The 2017 San Francisco Real Estate Wrap-Up: Data Sliced and Diced

2017 is a wrap, and it’s been another solid one for residential real estate in the City by the Bay.  For anyone so inclined you can read our full report —  complete with over 41 charts— here.  For those with less than a couple of hours to kill, I’ve sliced and diced the juiciest parts below.

Going Up

2017 was the seventh year in a row that the median price for a single family home in San Francisco increased.  It’s now over $1.4 million.  After taking a breather for the last couple of years, condominium prices also resumed their climb: their median price is $1.150 million.  Our data indicates that fourth quarter prices for both homes and condos are already above these figures.

While annual price increases for single family homes have slowed from the double digit increases we saw earlier in the recovery, at over 6% they are healthy by any measure.  With condos increasing at 5% over 2016, it will be interesting to see if they also continue upward or if they will lose steam again.  My guess is that it will depend very much on segment (luxury high-rise or not) and location.

City-wide, a single family home now averages nearly $1,000 per square foot and I would expect it to climb further (see below).  Condo prices, at a little above $1,000 per square foot, seem to be stuck in a range.

The Shrinking Part of the Pie:  Single Family Homes

The two charts below help explain the seemingly inexorable increase in single family home prices.  Simply put, they’re are a shrinking segment of sales, while condos have been an increasing segment since approximately 2012, when the boom in new condo construction really took off.  Note that the condo trend line in the second chart does NOT reflect condos offered for the first time directly by the developer, as these are not sold through the MLS database. If it did, the condo trend line would be significantly higher than shown for recent years.  We estimate that these direct-from-developer condo sales would add around 500 -700 units per year!

I’ll stick my neck out and wager that buying a single family home practically anywhere in San Francisco is going to be a good long-term investment.  This is a global city with all of the perquisites that pertain thereto.  Barring a cataclysm, natural or geopolitical, I think demand for this quintessential piece of American pie is going to outstrip supply for the foreseeable future.

(To read more about the long-term forces constraining supply, click here.)

Signs Point To another Robust Year

Regardless what you may think of The Man with Orange Hair, his ascendancy certainly has been accompanied by a continuation of robust economic growth and a record high stock market.  (Coincidence is not correlation!)  And while it’s difficult to guess what the net effect of the recently enacted tax reforms will be here in the Bay Area, I suspect that the people who can afford to buy here will continue to do so.

Months’ Supply of Inventory is probably the best overall indicator of the market.  The chart below shows that pretty much every segment showed some tightening of inventory after having loosened a bit (condos more than a bit) in the previous two years. 

A less objective indicator is all the construction and renovation I’m seeing as I tour the neighborhoods, not to mention all the people at open homes during the warm, dry week-ends we’ve been enjoying. 

All in all, I suspect it’s going to be another strong seller’s market in 2018.  That is, provided, the man with orange hair keeps his hat on.  Eat your carrots!

We Have a Winner!

And finally, a shout-out to Noah B., who correctly identified this image from my October 2017 newsletter as being the fairy shrine tucked into a tree stump on a walking trail through Glen Canyon.  (Glen Canyon, incidentally, was the site of first dynamite factory in the US, operating under license to none other than Sir Alfred Nobel. Until it blew up.) Noah wins a bottle of Dashe Cellars Dry Creek Zinfandel, awarded Double Gold by the SF Chronicle and 90 Points by Robert Parker.

As always, your questions, comments, and referrals are greatly appreciated.  If you like this newsletter, please consider forwarding it to people and “liking” RealDataSF on Facebook by clicking here.

Misha

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Homeless in the Bay Area

The weather is turning chilly.  While most of us were enjoying a surfeit of food with friends and family indoors last week, the Bay Area’s homeless were struggling to stay warm.  I’ve lived in this city for over 30 years, and the only other time I can think of when homelessness was this visible occurred during the mid-1990’s, before the dot com bust. Then, like now, the city was doing well.

It’s easy to avert our gaze from the tent encampments that gather under the freeways and along certain streets. Meanwhile, home prices are at record levels. Surely we can do better. Continue reading

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Winter: The Best Time of Year — for Buyers

I wanted to entitle this newsletter “Winter is Coming,” but decided that comparing buyers to the Dead Walkers might not go down well.  Besides, it’s buyers that have been getting the short end of the, um, spear for years now.  Prices really took off in 2012; with inventory relentlessly low (see my previous newsletter, it’s been a seller’s market ever since.

But everything slows down in winter.  There’s (even) less inventory, and buyers — being human — batten down the hatches from approximately Thanksgiving through early February.  Who wants to be out house-hunting when the weather’s turned cold and dreary? Besides, everyone is either preparing for or recovering from the Holidays.

Continue reading

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Here’s What’s Really Sustaining the San Francisco Real Estate Market

As I was getting ready to send out yet another newsletter showing further year over year gains in home prices(see first two charts below for single family homes and condos, respectively), I took a closer look at a chart that focuses on the supply side of the supply/demand equation.

August Median Sales Price

August Median Sales Price

“New Listings Coming On the Market”  is the simplest indicator of how many homes are being put up for sale in any given time period.  Take a look at the chart below, which tracks new listings (homes, condos, etc.) on a rolling 12 month basis. 

Continue reading

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Online Resources for Just About Anything You Want to Know about San Francisco Real Estate

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Let’s Talk about Taxes

First, a big thank you to everyone who responded to my RealDataSF Poll about how to make this newsletter better.  This month’s topic is a direct result of your input, as information about tax-related topics was among the top 3 subjects my readers wanted me to cover in addition to market news (the other two were investing in and renovating property).

Some other quick results: Continue reading

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The Cost of a Hot Economy in California: A Severe Housing Crisis

Today’s NY Times talks about the California housing affordability crisis and how the state is considering legislation to make it harder for opponents of developments to create roadblocks to projects that otherwise fit within a locality’s zoning laws. There’s finally a movement of “YMBY’s” That are saying “yes” to greater density – which is really the main issue – because they understand that sprawl is the enemy of the environment in so many ways. In San Francisco, that’s resulting in projects that, for example, don’t require parking for each unit – a recognition that younger buyers are abandoning cars in favor of car-sharing and public transport. Continue reading

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It’s Official: San Francisco Housing Market Reignites

In last month’s newsletter, I said that initial signs pointed to a newly robust Spring housing market after evidence that prices had flattened somewhat — especially for condominiums — in 2016. The data gathered through May confirms that conclusion.

The median house sales price jumped to $1,500,000, its highest point ever, about $100,000 (7%) above its previous monthly peak. The SF median condo sales price also hit a new peak at $1,200,000, $20,000 (1.7%) above its previous high. Continue reading

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Meet The Expert – ‘Everything You Wanted to Know About Buying a Home in San Francisco’

JUNE 08, 2017

(*But were afraid to ask!)

ABOUT THE TOPIC

Join Misha Weidman, J.D., Broker Associate and Attorney at Paragon Real Estate Group, for a lively and informative discussion about the essentials of buying a home in San Francisco. Here are just some of the questions he will address: Continue reading

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Spring Has Sprung Once Again in San Francisco’s Housing Market.

Between 2012 and 2015, the median price of a single family home in San Francisco increase by around 70% as we came out of the Great Financial Crisis. Condominium prices increased by around 55% during the same period.

San Francisco Home Price Appreciation

It’s not surprising, then, that the market took a breather and leveled off a bit during 2016. However, along with the return of warmer, dryer weather, buyers seem to be returning to the market in droves, and there is simply not enough inventory to meet demand. While it’s still a little too early to tell, our data suggests that things are heating up again. Continue reading

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