Happy Thanksgiving everyone. It’s been an emotional roller-coaster November with a surprise election result (on my birthday, no less) that sent many San Francisco residents into a state akin to mourning. (Full disclosure: I count myself among them.) Several of my own buyer clients have put their plans on hold while they regroup emotionally and assess how Donald Trump’s election affects their own plans to invest a sizable chunk of money in real estate and/or put down roots. Meanwhile, sellers ponder whether to speed up bringing their homes to market as the post-election spike in interest rates may presage more of the same, which in turn may reduce the amount that people can afford to pay.
Noe Valley? Bernal Heights? Those are so yesterday. Maybe you’re thinking Bayview/Hunter’s Point as people search out more affordable housing at the city’s edges.
Well, you’re right about the edge but wrong about the direction. Based on our recent analyses, San Francisco’s “hottest” neighborhoods are also some of its foggiest: go west to the Sunset and its more southerly counterpart, Parkside.
Now admittedly, together these comprise a lot of smaller neighborhoods. Many would object to, say, the Inner Sunset with its vibrant retail scene centered on 9th Ave and Irving, being lumped in with the quieter environs of the Outer Sunset. Fair enough: our analysis is really of MLS Districts, rather than individual neighborhoods, but it’s no less telling for that. Continue reading
In my July Newsletter, I did a wrap-up of the year so far and concluded that the market, for the moment at least, seems to be going sideways. Post Labor-Day inventory has already shown a big jump in anticipation of the short buy/sell season between now and the end of November. It’s too soon to say whether the new inventory will excite buyers to loosen their wallets or simply cause them to be pickier.
So with the market on “pause,” I thought I’d put together a grab bag of charts that cover SF housing affordability, both from the standpoint of owning and renting. Many view housing affordability as a central concern for San Francisco’s long-term future. Changes in the rental Continue reading
Mid-Year Report – A Soft Landing For San Francisco Residential Real Estate?
With the data in for the for the first six months of 2016, the cooling trend that I’ve noted in recent newsletters is increasingly clear. Since sales typically dip in the middle of summer due to seasonal factors (everyone, especially those who own or are looking to buy higher end homes, is on vacation), it’s best to compare 2nd quarter results with those of a year ago.
In Q2 2016, the year-over-year appreciation rate was 4% for houses and less than 1% for condos, as compared with 2014 to 2015 rates of 20% and 18%: A significant slowdown. However, median home prices are still at their highest point ever. Continue reading
Offered at $950,000
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.
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.
Thanks to my well-read friend at The Economist for sending me this fascinating infographic.
You can find the full article here at The Atlantic. Their choice of Westwood Park as their poster-neighborhood is an interesting one. On the one hand, it’s a tiny area tucked in to the west of City College between Monterey and Ocean Avenue and it’s not exactly a household name, even to longtime SF denizens. On the other hand, the statistics are impressive: four years ago, according to the article, just 2.9% of its homes cost $1 million or more. Today, 96% of them do.
Only in San Francisco would a $1 million home be considered “a bargain.” But I think that it’s precisely in the lesser-known neighborhoods loosely clustered around Mount Davidson like Westwood Park, Miraloma Park, and Monterey Heights, where a buyer can still find “value.”
The Mark Company has been developing iconic projects throughout the Bay Area and beyond for years and they put out excellent monthly summaries that track new construction across the city, from approval stage through to completion and sale. In my last newsletter, I referred to recent articles that had misquoted Paragon data to suggest, essentially, that the sky was about to fall on San Francisco Real estate. The Mark Company just published its own detailed rebuttal, and for those might be thinking about a high rise condo purchase, it’s worth a read. You can find it here.
While it’s clearly in the Mark Company’s interests to deny that the condo market is about to fall, our own data and conclusions are very much in line with theirs. In a nutshell, despite the 35,000 units that are in the pipeline for development, all but about 7,000 of them are in huge long-term developments that may or not ever get approved. Meanwhile SF’s economy and job creation remain strong.
To their credit, they don’t deny that the market is recalibrating. Here’s the takeaway: “These key facts help us point toward a normalizing market, not one on the verge of another recession.”
I’ll be hosting an open house at 207 King Street, Unit 410, this Sunday, May 1, between 1 and 3:30. Located a pitcher’s throw away from AT&T Park, this condo is not of the all-too-common shoe-box variety! With 2 beds and 2 baths occupying around 1800 SF on two levels, it is genuinely spacious. Tons of natural light, soaring ceilings, and sleek finishes complete the package. Priced to sell at $1.75 million, that’s below the minimum $1,000 a foot you can generally expect to pay for much less appealing condos in the area. Located in The Glassworks, one of Mission Bay’s premier boutique buildings. Come visit!
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