- According to the latest report from the state Employment Development Department, California added 46,000 jobs in April – the largest monthly gain since March 2017.
- While monthly job additions have varied a lot since the beginning of the year, California led all states in the monthly increase. The state has added 271,600 jobs over the last year, which is a 1.6 percent year-over-year increase – slightly behind the 1.8 percent overall national growth rate.
- The state’s unemployment rate remained steady at 4.3 percent in April. Labor force declined, however, by 52,200 in April, after some solid increases in first three months of the year. Compared to a year ago, the labor force has increased by 203,900 people.
- With 46,000 jobs added over the month, 9 out of 11 industries added jobs in January, with largest gains in educational and health services, up 17,300 jobs, followed by leisure and hospitality, up 12,100 jobs. Information and minting and logging posted monthly losses.
- In annual comparison, 10 out of 11 industries added jobs with health services showing the largest gains, up 78,800 jobs, followed by professional and business services, up 66,900 jobs. Only financial activity posted an annual loss of 2,700.
- Regionally, Los Angeles finally showed a rebound after a rocky start to 2019. Los Angeles County added 19,300 jobs over the month and 56,100 over the year. The region’s labor force, however, declined by 20,000 which is not encouraging for hiring trends going forward. Nevertheless, monthly gains were largely focused in leisure and hospitality, with a larger than usual seasonal addition. Construction also saw above-average April gains bringing the sector’s employment to the highest level in more than a decade. On the annual basis, the health and well being of an aging population continues to influence large gains. Job additions in healthcare and social assistance, up 18,800, accounted for ninety-two percent of the overall sector job growth to reach a new all-time high. On the other hand, losses were focused in financial
services, particularly, finance and insurance, though apparel manufacturing was down as well.
- In the Bay Area, gains were broad based across the regions and most regions saw unemployment rate decline again falling below the year-ago bottom. In San Francisco-San Mateo region, up 5,000 jobs, monthly gains were led by healthcare job additions, followed by leisure and hospitality, and solid gains in information.
- In the Santa Clara-San Benito region, up 6,400 jobs, gains were also led by leisure and hospitality, but also specialty trade contractors, and information. Computer and electronic product manufacturing posted 1,100 losses.
- In Alameda and Contra Costa, up 6,800 jobs, similar trends followed with healthcare and social assistance leading the gains followed by leisure and hospitality.
While pace of sales in
April still trends below last year’s levels in most Bay Area regions in which
Compass (reflecting the company formerly known as Pacific Union) operates, there
are signs that buyers are returning, and sales activity is picking up. Click on
each of our regions below for an expanded look at local real estate activity in
April median sales price in Contra Costa County picked up from the previous three months and leveled out with last year at $1,325,000. After slower winter months and longer days on market, homes are selling relatively faster, though still slightly slower than last year. See Contra Costa County market statistics for April.
Defining Contra Costa County: Our
real estate markets in Contra Costa County include the cities of Alamo,
Blackhawk, Danville, Diablo, Lafayette, Moraga, Orinda, Pleasant Hill, San
Ramon, and Walnut Creek.
Median home price in the East Bay in April picked up pace again reaching another peak at $1,246,500, up 10.8 percent above last year’s April price. Pace of sales activity also picked up with homes selling an average of 19 days, slightly above last year’s 17-day average. See East Bay market statistics for April.
Defining the East Bay: Our real estate markets in the East Bay region include
Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Alameda;
Albany; Berkeley; El Cerrito; Kensington; and Piedmont.
Marin County home prices remained relatively flat in April compared to last year, ending at $1,388,000. The pace of home sales accelerated again with homes generally selling in about 32 days, slightly faster than last year. See Marin County market statistics for April.
Defining Marin County: Our real estate markets in Marin County include the cities
of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill
Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon.
After a slow winter season, Napa County April median sales price picked up pace again and increased 6.1 percent above last year, to a median of $700,000. Also, homes continued to sell at a faster pace than in the previous year, with an average of 49 days on the market before entering into a contract. See Napa County market statistics for April.
Defining Napa County: Our real estate markets in Napa County include the cities of
American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and
FRANCISCO — SINGLE-FAMILY HOMES
Median home prices for single-family homes jumped in April following a seasonal decline, bringing San Francisco April’s median prices to $1,632,000. The number of homes under contract, however, accelerated notably reflecting anticipations over IPO impacts. See San Francisco single-family-home market statistics for April.
FRANCISCO — CONDOMINIUMS
At $1,222,000 median sales price, San Francisco condominiums trended slightly below last year’s median price which is mostly a function of an increase in sales of smaller units. However, buyer activity is picking up notably with an 11 percent point increase in number of units under contract compared to last year. See San Francisco condominium market statistics for April.
Silicon Valley median prices continued to show some weakness in April compared to last year, however the area saw a large jump in home prices last spring. Overall, buyers are continuing to see more homes to choose from and less buyer competition. See Silicon Valley market statistics for April.
Defining Silicon Valley: Our real estate markets in Silicon Valley include the cities
and towns of Atherton, Los Altos (excluding county area), Los Altos Hills,
Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside.
