1920 to Present
A companion to our recent overview on San Francisco Victorian and Edwardian architecture (Early SF Architecture): the text, chart and photos used herein are all courtesy and permission of the San Francisco architect James Dixon: James Dixon Website. We are most grateful for his generosity in allowing us to use them.
Art Deco: 1920 – 1940
Art Deco takes its name from the International Exposition of Modern Decorative and Industrial Arts held in Paris in 1925. This new style rejected aristocracy for democracy, frugality for luxury, and European architectural references for futuristic geometric ornament. It is a decorative style of applied ornamentation, and its features include geometric ornament of zigzags, chevrons, sunbursts, and florals; and use of exotic architectural references, such as of Mayan temples and ancient Egypt.
International Style: 1925 – Present
Mies van der Rohe’s maxim “Less is more” appropriately expresses this lean and functional style. Mies was one of three gifted architects who learned functional design from the industrial architect Peter Behrens; the other two were Le Corbusier and Walter Gropius. In 1923 Corbusier published “Towards an Architecture”. It set modern engineering and unadorned honesty, pure function and pure form, as the only true standards of architecture. Corbusier’s most famous dictum, “A house is a machine for living” still influences architects today. Characteristics include no ornamentation, windows flush with walls, no trim on doors or windows, functionally efficient open floor plan and flat roof.
Streamline Moderne: 1930 – 1950
Art Deco was a transport to another time-an exuberant fantasy future or an exotic past-while Streamline Moderne was a transport to another place. It was a romance of efficient travel by ocean liner, airplane, train and car. This new science of aerodynamics rounded edges, assisted air flow around corners with horizontal grooves, and smoothed surfaces so they were unencumbered and sleek. Buildings became romantic ships and airplanes to and from another place. Characteristics include curved corners; the use of glass block; corner and porthole windows; and other elements of nautical or aerodynamic flair.
Bay Area Modernism, Second Style: 1930 – 1960
Bay Area Modernism influenced more homes throughout America than all other architectural styles combined, as seen in the vast tracts of post-World War II suburban ranch houses. Architect William Wurster combined a love of California landscapes and its rural buildings (wood-sheathed farmhouses, barns and sheds) with the elemental quality of minimalist Japanese architecture. The goal was inexpensive homes that allowed the outside in and were easily built of local, natural materials.
Bay Area Modernism, Third Style: 1950 – 1980
As the Second Bay Area Style matured, architects tired of its plainness and flirted with playful pop culture and Postmodernism. They started the Third Bay Area Style and influenced acres of tract homes throughout the United States.
Eichler Homes: 1950 – 1970
Joseph Eichler was a visionary developer who built over 11,000 homes in California. All his homes would display Frank Lloyd Wright’s core ideas: “breaking the box”, “bringing the outside in”, floor to ceiling glass, simple natural materials kept exposed, and the open floor plan. These ideas made Eichler homes airy and modern.
Post-Modernism, 1960 – 2000
To Mies van der Rohe’s modernist maxim “less is more” architect Robert Venturi famously riposted “Less is a bore.” Venturi’s 1966 book “Complexity and Contradiction in Architecture” rejected International Style modernism and, at its best, freed architects to borrow freely across architectural styles. At its worst it allowed fake historical ornament pasted to boring boxes and intentionally jarring juxtapositions of different architectural styles.
New Modernism, 1980 – Present
These buildings use modern materials, technology and computer modeling, yet strive to be humane – a radical concept in modern architecture that up to this point had revered machines, not humanity, and had rejected nature, not embraced it. Humane Modernism’s aesthetic is contemporary, but it is warm, tactile, colorful and durable. It uses the best traditional building methods to increase the everyday quality of life of the inhabitant-such as local sustainable materials beautifully detailed and exposed to view, as well as the common incorporation of “green building” features.
SF Modern Architecture Timeline
Here is a nifty timeline of San Francisco’s variety of modern architectural styles.
This link goes to architect James Dixon’s complete overview, which was the basis for this article. It features short videos on each of the architectural styles mentioned above. Also included is a link to his overview of Victorian and Edwardian styles of San Francisco architecture:
And for those who find San Francisco history as interesting as we do, here are two other websites we’ve discovered filled with fascinating stories and photographs:
Percentage Changes since 2006-2008 Peak of Market
Range from 25% Below to 25% Above Previous Peak Values
August 2013 Market Report
This heat map compares 2013 2nd quarter or 1st half median home sales prices – for houses, condos, co-ops and TICs combined – with those at the peak value time prior to the recent market recovery. Previous peak value times vary by neighborhood: typically, the least affluent neighborhoods hit peak prices in 2006 and also fell the most, percentage-wise, during the crash, falling 25% to 50%. These neighborhoods were most affected by the subprime and distressed-property sales crises. The mid-affluent neighborhoods peaked in 2007, and usually declined in value in the 20% to 25% range. And the most affluent areas reached peak values last, in the first half of 2008 prior to the September 2008 crash: Their fall in value ranged approximately 15% to 20% from 2008 peak to 2010-2011 nadir.
