Real Data SF

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

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

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

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