The median sales price in the Mid-Peninsula continued to trend lower in April compared to last year, however year-over-year declines are diminishing following very slow winter months. Buyers are returning, however, causing a 4 percent point increase in homes under contract compared to last April. See Mid-Peninsula market statistics for April.
Defining the Mid-Peninsula: Our real estate markets in the Mid-Peninsula subregion
include the cities of Burlingame (excluding Ingold Millsdale Industrial
Center), Hillsborough, and San Mateo (excluding the North Shoreview/Dore
At $645,000, median home prices in Sonoma County remain below last year’s post-fire peaks but are still ahead of prices seen before the fires. Pace of sales has also picked up to an average of 42 days which is back to rates seen before the fires. See Sonoma County market statistics for April.
Defining Sonoma County: Sales data in the adjoining chart includes all single-family
homes and farms and ranches in Sonoma County.
Median home prices in Sonoma Valley stood at $718,000 in April, holding relatively steady over the last few months but down last year’s April peak led by post-fire activity. However, homes are selling faster than last year, averaging 35 days on the market, down 13 days from 48-day average last April. See Sonoma Valley market statistics for April.
Defining Sonoma Valley: Our real estate markets in Sonoma Valley include the cities
of Glen Ellen, Kenwood, and Sonoma.
TAHOE/TRUCKEE — SINGLE-FAMILY HOMES
At $755,000, median prices of single-family homes in Lake Tahoe/Truckee maintained below last year’s peak which was driven by a number of luxury new construction sales. However, solid buyer demand is evident in shorter days on market which averaged 70 days in April, down from 86 days last year. See Lake Tahoe/Truckee single-family-home market statistics for April.
Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region
include the communities of Alpine Meadows, Donner Lake, Donner Summit,
Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe
City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe.
TAHOE/TRUCKEE — CONDOMINIUMS
At $450,100, condominium prices in the Lake Tahoe/Truckee region picked up from winter lows, but still trend 6.2 percent below last year. Pace of sales has also picked up in April following the winter lull to an average of 109 days on the market, which is still about 30 days below last year pace. See Lake Tahoe/Truckee condominium market statistics for April.
Defining Tahoe/Truckee: Our real estate markets in the Lake Tahoe/Truckee region
include the communities of Alpine Meadows, Donner Lake, Donner Summit,
Lahontan, Martis Valley, North Shore Lake Tahoe, Northstar, Squaw Valley, Tahoe
City, Tahoe Donner, Truckee, and the West Shore of Lake Tahoe.
- IPO expectations are already showing up in home
sales activity, particularly in San Francisco and San Mateo
- Sales of homes in San Francisco, San Mateo and
Alameda have solidly exceeded last year – up 7 percent, 4 percent and 2 percent
respectively year-over-year in April
- Santa Clara, Wine Country and Contra Costa remain
slower compared to last year
- Homes priced between $1 million and $2 million
continue to struggle, except in San Francisco and San Mateo, likely a result of
tax reform changes and reduced state and local tax (SALT) and mortgage interest
- Nevertheless, sales of homes priced above $3
million have surged again, posting a 5 percent year-over-year increase, matching
last year’s peaks
- While growth in inventory of homes for sales is
broad based, availability of homes priced above $3 million accelerated again to
a 26 percent annual growth in April
- While price growth remains flat in most regions,
San Francisco median prices up 2 percent year-over-year in April
- A 9 percent annual increase in homes under
contract suggests buyers are back in droves, especially for homes priced over
$3 million, up 44 percent year-over-year
While overall Bay Area housing market activity continued to
post a year-over-year decline in April, the 4 percent decline was the smallest
since July of last year. The decline was driven by fewer sales in Santa Clara
County and Contra Costa, with a smaller contribution from the wine country. San
Francisco, San Mateo and Alameda, in contrast, posted solid year-over-year
increases, putting their April sales at the highest levels in three years. Table
1 shows year-over-year April changes in the number of homes sold by price
range, further highlighting some interesting trends.
First, while sales of homes priced below $1 million trend
slightly below last year, most regions are seeing an increased activity
compared to last year, particularly South Bay, Marin and Alameda. Contra Costa
is actually the driver behind the decline of 1 percent, given the relative size
of the county and the number of homes sold compared to the entire Bay
Second, the segment of the market that continues to struggle
are homes priced between $1 million and $2 million, except in San Francisco and
San Mateo, which is not surprising in lieu of IPO expectations. Weakness in
this price segment is likely a result of tax reform changes and reduced SALT
and mortgage interest deductions, which are potentially a big concern for
would-be buyers in this price range.
Third, the higher priced market, above $3 million, bounced
back to a 5 percent annual increase after significant declines in the previous six
months. The jump is mostly due to the tri-region of San Francisco, San Mateo
and Marin, where sales accelerated compared to last year. As noted in previous
analyses, sales of homes priced above $2 million were growing at a rate of 50
percent in early 2018, thus April’s flat change for homes in the $2 to $3
million range, and a 5 percent increase for homes $3M+ put higher-end sales
back on track with 2018 highs.