Generally speaking, when the market began to turn around in late 2011/early 2012, the last neighborhoods to fall were the first to recover, followed by the mid-affluent and then the less affluent areas. This link goes to our full report and an explanation of the analysis:
Heat Map Report
All-Cash Home Sales
All-cash buyers come in three main categories: the first group consists of investors buying foreclosed-upon properties, often during trust-deed auctions on the “courthouse steps.” The Blackrock Group alone has purchased over 20,000 distressed homes across the country, which they usually fix up and rent out. Other investors buy, fix up and re-sell, or just buy, wait and flip (as the market recovers). The second category of all-cash buyers consists of people who always purchase their homes without financing: These often very affluent buyers have always been around to one extent or another. And the last category of all-cash buyers are those who prefer to finance their home purchases but have enough cash available to buy without financing: In the hope of winning in a competitive bidding situation, they make all-cash offers in order to appeal to sellers. This link goes to our full report:
Homes With and Without Parking
The vast majority of San Francisco home sales include at least one on-site parking space in the sale, and 80% – 90% of buyers put parking on their must-have list when searching for a new home. That doesn’t mean that a home without parking cannot sell at a good price, but it does mean that on average it will take somewhat longer to sell, as well as selling at a lesser price than a comparable home with parking. It’s difficult to calculate the exact value differential between homes with and without on-site parking for a number of reasons. This link goes to our full report:
The Value of Parking
Renting vs. Buying in San Francisco
We’ve updated two analyses regarding the financials of renting vs. buying in San Francisco. This is the first part of our calculations regarding 2-bedroom units, comparing the median condo sales price with the average apartment asking rent. (We also did one for 3-bedroom houses.) These calculations depend to a large degree on one’s financial assumptions and projections. For our complete analysis:
Rent vs. Buy – 2-Bedroom
Largest SF Home Sales YTD
Looking at SF home sales reported to MLS by July 31, this chart shows the largest sales by neighborhood for properties selling for $3,500,000 or more. This link goes to our chart on sales below $3.5m:
Largest Home Sales, Chart 2
Victorian & Edwardian Architecture in San Francisco
In case you missed our recent article using information and photos by SF architect James Dixon, here is a fascinating timeline and this link goes to the complete, well-illustrated article on the different Victorian and Edwardian architectural home styles prevalent in the city:
San Francisco Transportation Report
We recently stumbled across the annual report of the city’s Municipal Transportation Agency (MTA) and charted some of its most interesting facts. This chart illustrates the (staggering) number of citations issued by violation, and this link goes to all 5 of our charts:
SF MTA Report
An Illustrated Overview
One of the great charms of San Francisco is the wonderful variety of architectural styles that grace our streets – it’s not unusual to see half dozen distinct types of architecture on a single block. Here is a brief overview of the Victorian and Edwardian eras of home architecture with which the city is perhaps most identified – though, of course, many beautiful homes and buildings have been built since that era, and continue to be built.
The text, chart and photos are all courtesy and permission of the San Francisco architect James Dixon: James Dixon Website. We are most grateful for his generosity in allowing us to use them.
This is a fascinating timeline of the different styles of architecture that will be discussed in this piece, created by Architect James Dixon. It can be a little difficult to read, but is easier to decipher if you adjust your screen-view zoom larger. It can also be found online at James Dixon’s website.
Gothic Revival: 1840 – 1890
The publication of Cottage Residences by Andrew Jackson Downing in 1842 became the spur for the Gothic Revival style in America. The residential offshoot, called Carpenter Gothic, used wood rather than stone and eschewed gargoyles and stained glass in favor of simpler ornament. Although some of the more extravagant homes may qualify as Gothic Revival, most can safely be called Carpenter Gothic. Characteristics of this style include pointed arches over doors and windows; steeply pitched roofs: turrets, pinnacles, crenellations; and leaded glass windows.
Victorian Italianate: 1850 – 1890
In 1850, Andrew Jackson Downing published The Architecture of Country Houses. which popularized a new style: Italianate. The house at 807 Franklin is an elaborate example of the style, exhibiting many of the hallmark characteristics: quions along the edges; tall, narrow windows with rounded tops, porch portico, a slanted bay window, classical columns and pilasters, as well as the look of a building that should be made out of stone.
Victorian Stick: 1860 – 1890
These houses have long, thin pieces of wood, called “sticks,” applied to their surface, especially at corners. These sticks are meant to be both decorative and expressive of the underlying wood framed structure. In the 1870s these decorative elements became exceedingly numerous and elaborate. Homes in this new vein were called Stick Eastlake, which is actually a misnomer since Charles Eastlake, from whom the name derives, abhorred excessive ornamentation. San Francisco has the greatest concentration of Stick and Stick Eastlake style homes in the world.
