SF Cultural Enclaves Moving Toward Heritage Preservation

The district of Bayview in San Francisco is a neighborhood of working class housing, retail shops and small hometown restaurants. It used to be a place of grittiness and patches of poverty. But like the Mission district that has undergone extensive gentrification, Bayview is starting to be bought up and built out upscale. According to a story in the SF Chronicle, that has residents like April Spears worried. She owns a soul food restaurant, likes the slow improvements coming to Bayview, but is anxious that upscale condo towers being built in Bayview now will drive out the current residents—including its African American heritage population.

San Francisco has a loose set of guidelines that define a cultural district, but thanks to people like Spears and others in Bayview, the idea and protections of a cultural district are becoming more solidified. Last week the Board of Supervisors passed a bill that will establish a formal process for creating protected cultural districts in the city. The bill also envisions city funding for the districts preservation efforts.

Another district pushing for these protections is the Castro.

Wow – Need $333K a Year to Buy a Home in San Francisco

It’s an easy number to remember: $333,000. So, if you’re talking at a party or around the cooler, you can make a weighty dialectical point by stating, “Buying a home in San Francisco—house, or condo—you or you and your significant other need to be hauling in $333,000 a year.” And everybody will be impressed or maybe dismayed.

The California Association of Realtors released its Quarterly Housing Affordability report a couple of days ago, and said report found the $333K annual income figure for SFers, and that’s without the taxes.

That fits with the upwelling median price of an SF home sitting now at $1.61 million. Another point to keep for the water cooler is these are asking prices, not the final sales price—and many houses or condos are going higher than the asking price. The $333K price tag has shot up in one year, since the 2017 SF figure of $267,130 needed in the income piggy bank per year.

Amazon Cashier-Free Grocery Stores Coming to SF and Chicago

Well, it’s a dubious honor, and another first for San Francisco, city of cultural experimentation ever since the Barbary Coast days. Amazon, with its love-hate relationship with consumers, is coming to an SF corner as a brick-and-mortar grocery store. The twist; it won’t have any cashiers to check you out. No humans except us shoppers cruising the aisles, putting stuff in our carts or baskets. And cameras watching us and recording every move and eyebrow lift.

That’s right. It’s called Amazon Go, and the store tracks with it’s Big Brotherish camera array all of our shopping activities and bills us after we’ve left the store. Critics worry that this technology will lead to armies of cashiers being out of jobs.

Amazon posted ads today for store managers for the SF and Chicago stores. It isn’t known where the Amazon Go will be situated, but SF Chronicle reports that Amazon recently purchased space in Union Square.

Twelve for Twelve in San Francisco Real Estate Neighborhoods

Across the U.S. the average increase in housing pricing is about 7 percent from 2011 on to where we are now in May 2018. In San Francisco that appreciation rate is running 12 percent since 2011 and this is in 12 neighborhoods across SF.

And these aren’t the neighborhoods you’d round up as the usual suspects as being twelfers for house value appreciation. Paragon Real Estate recently came out with a report identifying the big twelve. And while these twelve outpace their sister areas in SF, overall the city is reaching new highs of value. The median for a home or condo price is now more than $1.6 million, which is a 23 percent year-over-year increase. Also setting new records is the average dollar per square foot cost.

The hottest areas in SF for home price appreciation are Visitacion Valley, the Outer Sunset, the Excelsior and the Outer Richmond on the southern and western edges of the city. And there are 8 more—see below for link.

Go here to check out the big twelve.

San Francisco Homes Earn More Per Hour Than Average U.S. Workers

If you own a home or condo in San Francisco, then its accruing market value is chugging up around the clock, kind of like a money printing machine. In fact, the upward growth of value in a San Francisco home is so significant that that home is earning as much or more per hour than the average worker in the U.S. does.

Huh? Yes, that’s right. Well, pretty close to being right, according to real estate site Zillow.

A Zillow report that came out last week stated this rather startling fact: “The typical U.S. home appreciated 7.6 percent over the past year, from a median value of $195,400 in February 2017 to $210,200 at the end of February 2018. That $14,800 bump in value translates to a gain in home equity of $7.09 for every hour the typical U.S. homeowner was at the office last year (assuming a standard 40-hour work week), a shade less than the federal minimum wage of $7.25 per hour.”

So, there you are: your home working for you 24 hours a day, every day — in an up market. If you divide the gain in home equity by total hours of the day, then the average drops to about $1.68 an hour. But still, that’s good for just sitting around.