For-sale inventory continues to offer more options for
potential buyers across the Bay Area and at different price ranges, except in
San Francisco where inventory continues to decline at double digit rates. Table
2 summarizes changes in inventory by price range and region. Overall, there are
about 2,500 more homes on the market compared to last April, an 18 percent
increase. While all price ranges are posting a relatively similar percent
increase, growth in inventory of homes priced above $3 million has accelerated
in recent months, from low single digits over the last year, to a 26 percent
annual growth in April. As Table 2 depicts, most of the increase comes from
Santa Clara and San Mateo, but is also impacted by Sonoma which continues to
see more inventory after the initial post-wildfire shortage. While recent
increases in Santa Clara seem large and draw attention, the area suffered the lowest
inventories in a decade in 2018, so recent jumps put inventories only slightly
above 2017 levels.
Furthermore, anticipation of the impact of recent and
upcoming IPOs is influencing Bay Area housing market, particularly in San
Francisco where absorption rates of available inventory jumped to 40 percent in
April, up 9 percentage points from 31 percent last April – now at the highest rates since late 2016. The
other regions continued to see lessened absorption rates with inventory priced
between $1 million and $2 million generally seeing the largest declines in
absorptions, though this price range saw large increases in available inventory
in recent months. Again, the impact of tax reform is having an impact on demand
of homes priced between $1 and $2 million. In contrast, absorption of inventory
priced below $1 million has picked up in San Mateo as well as San Francisco,
and San Mateo saw a 10 percentage point jump in absorption to 44 percent — now the
highest absorption rate of the lower price ranges in the region. Note, though,
that absorption rates are relative to increased inventories across the region.
In addition, while overall median price growth continues to
trend sideways in the Bay Area, not showing any growth on a year-over-year
basis in 2019, San Francisco median prices were up 2 percent year-over-year in
April. Santa Clara and Sonoma, which led the region with relatively higher
annual declines in prices so far in 2019, showed some improvement in April with
slowing declines compared to previous months. However, as shown in Figure 1,
even without the price growth, Bay Area median prices are only slightly below
March 2018 when the run-up in prices accelerated, and well above median prices
prior to the run-up.
Median Home Prices in the Bay Area and San Francisco
Lastly, while the Bay Area housing market has started picking up in bits and spurs, April’s look into the increase in number of homes under contract suggests strong home-buying months ahead. Table 3 summarizes April year-over-year changes by region and price range. Overall, number of homes under contract in April increased 9 percent compared to last April with most all regions seeing the annual jump. The increase is particularly notable among homes priced above $3 million, which are 44 percent ahead of last year. In other words, there were 239 homes in contract in April, up from 166 last April. Again, it is reassuring that the increase in buyer activity is spreading throughout the whole Bay Area and across price ranges. Not unexpectedly though, buyers have been encouraged by favorable mortgage interest rates, more choices, and an influx of IPO.
With April’s end, we now have 2 months of spring season data unaffected by the end of 2018, when financial markets plunged. As of early May 2019, stock markets have recovered to hit new highs, interest rates are far lower than last year’s peak, and our local, unicorn IPOs have begun to roll out after a media frenzy of speculation on their potential effects on the market.
The market has heated up considerably from the slowdown in the second half of 2018, with strong buyer demand for a very limited inventory of listings. Median home sales prices have returned to highs close to those in spring 2018, but, so far, last year’s peaks have not been exceeded. This is a big change from the year-over-year appreciation rates of the past 6-7 years.
However, there are still 2 months of spring sales data to come in (before the typical summer slowdown), and word on the street is that some new listings are again generating feverish bidding wars between buyers.
Monthly Median House Sales Prices
Monthly median sales prices are often affected by other factors besides changes in fair market value – for example, the extreme seasonality of luxury home sales – but the above chart helps illustrate trends over the past 2 years: Spring 2018 was one of the hottest markets in history, with dramatic year-over-year price appreciation. The market then cooled, stock markets turned scary, and interest rates climbed. 2019 has heated up again, but, so far, without any y-o-y median price gains.
The most expensive housing market in the country has, for the time being, stopped becoming more expensive.
The table below compares the March-April market statistics of 2018 and 2019. Prices were stable, overbidding was down, and luxury home sales were up, but most statistics were remarkably similar to last year’s. The SF and Oakland-Berkeley markets are currently the strongest in the Bay Area.
Home Sales by Price Range & Bedroom Count
Below is an illustration of sales of houses, condos, co-ops and TICs over the past 12 months, by price segment and by number of bedrooms.
Condos now constitute the biggest share of sales in San Francisco, which mostly explains the high columns for 1- and 2-bedroom sales in the $500,000 to $1.5 million range.
District Sales & Median Home Prices
The next 2 charts break down the last 12 months of sales by Realtor District (delineated on the map above). Some districts were split into 2 for these analyses, but all these areas contain neighborhoods of differing characteristics and home values.
House Sales, Median Prices & Median Sizes
The two biggest districts by volume of house sales – Bayview/ Excelsior/ Crocker Amazon (D10) and Sunset/ Parkside/ GG Heights (D2) – are also 2 of the 3 most affordable districts for purchasing a house in the city. Many of the older districts with bigger, more expensive houses are relatively small markets.