Queen Anne: 1880 – 1910
The Queen Anne style came after many Victorian styles and it is not uncommon to see elements of preceding styles in one house. Two things make it easy to identify a Queen Anne: plasticity (“in-ness and out-ness”) and a continuous gable roof that is expressed at the street. Some houses that began as Italianate or Stick became Queen Anne after a remodel, and there are also some that are all three styles at once. The Victorians dreaded the vacant surface, everything was decorated. Characteristics include multi-textured facade; steeply pitched roof with gable front; conical, corner tower; cutaway bay windows; bands of ornament; and stained glass
Arts & Crafts: 1890 – 1910
Inspired by John Ruskin and William Morris, the Arts & Crafts movement started in England in the 1860s and started to influence American architecture around 1890. The movement advocated the use of locally sourced natural materials, pride in craftsmanship, and emulation of medieval design. Common characteristics include doorways and windows dressed with stone and brick; projecting eaves; intricate joinery; leaded-glass windows and square chimneys; Gothic ornaments and Tudor half-timbering
Shingle: 1880 – 1910
Ubiquitous shingle cladding is the defining feature of the Shingle Style. These houses vary widely in composition and historical affiliation, but are still readily identifiable as Shingle style. They minimized decorative elements due to the influence of the Arts and Crafts Style and aimed for informality and rusticity. These homes are a reaction to the design excesses of the Victorian period. San Francisco has many excellent examples of the Shingle style by some the best architects of that time: Bernard Maybeck, Ernest Coxhead, Julia Morgan, Willis Polk.
Tudor Revival: 1890 – 1940
Evocative of country homes from medieval England, Tudor Revival houses stand out in the urban context of San Francisco. This style is based on the principles of the Arts and Crafts movement, which advocated a return to medieval building types and design. Characteristics include steeply pitched roof; decorative half-timbering; prominent cross-gables; mix of brick or stone with stucco or wood; and grouped, leaded windows with small panes.
Another Example of Tudor Revival
Mission Revival: 1890 – 1920
All you need to do to identify a building in this style is look up. They always have a Mission-shaped parapet or window dormer, from which the name of the style derives. Although the Mission Revival style began around 1890, it did not become common until the start of the Edwardian period. San Francisco is no exception to the rule. Most of the Mission Revival homes and buildings were built after 1901.
Edwardian Craftsman: 1900 – 1930
In 1901, Gustav Stickley started a magazine called The Craftsman, for which the style is named. The magazine and some pioneering works by the Greene brothers quickly spread the style around the nation. Both Stickley and the Greene brothers were heavily influenced by the English Arts & Crafts movement. Craftsman homes tend to emphasize the horizontal, as in the bands of windows on the facades of these SF houses. Other characteristics include the use of native, natural construction materials; projecting eaves and exposed rafter ends; and casement windows, often with art glass.
Spanish Eclectic & Revival
Spanish Revival homes look like they belong in Spain, while Spanish Colonial buildings are less refined and look like they belong in a Spanish colony. These homes freely mix elements of Spanish Revival, Spanish Colonial, and Mission Revival. Mediterranean Revival is another freely-mixed style that was popular with San Francisco builders. Thousands of Spanish Eclectic and Mediterranean Revival homes were built in the Marina District and Sunset. Characteristics include a low-pitched roof with little or no overhang; red roof tile; arches over front door and most prominent window; stucco walls; and the large bow front window over a garage.
This link goes to architect James Dixon’s complete overview, which was the basis for this article. It features short videos on each of the different Victorian and Edwardian styles mentioned above. Also included is a link to his overview of subsequent styles of San Francisco architecture:
And for those who find San Francisco history as interesting as we do, here are two other websites we’ve discovered filled with fascinating stories and photographs:
July 2013 San Francisco Market Report
If you prefer, you can skip the following analysis to go straight to the charts and maps following.
Many adjectives are used to describe San Francisco, but normal isn’t a common one – and the same can be said about our real estate market. Even taking into account its tendency to be unusual in one way or another, this past spring’s market was overheated by virtually any definition. Surging consumer confidence and huge buyer demand chased a deeply inadequate supply of homes for sale, abetted by interest rates so low that loans – factoring in inflation and mortgage interest deduction – were almost like free money. All this led to an extreme seller’s market, a feeding frenzy and dramatic price appreciation.
But not, in our opinion, a bubble. The Economist, one of the first to sound the alarm for the last bubble, sees no sign of a U.S. housing bubble, basing its conclusion upon historical comparisons of home prices with rents and incomes. Also, it is not unusual for the market to go somewhat crazy following a 4-5 year down cycle after all the repressed demand bursts forth – this happened in 1996-1997 too. Besides which, we are only about 18 months into the current recovery. Though real estate is susceptible to sudden economic and political shocks, in past cycles, recoveries have typically lasted at least 6-8 years before peaking. That doesn’t mean there won’t be any short-term market adjustments, up or down, for one reason or another, along the way.
