Real Data SF – July 2013 Newsletter: Of Bubbles and Froth

The other day I was talking to a business-savvy fellow who has been looking to get into the real estate market since 2009. Back then, he recounted, everyone thought he was crazy to want to buy something. Ultimately he didn’t. Recently I introduced him to some clients of mine who were looking to partner up with someone on a “fixer” project. Surveying the $1 million prices “fixers” seem to be going for, he used the words “bubble” and “frothy” to describe what’s going on in SF right now.

Is he right? Let’s leave aside the question of whether we should consider homes “investments,” as we do stocks. (In general, I don’t think we should: click here for U.S. long-term home appreciation stats prior to the housing recovery.) Instead, let’s simply focus on whether, after 18 months of breath-taking price increases here in SF, we are already in a new housing market bubble.

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The San Francisco Luxury Home Market

A Market Overview

The luxury home market in San Francisco – typically defined as houses, condos, co-ops and TICs selling for $1,500,000 or more – experienced a big surge in activity in the second quarter of 2012. Below are a handful of charts analyzing sales by San Francisco district over the past 12 months, breaking the luxury house market in particular into three different price segments.

Our complete report can be found online here: SF Luxury Home Market Report


San Francisco Luxury HOUSE Sales by District and Price Range

SF HOUSES Selling for $1,500,000 to $1,999,999

SF HOUSES Selling for $2,000,000 to $4,999,999

SF HOUSES Selling for $5,000,000 or More

SF CONDOS, CO-OPS & TICs Selling for $1,500,000 or More

San Francisco Luxury Home Unit Sales

The second quarter of 2012 saw a substantial jump in the sales of expensive homes.

Average House Sales Price, Prestige Northern Neighborhoods

This is a sample of the many area specific analyses we perform. This chart includes a wide range of prestigious northern neighborhoods of differing values, so the numbers should be considered very general approximations. The reason why we put them all in the same basket is to get a large enough number of sales to be meaningful statistically.

Sales not reported to MLS – such as many new-development condo sales and a fair number of high-end off-market sales – are not included in this analysis. All figures are derived from sources deemed reliable, but may contain errors and omissions, and are subject to revision.

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