No Let Up in SF Real Estate Market – a Paragon Report

So far in 2018, the market seems to have brushed aside any concerns about increasing home prices, rising interest rates, and new federal tax law changes. It is still very early in the year to come to definitive conclusions about where the year is going, but right now, in most market segments, buyer demand is competing ferociously for a limited supply of listings. This is especially true in the more affordable home segments, and particularly for house listings. The situation is somewhat more complicated in the highest price ranges, especially in the luxury condo segment where supply has been rapidly increasing. Of course, whatever the property type or price segment, it all ultimately depends on the specific property, and its location, appeal, preparation, marketing and pricing.

As an example of what is going on so far in 2018, our dollar volume SF home sales here at Paragon is up 38% for January and February as compared to last year, though admittedly we are outperforming the general market, which is still up by 8% (per Broker Metrics for MLS sales).

San Francisco Median Home Price Appreciation
Year-over-Year Comparisons since 2005

San Francisco year over year median home price appreciation

San Francisco Price per Sq.Ft. Appreciation
Year-over-Year Comparisons since 2005

San Francisco Average Dollar per Square Foot Appreciation

These first two charts above compare year-over-year median and average home values for the same 3-month period, December through February, since 2005. For the past 3 years, appreciation for houses has dramatically outpaced that for condos. This is mostly a factor of supply as new-construction condos have poured onto the market, while the supply of house listings has continued to dwindle in the face of high demand.

We are not enthusiastic about monthly median price movements since they tend to bounce around without great meaningfulness due to a number of factors, and sales volumes are very low in the first 2 months of the year, but, for what it is worth, the SF median house price soared to a new high in February 2018 to $1,715,000 (100 sales across 70-odd neighborhoods, reported to MLS by 3/7/18 – late reported sales may affect this price). Monthly median condo prices have generally been jogging up and down within a relatively narrow range since 2015. Chart: Chart: SF Monthly House & Condo Median Sales Prices

Appreciation by San Francisco District
by Year since 2004

The next 2 charts glance at house value appreciation in a few major districts around the city, from most affordable to more expensive to most expensive. As mentioned before, houses in more affordable neighborhoods have seen the most competitive market dynamic, and most consistent appreciation, in recent years.

It can be challenging to measure appreciation in the most expensive price segments, because, firstly, there are not that many sales, and secondly, because of the huge range of sales prices within those segments ($3m to $30m for luxury houses in SF; $2m to $22m for condos and co-ops), but it may well be that their values have mostly plateaued since 2015, or in some instances, ticked down. This can be seen in the second chart below with average dollar per square foot values declining a little in the most expensive house district in the city, Pacific Heights-Marina. But, again, it all depends on the specific property, its location and circumstances.

Median House Sales Prices by District

Average Price per Square Foot House Values

Pacific Heights -Noe Valley- Sunset Average Dollar per Square Foot

We have hundreds of other analyses on San Francisco neighborhood house and condo prices and appreciation trends: SF Neighborhood Values & SF Neighborhood Appreciation Trends.

Or simply contact us regarding the neighborhoods you are specifically interested in.

San Francisco Luxury Home Market

Luxury home sales started off very strong in 2018, but the supply and demand dynamics are softer than in the general market. In the ultra-luxury condo market, in those neighborhoods where new, high-price condo construction is concentrated, supply is now outpacing demand. We just did a massive update of our luxury home analysis and it can be found in its entirety here: Paragon Luxury Market Report.

Below are a few samples of charts in the complete report.

Year-over-Year Sales Comparisons
First 6 Weeks of the Year

San Francisco Luxury Home Sales 2018 YTD

Active Luxury House Listings by District

San Francisco Luxury House Listings

SF Luxury House Sales by Era of Construction

San Francisco Luxury House Sales - Era of Construction

Active Luxury Condo & Co-op Listings by District

San Francisco Luxury Condo Listings

Supply & Demand: Ultra-Luxury Condos & Co-ops

San Francisco Ultra-luxury condo market

Long-Term Trends in Inventory

Only about 2% of house owners are putting their homes on the market each year, which is incredibly low by historical measures. About 5% of condo owners sell their homes each year, plus the new-construction condos that come on the market. This dynamic has made houses into the scarce commodity, and has fueled dramatic house price appreciation.

New Listings Coming on Market
Long-Term Trends

Active Listings on Market at End of Month
Long-Term Trends

Short-Term Trends: Seasonality

We are just heading now into the biggest sales season of the year, running from March through mid-June. The real estate market in the city is significantly affected by seasonality, and the luxury segment is even more fiercely affected. We shall also see if rising interest rates (if they continue to rise) or the changes in the federal tax law start to have any significant dampening effects on demand.

Listings Accepting Offers (Going into Contract)
General Market

New Listings Coming on Market
Luxury Home Market

Selected Supply & Demand Statistics

The following charts illustrate 3 of the classic indicators of market heat, and all of them speak to the feverish real estate market we have seen so far in 2018. However, the market is clearly hottest in the non-luxury price segment, and cooler in the highest price ranges, which is illustrated in the fourth chart below.

Average Days on Market
Year-over-Year Comparisons

Percentage of Listings Accepting Offers
by Month

Months Supply of Inventory (MSI)
Year-over-Year Comparisons

Months Supply of Inventory (MSI)
by Property Type & Price Segment

The market is softer in the highest price ranges especially for the most expensive condos

Average $/Sq.Ft. Value by House Size

All things being equal, house size and price per square foot go in opposite directions, i.e. a smaller house will sell for a lower sales price but a higher dollar per square foot value. This has to do with land value and the cost of systems, kitchens and baths. This is why, comparing two periods of time, it is possible that median sales prices can go up while dollar per square foot values go down, or there is a significant mismatch in the appreciation rates – the average size of the houses sold significantly changed between the periods, which happens sometimes. The charts below are of 2 districts with both a good number of sales and relatively homogenous values within the district.

In both the cases below, the difference in price per square foot between smaller houses and the largest houses runs about $200, or about a 15% to 20% difference.

The above effect does not always apply: For example, in Pacific Heights, the biggest houses are also often in the most prestigious locations with the best views, and so command a premium in price per square foot despite their size. And this often does not apply to condo sales, because bigger units are often built higher up in the building, with more expensive finishes, delivering better (or staggering) views, and thus selling for higher $/sq.ft. values.

Rising Mortgage Interest Rates
Short-Term Trends

Long-Term Trends

Long-Term Mortgage Interest Rate Trends

Debt in America

One of the macro-economic factors of concern is that debt levels, of virtually every kind, are hitting new highs in the country (and in the world). This has been heavily subsidized by the historically low interest rates prevailing in recent years, but rates appear to be headed upward, and increasing debt often plays a big role in market cycles.

Debt Taken On to Invest in Financial Markets
(Often a Sign of Investor Over-Exuberance)

Household Non-Housing Debt
Credit Cards, Student Loans, Car Financing

Household Mortgage Debt Service Ratio

The amount of total mortgage debt in the country is now about the same as at its last peak in 2008 (not illustrated on this chart), but because of the plunge in interest rates since then, the ratio of mortgage debt service to disposable income was close to an all-time low in mid-2017. Interest rates have been rising since then, but are still about 30% lower than in 2007. The good news is that so much of mortgage debt in America is now in fixed-rate loans at very low interest rates, which adds much stability to economic conditions, a stability grievously lacking at the time of the 2008 financial markets crash.

