Do You Make Enough to Buy?

My last post showed us median home prices in the Bay Area.  Now let’s look at income.  The chart below compares median income by county. The difference in income among the top three (Marin, Santa Clara and San Mateo) is negligible. SF’s is a notch lower, perhaps because we have a larger number of recent graduates who are seeking to launch their lives in the “Big Bad City.” Rent control has also enabled many with lower incomes to stick around. 

Median Household Income

Minimum Income Requirements

It’s the comparison between this chart and the one just above that shows just how out of reach Bay Area housing is for most of the people who live here. The silver lining is that a slight drop in prices, along with a significant drop in interest rates has increased affordability for some.

We should also keep in mind that this is affordability for a median priced house. Half of our house sales are below that number.

Monthly Housing Costs

This is where the story gets interesting, at least to me. $8,400 may seem like a lot to pay per month to own in San Francisco, but this is pre-tax. About $1500/month of your payment is going to get refunded to you each April, so your net payment is actually $7,000/month. The other cheerful news here is that the payment has actually gone down by over $1,000 since last year, mostly due to lower interest rates.

San Francisco Median Home Price Now Above $1.5m

Yes, you read that correctly.  Today a median house in San Francisco is $1,580,000, the highest in the Bay Area. And while not in this chart, a median condo is $1,125,000.

Wondering what a median priced house and condo look like in San Francisco? Here are the two most “quintessentially San Francisco” ones I could find in the MLS. One’s a Victorian in Bernal. One is a Mid-Century on Nob Hill. You can click on each pic to get a full readout.

When Selling a Home is Like Selling a Secret

When I moved here in the mid-80s, I learned San Francisco on foot by climbing its hills and counting its blocks. Back then the City unfolded itself to me in a series of unexpected moments as I stumbled across places like the Vulcan Stairs, Sutro Gardens, or the heart-stopping crest of the hill at Filbert and Hyde. At the time, I thought these discoveries were all mine and that no one else really knew about my secret spots.

An early favorite find was the first block of Liberty Street. If you have yet to discover it yourself, I recommend approaching it from the Valencia Street side holding an ice cream cone from Smitten. When you turn the corner, you’ll trade clutter and chaos for a canopy of Gum and Ash trees that frame front stoops and Italianate facades. The 19th Century homes are perfectly sized for this little street and love to show off their bits of gingerbread and clapboard in the dappled sunlight.

One of the best things I love about my job is that I not only regularly visit my favorite nooks and crannies but can also become part of their history–if only for a brief month or two. My recent sale at 22 Liberty was a thrill for me and for my buyers– who love the location as much as I do.

The Latest San Francisco Real Estate Report

Still want some charts about the SF Real Estate Market?  You can get your fill from our most recent Compass San Francisco Real Estate Report

If you’d just as soon hear my Cliff Notes version, here it is in five easy pieces.

  1. Year-to-Year the market has remained strong with prices up and number of sales down.
  2. San Francisco is outperforming other Bay Area market.
  3. Our median house sales price in San Francisco hit a new high this spring BUT our rate of appreciation is significantly slowing down.
  4. Looking forward, October is typically one of our busiest months for closed sale after a big spike in September’s inventory.
  5. We should also see more price reductions as Sellers try to spark renewed buyer interest for overpriced homes before the market slows for the winter holidays.

The Transformation of a Grand Old Lady

My Victorian listing on Bush Street sat virtually untouched for over 70 years before we got it ready for sale. This video shows the “before and after” transformation framed by a terrific back story. It’s a really good video and worth the two minutes of time it takes to watch it. Just remember to get out your hankie before you start.

Compass arranged for this production to promote their Concierge Service– which paid the renovation costs up front so the family that owned the home didn’t have to come out of pocket.

Looking to Become a Millionaire?

DID YOU KNOW?  Warren Buffet who turned 89 this past weekend, made over 95% of his fortune after the age of 50 years.  95%!!! He only became a billionaire at the age of 56.  Just like that $50 million house that sold in 2 days with multiple bids over ask, we tend to only hear the exceptional stories of those who make their first billion before the age of 25 in the media. The reality is that the vast majority of fortunes are amassed over the age of 50. The average person becomes a millionaire closer to the age of 60, and women hit this milestone sooner than men, under 59 years of age!