There are some signs of a normalizing market. After a year of declines, the number of new listings in the 2nd quarter was a little higher than the 2nd quarter of 2012. Though this inventory was quickly gobbled up and overall supply remains very low, it’s a good sign more sellers are entering the market. Median prices may be leveling off after spring’s big pop – it’s still too soon to be sure, but summer often sees a cooling down. It’s not welcome news to buyers, but interest rates have increased from extreme lows – though remaining very low by any historical scale. (See below: The Sky is Not Falling.) The distressed home segment, which always distorts markets, is disappearing in the city and declining everywhere. And new-home construction continues to increase: even though we won’t see much of this new inventory until 2014 and later, it’s a very positive sign.
We have updated our home value maps to reflect spring’s recent sales:
San Francisco Neighborhood Values
San Francisco Median Home Prices
For both houses and condos, the second quarter saw jumps well above previous peak values. Median sales prices are affected by other factors besides changes in value – seasonality, inventory, buyer profile, big changes in the distressed and luxury home segments – but the dramatic increases do reflect rapidly climbing home values in the city. Though all SF neighborhoods have been experiencing striking appreciation, this does not mean that all have now exceeded previous peak values.
Sales Over & Under Asking Price
This chart illustrates the enormous percentage of listings selling for over – and sometimes far over – asking price. 25% of house sales in June sold for 20% or more above list price: At San Francisco prices, 20% above asking often equals hundreds of thousands of dollars.
Price reductions: 89% of second quarter sales sold quickly without price reductions at an overall average of 8% over list price – a clear indication of overheating. Still, not every listing sold without a price reduction and some didn’t sell at all, but ended up withdrawn from the market:
Price Reduction Chart
San Francisco Luxury Home Sales
No market segment has been affected more dramatically by the recovery than luxury homes. In an inventory constrained environment, it has far out-performed the general market in unit sales.
This link goes to our luxury market report that also delineates the neighborhoods which dominate high-end house and condo sales in San Francisco:
Paragon Luxury Report
Interest Rates: The Sky Is Not Falling
Not to diminish legitimate concerns regarding rising mortgage rates and their effects on housing costs, but this graph puts recent increases in context. At any time before 2011, the current interest rates, even after their recent big percentage jump, would be reason for conga lines of celebration in the streets. Rates had to rise from their historic and artificial lows – how far and fast this may continue is unknown to us, but we don’t presently expect big shocks to the real estate market in the near future.
Distressed Home Sales: this link goes to a chart illustrating the rapidly dwindling distressed home market in San Francisco. In most neighborhoods, the effect of these sales has disappeared altogether.
Distressed Home Sales
Average Days on Market (DOM) have also hit historic lows for virtually every property type in the city:
Average Days on Market
Multiple SF Neighborhoods Reach Median Home Prices Exceeding $2,000,000
and/or Average Dollar per Square Foot Values above $1000
San Francisco Home Value Maps, Updated June 30, 2013
The San Francisco 5-county metro area had the biggest gain in home
prices among the 20 largest national metro areas according to the
April S&P/Case-Shiller Index released on June 25th, increasing 24%
year over year. We expect to see another bump in May’s Index
reflecting the acceleration in home price appreciation that began to
show up in March. By itself, San Francisco is the only county in the
state to exceed previous peak values set in 2006-2008, according to
Leslie Appleton-Young, chief economist for the California Association
of Realtors. It should be noted however that this does not yet apply
to every neighborhood in the city.
Looking toward July and August, it is not unusual for median sales
prices to fall during the summer due to seasonal factors related less
to changes in value than to inventory available to purchase and buyer
San Francisco House Values
San Francisco Condo Values
Median sales prices and average dollar per square foot values often
disguise an enormous disparity of values among the underlying
individual home sales in the data set, and how they apply to any
particular property is impossible to say without a specific
comparative market analysis (CMA). Please call or email if you’d like
a quick CMA performed on your home or one you’re considering
MEDIAN SALES PRICE is that price at which half the sales occurred for
more and half for less. It can be, and often is, affected by other
factors besides changes in market values, such as short-term or
seasonal changes in inventory or buying trends. The median sales price
for San Francisco homes (in all their almost infinite variety) is not
like the price for a share of stock (all the same), and short-term
fluctuations in median price are common and often meaningless.
Consistent, long-term trends are most meaningful.
AVERAGE DOLLAR PER SQUARE FOOT ($/sf) is based upon the home’s
interior living space and does not include garages, unfinished attics
and basements, rooms built without permit, lot size, or patios and
decks — though all these can still add value. These figures are
usually derived from appraisals or tax records, but are sometimes
unreliable or unreported altogether. All things being equal, a smaller
home will typically sell for a higher dollar per square foot value
than a larger one. Generally speaking, about 60-80% of listings report
square footage, and this statistic is calculated on these listings
The neighborhoods in the maps above were chosen because their volumes
of sales were considered sufficient to generate meaningful statistics.