Link to additional charts on debt

Additional reading for those interested:

Paragon Main Real Estate Reports Page
Positive & Negative Factors in Bay Area Markets
Survey of Bay Area Real Estate Markets
San Francisco & Bay Area Demographics

Please let us know if you have questions or we can be of assistance in any other way.
Information on neighborhoods not included in this report is readily available.

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group


San Francisco Luxury Home Market Report

After cooling somewhat in late 2015 and 2016, the San Francisco luxury home market bounced back in 2017 to hit new highs in the number of sales.

Note: Our report online contains several dozen updated analyses of the San Francisco luxury and ultra-luxury house and condo markets, of which this newsletter contains a relatively small sample. The full report is here: Paragon SF Luxury Home Report.

Increasing Sales Volumes
in 2017 and in 2018 YTD

Lux-SFD-3m_Condo-etc-1850_Sales_12-Month-Rolling.jpgLuxHome_YoY_Sales-Comp_first-6-weeks_since-2013.jpg

So far in 2018, SF luxury home sales have been quite strong, higher than in any previous year since the recovery began in 2012. The recent stock market volatility notwithstanding, the economic confidence that has been sweeping the nation is also showing up in our luxury home markets. For example, as of February 16th, the sales of condos, co-ops and TICs at prices of $2m and above has jumped 55% in the city, year over year, and luxury houses by 19%. However, year-to-date data is very preliminary and much more will be known once the spring selling season really gets started in earnest. Also, if the recent financial market volatility continues and becomes even more dramatic, that may cool high-end home markets (and IPO activity) as it has in the past.

2-18_Largest-House-Sales_MLS.jpg2-18_Largest-Condo_Co-op-Sales_MLS.jpg

Supply Growing Faster than Demand

Ultra-Lux-SFD-Avgs_Active-vs-Sales_since-2005_12-month-rolling.jpgUltra-Lux-Condo-etc-Avgs_Active-vs-Sales_since-2005_12-month-rolling.jpgExpired-to-Sales-Ratio_by-Prop-Type_Price-Segment.jpg

However, behind the positive sales statistics, inventory statistics provide a note of caution, especially for what we call the ultra-luxury home segments: houses selling for $5m+ and condos and co-ops selling for $3m+. In those segments, the supply of listings has been surging beyond demand, and many of these listings are expiring without selling. As an example of the supply and demand disconnect, ultra-luxury home sales make up about 2.5% of total MLS sales, but as of late February, they made up 12% of active SF MLS home listings (no offer yet accepted).

A big wildcard in this dynamic is the new luxury condo projects currently on market, under construction and planned. They dramatically swell supply in those areas where they are concentrated. It will be interesting to see if there is enough inherent demand to absorb, in the near future, the increasing supply of $3m, $5m and sometimes $10m+ condos. There have even been recent attempts to sell new penthouse condos in the $40 million price range. (Note: New-project marketing companies often try to keep their sales activity confidential, which can make it difficult to know exactly how well their most expensive units are selling.)

This does not mean that some very expensive houses and condos are not selling very quickly for well over asking price, as some certainly are. It all depends on the property, its specific location, appeal, preparation, marketing and, of course, pricing. Different neighborhoods are often experiencing different market conditions, some much stronger than others. This is discussed in much greater detail in the full report online.

Market Seasonality

The luxury real estate market in San Francisco is intensely seasonal. As illustrated by the 2 charts below, the high-price market wakes up and heats up as the new year gets going, with spring typically being the most active season overall for sales. It then slows way down in mid-summer, spikes back up dramatically for the short autumn selling season, and then plunges for the mid-winter holiday period.

Note the delay between new listings coming on market and listings accepting offers: For example, September is typically the single month with the highest number of new listings, leading to the big October spike of listings going into contract. Sales then usually close 3 to 5 weeks after going into contract. Right now is the period when new luxury listings start pouring on the market for the spring season.

LuxHome_2500-Plus_SFD-Condo_Co-op_New-Listings_by-Month.jpgLuxHome_Units-UC_by-Month-V2-Area-Chart.jpg

New Listings Coming on Market
Long-Term Trends since 2005, 12-Month Rolling Figures

The supply of luxury homes available to purchase plays a huge roll in market dynamics. Supply is affected by 3 large factors: 1) the number of new listings coming on market, 2) how quickly these new listings sell, and 3) how many listings are taken off the market because they cannot find buyers (expired and withdrawn listings). The chart below looks at longer term trends for new listing activity: The number of new listings hitting the market accelerated in early 2016 as the luxury segment was cooling due to financial market volatility (Chinese stock market crash, oil price crash, Brexit vote).

LuxHome_New-Listings_2500-Plus_SFD-Condo_Co-op_12-month-rolling.jpg

Sales & Average Dollar per Sq.Ft. Values

Luxury House Market by District

Sales of houses $3 million and above have soared in the central Noe, Eureka & Cole Valleys district (red line in first chart below) in recent years, to jump ahead of, by a tad, the wealthy, old-prestige, Pacific Heights-Marina district (blue line). These rapidly increasing sales have been fueled by younger, very affluent, high-tech industry buyers, who prefer the lower-key neighborhood ambiance, as well as the proximity to the hot Mission district and to highways south to the peninsula. However, the Pacific Heights district still utterly dominates house sales of $5 million and above – that chart can be found in the full report online – and its houses achieve by far the highest average dollar per square foot values, as illustrated by the blue line in the second chart below.

LuxHouse_Sales-Vol_Top-Districts_12-Month-Rolling.jpgLuxHouse_AvgDolSqFt_Top-Districts_12-Month-Rolling.jpg

Luxury Condo Market by District

The older, high-prestige neighborhoods running across the north of the city from Pacific & Presidio Heights-Marina through Russian, Nob and Telegraph Hills have been dominating the sales of luxury and ultra-luxury condos and co-ops (the top 2 lines in the next chart). The greater South Beach, SoMa, Yerba Buena, Potrero Hill and Mission district (the third, red line) saw its sales plunge from mid-2016 to mid-2017, but has had a significant recovery since. All three of these districts see very high dollar per square foot values (second chart below). And of course, some individual sales see much higher values than the averages.

LuxCondo_Sales-Vol_Top-Districts_12-Month-Rolling.jpgLuxCondo_AvgDolSqFt_Top-Districts_12-Month-Rolling.jpg

How the 2018 market plays out depends on a number of factors that are susceptible to change: financial markets, interest rates, the course of the high-tech boom, whether our big, local start-ups proceed with IPOs, political developments, and so on. (Positive & Negative Factors in Bay Area Markets) For the time being, the San Francisco market appears to be off to a heated start characterized by robust demand. Here at Paragon, our 2018 SF sales volume is up 30% year over year, though admittedly we are outperforming the general market, which is up about 5%.

Again, the full report online contains many more analyses: Paragon SF Luxury Home Report.

All our reports and articles are available here: Paragon Main Reports Page

Please contact us if you have any questions, or we can be of assistance in any other way.

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group


A Survey of San Francisco Bay Area Real Estate Markets

Our newly updated median home price maps for the entire Bay Area by city, for San Francisco by neighborhood, and then specifically for the Marin, Diablo Valley & Lamorinda, and Wine Country markets. To access them, click on the map image below and then roll your cursor over the maps on the webpage.

