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More on home appreciation in San Francisco

Yesterday we began a discussion on Paragon’s San Francisco Neighborhood Appreciation Rates report. Let’s continue that discussion today to give a little bit more context to the appreciation rates.

The chart that accompanies this article should shed some light. It delineates actual 2014 year-to-date median home sales prices, showing that in the second half of this year appreciation generally flattened or even ticked down a little in the city’s more expensive areas following a frenzied spring market. However, appreciation continued to tick up in the more affordable areas. It’s good to keep in mind, though, that the pricier areas started to recover much earlier than the less affluent areas.

It’s also key to remember that dollars are more real than percentages. It’s certain to catch your attention when you hear that a home has jumped hundreds of thousands of dollars in value in a relatively short time. You won’t necessarily be caught that much by a statement of percentage. In the higher-priced neighborhoods, there are sometimes lower percentage appreciation rates than less expensive areas, but the dollar amounts are what grab you.

Take Pacific and Presidio Heights, where the theoretical median house now goes for more than $1.3 million more than just three years ago. That increase in Noe, Eureka and Cole Valley is more than $700,000. Got your attention?

The less affluent neighborhoods in the city saw much bigger bubbles – largely thanks to subprime lending – and subsequently much bigger crashes. In the Bayview, for example, there was an amazing 136 percent appreciation from 2000 to 2006, followed by a huge 50 percent drop from 2006 to 2010/2011. As I mentioned yesterday, on average the city’s home values have now gone up 40 to 50 percent over the past three years, with some neighborhoods stronger than that general range.

Happy Thanksgiving, everyone!

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com

New Case-Shiller Index Report

The Case-Shiller Index for September was released today. Note that it will mostly reflect sales negotiated in August or before, during the slower summer sales season. (The next Index, published in late December, will begin to reflect transactions negotiated in September and the start of the autumn sales season.) These 2 charts pertain to the upper third of sales for 5 Bay Area counties – upper third by price range. The majority of home sales in San Francisco, Marin and San Mateo are in this upper price tier.

As noted in recent Paragon reports, after the feverish market and home price appreciation of spring 2014, home values in the higher-end neighborhoods typically flattened or ticked down a bit, while more affordable homes generally continued to tick up in price.

Short-term fluctuations are not particularly meaningful until confirmed over the longer term, since markets fluctuate for a variety of reasons including seasonality.

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Which neighborhoods have appreciated most?

Paragon has released its San Francisco Neighborhood Appreciation Rates report, which raises the question of which neighborhoods have seen the most appreciation and why that is the case.

Keep in mind that this analysis is based upon review of both median sales price as well as average dollar-per-squre-foot data. That said, there is no one city or neighborhood median or average home that can be used as an unchanging basis of comparison year after year, only differing collections of unique homes that are selling in different times and circumstances.

The chart that accompanies this article illustrates approximate home value appreciation from the bottom of the market (2010-2011) to present as illustrated by the dark gray bars as well as the overall appreciation or depreciation to date since the last market peak (2006-2008) as illustrated by the red numbers.

Over the past three years, San Francisco neighborhoods have seen typical appreciation ranging from 40 to 50 percent, with an overall increase of approximately 44 percent. So what are the three neighborhoods with the highest appreciation rates from bottom of the market to present?

  • Bayview: This neighborhood is up 75 percent from 2010-2011. However, it’s still down 12 percent from its market peak in 2006. Its bubble was huge thanks to subprime lending and its market crashed terribly when that bubble popped. Now that subprime lending has disappeared, Bayiew’s recovery has been equally dramatic.
  • Inner Mission: Here we’ve seen an increase of 63 percent from 2010-2011. That’s up 46 percent from the pre-crash peak of 2007. The huge change in buyer demographics over recent years explains its incredible appreciation rate as young, hip, affluent high-tech buyers are now flocking to the area, which is seeing expensive new condo projects aplenty.
  • Bernal Heights: Bernal is up 57 percent since the market bottomed out and up 24 percent from its previous market peak in 2007. It’s become extremely sought-after for buyers who love Noe Valley but have been priced out of there.

Looking for your own piece of San Francisco paradise? Get in touch!

San Francisco Neighborhood Appreciation Rates

Which Neighborhoods Have Appreciated Most and Why?