We began with sales closing in March because they generally reflect
offers negotiated in early 2013, when market dynamics went through
another shift. When medians and averages are being calculated for a
wide variety of properties of different locations, sizes, eras of
construction, amenities and condition – as is almost always the case
in San Francisco – they can only be considered very general
approximations of value and changes in value.
Paragon Market Report, June 2013
New highs in home prices have not yet been reached in every San Francisco neighborhood, but the majority has either regained the value lost since the 2008 market meltdown, or now exceeded the previous high points of 2006-early 2008. (Different neighborhoods peaked at different times, just as they are now recovering at different speeds). This does not mean that every property bought at the height of the bubble in feverish multiple-offer bidding wars has now regained peak value. Nor does it mean that values might not fluctuate or drop in future months due to seasonal and/or other economic factors.
Though virtually every market in the country is now on a similar upward trajectory, San Francisco’s has recovered more quickly than most in the Bay Area, state and country. The city’s neighborhoods, with a few exceptions, were never hit as hard as most other areas by the tsunami of distressed property sales: our home values generally fell in the 15-25% range compared to huge declines of 40-60% elsewhere and so we have had less ground to recover. That said, the city has always been an exceptional real estate market and the confluence of economic factors both general (such as the lowest interest rates in history) and unique (such as the local, high-tech boom) jumpstarted and supercharged our recovery beyond most others.
It should be noted that, looking at past recoveries in the early eighties and mid-nineties, it is not unusual once a recovery gets underway after years of recession and repressed demand, for the market to regain previous peak values within a couple years of the turnaround beginning. Recoveries often start with a dramatic surge and that is what has happened with this one.
City, State & National Long-Term Overview
In this chart, one can see the recovery occurring everywhere, but most dramatically in San Francisco. For this analysis, we’ve calculated the 2013 SF median house sales price for the 5 months since the year began; if we looked at just the last 3 months (reflecting offers accepted in 2013, when the market accelerated further), the SF median house price jumps to about $1,000,000. (Note: State and national data sources are behind those we can access for the city, and the last median prices reflect that disparity.)
SF Houses: Previous Peak Values to Present
In this chart, since we’re also calculating average statistics, we’ve capped the sales price at $3,000,000 because ultra-high-end sales usually distort averages. We see the previous peak value in 2007 (for SF houses in general), the drop to the bottom of the market in 2011, and the rebound starting in 2012 and accelerating in 2013. By all 3 main statistical measures of value, San Francisco houses have met or exceeded previous peak values. To adjust for seasonality, the comparisons are for the spring months of each year.
This link goes to the same analysis for SF condos except it starts in 2008 when condo values peaked and sales are capped at $2m:
Condos: Previous Peak Values to Present
Short-Term Appreciation Trends
This chart breaks down the rise in SF home values occurring over the past 2.5 years. Though it appears that 2013 prices surged after the first quarter, the surge actually started in March, which is when the market really started to reflect offers negotiated in 2013. January and February sales mostly reflect the holiday season market, when the higher-end home market typically checks out. We prefer quarterly or longer time periods because they make for more reliable statistics: monthly statistics often fluctuate without great meaning. The high overall median prices achieved in March-May may drop somewhat during the summer due to seasonal and other factors.
This link goes to an overview of the past 30 years: it helps give context to what we’re experiencing today:
30 Years of SF Real Estate Cycles
2006-Present: House Values by Neighborhood
These 4 SF Realtor districts generate a lot of house sales, so they’re good for statistical analysis. For 2013, this chart looks at the last 5 months of sales-if assessing just the last 3 months, 2013 numbers would typically be higher. The central Noe-Eureka-Cole Valleys district, a hot bed of high-tech buyer demand, has soared well beyond its previous peak value in 2008. The very affluent northern district of Pacific Heights-Marina has also exceeded its previous peak. Sunset-Parkside in the southwest has regained its 2007 peak, and the southeast Bayview-Portola-Excelsior district, which was hit hardest by distressed sales, while recovering rapidly, has not yet made up the value lost since its 2006 peak. This district, with more house sales than any other, lost more percentage value in the downturn (25-45% depending on neighborhood) and so has more ground to make up. But it’s well on its way.
2006-Present: SF Condo Values by Neighborhood
These 6 areas of the city generate high numbers of condo sales, which is why we chose them for this analysis. Condos in all these areas have increased in value beyond their previous peaks in 2006-2008; some of them, such as South Beach, dramatically so.
This link illustrates how, over the past 5 years, the SF market has switched from being dominated by house sales to condo sales; with the continuing construction of large condo projects, we expect this trend to continue. TIC sales have dropped significantly, both as a percentage of sales and in actual unit sales: This is due to a number of complex issues such as changes in city condo conversion and tenant protection regulations.