Bay Area Q4 2017 Median House Sales Prices

San Francisco Bay Area Median Home Sales Prices

Bay Area 2017 Median Condo Sales Prices

San Francisco Bay Area Condo Median Prices

One cannot draw many conclusions regarding the new year market by looking at January data, whose low volume of sales mostly reflects offers accepted in December, however, so far, it appears that the low-inventory/ strong-buyer-demand dynamic is continuing in 2018. One recurring situation in recent years is that buyers jump back into the market in January in larger numbers than sellers getting their homes listed to sell – setting up a mismatch between supply and demand. Typically, many more listings will start pouring onto the market in February and March, and a much better idea regarding where the market is heading in 2018 will be possible once spring selling season data starts coming in.

Since questions constantly arise as to how one development or another is affecting or may affect Bay Area real estate markets – new tax laws, the high-tech boom, interest rates, financial markets, new home construction, climate change, and so on – our chief market analyst has made an attempt to identify and quantify the factors currently at play: Positive & Negative Factors in Bay Area Real Estate Markets

This report will focus on Bay Area trends, but if you are more interested in the San Francisco market specifically, analysis is available via these links: SF Neighborhood Affordability *** SF Neighborhood Price Trends *** Our Latest SF Market Report

Year-over-Year Home Price Appreciation Rates
Comparing 2017 Median Sales Prices to 2016 Prices

San Francisco Bay Area Home Price Appreciation

Additional chart: Bay Area Median Home Price Appreciation since 1990

Average Dollar per Square Foot Values
& What You Get for $1 Million in the Bay Area

San Francisco Bay Area Dollar per square foot values

Your great aunt gives you a check for a million dollars to buy a home, so you go down to the real estate store to fill your cart. Below are some examples of how much home you would get for your money at 2017 average dollar per square foot rates: In Palo Alto, you could buy 626 square feet of home, and in Vallejo, 3817 square feet, with many other options in between.

Bay-Area_SqFt_for-1m_by-city.jpg

Bay Area Luxury Home Markets

Though San Francisco is a major player in luxury home sales, Silicon Valley – Santa Clara & San Mateo Counties together – has over 3.5 times as many homes selling for $2m and above. All 3 counties have similar average dollar per square foot house values in this high-price category. SF dominates the luxury condo market, and these condos, on average, sell at the highest per square foot values in the Bay Area. Marin, Alameda and central Contra Costa Counties have smaller luxury home segments, but you start to get more for your money.

Bay-Area_LuxHome-Sales_2m-plus_by-County.jpg

Market Dynamics Overviews

Bay-Area-All-Home-Sales-by-County.jpg

The decline in active listings available to purchase has played a significant role in pressurizing the market in recent years, especially as buyer demand has increased over the same period during which supply has dropped.

Bay-Area_Active-Listings_since-2012_NAR.jpg

Since median sales prices are so often quoted and compared, it adds context to look at the average size of houses in the different markets. (Comparing median prices to average sizes is not ideal, but you get the idea.)

Bay-Area_Avg-House-Size_by-County.jpg

New Housing Construction

This chart below from the November 2017 Housing Inventory Report issued by the SF Planning Department is for 2016, but illustrates how new housing construction in Alameda County has recently accelerated ahead of San Francisco and Santa Clara. Our larger analysis of this report, which focuses mostly on San Francisco, can be found here: SF New Home Construction Report

New-Construction_by-County.jpg

Days on Market, Overbidding Asking Prices
& Months Supply of Inventory

Bay-Area_Days-on-Market_by-County.jpg

Bay-Area_SP-OP-without-price-reduction.jpg

Bay-Area_MSI-Trends_SFD-Condo.jpg

Interest Rate Trends

Interest rate changes will certainly be one of the main factors to keep an eye on in 2018, as they play a huge role in housing affordability.

Short-term_30-Year-Rate-Trends.jpg

Bay Area Unemployment Rate Trends

Bay-Area_Unemployment-Rates.jpg

Bay Area Housing Affordability Trends

The CAR Housing Affordability Index, of which the trend lines since 1991 are charted below, estimates the percentage of households who can afford to purchase a median priced house in their county, based on a 20% downpayment. The big factors in this analysis are prevailing household incomes, interest rates, and, of course, quarterly median house sales prices. It should be noted that half of home sales are, by definition, below the median sales price, and that if one included condos in the equation, that would add substantially to affordability percentages.

For Q1 2018, the Index will attempt to factor in the effects of the new federal income tax law limiting mortgage interest, property tax and state income tax deductions, which will presumably reduce affordability percentages further. As seen below, many Bay Area counties are already getting close to historic lows, clearly one of our biggest social and economic challenges.

Affordability_Bay-Area-Counties_Chart.jpg

County to County, Metro Area to Metro Area
& State to State Migration Trends
Bay Area County-to-County Migration

Though people from all over the country and world migrate to and from the Bay Area, the greatest flow is actually between the local counties themselves. In net migration numbers, amid all the back and forth, people are, generally speaking, flowing from the core, most expensive counties to adjacent, somewhat less expensive counties, and then to even more affordable counties outside the inner Bay Area. However, the inner core counties, where the high-tech boom has been most concentrated, attract significant immigration from outside the Bay Area, state and U.S., which is why their population numbers have continued to grow. Note: This chart does not include Santa Clara County, though much of its migration patterns can be seen in the data of the other counties.

Bay-Area_County-to-County_Annual-Migration.jpg

U.S. Metro Area to Metro Area Migration

This chart pertains to immigration in and out of the 5-county San Francisco metro area, which does not include Santa Clara to its south. Between U.S. metro areas, more people are leaving the SF metro than arriving, but that deficit has been more than made up for by substantial numbers of foreign immigrants. These numbers, however, pre-date the much more hostile view of immigration by the current administration, so we will have to wait and see what effects derive from that change. Looking at net metro-area migration, more people come to the SF metro area from Santa Clara County, Southern California, New York, Chicago and Boston. And more people leave the SF metro area to go to other (less expensive) CA counties east and north of the Bay Area, and to metro areas in Texas, Nevada, Oregon and Washington State. The exodus is made up of both people changing jobs, and retirees, though they tend to go to different places.

Bay-Area-Migration-Trends.jpg

If you want to read about state to state migration patterns, our recent article is here: California Migration Trends

All our Bay Area reports and articles can be found here: Market Trends & Analysis

One of our recent and popular reports: San Francisco & Bay Area Demographics

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices can be and often are affected by other factors besides changes in fair market value, and longer term trends are much more meaningful than short-term. It is impossible to know how median prices apply to any particular home without a specific comparative market analysis. All numbers in this report are to be considered approximate.

© 2018 Paragon Real Estate Group


San Francisco Real Estate Market – New Year Report

The median SF house sales price in 2017 was $1,420,000 (up from $1,325,000 in 2016), and for condos, it was $1,150,000 (up from $1,095,000). Looking just at the 4th quarter, median prices were $1,500,000 for houses (up from $1,350,000 in Q4 2016) and $1,185,000 for condos (up from $1,078,000) respectively.