4th Quarter 2014, Paragon Special Report

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Percentage Appreciation Rates

2010/2011 – Present

This analysis is based upon review of both median sales price and average dollar-per-square-foot data. However, there is no San Francisco or Noe Valley median or average home that one can use as the unchanging basis for comparison year after year, only differing collections of unique homes selling in different times and circumstances. Please see notes at the end of this report regarding our methodology.

Adjusting your screen-view to zoom 125% or 150% will make the charts easier to read. A San Francisco neighborhood MAP can be found at the bottom of this webpage.

Appreciation-Percentages_by-Neighborhood

The above chart illustrates the approximate home value appreciation from the bottom of the market (2010-2011) to present (2014 YTD), as illustrated by the dark gray bars, and the overall appreciation or depreciation to date since the last market peak (2006-2008), as illustrated by the red numbers.

Over the past 3 years, in our latest market recovery, San Francisco neighborhoods have typically appreciated 40 – 50%, with an overall increase of approximately 44%. This correlates well with the Case-Shiller Index for the Metro Area, which estimates appreciation in the range of 42% – 46% for Bay Area mid and high-priced homes. As one can see in the percentages in red, most of the city’s neighborhoods have now exceeded, often by substantial margins, their previous peak values before the bubble popped. However, some of the neighborhoods hit hardest by the subprime crisis are still below their previous peaks.

Looking at the 3 neighborhoods with the highest appreciation rates from the bottom of the market to present, there are distinctly different reasons why they stand out:

  • Bayview: Up 75% from 2010/11; but still down 12% from its market peak in 2006. Due to subprime lending, Bayview’s bubble was so big, its market crashed terribly when it popped. During the downturn, its housing market became dominated by distressed sales and it fell so far that now, with the disappearance of the subprime effect, its recovery has been equally dramatic. But because its bubble was so large, it is still below its 2006 peak value. The markets in the Bayview and nearby neighborhoods are quite strong, because they contain the most affordable houses in the city.
  • Inner Mission: Up 63% from 2010/11; up 46% from 2007 (pre-crash peak). The Mission’s appreciation rate is explained by a huge change in its buyer demographics over recent years: Though it had been slowly gentrifying since the nineties, more recently it became a highly sought-after home location for young, hip, affluent, high-tech buyers. They love the Valencia Street corridor, being close to Dolores Park, the sunny weather and the (disappearing) edginess – and the speed of gentrification shifted into a feverishly high gear. This change has also entailed the construction of expensive, new, condo projects (typically selling for $1000 per square foot and up), which is also pushing up average and median values.
  • Bernal Heights: Up 57% since market bottom; up 24% from its previous market peak in 2007. Bernal Heights has become one of the most popular, more affordable, go-to neighborhoods for house buyers who like the neighborhood ambiance of the general Noe Valley area, but were priced out there by its rocketing prices. Bernal Heights’ houses – with a median price about 45% lower than Noe Valley’s – have looked likeextremely good values in comparison. Buyer competition for new listings became particularly fierce in the past year or so.

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To give context to the appreciation rates, this next chart delineates actual 2014 YTD median home sales prices. In the second half of 2014, after a frenzied spring market, appreciation generally flattened or even ticked down a little in the more expensive areas of the city, but continued to tick up in the more affordable districts. On the other hand, the more expensive neighborhoods began their recoveries in late 2011 and early 2012, much earlier than the less affluent districts.

Appreciation-Analysis_Median-Prices

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Dollar Appreciation Rates

Whether you are a buyer, seller or real estate agent, dollars are more real than percentages: Hearing that a home has jumped hundreds of thousands of dollars in value in a relatively short time period grabs the attention more than a percentage change. The higher priced neighborhoods sometimes have lower percentage appreciation rates than less expensive areas in a given time period, but the dollar-amount changes can make the eyes pop:

In Pacific & Presidio Heights, the theoretical “median house” now costs over $1.3 million more than it did 3 years ago. In Noe, Eureka & Cole Valleys, the increase is over $700,000.