Condo Sales & Median 2-BR/2-BA Condo Prices
Condo sales in SF run across a wide range of eras and styles, from Victorian and Edwardian units in small buildings, through brand new, ultra-luxury high-rise penthouses. The breakout of median sales prices pertain to 2-bedroom, 2 bath condos only.
San Francisco Luxury Homes Markets by District
We typically define the SF luxury house market as houses selling for $3 million+, and the luxury condo, co-op and TIC market as those selling for $2 million+.
SF Luxury House Sales by District
The central Noe, Eureka and Cole Valleys district (D5) dominates the market for houses selling from $3 to $4.99 million. The northern Pacific Heights-Cow Hollow district (D7) dominates the $5 million+ ultra-luxury segment. But high-end home sales are scattered across the city.
Luxury Condo, Co-op & TIC Sales by District
Luxury condo sales are concentrated in 3 districts: District 9, where most of the newer, high-rise, luxury projects are found in the South Beach/Yerba Buena area (which 30 years ago was filled with parking lots and auto-stereo shops), and in the old-prestige, northern neighborhoods of Districts 7 & 8, which include Pacific Heights and Russian Hill. (This is also where the city’s high-price co-op units are clustered).
Q1 2019 “Ultra-Luxury” Homes Markets
We start the “ultra-luxury” segments at $5 million for houses, and $3 million for condos and co-ops. There has been a large (and continuing) surge in the construction of very expensive condo projects over the last 15 years, which makes for a greatly increased inventory of high-price condos for sale – and softer market dynamics.
House Size & Era of Construction
Many factors influence home construction size during any particular period: Affluence, economic conditions, household size, buyer age, land costs, population growth, natural disasters, etc. Generally speaking, the median size of houses was larger during the Victorian-Edwardian era, and declined through the 1940’s – when enormous swathes of the city were built out in the south and southwest districts. Home sizes then began increasing again, and are now larger than ever – however, few new houses are currently built in the city.
The sizes of houses built in earlier periods have increased over the years due to renovations: Adding that 2nd bathroom, or a 3rd bedroom behind the garage.
Condos have become the major alternative for people purchasing homes of smaller size.
Selected Demographic & Economic Factors
SF has seen a dramatic population increase over the past 10 years, and by percentage growth, SF had the 2nd highest rate in the Bay Area after Alameda County. But new census data indicates the rate of growth is rapidly dropping.
Our latest burst of growth – an increase of about 78,000 or 10% – with all its social and economic effects, looks paltry compared to the 1940’s, when the city’s population soared by 140,000, a jump of 22% that began with WWII.
Venture Capital Investment
In recent years, the Bay Area has been the biggest destination of venture capital investment dollars in the country – and probably the world. These tens of billions of dollars have constituted a massive factor in the local economy, supercharging the creation of new companies, hiring, and, eventually, IPOs. Venture capital is effectively seed money that has exploded into the creation of stupendous amounts of new wealth.
It’s a historic neighborhood with a fascinating past and unparalleled waterfront access—so why isn’t it more in-demand? The truth is, Jack London Square had gotten little bit stale over the last few decades, but that’s changed in a big way. An influx of new restaurants, bars, and housing in recent years has helped reinvigorate the area into one of Oakland’s most lively destinations.
Combine that with two big
announcements—the Oakland A’s releasing a preliminary proposal to build a new
waterfront ballpark just north at Howard Terminal and the rekindling of plans
for a Ferry Building–style food hall to fill the long-vacant Water Street
Market—and this is a neighborhood that appears poised to take off.
“With its lovely waterfront stroll, incredible restaurants and concert venues, sweet Sunday farmers market, convenient ferry to SF, and fun festivals and events, living in Jack London Square is both convenient and fun,” said Compass agent Farrah Wilder. “Some of my favorite shopping, meeting and dining venues are in Jack London Square but I would be remiss if I didn’t mention the legendary concert-venue, Yoshi’s, as one of this great neighborhood’s many attractions.”
But you don’t have to wait for the
new ballpark and marketplace to enjoy Jack London Square.
Three new dining destinations
opened in the last years have rocketed Jack London up the list of culinary
hotspots in Oakland. Belcampo, which
sources über-sustainable meat from animals raised on its own ranches, serves up
melt-in-your-mouth burgers made from ground-daily chuck, duck fat–fried French
fries, and other hearty meat-centric eats in its gorgeous 7,000-square-foot
flagship restaurant with unparalleled waterfront patio. They have a butcher
counter, too. Next door, Farmhouse
Kitchen, the latest addition to Kasem Saengsawang’s burgeoning restaurant
empire, offers dazzling and innovative Thai fare with a Tiki flair. And in the
ground floor of the Water Street Market building, Dyafa’s celebrated chef Reem Assil crafts elevated versions of the
kind of Palestinian street food she first introduced to Oaklanders at East Bay
Farmhouse Kitchen: farmhousethai.com/oakland/
Sidle up to the tilted bar at Heinold’s First and Last Chance Saloon,
the 136-year-old ramshackle dive bar where author Jack London himself was said
to have jotted down book notes over a pint as a young aspiring author. Just
make sure to hold on to your beer—the bar has been angled on a downward slant
ever since the pilings were knocked out of alignment during the big 1906
earthquake. Come for the full Irish breakfast (served all day!), stay for the
extensive selection of Irish whiskey at two-year-old Irish pub Sláinte. Feel like something made
on-site? Jack London is home to one of the densest collections of urban wineries and breweries in the Bay Area, to go along with several tasting rooms
and beer-centric bars.