Additional chart: Bay Area Median Home Price Trends by County

The chart below, based on S&P Case-Shiller Index data, tracks general price appreciation trends of homes in the upper third of prices in the 5-county SF Metro Area. Case-Shiller does not base their calculations on median sales price changes but uses its own proprietary algorithm. This chart has been simplified to only reflect percentage increases and decreases from various points in real estate cycles. Since it covers 5 counties, it is a very generalized illustration.

Link to our full report on the Case-Shiller Home Price Index

Link to our report on SF Bay Area real estate cycles

Moving into 2018, there are a lot of spinning plates in the air – local, state, national and international factors that could affect markets. 2017 saw real estate markets surge and financial markets soar. After some cooling from mid-2015 to mid-2016, the Bay Area high-tech economy surged back into high speed, with companies leasing enormous spaces in newly built office buildings – which they will presumably fill with new hires. Unemployment rates have flirted with historic lows, and 2018 may see some major local IPOs, which could create great quantities of new wealth. The Bay Area still has probably the most dynamic, innovation-fueled economy in the world and indisputably remains among the great metro areas on the planet – but there are also significant social, economic, political and environmental challenges looming.

Congress delivered an unpleasant holiday present to many Bay Area residents in the form of federal tax law changes limiting the deductibility of mortgage interest and state and local taxes. The effect of these changes make living in an already high cost-of-living area more costly for many residents, and also reduce some of the financial incentives of homeownership, especially for more expensive homes. Predictions on the effect of these tax changes on local housing markets and the business environment range from one extreme (economic devastation) to the other (shrug), and the state legislature is currently working on bills that might blunt the negative financial impacts. It is too early to guess how it will all play out. We live in interesting times.

This January 2018 report will range far and wide looking at real estate, and some economic and demographic issues that impact it. Most of the charts are self-explanatory, so we have kept the text to a minimum. A review of annual, year-over-year, real estate market trends in San Francisco are at the end of this report.

Link to our report on market seasonality

Link to our analysis of domestic and foreign migration trends

Link to our new survey of SF & Bay Area demographics

Link to our report on economic context factors

Link to our report on Bay Area housing affordability

Link to our report on the apartment building market

 San Francisco Luxury Homes Market

SF Home Prices by Neighborhood

Annual Market Trends

Most of these annual trend charts show the market heating up again in 2017 after some cooling in 2016. Very generally speaking, since 2015, the house market has been hotter than the condo market, and the more affordable neighborhoods hotter than the more expensive. But 2017 was a strong year across virtually all market segments.

All our real estate analyses can be found here: Paragon Market Reports

Information on neighborhoods not included in this report is readily available.

If you will forgive a little celebration on our part: In 2017, Paragon became the largest brokerage in San Francisco by dollar volume sales of residential and multi-unit residential real estate (as reported to MLS, per Broker Metrics). We opened our doors in 2004.

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group


Dynamic October Market in SF Real Estate

The October 2017 median house sales price in San Francisco surged over $100,000 above the previous peak in May to hit a new high at $1,588,000 (sales reported by 11/5/17). A major factor was that October was a record-breaking month for luxury house sales, and more sales of expensive homes pull up the median price. The median condo sales price, at $1,180,000, was a tad below the recent peak hit in August, and luxury condo sales reported to MLS were well below their peak sales volume reached this past June. The luxury market is covered further down in this report.

San Francisco Monthly Median Home Price Trends

We prefer measuring median price trends by periods longer than 1 month (which are prone to fluctuate considerably without great meaningfulness), and the below chart illustrates rolling 3-month median price trends for houses ($1,415,000 for August, September, October) and condos ($1,175,000), and 6-month rolling median prices for TICs ($982,500). Remember that median price changes are not perfect measurements of changes in fair market value.

San Francisco 3-Month Rolling Median Home Price Trends

And this chart below based on CoreLogic S&P Case-Shiller data compares the appreciation of the more expensive Bay Area home markets (blue line) – such as most of SF, Marin, San Mateo and Diablo Valley – to the overall national trend (green line), going back to 1987. It is interesting to see where our local appreciation rates have diverged from national rates: The divergence since 2012 has been particularly striking.

Note that the numbers on this chart all refer to a January 2000 price of 100. So, the latest Bay Area reading of 238 means that home prices here have appreciated, according to Case-Shiller, by 138% since January 2000. National home prices appreciated by 95% during that period.

San Francisco vs National Home Price Appreciation

San Francisco Neighborhood & Realtor District Map

San Francisco Neighborhood & District Map

San Francisco Market Overviews
SF House, Condo & TIC Sales by Realtor District

Some districts are dominated by house sales and others by condo sales. The most balanced is the greater Noe, Eureka & Cole Valleys district with almost equal numbers of both. Condo sales now outnumber house sales in the city, a trend which will continue to accelerate with new construction. Looking at the horizontal columns below, the gray portion represents house sales, the teal, condo sales, and the green, TIC sales.

San Francisco House & Condo Sales by District

SF Home Sales by Price Segment

Home sales under $1m are dwindling, and 70% of those are condos or TICs.
The highest number of sales is now in the $1m to $1.5m price segment.

San Francisco Home Sales by Price Segment

Sales by Property Type & Bedroom Count

Compared to other Bay Area markets, SF has more small, 2-bedroom houses and fewer big, 5+ BR, house sales – and far more condo sales at much higher prices than in other counties. By far the most prevalent SF home sale now is a 2-bedroom condo.

San Francisco Average Sales Prices by Bedroom Count

Link to Chart: New Listings Trends since 2007
Link to Chart: Unit Sales Trends since 2007

San Francisco Luxury Homes Market

As mentioned before, luxury house sales hit a new high in October 2017: In recent years, October has become the biggest month for very expensive house sales. This is not the case for luxury condos, which typically peak in spring. Looking at broader trends in the second chart below, the luxury home market grew dramatically from 2012 through 2015, cooled significantly in 2016 (especially the luxury condo segment), and then surged back in 2017 to hit new highs. But then everything seems to be surging higher nowadays, from stock markets to homes to iPhone prices.

Luxury house sales in October were concentrated, highest to lowest numbers, in the Pacific Heights-Marina district (D7), the Noe, Eureka & Cole Valleys district (D5), and the Lake Street-Sea Cliff district (D1). These 3 districts contained about 80% of the sales. Other luxury house sales were scattered singly around the city: Russian Hill, Telegraph Hill, Inner Sunset, Potrero Hill, Mission, Bernal Heights, Hayes Valley and Lower Pacific Heights. The 3 districts that dominated luxury condo sales, with 9 to 11 sales each, were the Russian & Nob Hills district (D8), Pacific Heights-Marina (D7), and the South Beach-Mission district (D9). There were also a handful of sales in Noe-Eureka Valley (D5), and a couple in Lake Street-Richmond (D1). (Sales reported by 11/5/17.)

San Francisco Luxury House Sales by Month

Link to Chart: Luxury Condo Sales by Month

San Francisco Luxury Home Sales Trends

Median Home Price Trends by Neighborhood
2005 to Present

Following are 2 charts on houses and one on condos illustrating home price appreciation trends over the past 12 years in selected neighborhoods. We generally picked neighborhoods with greater quantities of sales, but please contact us if you would like information on one not included below. (The highest priced house neighborhoods like Pacific and Presidio Heights – with median prices in the $6m range – have relatively few sales and an enormous range in sales prices, which has a tendency to make the trend lines jump up and down somewhat erratically.)

