Back in February 2021, the august NY Times veritably crowed “They Can’t Leave the Bay Area Fast Enough,” citing nothing less than “the end of a tech era.” I was skeptical. The Bay Area’s demise as a tech and people magnet had been predicted many times before. So I’ll confess to a certain amount of relish at being proven correct when, just a couple of weeks ago, the self-same paper announced that “tech workers who swore off the Bay Area are coming back.” That would be obvious to anyone who has been driving Bay Area highways since mid-June.
Back in February, when I posted my last newsletter, it was already clear that much of the Bay Area real estate market, including San Francisco, had held up quite well during the pandemic. The sole exception were condominiums, and especially those concentrated in downtown and South of Market high-rises, where a number of factors contributed to something of a sell-off: lack of outdoor space for socializing; the closure of bars, restaurants, and gyms; and the ability of many young tech workers to work remotely. Recent data shows that all segments of the market have only continued to improve since then.
There’s a lot of information to cover, so I’m breaking this newsletter into two parts. The first will focus on single family homes; the second, which I’ll send out it in a couple of weeks, will cover condominiums.
Houses on Fire (Figuratively Speaking)
Prices barely budged downward during the pandemic from their previous high in Q2 2019 of ~$1.7 million, and some of the downward fluctuations are simply attributable to seasonal factors. But boy have they jumped since Q2 2021 when, roughly speaking, the local vaccination roll-out and opening up accelerated. The median price spiked to just shy of $1.9 million. Comparing YTD 2021 to 2020, median prices have increased $150,000 or 9% over 2020 (2nd chart). It’s interesting to compare that to the losses following the Great Financial Crisis (GFC) in 2008.
Luxury Houses – Nice Work If You Can Get It
If median house prices have reached record levels, it’s in no small part because of an unprecedented explosion of luxury home sales since March, 2021, which has helped drive the overall median price up. Equitable or not, the people at the top of the food chain have indulged their pent-up appetite for high end homes since restrictions started to lift in the Bay Area.
Houses have been getting bigger, as everyone tries to shoe-horn more square footage out of their existing homes or lots. This also partly explains the increase in median prices overall. But luxury homes seem to have done better on a per square foot basis as well, as the next comparative chart shows. (Note, this chart’s breakdown of values tracks what I think are the low, middle, and luxury ranges in SF. Whether “luxury” is above $3 million or above $3.5 million is a matter of, um, taste.) While all houses have seen a YoY increase in price per square foot, that of luxury houses has rocketed up 18% to $1382.
Here’s a snapshot of house price values in various neighborhoods across San Francisco. Email me if you’d like detailed information on your particular neighborhood, or you can check out the new interactive map at my website.
As always, your questions, comments and referrals are much appreciated! And a special thanks to those who have contacted me to let me know that they’ve missed receiving my newsletter. I love researching and writing them, but – as you can see from the data – it’s been a busy Spring. Stay safe out there everyone!