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Affordability & the Cost of Housing in the SF Bay Area

Home prices, affordability percentages, monthly housing costs and income requirements for SF, Marin, San Mateo, Santa Clara, Sonoma, Napa, Alameda, Contra Costa & Solano Counties

This national affordability chart above employs a different methodology than the CA county charts below: The graphed chart values (percentages) have totally different meanings.

San Francisco & Marin Counties: Long-Term Overviews

The California Association of Realtors recently released its Housing Affordability Index (HAI) for the 3rd quarter of 2017, which measures the percentage of households that can afford to buy the median priced single family dwelling (house).

In this analysis, affordability is affected by 3 major factors: county median house price, mortgage interest rates, and the distribution of household incomes within the county. (Housing Affordability Index Methodology). The HAI uses house prices exclusively and if condos were included in the calculation, median home prices would decline, affordability would increase and income requirements and PITI costs would be reduced as well. (SF now has more condo sales than house sales, but that is not the case in other Bay Area counties.)

By definition, half the homes sold in any given county were at prices below the median sales price, i.e. there were numerous homes that were more affordable than the median prices used in this analysis. However, any way one slices it, the Bay Area has one of the most expensive – if not the most expensive – and least affordable housing markets in the country. That impacts our society and economy in a number of important ways.

Since many of the figures don’t change that much quarter to quarter, we’ve only updated some of the charts in this report with Q3 2017 data.

Our Survey of Bay Area County Markets, Trends & Demographics

Year-over-Year Changes
Year over year, affordability declined in every Bay Area county as well as in almost every other county in the state.

Long-term Bay Area Housing Affordability Trends

Affordability Percentage by Bay Area County

Note that extremely low affordability readings converged across Bay Area counties at the top of the bubble in 2006-2007. So far, there has not been a similar convergence in our current market, though affordability is generally dropping as prices increase. Most counties now have higher, and sometimes much higher, home prices than in 2007 (see chart later in report), but their affordability percentages are higher now too, instead of lower. The reason behind that apparent contradiction is the approximate 40% decline in interest rates, 2007 to 2016, as well as some increase in median household incomes.Extremely low interest rates have subsidized increasing home prices to a large degree in recent years.

San Francisco is still 5 percentage points above its all-time affordability low of 8%, last reached in Q3 2007 (even though its median house price has increased about 50% during that period). Other Bay Area counties (except for San Mateo) have appreciably higher affordability percentages, for the time being. Generally speaking, as one moves farther away from the heart of the high-tech boom, San Francisco and Silicon Valley, affordability increases.

Monthly Ownership Cost at Median Sales Price

Minimum Qualifying Income to Buy Median Priced House
Assumes 20% down payment and including principal, interest, property tax and insurance costs.

Bay Area Median House Prices

Before the high-tech boom, Marin, a famously affluent county for long time, had the highest median house price. But the high-tech boom accelerated median home prices in San Francisco and San Mateo faster and higher.

Additional chart: Median condo sales prices by county

San Francisco has a much larger and more expensive condo market than other local counties, and is the only county with a very substantial luxury condo market – one that is growing significantly with recent new-condo project construction.

Income, Affluence & Poverty

Santa Clara, San Mateo and Marin Counties have the highest median household (HH) income in the Bay Area. Though the median HH income figures of these 3 counties are almost double the national figure, their median house prices are 4 to 5 times higher, an indication that income dollars can go a lot farther in other parts of the country than they do here. Indeed an income that in other places puts you close to the top of the local register of affluence, living grandly in a 6-bedroom mansion, in the Bay Area might qualify you as perhaps slightly-upper-middle class, living in an attractive but unostentatious, moderate-sized home that costs twice what the mansion did (though, this being the Bay Area, you are probably still driving a very expensive car).

On the other hand, you live in one of the most beautiful, highly educated, culturally rich, economically dynamic, and open-minded metropolitan areas in the world.

Behind median HH incomes, each county also has enclaves of both extreme wealth and poverty within its borders.

Very generally speaking, in the Bay Area counties, renters typically have a median household income about half that of homeowners. In San Francisco, where the majority of residents are in tenant households, that significantly reduces the overall median HH income figure. The picture of housing affordability for renters in the city is ameliorated or complicated by its strong rent control laws (which, however, don’t impact extremely high market rents for someone newly renting an apartment) .

Additional chart: Homeownership Rates by County

Additional chart: Population Demographics – Children & Residents Living Alone

San Francisco has the lowest percentage of residents under 18 of any major city in the U.S. (It is famously said that there are more dogs in the city than there are children.) It also has an extremely high percentage of residents who live in single-person households – 39% – which is a further factor depressing median household income below markets with similar housing costs.