Neighborhoods with current median house prices under $1.5m have generally
seen smooth, consistent appreciation since the recovery began in 2012.

San Francisco Neighborhood More Affordable Median House Price Trends

Neighborhoods with current median house prices of $1.5m to $3m:
Some of these saw median price dips in 2016, but recovered in 2017

San Francisco Median House Price Trends over $1,500,000

Two-Bedroom Condos – Median Sales Price Trends:
Some SF condo markets saw significant dips in 2016, but recovered in 2017

On the chart below, South Beach would ideally be divided into two distinct neighborhoods, with condos on lower floors of highrises in one, and condos on higher floors in another (distinctly more expensive). Since that is not easily possible, the median price below is a blend of both. To a large degree, all median sales prices are derived from a blend of a wide range of individual sales, but the highrise dynamic is concentrated in the greater South Beach area.

San Francisco Median 2-bedroom Condo Price Trends

SF Neighborhoods & Property Types: Hottest to Coolest Markets

The following charts looks at the various districts of the city by a number of standard statistical measures of supply and demand, or market heat. As has been the case for the last couple years, generally speaking, the greatest pressure of buyer demand has continued to be focused on the more affordable house neighborhoods (affordable by SF standards), such as those in the Sunset/Parkside District.

Note: These are general statistics and small differences between districts or market segments are not particularly significant.

Overbidding Asking Prices

First houses and then condos: The higher the %, the hotter the market.
Some of these percentages are staggeringly high.

San Francisco Neighborhood Overbidding House List Prices

Overbidding in the condo market is not quite as frantic as with houses.

San Francisco Neighborhood Overbidding Condo Prices

Months Supply of Inventory & Average Days on Market

First houses, then condos: The lower the statistics, the hotter the market.

San Francisco Houses - Months Supply of Inventory and Days on Market

San Francisco Inventory and Days on Market - Condos

Hottest to Coolest by Price Segment & Property Type

To a large degree, what is seen below dovetails with the analysis by district above: More affordable home segments are strongest, and the affordable house segment in particular has been crazy feverish. The ultra-luxury condo market is, by far, the softest: Part of this is certainly due to competition from new, luxury condo projects coming on market.

San Francisco Sales Prices to List Prices

San Francisco Market Absorption Rate

San Francisco MSI by Price Range

Seasonality & the SF Homes Market
Advantages to buying during the mid-November to mid-January slowdown

Just before Thanksgiving the market begins to rapidly subside until starting to revive about 7-8 weeks later. Many buyers simply check out during this period, but there are good reasons for staying engaged – mainly the possibility of getting a much better deal. Starting in October and extending into November, sellers begin reducing prices in large numbers as they try to capture the attention of disappearing buyers: Buyers should treat these as brand new listings and take a new look. Competition between buyers drops dramatically during the mid-winter period, and since competitive bidding is the biggest single factor behind higher prices, its decline can mean significant savings. Fewer buyers also means that sellers are often more willing to negotiate: Throw offers in at whatever price you feel is right and see where they go. It is true that the number of new listings coming on markets plunges, but there are still hundreds of listings to consider for those willing to stay in the game.

The dark red lines in the charts below illustrate these big, seasonal market shifts.

Price Reductions Soar in October/November

San Francisco Home Price Reductions

Overbidding Declines

San Francisco Overbidding Seasonality

San Francisco Seasonality Selling over List Price

Average Days on Market Increases
Making sellers more willing to negotiate

San Francisco Market Seasonality - Days on Market

Inventory Drops
But hundreds of listings remain on market

San Francisco Seasonality and Active Listings on Market

Median Home Prices Drop
due to a number of factors, including a reduction in demand

San Francisco Seasonality and Median home prices

All our real estate analyses can be found here: Paragon Market Reports

Link to SF Neighborhood Home Price Tables
Link to our SF luxury house market update
Link to our SF luxury condo market update
Link to our apartment building market report

Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change the statistics for the last month in some charts.

© 2017 Paragon Real Estate Group


Q3 SF Real Estate Market Review

Year-over-year, a low inventory homes market dropped even lower, while buyer demand increased to keep the pot boiling in San Francisco through the third quarter, when activity typically cools down between the spring and autumn selling seasons. Since closed sales in each month mostly reflect the market heat in the previous month, when the offers are actually negotiated, we will not have hard data on September until October sales data becomes available in November. One thing we do know is that the number of new listings coming on market in September, which is usually the month of the year with the highest number of new listings, is down considerably from last year – but the number of listings accepting offers increased: Less inventory, but more demand.

Q3 SF Median Home Sales Price Changes since 2005

San Francisco Q3 Median Home Price Trends

The Q3 SF median house sales price was $1,365,000 and the median SF condo sales price was $1,175,000, considerable year-over-year increases over Q3 2016 prices: 7% and 11% respectively. It is not unusual for median prices to drop from Q2 to Q3, to a large degree due to the seasonal decline in luxury home sales, as well as the typical overall market cooling during the summer, and this occurred for houses, which dropped $75,000 from Q2, similar to drops in previous years. But condos bucked this trend and increased $40,000 quarter to quarter. (Q2 to Q3 change is not illustrated on this chart.) However, while the house inventory in the city has been relatively unchanged for 60+ years, tens of thousands of new condos have come into the market over recent decades, which means that comparing the basket of sales in different periods is not always apples to apples.

Q3 San Francisco Market Trends since 2005
Comparing Q3 statistics for the past 12 years

Q3 New Listings Coming on Market since 2005

New listings hitting the market dropped appreciably year-over-year, doing no favors for buyers competing for homes in Q3 overall, and in September specifically.

San Francisco Q3 New Home Listings on Market

Months Supply of Inventory (MSI), Q3 since 2005

MSI compares demand to supply in one statistic: The lower the MSI, the higher the demand vs. the number of listings available to purchase. The MSI for the SF house market in Q3 2017 was as low as in any Q3 during the past 12 years. For San Francisco condos, the MSI was somewhat higher, but still historically low (but does not include the substantial inventory of new-project condo listings, not listed in MLS). Both are down significantly from Q3 of 2016: 2016 was a cooler market between two very hot markets in 2015 and 2017.

San Francisco Q3 Months Supply of Inventory

Average Days on Market, Q3 since 2005

San Francisco Q3 Days on Market

Overbidding List Prices
by Month since December 2015

In the last 6 years, overbidding percentages have usually declined from the Q2 spring selling season to the quieter Q3 summer market. But not this year: This year overbidding increased in July and September to their highest points since mid-2015.

San Francisco Overbidding Home Prices

Context Economic Factors to Bay Area Housing Markets

Market-Context-Tile_V2.jpg

We recently completed a report placing the Bay Area housing market within the context of a wide variety of other economic and demographic dynamics, such as population growth, employment and hiring, the stock and the IPO markets, consumer confidence, interest rates, commercial lease rates, , aging homeowners (who sell less frequently), housing affordability and new housing construction. Because conditions, trends and cycles seen among them are, more often than not, closely interrelated. The full report is online here: Economic Context Report.