What are a few things you could initiate today to help you accumulate more wealth by this time next year?

  1. Set up automatic savings.
  2. Put your money in a high-yield savings account. Most basic savings accounts pay a very low rate. An extra percent can add up.
  3. Increase your 401k contribution.
  4. Analyze your monthly expenses and set a new budget that cuts out any excess.
  5. Do some after-hours/outside-of-your-routine work for 1-2 hours a week or month for additional income set aside purely for savings.

How Strong is the Bay Area Market?

We’re topping it off with charts this week! For those of you who are just here for the graphs and data, I will not be offended if you leave off after you’ve digested the data below:

We’ve had a strong market for longer than normal this cycle. But San Francisco is always last in and first out when it comes to a slump. Forecasters say that the market should remain strong through 2020. In the meantime, the chart below indicates a slight dip in some Bay Area markets.

The good news in the next chart? While we sometimes fall harder, we come back stronger relative to the national market.

Five cents worth of advice:

  1. Don’t try to time the market. Wondering when we’ll peak or if we’re peaking will exhaust you. And you’ll never know the answer until the moment has come and gone. 
  2. Think of the home you buy as a place to live first and an investment second. There’s so much more to owning a place than the dollar payout at the end, like you get to paint the rooms any color you want, never worry about the rent going up and finally get a dog!
  3. Plan to stay at least seven years. Over my 30+ years of selling, I’ve always seen the market run in seven year cycles from peak-to-peak. I’m especially aware of this because I have a knack for buying at the top. We purchased our current home in 2009, just a few months before the market melt-down. There was some slippage in value after we closed, but today it’s worth 35% more than what we paid for it.

Single Family Home Rentals on the Rise

DID YOU KNOW? Demand for single-family rental homes is surging, and homebuilders are now stepping in, redesigning and reimagining the sector — and becoming landlords themselves. In 2018, about 43,000 single-family homes were built for rent, the largest number in nearly 40 years according to National Association of Home Builders analysis of U.S. Census data. The built-for-rent share of housing starts is also rising, nearly double its recent historical average (from 1992-2012). (CNBC)

Affordability Crisis Spreads to the Heartland

What began on the coasts, in areas like New York and San Francisco, is now radiating into the nation’s heartland, as well as to cities from Las Vegas to Charleston, South Carolina. Entry-level buyers are scrambling to purchase homes that are in short supply, sending values soaring.  Expectations that the Federal Reserve will reduce interest rates this week will do little to change the sober reality: For many, prices have risen much faster than incomes, pushing homeownership out of reach for a new generation of hopeful buyers (BLOOMBERG).

You can read the full article HERE.

Fun Things to Do This Weekend July 27-28

One of the many reasons I love this city is that there is ALWAYS something fun to do.  Here are just a few things to check out this weekend.

“Crazy Funny Asians” Comedy Showcase

July 28th, 7:00pm

Neck of The Woods, San Francisco, CA

Inspired by the blockbuster movie, see some of the Bay Area’s top comedians at San Francisco’s Crazy Funny Asians comedy showcase! Let’s celebrate the Bay’s Asian-American culture and heritage with laughs.

Stern Grove Festival presents the San Francisco Ballet

July 28th – Show starts at 2:00pm.  Seating is first come, first served.

Artistic Director Helgi Tomasson, performs a selection of highlights from their current repertory at Stern Grove Festival. Conductor Martin West leads the San Francisco Ballet Orchestra.

Treasure Wine Fest Happy Hour on Treasure Island

July 27th & 28th, 12:00-5:00pm

Winemaker Studios

Winemaker Studios is a collective group of urban wineries located in a rustic, relaxed setting with waterfront and Bay Bridge skyline views, providing a genuine, winetasting experience. Located on San Francisco’s historic Treasure Island, Winemaker Studios brings together great winemakers to provide a one-of-a-kind urban wine experience for individuals, private events and unique corporate gatherings.