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SF Developers Taking Bites Out of Project Parking Lots

Last week we reported millennials are eating out five times as much as other generations. There’s now an emerging pattern that millennials in San Francisco are not that into owning cars. Case in point: at 10th and Market is the luxury apartment tower NEMA. It has plenty of alternative-to-cars transportation nearby. The tower opened in 2013 with 757 underground parking spaces—one for each unit. Today, some of NEMA’s parking spaces are empty while occupancy is full.

Lesson learned. NEMA’s developer Crescent Heights is building a housing project at South Van Ness (a block away from NEMA tower) with 984 units, and 518 parking spaces. The one to one ratio is out the door. Financially, they’re a disincentive. A single parking space costs from $20,000 up to $60,000 to build (more expensive if underground). Environmental activists and neighborhood residents are pushing for less parking—toward a better walkable life-style in the local area.

As of 2014, a study done by the Center for Neighborhood Technology found that in 80 Bay Area housing projects 3,882 parking spaces out of 13,823 were unused—28%. The cost for the unused spaced: $200 million.

National First: SF’s Pilipina Cultural District’s Night Market

Another first is happening here in San Francisco, the cultural celebration hub of the U.S. The first Pilipina cultural district in the nation is going from legislative approval to concrete reality with the establishing and funding of a Pilipina night market. The market will be open the third Friday of every month, and is occupying the vintage Mint Building in the SOMA area.

Last year the SF supervisors approved the establishment of a Pilipina cultural district in SOMA, and recently gave a $150,000 grant to SOMA Pilipinas, with $130,000 of the grant going to funding the night market. One of SOMA’s many fames is as a major starting-place for new incomers from the Philippines.

The grand plan of the Pilipina community in SOMA is to attract back to the neighborhood Filipino-American families and entrepreneurs that have moved to other areas of the SF Bay Area or elsewhere. “Night markets will showcase artists and vendors that represent the emerging culture of Filipino-Americans involved in music, visual arts, fashion, design, retail, food, technology, social activism, and health and wellness,” Ellen Canale, chief deputy director of communications for the mayor’s office—as reported by Hoodline.

WalletHub: Our City is #16 in Best U.S. City to Live In

What? Wait… Is that right? SF is number 16 in a recent study of best cities in the U.S. to live in—conducted by WalletHub? Yup. That’s right. Affordability, of course, was one of the factors, and that definitely skewed us out of the top 10, and the top 15. Our cousins down in San Jose came in #10, so we’re even behind “Do You Know the Way to San Jose?”

Education and quality of life were part of the survey, and we’re certainly really, really high in those—in fact often at the top of national studies.

The top spot for this survey goes to Virginia Beach, Virginia, then Seattle, followed by Pittsburgh. And even Omaha, Nebraska (usually the butt on jokes) beat us out, which has not a few San Franciscans a tad grumpy and thinking something’s amiss. But, it is what it is.

That’s Pretty Expensive for a SF Teardown: $7 Million

San Francisco’s very desirable neighborhoods fetch rather stretch-the-imagination dollars for houses that are destined to be bulldozed down. The homes are broken down, unkempt eyesores, but the location is a treasure. Thus big bucks for ramshackle homes. The latest case is the 3669 21st Street home in Dolores Park, which is a hot spot in the city. The house is close to where the Zuckerbergs of Facebook fame recently made their San Francisco homestead.

The house once was a proud Edwardian of 1900 vintage, and perched atop Dolores Heights. It’s a modest size, with two beds and one bath and stretching out at its best days at 1,071 square feet. But the lot it sits on is a whopping 6,926 square feet. That is a zinger of desirability. Plus, the views are 180 degrees.

The last change of hands was in 1973 for $62,500. The listing for $7 mil describes the house as “distressed.” Another Dolores Heights teardown went on the market last fall at $3.29 million, has not sold yet and is now listed at $2,799,000.

Five SF Restaurants Win Coveted Wine Spectator Award

Put these five restaurants on your must-eat-at list—if you love the pairing of gourmet food and demi-godly wine. Five of San Francisco’s fabulous spread of restaurants just picked up the Grand Award from Wine Spectator magazine, their highest award. Dozens of other SF restaurants received the magazine’s two lesser awards for excellence. Across the U.S. 86 Grand Awards went out in 2017 with San Francisco taking away 6% of those.

