such as property taxes) has played a part in changing the balance between the two.

It’s interesting to note that SF rents actually dropped much further after the dotcom bubble burst than after the 2008 financial markets crash, though the latter was a much more destructive economic event. It suggests that local rents may be more affected by the simple ebb and flow of high-tech hiring and employment than by other macro-economic issues, such as stock market changes. If one loses one’s job and the likelihood of finding another in the area plunges, it may be an immediate imperative to move to a less expensive rental area (pressuring rents lower); if one’s net worth plunges with a stock market crash, one may no longer afford to buy a home (pressuring home prices lower). This is an oversimplification, but may still go some ways to explaining the different scale of reaction by purchase and rental markets to different macro-economic events.

After peaking in 2015, the SF rental market definitely cooled in 2016, with supply increasing significantly with new construction, demand softening (as the high-tech boom temporarily cooled), and rents beginning to decline, especially at the high end. SF asking rents dropped around 8 – 10% from their peaks in 2015. In 2018, some signs of recovery showed up.

Consumer Confidence

The monthly fluctuations in consumer confidence reported on in the media are relatively meaningless and without context, but longer-term movements are much more meaningful to overall economic trends. Psychology – confidence, optimism, fear, pessimism – often plays a huge role in financial and real estate markets. And events can sometimes turn consumer confidence one way or another very rapidly, whether such movements are rational or not. Generally speaking, pessimism is bad for the economy, confidence and optimism are good, and over-confidence – sometimes called irrational exuberance – is dangerous. It can be hard to draw the line between where confidence moves into irrational exuberance.

Mortgage Interest Rates since 1981

It’s much harder to decipher any cycles in 30-year mortgage rates. Rates remain very low by any historical measure, but have risen since the 2016 election. Interest rates play a huge role in the ongoing cost of homeownership (affordability) and the real estate market. The substantial decline in interest rates since 2007 has in effect subsidized much of the price increases that have occurred since 2011.

Employment Trends

Real estate market cycles have a symbiotic relationship to other economic cycles, such as illustrated in the employment chart above.

Housing Affordability Index (HAI) Cycles, 1991 – Present
for San Francisco & Bay Area, per CA Association of Realtors

Unsurprisingly, there is a reverse correlation between the trend lines for housing affordability rates and those of real estate price cycles (above). HAI rates jump higher in market recessions, peaking at the bottom of the market, and then decline as the market recovers, bottoming out when peak prices are hit. The lowest Bay Area housing affordability housing index rates (probably in history) were hit in 2007 right before the 2008 market crash (subsidized by buyers taking out loans they could not afford). The Bay Area overall is still above those lows in its current recovery.

The 2008 San Francisco Bay Area real estate crash was not caused just by a local affordability crisis: It was triggered by macro-economic events in financial markets which affected real estate markets across the country. It is important to note that in the past (certainly going back at least 50 years), major corrections to Bay Area home prices did not occur in isolation, but parallel to national economic events (though the 1989 earthquake, which occurred just before the national recession began, certainly exacerbated the local downturn). Ongoing speculation on local bubbles (and predictions of awful upcoming local crashes) often neglect to remember this.

Still, dwindling affordability is certainly a symptom of overheating, of a market being pushed perhaps too high. Looking at the charts above, it is interesting to note that the markets of all Bay Area counties hit similar and historic lows at previous market peaks in 2006-2007, i.e. the pressure that began in the San Francisco market spread out to pressurize surrounding markets until all the areas bottomed out in affordability. This suggests that one factor or symptom of a correction, is not just a feverish San Francisco market, but that buyers cannot find affordable options anywhere in the area. We are certainly seeing that radiating pressure on home prices occurring now, starting in San Francisco and San Mateo (Silicon Valley) and surging out to all points of the compass.

Significant increases in mortgage interest rates – as happened in the second half of 2018 (before then subsiding again in 2019) – affect affordability quickly and dramatically, as interest rates along with, of course, housing prices and household incomes, play the dominant roles in this calculation.

Different Bay Area Market Segments:
Different Bubbles, Crashes & Recoveries

The comparison composite chart dramatically illustrates the radically different market movements of different Bay Area housing price segments since 2000. Farther below are updated individual price charts for each price segment.

Again, all numbers in the Case-Shiller chart relate to a January 2000 value of 100: A reading of 220 signifies a home value 120% above that of January 2000. The chart above illustrate how different market segments in the 5-county SF metro area had bubbles, crashes and now recoveries of enormously different magnitudes, mostly depending on the impact of subprime lending. The lower the price range, the bigger the bubble and crash. In the city itself, where many of our home sales would constitute an ultra-high price segment, if Case-Shiller broke it out, many of our neighborhoods have risen to new peak values. Updated C-S charts for each price segment are below.

Since mid-2016, the low-price tier has begun taking the lead in home price appreciation.

Updated Case-Shiller Price-Tier Charts
Low-Price Tier Homes

Huge subprime bubble (170% appreciation, 2000 – 2006) & huge crash
(60% decline, 2008 – 2011). Strong recovery, now slightly above previous peak.

Mid-Price Tier Homes

Smaller bubble (119% appreciation, 2000 – 2006) and crash (42% decline)
than low-price tier. Strong recovery has put it significantly over its 2006 peak.

It is interesting to note that the low and mid-price house tiers basically shrugged off the dotcom bubble popping in 2001, while the high-price house tier and condos (and apartment rents) saw significant declines. This is another example of how difficult it can be to make big, general pronouncements regarding the entire Bay Area market.

High-Price Tier Homes

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

Bay Area Condo Values

Other Compass San Francisco Bay Area real estate reports with market conditions, trends, home prices and appreciation rates: 

Santa Clara County Real Estate June 2019 Market Report

Buyer Demand Strengthens, Median Home Prices Rise, but Conditions Still Cooler & Prices Lower Than in  White-Hot Market of Spring 2018.

Median House Sales Prices
Long-Term Trends

Year-over-Year, March-May Comparisons

Santa Clara Luxury Home Sales

The luxury home market is fiercely seasonal with sales volume typically peaking in May or June – remember that one month’s sales typically reflect accepted offers in the previous month. By any standard except a comparison with spring 2018’s market, luxury home sales in spring 2019 have been strong – however, as referenced in the table above and the chart below, they are well down year over year.

Median Home Price Changes
in Selected County Markets

Comparing annual median home prices to partial year prices is not really an apples-to-apples comparison because of the effect of market seasonality on sales prices, but the below analysis is still an interesting indicator: In almost all of the markets below, year-to-date prices have ticked down. However, full-year 2019 median home prices may be significantly different than the year-to-date figures.

Median House Sales Prices by City
& Bedroom Count

Click here to go to our updated map of Bay Area median house prices.

Selected Market Indicators

Selected Economic & Demographic Snapshots

This next chart graphs unemployment rates from 1990 through January 2019. By April 2019, they had typically fallen another half percentage point.

Bay Area housing affordability – the percentage of county households that could afford to buy a median priced house with a 20% down-payment – ticked up in Q1 2019 due to the significant drop in interest rates, and in Santa Clara County, a year-over-year decline in median house sales price. But affordability is still very, very low compared to state and national standards.

In the Bay Area, the counties most affected by the high-tech hiring boom – San Francisco, Alameda, Santa Clara & San Mateo – have the highest percentages of population in the 25-34 age group, i.e. of millennials.

Of Bay Area counties, Santa Clara has the lowest percentage of 1-person households, and the highest percentage of households with 4 or more residents.