The Bay Area has approximately 2.8 million households. Of those, approximately 124,000 households have incomes of $500,000 and above, which would generally be considered to place them in the top 1% in the country by annual income. At 7.5%, Marin has the highest percentage of top 1% households, followed by San Mateo at 6.2%. With approximately 38,000 top 1% households, Santa Clara, the Bay Area’s most populous county, has by far the largest number of these very affluent households, while San Francisco has about 22,000.

It should be noted that besides high incomes per se, another factor in the Bay Area housing boom of recent years has been the stupendous generation of trillions of dollars in brand new wealth from soaring high-tech stock market values, stock options and IPOs. Thousands of sudden new millionaires, as well as many more who didn’t quite hit that level, supercharged real estate markets (especially those in the heart of the high-tech boom) as these newly affluent residents looked to buy their first homes, perhaps with all cash, or upgrade from existing ones. That is something not seen in most other areas of the country, certainly not to the degree experienced locally, and is a dynamic outside typical affordability calculations. This increase in new wealth has slowed or even declined in the past 12 months as the high-tech boom has cooled (temporarily or not, as time will tell). Still, there are dozens of local private companies, usually start-ups, some of them very large – such as Uber, Airbnb and Palantir – which are considered to be in the possible-IPO pipeline. If the IPO climate improves and successful IPOs follow, a new surge of newly affluent home buyers may follow.

Additional chart: Bay Area Populations by County

A look at two very different income segments in the Bay Area, those households making less than $35,000 and those making more than $200,000. The $35,000 threshold is not an ironclad definition of poverty, especially since housing costs (by area, and whether market rate, subsidized or rent-controlled), household sizes and personal circumstances vary widely, though it is clearly difficult for most area families trying to live on that income. At over 25%, San Francisco has the highest percentage of households with incomes under $35,000 and, at 22%, Marin has the highest percentage making $200,000 and above.

Amid all the staggering affluence in the Bay Area, and huge amounts of new wealth generated by our recent high-tech boom, very significant percentages of the population still live in poverty, especially if our extremely high housing costs are factored into the calculation. (The above chart calculates poverty rates by different criteria, the higher one factoring in local costs of living.) The economic boom has helped them if it resulted in new, better paying jobs, unfortunately not as common a phenomenon as one would wish for the least affluent. It hurt them, sometimes harshly, if their housing costs escalated with the increase in market rates.

Mortgage Interest Rates since 1981

Interest rates play an enormous role in affordability via ongoing monthly housing costs, and interest rates, after their recent post-election jump are about 35% lower than in 2007. To a large degree this has subsidized the increase in home prices for many home buyers. It is famously difficult to predict interest rate movements, though there is general agreement. Any substantial increase in interest rates would severely negatively impact already low housing affordability rates.

Longer-Term Trends in Prices and Rents

The same economic and demographic forces have been putting pressure on both home prices and apartment rents.

Bay Area Median House Prices since 1990

If one looks at charts graphing affordability percentages, home prices, market rents, hiring/employment trends and to some degree even stock market trends, one sees how often major economic indicators move up or down in parallel.

Monthly Rental Housing Costs

The recent economic boom has added approximately 600,000 new jobs in the Bay Area over the past 6 years, with about 100,000 in San Francisco alone – with a corresponding surge in county populations. Most new arrivals look to rent before considering the possibility of buying. The affordability challenges for renters (unless ameliorated by rent control or subsidized rates) has probably been even greater than that for buyers, since renters don’t benefit from any significant tax benefits, from the extremely low, long-term interest rates, or by home-price appreciation trends increasing the value of their homes (and their net worth). In fact, housing-price appreciation usually only increases rents without any corresponding financial advantage to the tenant. Rents in the city have been plateauing in recent quarters and may even be beginning to decline as the hiring frenzy has slowed and an influx of new apartment buildings have come onto the market – but they are still the highest in the country.

Bay Area Rent Report

Affordable Housing Stock & Construction in San Francisco

Additional Chart: Affordable Housing Construction Trends in San Francisco

There may be no bigger political and social issue in San Francisco right now than the supply (or lack) of affordable housing: Battles are being fought, continuously and furiously, in the Board of Supervisors, at the ballot box and the Planning Department by a wide variety of highly-committed interests, from tenants’ rights and neighborhood groups to anti-growth factions and developers (to name a few). It is an extremely complicated and difficult-to-resolve issue, especially exacerbated by nimby-ism and the high cost of construction in the city. SPUR, a local non-profit dedicated to Bay Area civic planning policy, estimated in 2014 that the cost to build an 800 square foot, below-market-rate unit in a 100-unit project in San Francisco was $469,800 – and we have seen higher estimates as well.