Sales by Property Type
Price Range Dynamics
There are 3 main underlying currents occurring in San Francisco. First is the rapid dwindling of distressed property sales: Thus, sales under $500,000, the price range of most distressed sales, have dropped by 62% since last year. This segment is on the verge of disappearing completely in SF. Second is the dramatic resurgence in luxury home sales: the affluent have profited most from the economic recovery and the city also has large numbers of the newly affluent (often high-tech) who wish to buy homes. So, sales of homes costing $1,500,000 plus have surged by 76%. The third dynamic is simply the general appreciation of home values. All 3 factors add up to a large migration from lower-priced to higher-priced sales. Note: The medians quoted on this chart are for many different property types combined.
May Listings/Sales Snapshot
A clear indication of the red-hot heat of our market: 90% of SF home sales closing in May sold without going through any price reductions, at an average sales price 7% higher than the asking price and a very low average days-on-market of 29 days. These are very dramatic statistics illustrating the high demand/low supply situation here in the city.
San Francisco: A Hot Market Getting Hotter
1st Quarter 2013 Market Report
In 2012, the market turned with a vengeance and grew very hot very quickly. Now in 2013 it has grown even hotter. Recent deal-making stories almost make the seemingly crazy, multiple-offer tales of last year appear sedate. The supply of listings is drastically low against buyer demand, and the pace of price appreciation looks to be accelerating. Some city neighborhoods appear to be surpassing the previous peak values reached in 2007-2008. As seen below, the first quarter’s numbers reveal big increases in home values year over year. And the month of March alone saw a particularly big jump of almost 9% above February’s median price.
March sales prices reflect the heat of the market 4-8 weeks earlier, when the offers were actually negotiated. Much of the first quarter’s sales data reflects offers negotiated in late 2012. In a rapidly changing market, we’re always looking in the rearview mirror.
How Does Supply & Demand Affect Prices?
The past 18 months give a text book example of how the supply and demand dynamic affects home values. Months supply of inventory (MSI) measures the strength of buyer demand against the available inventory of homes to purchase: the lower the MSI, the hotter the market. The hotter the market, the greater the upward pressure on prices.
This link shows the details of the recent increases in median sales price:
SF Median Home Price by Month
Sales Prices Over & Under List Price
As the market has strengthened, the percentage of SF homes selling for over — and sometimes far over — list price, has soared to almost unbelievable levels. In the last 2 months, 30% of SF house sales have sold for 15% or more above asking price.
This link shows the huge decline in inventory since the market turnaround began. Typically, we see a surge in early spring. Not this year, at least not so far:
Inventory of Listings for Sale
This link goes to our chart on average days on market. Generally speaking, the hotter the market, the faster listings go into contract and that is what we are indeed seeing now:
Average Days on Market
San Francisco Home Values by Neighborhood & Bedroom Count
The March 2013 Paragon Market
We’ve just completed our semiannual review of SF house and condo values by average and median prices, average size and average dollar per square foot for sales occurring September 1, 2012 – February 28, 2013, as reported to MLS.
The maps contain median sales price data only, while the tables include the full range of value statistics. (The tables are easier to read, but they’re not as colorful.) If a price is followed by a “k” it references thousands of dollars; if followed by an “m”, it signifies millions. Remember that medians and averages are very general statistics.
Further down in the newsletter are charts tracking supply and demand dynamics and price appreciation trends for the city’s residential real estate market. Statistical definitions can be found at the very bottom. For the smaller images, you’ll need to click-to-expand them to really make them decipherable.
4-Bedroom House Values
This is the table for 4-bedroom house sales over the past 6 months. This link goes to the full analysis by property type, neighborhood and bedroom count.
Neighborhood, Property Type, Bedrooms
2-Bedroom Condo Median Price Map
A map of median sales prices for 2-bedroom condos around the city. The table in the full analysis provides further statistical measures.
Trends in Inventory & Sales Volume
Sometimes there’s nothing like a chart to depict trends. Here one can clearly see the drastic decline in inventory. And this link goes to a chart on Months Supply of Inventory, another statistic of supply and demand:
Months Supply of Inventory
New Listings Coming on Market
The quantity of new listings ebbs and flows by season, however even accounting for seasonality, the number of new listings coming on market is much lower than usual. And this link shows the increasing demand since the market recovery really got underway in 2012:
Percentage of Listings Accepting Offers
Median Price Trends by Month
Monthly price data often fluctuates due to a variety factors. For example, median and average prices almost always drop in January since the higher end of the market usually checks out for the holidays: Values haven’t changed; the demographic of buyers and available inventory changed. However, the clear upward trajectory of prices over the past year is clear in both median and average sales prices.
Average Price Trends
The MEDIAN SALES PRICE is that price at which half the properties sold for more and half for less. If there were 3 sales, at $1, $2 and $10, the median price would be $2. If there were 4 sales at $2, $2, $5 and $10, the median would be $3.50. Median sales price may be affected by seasonal trends, and by changes in inventory or buying trends, as well as by changes in value.