Appreciation-Dollars_by-Neighborhood

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Boom, Bust, Recovery

2000 – 2014

Different neighborhoods and price segments experienced bubbles, crashes and now recoveries of significantly different magnitudes. The city’s less affluent neighborhoods – on this chart illustrated by Bayview, Excelsior & Portola – had much bigger bubbles and subsequently much bigger crashes, both inflated by subprime lending issues. Bayview saw an astounding 136% appreciation from 2000 to 2006, followed by a huge 50% drop from 2006 to 2010/2011. Excelsior and Portola were an order of magnitude behind with 90% appreciation and 30% decline. Generally speaking, the mid and high-end segments of the city’s market appreciated 60% – 70% from 2000 to pre-crash peak, and then dropped by 15% to 20% subsequent to the 2008 market crash. And, as mentioned earlier, on average the city’s home values have now increased 40% – 50% over the past 3 years, with some neighborhoods outperforming the general range.

According to the Case-Shiller Home Price Index, Bay Area homes of all price segments are now, regardless of their different ups and downs over the past 15 year, about 96% above their prices in year 2000 (as of late 2014). This may suggest that an equilibrium is being achieved in the market.

Note that the tremendous burst in home price appreciation actually began in 1996, subsequent to the early nineties recession. Prices approximately doubled in the 5 years 1996 to 2000. This earlier period is not included in these charts, nor is the smaller, short-term decline following the dotcom bubble bursting in 2001 broken out.

Appreciation-since-2000_by-Neighborhood

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Housing Cost: Today vs. Previous Peak Values

Comparing current San Francisco home values to previous peak values before the 2008 financial markets crash, we estimate general home-price appreciation in San Francisco of approximately 15% to 20% over the past 7 years. However, mortgage interest rates are now about 35% lower than in 2007 and there has been inflation of approximately 15% over the same period. Thus, we estimate that, adjusting a normal 20% – 25% down-payment plus resulting loan expense to 2007 dollars, the current cost of housing – mortgage and property taxes – is about 12% lower now than it was in 2007. This is a back-of-the-envelope calculation based on a number of basic assumptions – and it would obviously vary widely by neighborhood – but we believe it to be generally valid.

The Bay Area’s current market recovery has lasted about 3 years now. Over the past 35 years of cycles, recoveries have typically lasted in the range of 5 to 7 years, which doesn’t guarantee that this one shall follow past patterns.

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Important notes regarding this report:

The estimates in this analysis should be considered very approximate since there are different ways to evaluate home value movements – such as median price and average dollar per square foot – and they don’t always agree, nor are they perfectly reliable. Besides which, other factors can affect these statistics besides changes in values, such as big changes in the distressed, new-construction or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets.

Different San Francisco neighborhoods peaked in value at varying times before the bubble popped on 9/15/08: Generally speaking, the least affluent areas peaked in 2006; the mid-price segment in 2007; and the high-end market hit peak prices in late 2007/early 2008. We use the 2-year period of 2010-2011 as the basis for “bottom of the market” values, and we use aggregate 2014 YTD values (as of mid-late November) for “present” values. If one cherry-picked specific months or quarters for the absolute lowest and highest values in each neighborhood, the percentage and dollar swings illustrated would be much more dramatic than with the broader periods used in this report, but, we believe, no more meaningful.

This map of neighborhoods is according to the San Francisco Association of Realtors,

San_Francisco_Neighborhood_Map

SAN FRANCISCO REALTOR DISTRICTS

District 1 (Northwest): Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain

District 2 (West): Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights

District 3 (Southwest): Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview

District 4 (Central SW): St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands

District 5 (Central): Noe Valley, Eureka Valley/Dolores Heights (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights

District 6 (Central North): Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights

District 7 (North): Pacific Heights, Presidio Heights, Cow Hollow, Marina

District 8 (Northeast): Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin

District 9 (East): SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena

District 10 (Southeast): Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission

Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.

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Statistics are generalities that may fluctuate for a number of reasons, including but not limited to changes in home values. There is no San Francisco “median home” or “average home,” that one can use as the unchanging basis for analysis year after year, only differing collections of unique homes – and how these general statistics apply to any particular property is impossible to say without a custom market analysis. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. All numbers should be considered approximate.

From our NorCal network : The Artisan Group

4791959

172/174 Snug Harbor
Glenbrook, NV
Offered at $4,150,000

For more information about this property or a referral to other areas of Northern California, please contact me.

Should I go for the last homes in a new development?

I recently received notice that Millwheel North’s last unit is for sale. This is in a super-hot neighborhood: Dogpatch. The homes have the kind of proportions that make you dream of roller-skating in the living room, with hardwood floors, high ceilings and generously sized bathrooms with deep bathtubs. We’re talking good stuff, people.