This fascinating graphic above, based on SF Controller’s Office estimates from late 2013, breaks down SF housing supply by rental and ownership units, and further divides rental by those under rent control. All the units labeled supportive, deed restricted and public housing could be considered affordable housing to one degree or another, i.e. by their fundamental nature their residents are not paying and will never pay market-rate housing costs. (Units under rent control will typically go to market rate upon vacancy and re-rental, though rent increases will then be limited going forward.) Adjusted for recent construction, there are roughly 34,500 of these units out of the city total of about 382,500, or a little over 9% of housing stock. Section 8 subsidized housing would add another 9,000 units.

There are currently many thousands of affordable housing units, of all kinds, somewhere in the long-term SF Planning Department pipeline of new construction, though many of them are in giant projects like Treasure Island and Candlestick Park/Hunter’s Point, which may be decades in the building. But it is generally agreed that new supply will never come close to meeting the massive demand for affordable housing, further complicated by the question of what exactly affordable means in a city with a median home price 5 times the national median, typically well beyond the means of people such as teachers and members of the police force. One corollary of increasing affordable housing contribution requirements for developers and extremely high building costs is that developers are concentrating on building very expensive market-rate units – luxury and ultra-luxury condos and apartments – to make up the difference.

Other reports you might find interesting:

Survey of SF Bay Area Real Estate Markets
10 Factors behind the San Francisco Real Estate Market
30+ Years of San Francisco Bay Area Real Estate Cycles
San Francisco Neighborhood Affordability

All our analyses can be found here: Paragon Market Reports

Our sincere gratitude to Leslie Appleton-Young, VP & Chief Economist, Oscar Wei, Senior Economist, and Azad Amir-Ghassemi, research analyst, of the California Association of Realtors, for their gracious assistance in supplying underlying data for the CAR Housing Affordability Index calculations.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. All numbers should be considered general estimates and approximations.

© 2017 Paragon Real Estate Group

Best Turkey Dining-Out Spots in San Francisco

One week to Thanksgiving Day 2017 in the city by the bay, and if you’re finding your kitchen just too small for feast-making or don’t feel like all that feast-making, then be thankful there are so many fine restaurants offering so many different interpretations on the turkey celebration meal.

To help us navigate all the possibilities, sf.eater.com has put together an interactive SF city map of 15 eateries they feel are offering this year’s supreme turkey dining. This map is a culinary range so don’t expect all these restaurants to carry the roasted bird, stuffing and ultra rich gravy. Some, for example, are going to serve you sushi, but it will be Michelin-starred sushi.

Make reservations now, of course.

Here’s a peak at the gobble gobble offerings:

  • 1300 on Fillmore: 3 seatings for the day, each with a 3-course feast that includes buttermilk fried quail, butternut squash risotto, not too mention the perfect oven-roasted turkey.
  • Balboa Café: Menu includes kobacha squash soup, pumpkin risotto, New York Steak, and turkey dressed with Autumn herb stuffing.
  • Brenda’s French Soul Food: a Tenderloin morning-to-lunch spot serving up deep fried turkey and pumpkin pie pancakes with gingersnap streusel. Umm.


Go to the turkey-dining-out map here.

2017 SF Holiday Events Calendar

There are many great things to enjoy in our wonderful Bay Area now through January. Take a look at some of the events that will “Add a little sparkle to your holidays” in our events guide this winter season.

Even a Fire-Gutted SF House is On the Market for Big $

San Francisco is the town of quirky, sometimes bizarre, real estate. We have a luxury condo tower that is sinking into the ground and leaning over 15 inches to the northwest (Millennium Tower), and monthly renting of a Fedex Truck (no plumbing for $600) and a backyard tent (for $400). And many other examples of surreal real estate.

Now, take the case of the burnt-out shell of a house on 121 Gates Street that burned in a 2-alarm fire in 2016 in the Bernal Heights neighborhood. It was gutted but still standing—a 600-square foot one-bed, one-bath house built in 1907, the year after the great SF Earthquake.

Now, the Bernal Heights charred walls-and-frame of a house is on the market for $800,000 (and will require extensive tearing down and rebuilding). That is almost the median price for a home in the entire Bay Area, while the median price for a house in California is $555,400. The ad now lists as a sale pending.

It’s expected that this house will go well over asking. A precedent for this kind of action is an “extensively damaged, uninhabitable” house in Sunset listed in early 2016 for $600,000 and ended up selling for $950,000.

Big Thanksgiving Question: What’s Open On That Day?