AVERAGE DOLLAR PER SQUARE FOOT is based upon the home’s interior living space and does not include garages, storage, unfinished attics and basements; rooms and apartments built without permit; decks, patios or yards. These figures are typically derived from appraisals or tax records, but can be unreliable, measured in different ways, or unreported altogether: thus consider square footage and $/sq.ft. figures to be very general approximations. Generally speaking, about 60-80% of listings report square footage, and dollar per square foot statistics are based solely on those listings. All things being equal, a house will have a higher dollar per square foot than a condo (because of land value), a condo will have a higher $/sq.ft. than a TIC (quality of title), and a TIC’s will be higher than a multi-unit building’s (quality of use). All things being equal, a smaller home will have a higher $/sq.ft. than a larger one. The highest dollar per square foot values in San Francisco are typically found in upper floor condos in prestige buildings with utterly spectacular views.
The AVERAGE SIZE of homes of the same bedroom count may vary widely by neighborhood: for example, the average size of a 4-bedroom house in Pacific Heights is much larger than one in Noe Valley; and the average of a Marina 2-bedroom condo is larger than one in South Beach. Besides the affluence factor, the era and style of construction often play large roles in these disparities.
Some neighborhoods are well known for having additional ROOMS BUILT WITHOUT PERMIT, such as the classic 1940′s Sunset house with “bedrooms” and baths built out behind the garage. These additions often add value, but being unpermitted are not reflected in $/sq.ft. figures.
Many aspects of value cannot be adequately reflected in general statistics: curb appeal, age, condition, views, amenities, outdoor space, “bonus” rooms, parking, quality of location within the neighborhood, and so forth. Thus, how these statistics apply to any particular home is unknown.
Over the last 13 months, for a variety of compelling economic reasons, home-buyer demand in San Francisco has continued to grow ever stronger, while the inventory of homes available to purchase has only become tighter. This is the classic supply and demand dynamic — increased competition for a scarce commodity — that leads to increasing prices. Our inventory crunch, at least so far in 2013, is not easing. This situation is advantageous to sellers, and difficult and aggravating for buyers (and their agents): the time, effort, emotional energy and money that it takes to find and buy a home have all been increasing.
However, if buyers can summon the patience and endurance to see the process through, they might take some solace in the last 2 real estate recoveries, in the eighties and nineties. As can be seen on charts further down, it’s not unusual for repressed buyer demand to explode after a long down market, creating the same rapid appreciation situation we are experiencing now. But even with increasing competition and rising prices, those who purchased in the first few years of the past 2 turnarounds ended up doing very well with their investments. We don’t know if this recovery will continue to follow the same trend lines as past market cycles, but it has thus far.
Below are analyses that look at both short-term and long-term trends from a variety of angles.
Is Everything Selling Over the Asking Price?
No, of course not: not all listings are selling for over list price. Some homes still go through price reductions and some don’t sell at all, but it is true that a large percentage of SF listings is now selling for over asking price and sometimes far over. This is especially the case with houses, where 1 in 4 sold in the past 2 months went 10% or more over the list price. (Note: Homes selling for within a quarter percent of the list price were considered to have sold AT asking price.) And this link shows the dramatic increase in median home prices in 2012:
Median House & Condo Prices
New Listings vs. Accepted Offers
There are two issues behind the current low inventory crunch: firstly, there’s the simple matter of fewer listings coming on market, and secondly, that the listings that do arrive are being snatched up very quickly. This chart compares the influx of inventory and buyer demand in January of the last 4 years. Currently, on any given day, the choice of listings available to purchase is far below that of previous years — which fuels fierce competition between buyers. This link illustrates that fact and the overall decline in listings for sale:
Listings for Sale
Ratio of Expired Listings to Sold Listings
Even in a hot market, not every listing sells: some listings viewed as overpriced end up expiring or being withdrawn. However, the ratio of expired and withdrawn listings to sales declines significantly in a strong market, which is what happened last year. Typically, the fourth quarter is marked by a very high rate of expired and withdrawn listings due to the holiday season and end of the year, but in the last quarter of 2012, buyers continued to aggressively snap up listings. And this link goes to a days-on-market chart illustrating the increasing speed with which buyers are snapping up listings:
Average Days on Market
Perspective on 3 Recoveries
This Case-Shiller chart for the 5-county SF Metro Area begins with the recovery following the market recession/ doldrums of 1991 – 1995. The market of 1996 and 1997 had basically the same dynamic of repressed demand exploding alongside a recovering economy that we’re experiencing today. (All chart numbers reflect a percentage of the home values in January 2000.) There followed a 100% increase in values over the next 5 years, even before the inflation of the big bubble of 2004-2008. Buyers who bought in the mid-late nineties ended up doing quite well. This link shows the same dynamic in the transition from the late seventies/ early eighties recession to the mid-eighties rebound. Those buying in the early years of that recovery also did pretty well, even factoring in the following recession and market correction:
Market Recovery in the 1980′s
Supply & Demand
The chart and the one in the following link are two classic measures of supply and demand. The lower the months supply of inventory and the higher the percentage of listings accepting offers, the stronger the demand when compared to the supply of homes available to purchase.
