The 2023 Real Estate Wrap-Up: Down from the Heights!

Before we get deep into the numbers, let’s review some of the year’s milestones and, um, millstones.

  • Rosalyn Carter, Henry Kissinger, Dianne Feinstein, Harry Belafonte, Jimmy Buffett and Tina Turner all died.
  • Between March and May, Silicon Valley Bank, Signature Bank and First Republic Bank all failed.
  • In the summer, Hollywood went on strike and in September tens of thousands of United Autoworkers followed suit.  
  • Also in the summer, Nvidia joined Apple, Microsoft, Amazon and Alphabet with a market cap of 1 trillion on the basis of its being the leading supplier of chips for the new high tech darling, AI, whose breakout star, Open AI, just happens to be headquartered in SF.
  • The Fed Reserve raised the fed funds rate five times, on top of the six increases that occurred in 2022, to around 5.25%  — a rate last seen in 2007 just prior to the Great Recession. 
  • Four major insurance companies announced they would stop or limit writing new insurance policies on residential property in California.

Home Sales Plummeted

Except for a temporary drop in mortgage interest rates at the beginning of 2023, the Fed’s relentless rate increases had their inevitable effect: with 30 year mortgage rates topping out near 8% (chart below), residential sales slowed to a crawl.

Let’s be clear:  it was a horrible year financially speaking for most real estate agents.  San Francisco residential sales volume, the lifeblood of real estate agents, was absolutely hammered. Throw in the difficulty of finding casualty insurance on most of the older housing stock that graces our charming city  – without which lenders will not lend – and it would be fair to say that describing 2023 as a “challenging” year is like us real estate agents saying that a fixer in need of everything has “charming period details.” ...  Additional Details

San Francisco Mid-Year Real Estate Report:
It’s Not Just the Weather That’s Gloomy

(Photo courtesy of Henri Borius @ IG_Henri_Borius_Photos)

Noe Valley, where I live, is supposed to be sunny.  But I can tell you that – until this July 4 week-end’s delightful respite  — I was getting tired of waking every morning to another milky white sky and a temperature reading that seemed stuck on 50º. It’s not just the weather that’s been gloomy. One article after another seems to take delight in enumerating San Francisco’s travails.  The Economist, among other magazines, opines that downtown San Francisco may risk falling into a “doom loop.”  The San Francisco Chronicle followed up with a list of major retail vacancies after Westfield gave up its flagship property on Market Street.  And the Financial Times, in an article titled “Defaults Raise Alarm Over Stability of San Francisco’s Commercial Property,” quoted the chief executive of the company that owned two major hotels given back to their lenders as saying “San Francisco’s path to recovery remains clouded and elongated by major challenges” including “concerns over street conditions”. ...  Additional Details

The 2022 San Francisco Residential Real Estate Wrap-Up: The Bad, The Worse, and the Ugly

Happy New Year everyone!  It’s been nearly three years since the Covid pandemic hit the world. Back in March 2020, as San Francisco’s streets became eerily quiet, it might not have been wrong to predict an apocalyptic end to the modern world and city life in particular à la Station 11, ( I highly recommend the Amazon Prime series).  As people fled the city and its density, predictions for SF’s real estate collapse propagated faster than new Covid variants.

Fast forward to mid-2022: both house and condo prices hit records of $2 and $1.3 million respectively.  For the full year, the median house price ended down just 1% from the all-time high set in 2021; condos ended down just 2% from the previous year.  Covid, Schmovid, you might say. ...  Additional Details

Property Tax Reminder and Two Charts on the State of the Market

A quick reminder that Property Taxes are technically deemed delinquent if received after 5 pm on December 10. Since that falls on a Saturday this year, you’re probably ok if they receive payment by Monday at 5 pm or your payment is postmarked before that time. At least that’s the case in Sonoma County and Santa Clara County. Of course, San Francisco’s website chose not to be that clear. You always have the option of paying online.

My apologies for having dropped the ball on my newsletter in the second half of this year, a combination of many factors mostly having to do with too little time. Here are a couple of charts that reflect the current state of the market. In a word, it is sloooowww. The second chart, which covers year over year 3 month moving averages for condos shows more clearly how the market has really decelerated in the second part of the year. (I don’t have a three month moving average for home sales). ...  Additional Details

San Francisco’s Red-Hot Residential Market: The Times, Are They A-Changin’?

If I simply posted our most recent charts on the San Francisco residential real estate market, you could be excused for shrugging and concluding “another crazy month in San Francisco.” The median price of a single-family home hit $2.050 million in April, just $10,000 down from its all-time high of the previous month.  The median price of a condominium in April was $1.365 million, an all-time high.  Single family homes were on the market for an average of 11 days; 15 for condos. Both were near record lows. To put things in perspective, take a look at the table below to see how things compared to April 2020, just after the pandemic hit, and last month. ...  Additional Details

The 2021 San Francisco Residential Wrap-Up: Pandemic? What Pandemic?

A very happy New Year to my loyal readers and apologies for the long delay between my last newsletter and now.  Between a death in the family and a very busy end-of-year, my newsletter got put on the backburner, if not taken off the stove altogether.

But enough of that.  Let’s dig into the data! 

The Executive Summary

For those that want the big picture fast, the table below summarizes key metrics for the market as a whole.

While the price data may be interesting, what really strikes me is the absolute explosion in Dollar Sales Volume ($13.55 billion), which must have been driven by a combination of (a) a massive increase in condo sales (4590 units), (b) a very healthy increase in house sales (3075 units), and (c) huge increases in the number of properties that sold for $3 million or more (766 units at over $3 million; 203 at over $5 million). ...  Additional Details

So Much For the Great Bay Area Exodus – Part 2: Condominiums

In my previous posting, we looked at how well the single family home market held up during 2020 and continues to do so, particularly at the luxury end.  The story for condominiums is more complex, with prices for those located in highly urban neighborhoods like South of Market/South Beach/Mission Bay, still below their previous highs but with levels of activity suggesting that a rebound is either underway or imminent.  Read on for details!

Condominiums in the Doldrumiums?

Condominiums and their ilk have comprised a majority of all residential sales for about two decades.  The reason is simple:  most of the new homes created since then are condos – just look at the SF’s skyline.   They also comprise 88% of sales under $1 million (see side bar in pie chart below). ...  Additional Details

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