San Francisco Luxury House & Condo Markets

In September, we issued 2 detailed reports on the San Francisco luxury house market, and the SF luxury condo, co-op and TIC market. Above are 2 of many updated analyses. The complete reports can be found here:

Link to our SF luxury house market update
Link to our SF luxury condo and co-op market update

San Francisco Investment Property Market

After dropping in 2016, SF residential rents appear to be making a small recovery, though the data is still very short-term, and there are thousands of new apartments in the new construction pipeline in the city. This chart is from our latest report on the San Francisco, Alameda and Marin multi-unit residential markets:

Link to our apartment building market report

Trends in Selected San Francisco Neighborhoods

We have dozens of analyses of appreciation trends within specific SF neighborhoods and districts, and below is a sampling, some by median sales price and others by average dollar per square foot value. Some city neighborhoods plateaued or saw declines in values in 2016, when segments of the market distinctly cooled: Generally speaking, these were more expensive home segments, and condo markets most impacted by new-project condos coming on market with major new supply. Affordable house markets largely continued to appreciate in 2016. In 2017 to date, most areas of the city have experienced further appreciation.

Changes in these statistics do not necessarily correspond exactly to changes in fair market value, as they can be affected by a variety of factors. Neighborhoods with relatively few sales and broader ranges in individual sales prices are most prone to fluctuations unrelated to changes in fair market value. Longer-term trends are always more meaningful than shorter term. If you are interested in a neighborhood not included below, please let us know.

Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

SF neighborhood home price tables: Median Sales Prices by Bedroom Count

All our real estate analyses can be found here: Paragon Market Reports

Over the past 12 months, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage. (Dollar volume sales reported to MLS per Broker Metrics.)

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group

 No one knows San Francisco real estate better than Paragon.


A Hot Autumn Market in San Francisco?

Generally speaking, late summer market dynamics (or, for that matter, during the mid-winter doldrums) are not of great significance and do not tell us much about where the market is heading. September, however, is usually the single month with the greatest number of new listings hitting the market in San Francisco, and that surge fuels sales through mid-November, when activity begins to plunge. The coming two months will be the next major indicator: Will the SF market continue to maintain the intense high-demand, low-supply heat of this past spring, or will it cool? While the entire market is affected by seasonality, the luxury home segment is fiercely so, and the next couple months will be the peak selling period for high-end homes until spring 2018 rolls around.

City-Wide Home Appreciation Trends since 2005
Median Sales Prices & Average Dollar per Square Foot Values

As of September 1, the 3-month-rolling median sales price was $1,418,000 for SF houses, and $1,160,000 for condos. The average dollar per square foot value was $907 for houses and $1056 for condos.

San Francisco Median Home Sales Price Trends

San Francisco Average Dollar per Square Foot Trends

San Francisco Neighborhood Appreciation Rates
2011 to 2017 YTD, Median Sales Price Change

Median sales prices are not perfect indicators of changes in values for specific homes: They can be and often are affected by factors other than changes in fair market value, and shorter-term anomalies are not uncommon. What is certainly true is that every part of the city has seen tremendous appreciation since the recovery began in 2012, however the percentages on the charts below should be considered very approximate indications of the scale of change.

These charts delineate 2011 and 2017 YTD median sales prices by neighborhood, as well as the percentage change between the two. The 2 charts on house appreciation are followed by 2 on condo appreciation. If you wish information on a neighborhood not included in the charts below, please let us know.

SF HOUSE Median Sales Price Appreciation Rates

SF Neighborhood House Price Appreciation

NOTE: A perfect example of how median price changes can misrepresent changes in fair market value can be seen above: Typically, Noe Valley and Eureka Valley (Castro) have very similar median house prices, but in 2017 YTD, the Eureka Valley median price unexpectedly jumped by an astonishing $500,000 (23%), putting it far above Noe, and giving it a much higher overall appreciation rate. However, the average size of houses sold in Eureka Valley so far in 2017 suddenly jumped by 22% from 2016: That is, its houses did not just suddenly and inexplicably have a tremendous jump in value: the average size of homes sold changed, probably temporarily. Monthly median price changes in particular, trumpeted everywhere in the media as vitally important, are often unreliable due to seasonality and the small size of the data set.

SF Neighborhood Home Price Appreciation

SF CONDO Median Sales Price Appreciation Rates

Thousands of newly constructed condos, which typically sell for higher prices than resale condos, have hit the market in recent years, which means year-over-year comparisons are not always apples to apples. Generally speaking, comparable-condo appreciation rates have been well below house appreciation rates since 2015, because of the difference in the supply available to purchase.

San Francisco Neighborhood Condo Price Appreciation

SF Neighborhood Condo Price Appreciation

The September Rush of New Listings
General Market

San Francisco New Listings

Luxury Home Market

For some reason, September 2016 saw a stupendous rush of luxury home listings coming on market, which among other effects led to the highest monthly number of luxury house sales ever in October 2016. (As an aside, luxury condo and co-op sales hit their highest sales volume this past June.)

San Francisco New Luxury Home Listings

Where to Look in Your Price Range

In August, we updated our complete series of charts delineating where one is most likely to find a home in a specific price range. Below are 2 of the charts, and the entire series can be found here: SF Neighborhood Affordability.

San Francisco Condo Prices by Neighborhood

San Francisco House Prices by Neighborhood

National Housing Affordability

This next chart illustrates home affordability for selected metro areas across the country as calculated by the National Association of Realtors. The 7 Bay Area counties, in our 2 metro areas, are the least affordable in the nation – not the happiest of distinctions, except for those planning to sell and move out of the area.

U.S. Metro Area Housing Affordability

San Francisco, California & the United States

The appreciation of home prices in San Francisco since 2011 has out-performed overall state and national markets by a substantial margin.

San Francisco, California and US Home Price Trends

County House Markets

Since San Francisco is considered the big city in the Bay Area (though San Jose is actually larger), it seems counter-intuitive that its house market is one of the smallest, but this is a major part of its ruling dynamic: Very little supply compared to intense demand. Owners in the city (and the nation) are getting older, and selling their houses ever more infrequently. And virtually no new houses are being built within SF itself.

SF Bay Area House Markets

Condo sales significantly outnumber house sales in SF, and the supply of condos available to purchase has surged with new project construction. This has made that market segment somewhat less heated; condo owners also tend to sell more frequently than house owners. However, the condo market in the city is much more expensive than in other counties.

Ultra-Luxury House Sales in San Francisco
Houses Selling for $5 Million & Above

A quick look at the very highest end of the SF market. Though other districts, such as the greater Noe-Eureka-Cole Valleys district, have increasingly surged into the luxury home segment, when it comes to the realm of the really big, most expensive houses, the district comprised of Pacific & Presidio Heights, Cow Hollow and Marina dominates with 75% of sales. House sales there can exceed $30m, though that is still very rare.

Most expensive houses in San Francisco

Bay Area Home Price Appreciation
per the S&P CoreLogic Case-Shiller Index

Earlier in this report, it was mentioned that median price changes can sometimes be unreliable as indicators of actual appreciation. However, the S&P Case-Shiller Home Price Index measures appreciation using its own special algorithm tracking resales of the same home, and it does not use median sales prices. This first chart below, based on Case-Shiller, is a simplified, smoothed-out look at the up and down cycles over the past 33 years in the higher end of the Bay Area real estate market, which predominates in most of the city, Marin, San Mateo and areas like Piedmont, Diablo Valley and Lamorinda. Because it covers 5 counties, it merges the differences between their separate markets into a single trend line.