Percentage of Listings Accepting Offers
Buying vs. Renting in San Francisco
This analysis (just 1 part of a full report) compares buying a 2-bedroom SF home at the current median price of $775,000 to renting a 2-BR at the current average asking rent of $3800. It illustrates how buying can make excellent financial sense after tax benefits and principal pay-down are factored in, much less building substantial home equity over time. In this analysis, the “net” house payment comes out well below the rent. However, these scenarios depend on many assumptions such as interest, appreciation, inflation and income-tax rates. It depends on the rent one is paying and having the 20% down payment and closing cost monies available. Still, there’s no doubt that with current interest rates and rents, the equation is much more favorable to buying than it has been for a very long time. Feel free to perform your own analyses using our Rent vs. Buy calculator, which can be accessed using this link. After putting in your numbers, be sure to click on Calculate and View Report:
San Francisco Rankings, Real Estate Prices & Trends, and the Biggest Home Sales of 2012
January 2013 Paragon Market Report
Here is a look at how a diverse group of major and minor organizations have recently ranked San Francisco on a wide variety of important and whimsical measures. Where disagreements existed — 3 different surveys ranked SF as the 1st, 2nd and 3rd “Greenest City” in America, and 2 surveys ranked us as second and third smartest city in the country — we naturally chose the highest grade as most accurate.
The ranking report is followed by some fascinating snapshots of the San Francisco and Bay Area real estate markets.
Median Home Sales Prices around the Bay Area
This mapped analysis calculates median prices from both distressed and non-distressed property sales around the Bay Area as reported to MLS. Median price is a very general statistic and many cities include districts of wildly varying value. For example, San Francisco contains neighborhoods whose median prices vary by over $4,000,000: The overall statistic mixes them all up together and comes up with $810,000. Maps with SF neighborhood values are included later in this report.
The 2012 Rebound
Exactly a year ago, we suggested that, based upon the changing market and economic dynamics we perceived developing in 2011, the SF real estate market was on the cusp of a major turnaround in 2012, possibly similar to what occurred in 1996 when the market blasted off after years of doldrums. And that is what happened, not only for the city, which led the way early in the year, but for the Bay Area, state and country somewhat later. Note that the SF house median price quoted here for 2012 is for 4th quarter non-distressed sales only.
San Francisco Neighborhood Values
This map charts median sales prices and average dollar per square foot for houses by city neighborhood. And this link goes to a map for SF condo values:
SF Condo Values Map
Year over Year Changes in Values
Very generally speaking, and depending on neighborhood and property type, SF home values have risen by 10% to 20% over the past year. Here is a chart assessing the surprisingly consistent change in overall SF condo value statistics and this link looks at SF house statistics.
SF House Value Statistics
SF Homes Sales by Price Range
One client once called this the “high-heel shoe” graph of San Francisco home prices. One of the big components of the 2012 market was the resurgence in luxury home sales, the chart for which can be found using this link:
SF Luxury Home Sales
Sales by Property Type
Gradually, with the addition of the big new developments in the SoMa-South Beach district (and other areas of the city), condos have become the largest single category of property type sales in the city. This trend will only accelerate with the new burst in construction plans. And this link leads to a chart showing the resurgence in unit sales. Unit sales would have been much higher in 2012 if inventory had not been so drastically low:
Unit Sales Trends
Distressed Sales: Goodbye to All That
Distressed home sales have been a market aberration caused by the collapse in loan underwriting standards and the refinancing frenzy of the bubble years. Fair market value is defined as “the price a willing, able and reasonably knowledgeable buyer would pay to a seller not under distress.” But bank and short sales radiate distress: underwater sellers, overwhelmed and unresponsive banks; often the physical condition of the homes themselves is distressed. Buyers demanded a huge discount to deal with them. In SF, this market segment was largely confined to the lower price ranges and less affluent neighborhoods. Now, with the market recovery, the city’s distressed home market is rapidly dwindling and should soon disappear altogether.
Percentage of Listings Accepting Offers
This one statistic provides the context to everything we’ve seen in the market this past year: ferocious, pent-up, buyer demand met a drastically inadequate inventory of homes for sale, leading to much more competition for listings and strong upward pressure on prices.
Median SF home prices vary on some of the charts above, depending on whether the price specified is for both distressed and non-distressed properties together, only non-distressed homes, for the last 4 months of 2012 or for the last quarter of the year, or whether price limits were placed on the analysis (limiting sales to under a certain sales price). This is natural: the statistics will change depending on the parameters of the analysis, and it’s always useful to look at the market from slightly different angles.
Statistics are generalities and should be considered approximations: How they apply to any specific property is unknown. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. If you have any questions, please don’t hesitate to contact us.
© Paragon Real Estate Group, January 2013