Happy Holidays

Here are some of my favorite photos from 2016: from a trip to Death Valley in February to see the super-bloom, and the rest from our family trip to Peru where we did the Inca Trail among other things. Somehow Luna the Wonderdog got in there too, carrying flowers home on 24th Street.

We’ll take a detailed look at 2016 when all the data is in early next year. Let me take this opportunity to wish you all a joyful 2017. And thank you all for your continued readership and positive feedback for this newsletter. Keep it coming!

~Misha

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The San Francisco Rental Market and Why It Matters

For starters, the most recent US Census Bureau estimate (2014) concludes that about 57% of San Francisco’s population are renters.  That’s reason enough, especially when housing affordability is perhaps the major social and economic challenge that San Francisco faces over the long-term.

Rent and Condo Conversion Control.  With strength in numbers comes political power: San Francisco’s Rent Control ordinance applies to the vast majority of San Francisco’s housing stock, regulating everything from the rental increases that landlord’s can charge to existing tenants to how much interest owners have to pay renters on their security deposits.  Other ordinances have severely restricted the ability of owners to “remove” units from the rental market by converting them to condominiums.  Regardless of whether you think these controls are a good or bad idea, they have created an incredibly complicated legal landscape.  Whether you’re a tenant or an aspiring landlord, it pays to know your rights.  Here’s my favorite cheat sheet, courtesy of the Law Firm of Bornstein & Bornstein.

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Home Prices:  Chicken and Egg.  Furthermore, the correlation between the price of renting and owning is well-known, as this fascinating article from the Economist  shows. All things being equal, high rental rates tend to make buying – for those who can – a more attractive option.  When rents fall, home prices may fall too due to less demand.  Conversely, high home prices may swell renter demand while falling home prices may entice more renters into buying.  Of course, other factors are at play too:  rents and home prices will fall if employment drops, interest rates increase, wages fall, etc.  This is a complicated “chicken and egg” cycle – my guess is that while we can say there’s a correlation, it’s probably impossible to say which comes first.
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Real Data SF April Newsletter

realdatasfAre Condos Cooling? Are Homes Still Hot?

Paragon’s April newsletter created quite a stir recently when it was misquoted in a Business Insider article to suggest that San Francisco’s condo market is heading for a bust. That, in turn, prompted cries of foul play by one of San Francisco’s leading condo developers – presumably because even the suggestion of a slowdown would not be good for business. (If you have an SF Chronicle subscription, you can read all about it here.)

Sensationalist headlines make good copy but misleading news. A fair reading of the newsletter suggests that there is increasing evidence of softness in the high-end condo market, represented most clearly by the glass towers of SOMA/South Beach, etc. Continue reading

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Special Report: Noe Valley Homes

NoeValleyMore High Priced Homes Than Any Other Neighborhood

While its homes may not generally be as grand as those of Pacific and Presidio Height or St. Francis Woods, no neighborhood in the city comes close to matching the number of $2 – $4 million sales that occur in Noe Valley and its environs. Admittedly, part of the reason is that the Noe Valley and surrounds is large geographically compared to those other neighborhoods, so you’d expect there simply to be more sales. But, as any one who has tried to buy a home in Noe Valley will tell you, homes here are expensive – period.
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El Niño Doesn’t Appear to Have Dampened the SF Housing Market

It happens every year. People decide that holiday parties, visiting with family, and staying dry are more important than visiting open houses on the week-end. Activity drops and often so do prices. But with the first glimmers of sunshine and longer days, buyers and sellers get back into the market and the home buying/selling season takes off.

And that seems to be exactly what’s happening this year, despite the lingering effects of El Niño and a bumpy stock market ride. Take a look at the chart below:

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The 2015 San Francisco Real Estate Wrap-Up

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Happy New Year everyone!  San Francisco residential real estate recorded another year of double-digit appreciation last year.  Our Chief Market Analyst has been busy slicing and dicing the data every which-way, and has created over 20 charts that serve up the market from soup to nuts (which, is exactly how some people view it!).  You can experience the full meal at Paragon Real Estate Group’s main website.  I’m doing the prix fixe menu here for those with less time and/or appetite.

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It’s Now a Buyers’ Market for Higher End Homes and Condos

“Months’ Supply of Inventory,” or MSI, shows the theoretical number of months needed to “absorb” available homes for sale in a given month based on the number of homes going into contract in a given month. The shorter the time period, the stronger the market for sellers, leading to upward pricing pressure.  Longer time periods indicate slower absorption and a buyers’ market.

The chart below illustrates the dramatic difference in MSI for homes up to the median price ($1.3 million for houses, $1.1 million for condos) and in the next price segment higher, versus the luxury home segment, defined here as houses selling for $2,000,000+ and condos for $1,500,000+. (By this definition, luxury sales currently make up about 20% of San Francisco’s home sales.)
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The Autumn SF Real Estate Market Survey: “We are neither blind optimists, nor inveterate pessimists….”

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Our Chief Market Analyst, Patrick Carlisle, was recently quoted in a Vanity Fair article in the same paragraph as renowned economist John Maynard Keynes. The subject, a perennial one these days: whether the Silicon Valley, which now indisputably extends north at least as far as the new Salesforce Tower at 415 Mission Street, is in a bubble that’s about to pop. Of course, Keynes is long-dead, but we at Paragon are lucky to have our own resident guru sifting the tea leaves.

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Cheat Sheets for (Almost) Everything You Wanted to Know About Rent Control, Owner Move-In Evictions, and Condo Conversion in San Francisco

“June Gloom” has arrived in San Francisco. We’re talking about the weather, not the housing market, though buyers may well continue to feel gloomy as the market shows no signs of letting up. Both condo and home prices continue to hit record highs, with the average home selling for 10% over the original asking price.

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There may be a typical summer slowdown (reflected in the trailing drop in third quarter numbers above) as the Continue reading

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