This particular unit features three bedrooms and three bathrooms. It’s got two master suites and is just a little more than 1,600 square feet – a lot for the city. There’s a large living room, dining room and kitchen, plus built-in counter space for display or a home bar.

It’s worth noting that the last few homes left in a new-development project are often the best deals because the developer tends to be worn out by that point and ready to move on. That can translate to being ready to negotiate a better price. These “orphan” units also tend to hold up better than one might think on resale. I know that some of the last units available in a project have an ugly view on a trashy lot across the street, but area development can also make it fairly likely that this will change.

HGTV offers the following five tips when buying a newly constructed home:

1) Weigh the pros and cons. Will new construction fit your lifestyle? Are you okay with waiting for landscaping to develop and with the fact that your home is very similar to those of your neighbors?

2) Research neighborhoods and builders. Due diligence pays off.

3) Understand what’s standard and what’s extra. You need to know what comes with the place and what’s considered an amenity or upgrade.

4) Get an inspection and a home warranty. Just because a home is newly built, that doesn’t mean it’s not going to have issues.

5) Close the deal. Read everything you’re given before you sign it. Once your name’s on the dotted line, it’s a whole different ballgame.

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com

Open tonight: 220 Lombard Street #114

Late notice, I know, but I’m holding a twilight tour of my listing at 220 Lombard Street #114 tonight from 6 p.m. to 7 p.m.

This unusual one-bedroom garden condominium retreat is set at the base of historic Telegraph Hill. A corner orientation offers enough room for both living and dining with a wraparound deck that provides outdoor space and overlooks a quiet courtyard that in due time will abound with greenery and plantings.

During the current owner’s tenure, the home saw upgrades that include hardwood floors and newer baseboards as well as upgrades to lighting and plumbing fixtures, a re-glazed tub and sink and new shower door. The appliances are stainless steel and the refrigerator is brand new.

The new owner will also enjoy extra storage as well as parking for one car – especially helpful in this neighborhood. Homeowner’s dues are $695.68 per month; these include water, garbage, insurance and building reserves.

Built in 1992, the Parc Telegraph condominiums boast a gracious street presence with an around-the-clock doorman as well as fitness center for sweating out the stress and clubroom that’s perfect for everyday gatherings with friends and neighbors. The complex also boasts a guest suite that can be reserved for visitors at a reasonable daily rate (imagine that – no in-house guests!).

Telegraph Hill is a vibrant neighborhood that is one of San Francisco’s original Seven Hills. It’s quieter than adjoining North Beach but extremely convenient to the nightlife scene – without the hassle and noise. And don’t forget about the wild parrots!

Visit www.220LombardStreet114 to learn more.

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com

Housing, retail slated for Candlestick Point

Now that demolition of Candlestick Park has begun with the removal of the stadium’s seats, it’s becoming clearer what will replace it. Candlestick Point will now become home to a half-million-square-foot “urban outlet” shopping center, according to the San Francisco Chronicle. That shopping center will also encompass 6,000 homes and create more than 3,000 jobs. It is spearheaded by homebuilder Lennar Corp. and retail developer Macerich.

“It’s a very urban kind of concept – rather different from a typical outlet center,” Lennar San Francisco division president Kofi Bonner told the Chron. Lennar is also finishing construction on the first 88 units at Hunters Point; these are collectiveliy called the Shipyard. That project will eventually include 1,400 homes in its first phase as well as 16 pocket parks and 25 acres of open space. An estimated one-third of the housing in Candlestick and Hunters Point Shipyard will be set at below market rate.

Macerich executive vice president of real estate Randy Brant told the newspaper that Candlestick Point is “a prime location in one of the strongest regional economies.”

“Macerich has a rich history of developing and operating high-quality retail environments in urban centers, not to mention the company’s strong track record in the outlet space,” Bonner said. “We’re delighted to have them as a partner. We think this will create one of the Bay Area’s great destinations.”

Demolition crews are slated to begin demolishing Candlestick Park this winter, and that is expected to take three months. The eventual $1 billion investment over four years includes basic infrastructure and community sites such as police and fire stations. Lennar currently doing infrastructure work to completely rebuild the nearby Alice Griffith affordable-housing community, which will begin construction next year.

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com