Heinhold’s: 48 Webster St #3721
Oakland Urban Wine Trail: visitoakland.com/restaurants/oakland-urban-wine-trail/
Oakland Ale Trail: visitoakland.com/restaurants/oakland-ale-trail/
Dynamo entrepreneur Ayesha Curry
(wife of Warriors’ star Steph) recently launched her first pop-up retail store,
Homemade, featuring home goods and
products that includes her own signature line of bedding, cookware, and
bakeware, as well as a new jewelry collection. Next door, Oakland Supply Co. specializes in unique, quality goods made in the
U.S. and often right in Oakland. In the shadow of Bed, Bath, & Beyond, Narrative provides a chic boutique
shopping experience for affordable vintage home décor.
Oakland Supply Co:oaksupplyco.tumblr.com
Don’t just admire the calm,
sun-dappled waters of the estuary snaking between Oakland and Alameda: Get out
there. California Canoe & Kayaks
rents out canoes and stand-up paddle boards, as well as offering classes, to
allow you to do just that. With a myriad of entertainment options—bowling,
bocce, skee-ball, arcade games—to go along with its hopping bar and food scene,
Plank is like an adult version of Chuck
E. Cheese. America’s one true original art form is alive and well at Yoshi’s, a combination sushi restaurant
and nightclub that hosts live music with an emphasis on world-class jazz nearly
California Canoe & Kayaks: calkayak.com
A Goldilocks Economy is an economy that is neither too hot or cold, in other words, it sustains moderate economic growth and has low inflation, which allows a market-friendly monetary policy.
- Today’s national employment report from the U.S. Bureau of Labor Statistics once again outpaced expectations by posting a 263,000 increase in jobs added in April. The strong gain adds to the upward revisions of the two previous months, bringing the year-to-date monthly average to 205,000 jobs added, only slightly below the 223,000-monthly average in 2018.
- Notable job gains continue to bolster professional and business services (up 76,000 jobs), which comprised about one fifth of last year’s employment growth. Other sectors experiencing notable growth include construction (up 33,000 jobs), healthcare (up 27,000 jobs), and social assistance (up 26,000 jobs). Retail trade employment, particularly in general merchandise stores, are continuing to weaken.
- According to a new CompTIA report, the information-technology sector added 18,900 jobs in April, with hiring in technology services, custom software development and computer systems design leading April job growth. Software and application developers continue to be the most in-demand talent companies are looking to hire, with 78,000 job postings last month.
- The unemployment rate, falling to 3.6 percent, hit another 50-year low (the lowest rates since 1969). Nevertheless, the decreased unemployment rate primarily stemmed from a drop in labor force participation, which has been improving in recent years but was inevitably going to decline due to demographic factors like retiring baby boomers and lack of population growth. In addition, immigration of foreign-born workforce has slowed dramatically. Over the past 10 years, immigration has been a significant contributor to the domestic labor force, accounting for half of labor force growth. While labor force participation among women has returned by to pre-recession rates, male participation rates are still well below. Women’s participation has been fueled by growth in industries that generally employ a higher share of women, such as healthcare and education, while men’s participation has been held back by a decline in manufacturing jobs and factors such as the opioid crisis and lower graduation rates than women.
- Wage growth has inched up, 0.1 percent, in line with expectations, but still relatively subdued at this point of the labor market cycle. A recent surge in productivity is one of the main arguments for the lack of compensation growth. Overall, labor income is running at about 4 percent annualized growth rate. However, low inflation is helping improve real wages and will keep bolstering consumer spending.
- Nevertheless, low inflation is the reason the Federal Open Market Committee (FOMC) decided to keep the fed funds rate unchanged earlier this week. The FOMC’s decision was largely based on slower growth in household spending and business fixed investment, and consequently lack of overall inflation which the FOMC believes will remain muted. While March’s decision to keep the funds rate unchanged was primarily due to concerns over lack of global growth, their most recent statement shifted the concern to low inflation expectations.
- FOMC is expecting to see continued economic growth through 2019 supported by a rebound in domestic demand, putting GDP around 2.5 percent — a slowdown from 2018, but still above the economy’s potential rate of growth. And while some market observers, and the president, have been looking for some policy easing from the Federal Reserve, such as lower rates, the Fed’s statement suggests continued patience and no changes to the fed fund’s rate through the remainder of this year, and possibly a good portion of 2020.