San Francisco Bay Area Home Price Cycles

This second Case-Shiller chart illustrates how homes in different price segments around the Bay Area have recently been appreciating at considerably different rates. C-S divides all the Bay Area house sales into thirds by number of sales: low-, mid- and high-price. As illustrated in the lower green line, the higher-priced segment went flat in appreciation in 2016, but then jumped back to life in 2017. The most affordable price segment (top blue line) has been experiencing the highest pressure of buyer demand and competitive bidding, and since April 2016, has out-appreciated the most expensive segment, 12.4% to 4.3%, i.e. almost triple the rate of increase. The middle price segment (gold line) has been in between, appreciating by 7.8%.

These dynamics are generally true within each county, as buyers, somewhat desperately, search for homes they can still afford, in the area they wish to live.

The numbers on this chart all refer to a January 2000 home price of 100. Thus 262 signifies a price 162% higher than in 2000.

Case-Shiller SF Home Price Trends by Price Tier

Months Supply of Inventory (MSI)

The lower the months supply of inventory, the higher the demand as compared to the supply of homes available to purchase, i.e. lower MSI equals a hotter market. The entire Bay Area has been experiencing very, very low MSI figures recently, with San Mateo at rock bottom. (Its median house sales price has just recently been exceeding the median price in the city.) Alameda and Contra Costa Counties, generally offering considerably more affordable home prices than Silicon Valley, San Francisco and Marin are also at extreme lows.

Within SF itself, the MSI for houses alone, and especially in the more affordable neighborhoods, is substantially lower than the MSI for condos, though both have been very low since spring began.

SF Bay Area Months Supply of Inventory

Mortgage Interest Rates

Since the election, interest rates have seen a wild ride, first up and then down. As of the end of August, rates hit their lowest point so far in 2017, a significant financial advantage for buyers.

Mortgage Interest Rate Trends

Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

All our many Bay Area real estate analyses can be found here: Paragon Market Reports

Over the past 12 months, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage.

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group


1000+ Things to Do in San Francisco & Bay Area

Out of town guests are arriving, the kids are hungry, the dog is restless, or you are just lying on the couch reading email and need something to motivate you to get up and out of the house.

Dinner, brunch, burritos, burgers, desserts, bars, music, dance, theater,
walking, biking, hiking, and things to do with visitors, children and dogs.


 


FOOD & DRINK

Hottest SF Restaurants
Zagat’s Best Restaurants
Best Cheap Eating
More Cheap Meals
Best Spicy Food
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More Breakfasts
Essential Bakeries
Best Brunch
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Out & About

Things to Do
To Do with Kids
More To Do with Kids
8 Unique Day Trips
Weekend Getaways
Meditation Retreats
To Do in Oakland
To Do in Marin
In Napa & Sonoma
Top 10 SF Bike Rides
Longer Bike Rides
Mountain Biking
City Walks
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15 Stairways
Best Views
Bay Area Hikes
Places to Kayak
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Arts & Entertainment

Arts & Events
Places to Dance
Best Jazz Clubs
Stand-Up Comedy
Music
Museums
Ballet
Opera
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Theater
Place Magazine
Paragon Real Estate Market Reports


Note: You will undoubtedly find yourself disagreeing vehemently with one or more of the above lists: best burrito, brunch and dive bar are particularly contentious, ferociously disputed issues in the Bay Area. We hope you will accept our apologies for any egregious errors.

© 2017 Paragon Real Estate Group


Bay Area Home Prices, Incomes & Demographics

Which counties are most expensive or most affordable, have the highest overbidding and appreciation rates? Which are healthiest, most educated, have the highest incomes or worst poverty percentages? What cities have the biggest, most expensive homes? And where do Bay Area residents come from?

August 2017 Report

Median House Price Appreciation since 1990

Appreciation trend lines are largely similar across the Bay Area, but some counties have outperformed others. Solano is still well below its previous peak price ten years ago, and Sonoma and Napa are just now coming back up to their previous highs. Most of the other counties have exceeded their 2006-2007 peaks, sometimes by very wide margins. As will be explored further below, proximity to the heart of the high-tech boom has been one of the major factors in recent appreciation rates. Still, it is worth noting that in the past year and a half, appreciation rates in less expensive towns and neighborhoods have typically been higher than in more expensive areas, an indication of the sometimes desperate search for affordable housing – however that might be defined within the context of any given market.

Average Dollar per Square Foot Values

The Most Expensive Places in the Bay Area

By clicking on map, you can also access our full collection of home price maps delineating current city home prices throughout the Bay Area.

Note: Diablo in Contra Costa with 6 sales at a median price of $2.73m, and Penngrove in Sonoma with 13 sales at a median price of $919,500, had higher prices than Alamo and Healdsburg in the period measured, but because of their very low number of sales, we highlighted the larger markets on the map above.

Annual Home Price Appreciation Rates (since 1996 and 2011)

This table below illustrates annual compound appreciation trends going back to the post-recession recovery that began around 1995, and also from the current post-2008-crash recovery which started in 2012. This is based upon someone purchasing their home all cash: If one had purchased with a 20% down payment, then the annual compound rate of appreciation of that cash investment would be much, much higher.

There are 3 big factors behind local appreciation rates: 1) the emergence of the Bay Area in the past 20 years as an international, economic powerhouse, which generally lifted all markets, 2) how close the specific market is to the white-hot centers of the high-tech boom (SF and Silicon Valley), and, 3) how badly the county was hammered by the foreclosure crisis, since those markets whose prices fell 50% or more to unnatural lows bounced back more on a percentage basis than those counties less affected by the subprime catastrophe.

SF has had the highest compound annual rate since 1996: It is the epicenter of the Bay Area high-tech, bio-tech and fin-tech economic miracle. But Oakland soars above all other markets in appreciation since 2011, because of a combination of factors: It is the closest affordable alternative to much higher SF prices; it is a lively, multi-cultural urban area appealing to high-tech workers; and its housing prices dropped an astounding 60% after the 2008 crash, which set them up to fly upward once the heavy anchor of distressed property sales was removed.

Having complete confidence in our ability to predict what will happen in the past, we now recommend that all our clients go back in time to 1995 or 2011 and buy as many homes as possible.

Economic & Demographic Factors

Underpinning the Bay Area real estate market and general economy are often amazing, but sometimes worrisome statistics. Below are tables and charts ranking counties, zip codes and cities by a variety of parameters. The Bay Area ranks extremely high in income, education, employment rates and general health factors, often grabbing almost all the top rankings, but it is also unhappily high in income inequality, housing unaffordability and poverty.

Bay Area City & Zip Code Income Rankings

Atherton has the highest median household income and the highest median income per worker in the state, followed by a handful of other nearby, highly affluent, Silicon Valley communities. In San Francisco, South Beach and the Presidio zip codes make the top rankings, but note that several of the most expensive neighborhoods in SF are in zip codes that mix highly affluent with less affluent areas (such as Pacific Heights and Western Addition, or Russian Hill and the Tenderloin). SF also has much higher percentages of residents who are tenants, and generally speaking, renters have lower incomes than homeowners.

In Marin County, Belvedere, Tiburon, Kentfield and Mill Valley make the lists; in Contra Costa, the Diablo Valley & Lamorinda communities of Blackhawk, Alamo, Lafayette, Orinda and Moraga rank highest; in Alameda, Piedmont is in the top 10 cities for median worker earnings.