I don’t know about you, but there are some Thanksgivings when I need to go shopping either in SF or nearby locales. Sometimes it’s for something I forgot for the turkey dinner. Other times, it’s to get in on some too-good-to-miss sales. And then, right after Thanksgiving, there’s Black Friday.

But as we all know most stores are closed on Thanksgiving. So. What’s open on this traditional day of gratitude and community sharing?

Here’s a helpful list:

  • There will be a few shops open on Union Square, if you want to check the square out. About 75% of the shops will be open at Pier 39.
  • Target is planning on opening its doors at 6pm on Thanksgiving and stay open till midnight. Six hours later, the store will open for Black Friday at 6am.
  • Macy’s will be open 5pm to 10pm on Thanksgiving Day, and on Black Friday.

 

Other retailers open on Turkey Day around the Bay Area are:

  • Bass Pro Shops – 8 a.m. to 6 p.m Thanksgiving; 5 a.m. to 9 p.m. Black Friday
  • Belk – 4 p.m. to 1 a.m. Thanksgiving; 6 a.m. to 10 p.m. Black Friday
  • Five Below – 6 p.m. to 1 a.m. Thanksgiving; 7 a.m. to 9 p.m. Black Friday
  • JCPenney – 2 p.m. Thanksgiving through 10 p.m. Black Friday
  • Kmart – 6 a.m. to 12 a.m. Thanksgiving; 6 a.m. to 2 p.m. Black Friday
  • Kohl’s – 5 p.m. Thanksgiving through Black Friday. (Store hours may vary by location).

Coolest City?—SF Comes to Mind, and Yes, It is the Coolest Ever

Ever since the coining of the word “cool,” (1890’s urban life to 1920 jazz), it’d be easy to paint San Francisco with the slang word that implies stunningly fine,  moving, avant garde, best of the best, and hip. But has there ever been a study on cities in the U.S. that covers coolness?

Well. Yes, there has. Surprisingly, Forbes (not known for its coolness) came together with Sperling’s Best Places to suss out the top 20 cities which make their citizens swoon with labeling their town the “coolest.”

Forbes and Sterling dug down into the layers of 100 of the largest metro areas nationally, using 9 ways to measure coolness—including recreation and arts, non-chain restaurants, mass transit infrastructure, and diversity.

Da Dum! The coolest city in the U.S. is us, San Francisco. Next in the conga line of coolness are: Seattle, San Diego, New Orleans, Portland, San Jose, Los Angeles, New York, Boston, Denver.

However, the rising cost of living in SF may knock our coolness top dog position down a peg or two. We’ll see.

Read the full article here.

Oh Oh—More Lawsuits for Leaning, Sinking Millennium Tower

The CBS investigative journalism on-air show “60 Minutes” did a segment recently on San Francisco’s now infamous Millennium Tower. The tower used to be known as a place of import for people of note living in the luxury tower, which scooped in $750 million in 2013 in condo sales. It was the toast of the residential real estate world in SF.

Then in 2016 it was discovered the tower had sunk 17 inches and was leaning over 14 inches to the northwest (and continues to sink and lean). It’s reputation sank into infamy. Condo owners sold and fled at a loss. Homeowners staying are saying their residences “are practically worthless.”

And then all property value, legal, and blame-game hell broke loose on the project. Lawsuits were flying and fingers were pointing between owners, developers, architects, engineers, city officials.

Now, there are more lawsuits are in the legal machinery works, so many with such a mighty assembly of lawyers that it takes 30 minutes to name the legal proceedings. There are now 20 parties involved in the tower’s lawsuit fest.

Airbnb’s Most Pricey Listing in San Francisco Pops at $10,000 a Night

It’s no surprise when uber-nice hotels in the world’s great cities take a $10,000 (or much more) chunk out of your wallet for the room—per night. That’s expected. But, now in a tip of the hat to the new paradigm of accommodations, a listing in Airbnb is touting a $10,000 a night stay. That makes it the most expensive Airbnb in the city, and sets a new bar for overnight hospitality in other people’s SF homes.

Now—according to a story in bizjournals.com—what you get for the $10,000 is pretty good though. You get the entire historic Payne Hotel which was built in 1881 and is now the 12-bedroom Payne Mansion hotel—just a brief stroll up from Union Square, Pier 39, Ghirardelli Square or Lombard Street.

The hotel-cum-mansion is adorned with 8 bathrooms and 2 event spaces, and a penthouse. If you don’t have an extra $10,000 lying around, you can rent a single room for $74 a night. Or pony up $10,000 and the history-packed hotel is yours for the night, top to bottom.

The Airbnb listing for the Payne states the entire interior has been remodeled, and it has operated as a full service hotel since 2014.

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