- In looking at future job growth, the U.S. Bureau of Labor Statistics Job Opening Labor Turnover Survey released earlier this month said there were 7.1 million job openings at the end of February. While the number of job openings declined from recent highs, the number is still above levels seen a year ago and since 2000 when the data history began. Job openings decreased from the month before, mostly in accommodation and food services (-103,000), real estate and rental and leasing (-72,000), and transportation, warehousing, and utilities (-66,000). The number of job openings fell in the Northeast, South, and Midwest regions.
- Filling open positions remains a concern for companies. According to NABE’s Business Conditions Survey, 52 percent of respondents reported shortages of skilled labor at their firms—an increase from 45 percent a year ago.
San Francisco Real Estate Home Prices, Sales & Statistics; Stock Markets; Interest Rates and Unicorns in Spring
A substantial portion of Q1 statistics reflect new listings and accepted offers occurring during the mid-winter market doldrums (Thanksgiving to mid-January). In November and December 2018, the stock market plunged drastically from its all-time high in September, and interest rates hit their highest point in years: these factors negatively affected buyer demand. Then both turned in dramatically positive directions in early 2019. So, Q1 statistics reflect economic conditions in both Q4 2018 (very negative) and Q1 2019 (very positive). It is also the quarter with the lowest sales volume.
The spring selling season – whose data starts to show up in March, but is mostly reflected in Q2 – is the most active of the year, and also typically sees the highest rates of appreciation. As always, there are many economic factors at play impacting Bay Area markets, some of which are discussed below.
Year-over-Year & Longer-Term Trends
Median Sales Prices
Median house sales prices dropped dramatically from last spring, but then spiked up again in March 2019. Spring is typically the season when median prices increase most.
The biggest change since last spring as been a switch from high year-over-year quarterly appreciation rates to zero appreciation and a slight decline in the last 2 quarters. What occurs this spring will be critical to understanding market trends.
New Listings Coming on Market
Year-over-year, there was a plunge in the number of new listings coming on market in Q1 – new listings almost always climb from January through March, but not this year. Were sellers waiting for a hoped-for rush of new IPO millionaires to appear? Will new listing inventory jump now that the IPOs have begun to occur? Q2 will provide much more data regarding the media-frenzy “IPO effect.”
Luxury Home Sales
There has been a significant drop in MLS sales of luxury condos. The jump in the number of new, luxury (and ultra-luxury) condos being built is creating a surge of supply that has increased the competition between sellers for buyers’ attention. (Many new-project luxury condos are neither listed nor their sales reported to MLS, and so are not reflected in this chart.)
Selected Economic Factors
Stock Markets & Unicorn IPOs
A wild ride in stock prices, particularly in high-tech: Prices soared to new peaks in summer-early autumn 2018, plunged drastically in Q4 2018, and then saw the biggest Q1 jump in 20 years. Huge amounts of wealth appearing, disappearing and reappearing – a major influence on consumer confidence and home-buyer demand.
A new surge of large, high-tech unicorn IPOs – mostly of firms headquartered in SF – has just started to roll out. IPOs have historically created vast quantities of new wealth in the Bay Area, though the magnitude of the effect of this new wave on the SF housing market is yet unknown – but currently fiercely disputed. Anecdotally, there have certainly been reports of buyers moving more quickly to beat the “rush of new millionaires” and of sellers waiting to list in order to catch the rush (see New Listing chart above).
A gigantic factor underlying Bay Area housing markets has been the staggering increase in employed residents since 2010. Outward-bound migration trends of residents and businesses – often citing housing costs as one major motivator – have been an increasing concern in recent years, but for the time being, employment numbers have continued to grow.
New Home Construction
Due to a number of factors, including a rapid increase in land and construction costs, new housing construction in SF dropped dramatically in 2018. The quantity of new homes being built plays a significant role in the supply and demand equation, and thus home prices.
There has been a stunning decline in mortgage interest rates from mid-November 2018 through the end of March, from 4.94% to 4.06% – to the enormous advantage to buyers. Big drops such as this have helped to recharge buyer demand in the past.
Housing Affordability & Household Incomes
This chart calculates the income required to buy a median-price house in Q4 2018. Median condo prices are substantially less in every county and would require lower incomes.
County median household incomes are broken out below for homeowners and tenants – some Bay Area county incomes are among the highest in the country. However, comparing the chart below to the one above illustrates the disparity between prevailing incomes and the incomes required to purchase in the Bay Area.
Health & Economic Indicators
According to a 2018 ranking of state health conditions by the Commonwealth Fund, California ranks 14th in the nation (1st being best – Hawaii). According to CountyHealthRankings.org, Bay Area counties are at the top of the list within CA for Overall Health Outcomes: Marin, San Mateo and Santa Clara rank 1, 2 & 3, while SF is 8th. On the less positive side, SF has the highest income inequality ratio in the state.
Spring 2018 was one of the hottest markets in SF and the Bay Area in the last 2 decades. Then the market began to cool in summer and autumn – demand, sales and appreciation rates generally dropping, while supply and price reductions increased – before the mid-winter doldrums took hold. The magnitude of these changes varied by county, with SF less affected than many others, but still certainly affected.
Since the recovery began in 2012, spring has typically been the most active season of the year, and usually the period during which appreciation gains have been the largest. The spring 2019 market is just getting started amid a diverse set of economic indicators. Financial markets have, so far, recovered in 2019, interest rates have dropped, and big local IPOs loom. We will know much more soon.
