San Francisco Real Estate: Doom and Gloom or Vroom and Boom?

Driving with one eye on the rear-view mirror is a good thing.  Driving with both eyes on it is likely to get you into a crash.

At a recent sales meeting where 40 or so agents discussed their impressions of the autumn sales market which opened on Labor Day, quite a few bemoaned the lack of agents showing up on brokers’ tour on Tuesdays and Wednesdays.  Others said that they’d had Sunday open houses with nary a visitor.  Agent and client fatigue?  The “flood” of new listings on the market (though that’s typical for this time of year)? An ominous sign of things to come?  ...  Additional Details

San Francisco’s new “COPA” Law could turn Owners of 3+ Unit Buildings into, um, Sausage

“Coppa” with two “p’s “ is a delicious dried pork salume of Italy and Corsica.  “COPA” is a new SF law that requires owners of buildings with three or more residential units to give a right of first offer and a right of first refusal to a designated set of non-profits before they can sell their building to a third party.  If a seller fails to comply with the statutory requirements, they may well feel that they’ve been through the COPA meat-grinder.  Penalties can include disgorgement of profits and a fine equal to 10% of the sale price they received. ...  Additional Details

How Does San Francisco Rank as a Global City?

“Home ownership has dropped, evictions and homelessness have climbed sharply, surging demand for rental units has led to a shortage, and soaring rents are fodder for daily conversation…. In the last few years, [it] has become one of the world’s 10 most expensive places to rent, ahead of cities like Tokyo, Sydney and Singapore.”

San Francisco?  Actually, Dublin, Ireland, according to a Deutsche Bank Report cited in a New York Times article a few days ago. But before you heave a sigh of relief, consider this:  Dublin ranked 8th most expensive city in the world to rent a mid-range 2 bedroom apartment, clocking in at around USD $2,000.  San Francisco came in second – just after Hong Kong and ahead of New York.  The quoted rent for SF: a whopping $3,631, down slightly from 2018. ...  Additional Details

Which San Francisco Neighborhoods Have Appreciated the Most?

A client of mine recently opined that he thought that Pacific Heights and other luxury neighborhoods were “overdue for a bump” in home prices. He thought that well-heeled Millennials and Gen-Z-ers were neglecting the north side of the city in favor of hipper locations like Mission/Valencia Street, Duboce Triangle, Hayes Valley and, of course, the perennial favorite Noe Valley.

As someone who has lived and worked in SF for over 30 years, I’ve witnessed my share of cycles where people bid up the “up and coming” neighborhoods (Bernal Heights is the poster child) as they get priced out of their “A-list” neighborhoods. However, when the market turns down, those same neighborhoods tend to get hit hard as buyers shift their attention back to their first choice. So, my hunch was that over the long-term, neighborhood appreciation rates would be about the same. ...  Additional Details

Spring has Sprung: How about the SF Housing Market?

First, let me thank everyone for their positive feedback on my last newsletter regarding Unicorns, IPO’s, big press headlines, and the likely effects of all of that on San Francisco home prices.  With Lyft down 30% from its opening price, Uber looking less “über alles”, and the stock market gyrating on news of a trade war – or just, um, war – we are already in the realm of larger forces potentially swamping whatever IPO effect was so breathlessly anticipated. 

That said, after a very slow start to the typically strong spring season – and by “strong” I mean heavy buyer demand and higher prices – the residential market has notably recovered from the “weakness” of the last half of 2018.  (For more on that, check out my 2018 Real Estate Wrap-Up.) ...  Additional Details

The IPO Thing: Will Lyft and Uber take Real Estate Prices for a Ryde?

I don’t think I have ever been pinged so often as I was shortly after the New York Times published “When Uber and Airbnb Go Public, San Francisco Will Drown in Millionaires.” In the Styles Section, no less.  Certainly, the idea that San Francisco, where so many IPO companies are headquartered, could see upward pressure on home prices makes sense.  As the NY Times article notes, there were only about 5,600 home sales in San Francisco in 2018 and less than half of those were single family homes.  So it makes intuitive sense that a few thousand newly minted millionaires could move the market with their new-found fortunes. (I made the same point months before the NY Times article but sadly they didn’t quote me.) ...  Additional Details

“What Goes Up Just Might Be Coming Down.” The 2018 San Francisco Residential Real Estate Wrap-Up

Off to the Races

In 2018, San Francisco’s median house sales price was $1.6 million.  That’s an increase of 13% over the previous year.  Meanwhile, the median condominium sales price increased about 5% to $1,210,000.

If the chart above was the only one you consulted on SF real estate, you could be forgiven for thinking that since the 2012 recovery from the Great Financial Crisis, the city’s real estate prices have been rocketing inexorably upward. 

Slow Finish

But you’d be wrong.  As Mark Twain said, quoting Benjamin Disraeli: “There’s lies, damn lies, and statistics.”  In 2018, the year had two very distinct halves.  And if you don’t look at the statistics for those two halves, you’ll miss the real story here – which is that single family home prices fell precipitously over the last two quarters. The chart below shows price changes by quarter. ...  Additional Details

Where is Bay Area Housing Headed?

In my last newsletter in late October, I suggested that despite data indicating the possibility of a slowing real estate market, it was too soon to tell.  It may still be too soon – but the evidence is mounting.

Notably, we’re seeing evidence of a slowdown across the Bay Area and, indeed, nationally.  The December 1 issue of The Economist describes a national “housing wobble”, citing declining new construction  and higher interest rates as among the contributing factors.  Nationwide, sales of existing homes were down 5.1% from the year previously and sales of new homes were down by 12%.  (interestingly, the article suggests that declines in residential purchases and homebuilding are a leading indicator of recessions, rather than the other way around.) ...  Additional Details