Bay Area zip codes utterly dominate the CA rankings for higher education, taking 14 of the top 15 spots out of about 2600 zip codes. Unsurprisingly, high positions in income usually correlate with the same in education (and having UC Berkeley and Stanford in our midst was a help): Top Zip Codes for Higher Education

If you wish to explore Bay Area rankings by other criteria: Top 25 Rankings in California

Employment & Unemployment

High-tech employment in SF & San Mateo Counties illustrates broader trends in hiring: massive growth and some recent cooling.

Unemployment rates are bumping against historic lows.

Bay Area Poverty Rates & Housing Affordability

Beneath surging affluence, significant percentages of county populations are living in poverty. High housing costs are a big factor.

Housing affordability percentages are approaching historic lows in some counties,
a huge Bay Area political, economic and social issue. If interest rates start to go up
considerably, the picture will worsen, but so far they have remained quite low.Link to our mortgage interest rate chart
Link to our full report on Bay Area housing affordability

Bay Area Luxury Home Markets

Santa Clara is by far the biggest luxury home market in the Bay Area by the number of homes selling for $2m+, but then its overall market is also the largest, more than 2½ times larger than that of San Francisco. Average dollar per square foot values for luxury house sales are surprisingly similar across Santa Clara, San Mateo and San Francisco, with Marin County just a notch lower. Moving further out, one gets considerably more luxury house for the money.

Generally speaking, SF luxury condos and co-ops command the highest dollar per square foot values in the Bay Area: Think fabulous units on high floors of prestige, ultra-amenity buildings with absolutely staggering views.

Calculating luxury markets by the top 10% of sales, the thresholds for the luxury designation vary widely: For example, in Sonoma, the threshold is about $1,125,000 for houses, while in San Francisco, it is about $3m.

Other Angles on Bay Area Market Dynamics
Bay Area Condo Markets

Overbidding

Average Days on Market

Bay Area Market Sizes

Bay Area Rents

Rents are even more sensitive to hiring trends than home prices.Link to our apartment building market report

Additional Demographic Snapshots

The foundation of the Bay Area economy is a richly multi-cultural society constantly infused by many of the best and brightest from around the world.

S&P Case-Shiller Home Price Index for the San Francisco Bay Area

Case-Shiller charts are complicated, which is why we have put them at the end of the report, but they do give perspectives on home price appreciation by price segment. The different price tiers had bubbles, crashes and recoveries of very different magnitudes, with the low-price tier having an extravagantly enormous subprime bubble and a disastrous crash, while more costly home tiers having lesser bubbles and crashes. The end result now is that all three tiers are relatively close in their current prices as compared to 2000 values, but are in very different circumstances when compared to their 2006-2007 bubble peaks. Around the Bay Area, generally speaking, San Francisco, San Mateo, Marin, Santa Clara and Diablo Valley-Lamorinda have high-price tier markets with smaller mid-price segments; Alameda, Sonoma, Napa, Solano and non-central Contra Costa have mixes of low-price and mid-price markets (though there are, of course, pockets of high-price homes as well).

All C-S data points refer to a January 2000 home price of 100. Thus a reading of 250 signifies a price 150% higher than in January 2000.

More affordable homes have been appreciating much more quickly in the past 15 months than more expensive price segments.

Link to our full S&P Case-Shiller Index Report

All our reports, including dedicated analyses of the SF luxury home segment, and of the Marin, Sonoma and Diablo Valley-Lamorinda markets, can be found here: Market Trends & Analysis

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices can be and often are affected by other factors besides changes in fair market value, and longer term trends are much more meaningful than short-term. It is impossible to know how median prices apply to any particular home without a specific comparative market analysis. All numbers in this report are to be considered approximate.

© 2017 Paragon Real Estate Group


San Francisco Real Estate: The Paragon Mid-Year Report

After hitting new monthly highs in May, San Francisco houses and condos hit new quarterly peaks in Q2 2017. However, median house price appreciation, $100,000 above its previous high, has been more dramatic over the past 2 years than median condo price appreciation, which has mostly plateaued due to the surge in new-project condos coming on market. As illustrated above, it is not unusual for median prices to peak for the year in Q2, and a significant part of this dynamic, besides the competitive heat of the market in springtime, is the large jump in high-end home sales seen at this time of year. More expensive home sales closed in Q2 than in any quarter in the past.

A Very Hot Spring
SF Median Sales Price Appreciation
by Quarter since 2012

San Francisco Luxury Homes Sales
by Month since 2014

Sales of luxury condos surged dramatically this spring to hit their highest number ever in June on a monthly basis, and in Q2 on a quarterly basis. Luxury house sales of $3m+ also barely exceeded the previous quarterly high in sales, but its component months were well below earlier monthly peaks. Note that condo figures do not include new luxury condo sales unreported to MLS.

Our complete report: The San Francisco Luxury Home Market

Building Cranes Everywhere

Approximately 64,000 housing units, 31 million sq.ft. of commercial space
& 25 hotels with 4685 rooms are now in the SF new construction pipeline –
with 5700 units, 10 million sq.ft. and 5 hotels currently under construction.

In the above chart on new housing construction, the main issue for the SF residential sales market is new condo construction and its effect on the supply and demand dynamic. Over 5000 new condos have been built in the past 4 to 5 years, with another 2000 expected to hit the market in the next 2 or 3. This surge of supply has been a substantial factor in the overall plateauing of condo median sales prices in the city since 2015, and some declines in those neighborhoods where new construction has been concentrated. However, it is true that new construction has been shifting much more toward building rental housing than condos intended for sale, which should help relieve pressure on condo prices and continue to exert downward pressure on rents. The rental scenario is discussed further at the end of this report.

Home Price Maps

We have just updated our median home price maps for the entire Bay Area by city, for San Francisco by neighborhood, and then specifically for the Marin, Lamorinda & Diablo Valley, and Wine Country markets. To access them, click on the map image below and then roll your cursor over the maps on the webpage.

SF Neighborhood Home Prices & Trends
House & Condo Prices by Bedroom Count

Our full collection of home price tables: Median Sales Prices by Bedroom Count

Appreciation Trends since 2005 for Selected San Francisco Neighborhoods

Sales by Price Segment within Neighborhoods

Median sales prices typically disguise a wide range of prices in the underlying individual home sales, which is what these charts illustrate.

Dozens more neighborhood analyses can be found here: San Francisco Neighborhood Prices & Trends. Or simply reply to this email if you would like information on a neighborhood or district not included above.

Bay Area Rent Trends

This is from our mid-year report on the multi-unit residential market, which can be found in its entirety here: Bay Area Apartment Market Report

San Francisco still has the highest rents in the nation (the light blue columns in the chart above), exceeding even Manhattan (in second place, delineated by the dark blue line), but they have been dropping since recent peaks in late 2015/early 2016. There are two main factors: 1) per Ted Egan, the chief economist of the City of San Francisco, high-tech hiring has been slowing since 2016, and 2) over 8000 new rental units have been built in the past 5 years, with at least 10,000 more expected to hit the market in the next 5. Generally speaking, rents around the Bay Area have either declined, in what had been the hottest markets, or seen their appreciation rates significantly slow, over the past year or so.

Please let us know if you have questions or we can be of assistance in any other way.

All our Bay Area real estate analyses can be found here: Paragon Market Reports

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group



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