Long-Term, Annual Median Price Trends
Short-Term Median Price Trends
3-Month Rolling Figures
Looking at 3-month rolling median sales prices, the SF median house price was virtually unchanged on a year-over-year basis, while the median condo price (second chart below) ticked up a little – but the critical issue is what will happen in the spring months, when sales volumes are much higher.
Median Sales Price Appreciation
1998 – 2018, by District
Markets appreciate due to a wide variety of local and macro-economic reasons: economic cycles, industry booms, inflation, consumer confidence, interest rates, employment, gentrification, new construction, comparative affordability (to other nearby markets), population growth, buyers’ median age, commuting, fashion, and so forth. The combination of factors affecting any particular neighborhood or district in the city is often specific to that market.
In SF and around the Bay Area, more expensive homes have generally appreciated less than more affordable homes, especially over the last 3-4 years. On the other hand, during the last downturn after 2008, the prices of more expensive homes usually declined significantly less. These appreciation percentages should be considered very approximate.
House Median Sales Price Changes
1998 – 2018
Condo Median Price Changes
1998 – 2018
What’s for Sale in San Francisco
as of March 1, 2019
Active Listings by Price Segment
March 1, 2019
The number of active listings fluctuates daily, and the numbers below are increasing as more new listings come on market. These next 3 charts are snapshots of active listings on March 1st.
Houses for Sale by District
with Median LIST Prices. 3/1/19
The supply of listings available to purchase varies widely between city districts, which can be a simple reflection of market size and/or an indicator of supply and demand dynamics. If median LIST prices (below) are well above 2018 median SALES prices (delineated earlier in this report), it is typically a sign that the balance in listings for sale is disproportionately weighted towards higher priced properties, where demand is softer – and/or a sign of overpricing beyond what buyers consider fair market value.
Condos for Sale by District
with Median LIST Prices, 3/1/19
New Listings Coming on Market
New inventory usually starts pouring into the market right now, in early spring, to fuel the biggest selling season of the year.
Active Listings on Market
Sales Volume by Month – General Market
The number of sales in the first 2 months of 2019 was down from the same period of 2018, but these are the 2 lowest sales-volume months of the year. A much more significant indicator will be what occurs over the next 4 months during the classic spring selling season. Sales are a somewhat lagging indicator, as they mostly reflect new listings and accepted-offer activity in the previous month or two.
Luxury Home Sales by Month
Market Statistics by City District
In SF and around the Bay Area, higher-priced areas have generally had somewhat cooler markets than more affordable markets in recent years, which is reflected in the next 4 charts. But home price is certainly not the only factor at play in these different neighborhoods.
Sales Price to Original List Price %
Any percentage over 100% reflects overbidding of asking price. Though these percentages have declined somewhat in the past 6 months, they are still incredibly high compared to most other places in the Bay Area and the U.S..
Unlike the house market, various city districts have seen high volumes of newly constructed condos in the last 3 to 4 years, and the increased supply has affected the condo markets in those areas.
Average Days on Market by District
Comparing Bay Area Markets
Homes for Sale under $1 Million
as of March 1, 2019
Bay Area Luxury Homes for Sale
as of March 1, 2019
Bay Area Median Sales Prices, Q4 2018
On a quarterly basis, the highest median house sales price in the Bay Area has been alternating between San Francisco and San Mateo Counties.
County to County Migration
People move to SF and the Bay Area from all over the country and the world, and people leave to move to a vast number of locations, for differing reasons. This analysis looks at those counties with the greatest number of people moving to and from SF. In many cases, there is a large exchange between 2 counties, with residents going in both directions. Often, but not always, the outward flow is greater to counties with more affordable home prices, but there are many factors – such as schools, employment and quality of life issues – at play. (Cook County is where Chicago is located.)
San Francisco vs. U.S.
San Francisco, as well as the greater metro area, is very highly educated against national norms.
Education & Income
Disparity between the Sexes
An indicator of the income-generating value of education, along with an unhappy indicator of where progress remains to be made in income equality. (As an aside, real estate is certainly one of the first professions that saw income equality established between the sexes: Women have been holding their own and sometimes dominating rankings of top Bay Area agents for many decades.)
The statistics in this report are very general and approximate indicators based upon listing and sales data pertaining to assortments, of varying size, of relatively unique homes across a broad spectrum of locations and qualities. How these statistics apply to the current value, appreciation trend, and prevailing market conditions of any particular property is unknown without a specific comparative market analysis.
We learned and then imagined a different San Francisco after hearing from the panelists at last night’s Commonwealth Club event. Think about the Painted Ladies in Alamo Square…do you ever think about the eight-unit building that is next to the row? We could have bigger buildings and still not “ruin” San Francisco’s charm. More housing is good for everyone, at all different economic levels.
As of early February, the government shutdown is over – at least for a little while – the stock market has recovered dramatically from its late 2018 plunge, and interest rates are well down from November highs. A good number of large, local, high-tech “unicorns” continue to plan IPOs in 2019. All these are positive economic indicators for the Bay Area real estate market – but indicators have proven to be quite volatile over the past 5 months and future movements are not to be taken for granted.