The criteria for the Grand Award:

  • 1,000 wines available to select from.
  • Must “display excellent breadth across multiple winegrowing regions and/or significant vertical depth of top producers, along with superior presentation.”
  • Grading is on presentation, menu harmony, mature vintages, large-format bottles.

The 2017 Fab Five:

  • Saison, American cuisine on Townsend Street.
  • Acquerello, Italian cuisine on Sacramento Street.
  • RN74, French cuisine on Mission Street.
  • Spruce, American cuisine on Sacramento Street.
  • Restaurant Gary Danko, American, French cuisine on N. Point Street.

See full slide show here.

$150 Million Fix for Sinking/Tilting Millennium Tower

The 58-story luxury condo Millennium Towers is the “leaning tower of Piza” right here in San Francisco. It’s leaning over by 14 inches, two more than first reported last year when it was discovered the tower was tilting by 12 inches and had sunk into the ground by a foot and a half (far beyond expected settling). Condo owners are up in arms as unit values sink and the basement is cracking, law suits are flying, and fingers are pointing from everybody at everybody else involved.

But, as the San Francisco Chronicle reported—a group of big building engineers has developed a brainy but brutish way to stabilize the building. The firms of Arup Group and LERA were hired by Millennium Partners to find a solution. Their idea: drill down from the basement all the way to bedrock with 50 to 100 new piles—each one 10-12 inches in diameter. Sitting on bedrock, the smartly-positioned piles would right the ship, so to speak. The original piles went down from 60 to 91 feet. Not even close to bedrock. The cost of this solution: between $100 M and $150 M.

Another plus: residents may be able to stay in the building while the piles are being sunk. So far, building permits for the proposal have not been submitted to the SF Planning Department.

SF Supervisors Could Soon Pass $138,000 Rule for Middle Income Housing

San Francisco is experiencing a shrinking base of families buying residences in the city. The reason: affordability. A new rule under consideration by the SF Board of Supervisors will ease this situation by allowing families with (at least) two people earning less than a combined $138,400 to qualify for middle-income affordable housing purchasing in the city.

This rule—not yet passed but is expected to—applies only to buyers, not to renters. Another proposed allowance for renters to quality for affordable rent units puts the combined income for families at $105,000. That figure is 30% of SF’s median income.

According to the SF Chronicle, “”Under the city’s previous policy, last updated in 2002, only those who earned 55 percent of the typical San Francisco median household income or less were able to utilize the option to buy affordable housing, per ABC.”

12 Pianos A-Playing Outdoors for Public at SF Botanical Garden

How often do you come across a piano out in a garden with someone sitting at it, playing as if it’s Carnegie Hall? Well, not often I expect. Maybe never. But here in San Francisco you can wander the SF Botanical Gardens in Golden Gate Park, following your ears and encounter not one, but twelve pianos secreted among the Garden’s 55 acres of lawns, trees, flora and waterway overlooks. It’s called Flower Piano.

The pianos are out au natural from July 13th to the 24th—open, of course, to all visitors to the Gardens. The music/flower event is organized by Sunset Piano’s Public Piano Project, now in its third year. Amazingly, you can also sit down and play at any of the pianos—as long as someone else is not playing. So plunk out Chopsticks or perform a gorgeous Chopin or George Winston.

Noteworthy players will be performing, including members of the San Francisco Symphony Chorus Group and alumni from the Symphony’s Youth Orchestra, and members of the Oakland School for the Arts and the Ruth Asawa San Francisco School of the Arts. There will also be sing-alongs.

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

Millennials Sure Love to Dine and Coffee Out

San Francisco with its super hot dining evolution has a lot of millennials going out for dinner and brewed coffees. There are approximately five times as many millennials hitting the SF restaurants and coffee bars as the rest of the generations. But, not only in SF, across the entire landscape of America. Forty percent of all Americans dine out once a week. Millennials clock in at five times a week.

An interesting study from bankrate.com came up with these numbers: 51% millennials hit a bar once a week, 54% eat out at least three times a week, and 29% of them (ages 189-29) slurp down shop-brewed coffee three times a week. This means millennials are setting restaurant industry trends for all of us.

So, if you’re out among San Francisco’s dining cornucopia and notice a very large preponderance of millennials enjoying their meal or drink, or waiting for a table, this explains it.

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