As detailed in our last report, there was considerable cooling in the market in the second half of 2018. The month of January typically has the fewest sales of the year, sales which mostly reflect activity during the December market doldrums: We don’t consider its data to be a reliable indicator of conditions or trends. But activity is picking up, and the beginning of the spring sales season – which in the Bay Area can start as early as February – will soon provide more direction as to where the market is heading.
San Francisco Home Value Trends
Median House Sales Prices by Month
Median sales prices often fluctuate by month and by season. It is not unusual for them to spike to new peaks during the spring selling season, and then decline and/or plateau afterward (until the next spring). So, the question is: What’s going to happen in spring 2019?
Median Condo Sales Prices by Month
Median condo sales prices, especially on a monthly basis, can be confused by new-project condo sales reported to MLS, which sometimes occur in quantity in a single month. Monthly fluctuations are common, and it is always the longer term trend that is most meaningful.
Home Sales Breakdowns
Since the market recovery began in 2012, home sales at prices under $1 million have dropped by 68%. This chart shows the migration of sales to higher price segments.
Condos sales in San Francisco significantly outnumber house sales, and this trend will continue with the ongoing construction of new-condo projects. The most common property type for sales in the city was the 2-bedroom condo at a 2018 median sales price of $1,375,000. The dominant house sale was of 3 bedrooms at a median sales price of $1,560,000.
Compared to more suburban Bay Area counties, San Francisco is a city of relatively small, older homes occupied by relatively small households: Almost half of SF housing was built before WWII, 61% of homes are of less than 1500 square feet, and, per census data, 38% of SF households consist of a single person. SF also has the lowest percentage – 4.5% – of children under the age of 5 of any major city in the country.
San Francisco Luxury Home Sales
While luxury home sales from $3 million to $4.99 million have steadily increased since 2012, home sales of $5 million and above have, to a large degree, plateaued in recent years. [Sales reported to MLS]
Luxury House Sales by District
Luxury Condo, Co-op & TIC Sales by District
San Francisco Long-Term Rent Trends
Generally speaking, there should be a relatively close correlation between home prices and rents: They constitute the 2 main options for paying for one’s housing. It is not an apples-to-apples comparison, because there are other issues at play, such as building equity, the ability to remodel and improve, certain tax advantages (though greatly diminished under new tax laws) and so on. If home prices continue to appreciate while rents plateau or decline, it can be a warning sign of an imbalance in the market – if it extends beyond the short term.
Did Someone Say Multi-Cultural?
Bay Area Demographic Snapshots
Before looking at the charts below, here is today’s demographics quiz question: What 4 nationalities account for the origin of the highest numbers of Bay Area residents?
Neighborhood Appreciation Trends – Selected Districts
There are 70-odd SF neighborhoods in 10 Realtor districts, so we can’t cover all of them here – but if you would like information on one not included, please let us know. We track prices and trends in all of them.
Realtor District 7 is the most expensive house district in SF – consisting of Pacific & Presidio Heights, Cow Hollow & Marina – but we didn’t include it on the first chart, because its median house sales price is so much higher – over $4.7 million in 2018 – that the trend lines of the other districts would be flattened.
Median House Sales Price Trends
Average House Dollar per Square Foot Trends
Median 2-Bedroom Condo Sale Price Trends
Stock Prices & Interest Rates
As seen in the first chart below, the changes in the S&P 500 Index have been dramatic since the 2016 election, seeing an enormous jump to its most recent peak in September 2018 before entering a period of substantial volatility. Ups and downs and major volatility in financial markets – and their effects on household wealth – can play a large role in local real estate markets, especially in the higher price segments.
As illustrated in this next chart, the movements in the S&P 500 have been distinctly modest compared to the stock price changes of some of our local high-tech giants. It has been has been a wild, queasy ride for investors and stock-owning employees – and for many home buyers.
If the big unicorn IPOs go forward as expected, and the market greets them enthusiastically, that could play a substantial role in demand as thousands of employees suddenly feel considerably more affluent.
Interest rates appeared to be headed relentlessly higher, but instead dropped sharply since the latest November 2018 high point. Substantial declines in interest rates can spark renewed buyer motivation to purchase.
Market Indicators by Property Type & Price Segment
The next 4 charts divide first the house market and then the condo, co-op and TIC market by price segment, for trends in average days on market and months supply of inventory. For both of those indicators, lower readings signify stronger demand as compared to the supply of listings available to purchase. Generally speaking, demand has been stronger for houses than condos, and for lower price segments than for higher. The ultra-luxury condo and co-op market in particular – prices of $3m+ – is seeing high readings in these statistics. Certainly part of the issue is the new luxury condo projects coming on market and swelling supply.
House Market Stats by Price Segment
Condo, Co-op & TIC Market Stats by Price Segment
The ultra-luxury segment here – priced $3 million and above – is seeing distinctly higher months supply of inventory and days on market readings, reflecting appreciably softer supply and demand dynamics.