Another Beer Haus Suds it Up in San Francisco

Beer is uber popular in San Francisco, and the Bavarian tradition of combining barrel-pulled beer and hearty German food in a long-table atmosphere under a haus roof is further promulgating in SF. We already have the popular Biergarten over in Hayes Valley, and now the huge Radhaus is opening soon in Fort Mason. So, if you have a hankering for beer, weinersnitchel and rollicking good-cheer company, then get in your BMW and drive on over to the Fort.

And who is building this festive beer hall? The same developers who gave SF Biergarten. Only, this one is bigger, in that its occupying the former army machine shop at the fort. They are turning a 3,700 square-foot space into an open Bavarian beer hall design, keeping the 27-foot high ceilings with their steel trusses and vintage industrial look. The star of the beer haus will be its alpine bar, a whopping 200 feet of ponderosa pine carved right on the site.

Look for a very late spring or early summer opening.

Historic Designation Pushes Back Big Development in North SF

The Laurel Heights neighborhood is lovely, leafy and now embroiled in a battle between the Laurel Heights Improvement Association (LHIA) and developers Prado Group and SKS. The developers are wanting to tear down part of the UCSF Laurel Heights campus at 3333 California Street and turn the property into 558 new homes, 54,000 square feet of retail space, 50,000 square feet of office space and a child care center. UCSF is moving out of the 10.2 acre, 550,000-square foot office building.

But the LHIA is attempting to have the development more closely examined in line with neighborhood looks and tastes by seeking a historic designation for the UCSF building, nominating it for the National Register of Historic Places. John Rothman, who heads the LHIA, said, “The neighborhood is trying to get clarity. Our goal is to try to do the right thing for the neighborhood and builders. We’re trying to come to a resolution.”

The developers are opposing the designation. SF city staff are for the designation, stating the building is, “The first major office building to be built outside of downtown in a suburban setting” and “reflecting mid-twentieth-century modernist design principles.”

SF Residential Newsletter: Hottest SF Neighborhood Markets

Before discussing neighborhood values, appreciation rates and market cycles, here are 3 overview charts on the entire city market.

Citywide Home Values & Trends

On a 3-month-rolling basis, median home sales prices in San Francisco yet again hit new highs in April 2018: The median house sales price jumped $55,000 over the March price to hit $1,665,000, and the median condo sales price jumped $50,000 in April to $1,225,000 (3-month rolling sales through 4/30/18, reported by May 2). Those reflect year-over-year increases of 23% and 8% respectively. Average dollar per square foot values also reached new peak values.

Highest Median House Price Appreciation Rates by Neighborhood:
Compound Annual Appreciation Percentages, 2011 – 2017

The neighborhoods and districts circled on the map below have seen compound annual appreciation rates of 12% or more over the past 6 years. As a point of comparison, the national rate over that period was about 7%, and the CPI inflation rate about 1.5%. As illustrated in the table below the map, the highest rate in San Francisco over the period was above 18%.

If the return on cash investment was calculated for purchasing with a 20% down payment (instead of paying all cash), and adjusting for closing costs (estimated at 2% on buy-side, 7% on sell side), the compound annual rate of return on the cash investment soars: A 10% annual rate of home price appreciation would then translate into an annual compound return on cash investment of just under 40%. The use of financing in home ownership is one of the reasons why it can often be such a good investment to develop household wealth over time.

Total 6-year appreciation rates can be calculated by dividing the 2017
median house sales price by the 2011 price.

Though median home price appreciation rates throughout the city have been incredibly high by any reasonable measure, some neighborhoods have outpaced the norm. The main reason is affordability: Less expensive homes have appreciated considerably faster than more expensive homes. Also, some of the most affordable districts were hammered by foreclosure sales after the 2008 crash, which brought their sales prices down to unnatural lows by 2011 – setting the stage for dramatic recoveries. Bayview, with the most affordable houses in SF and also worst hit by the 2008-2011 distressed property crisis, has had the highest compound annual appreciation rate since that time, a staggering 18.3%, or a 6-year total rate of 174%. Other affordable neighborhoods running across the southern border of the city – such as Excelsior, Visitacion Valley, Sunnyside, Ingleside and Oceanview – also saw extremely high annual rates of 12% to 14% for similar reasons.

The dynamic in the Inner Mission was somewhat different: Its 14.7% compound annual rate of appreciation – a total of 128% over the 6 years – was because it turned into the hottest, hippest district in the city, especially among younger high-tech workers. The gentrification which had been slowly occurring for 30 years suddenly went into overdrive to catapult prices higher.

Bernal Heights – with a 13.3% compound annual rate and 111% 6-year total – is right next to the Mission on one side and to Noe Valley on another. It was perfectly situated to take advantage of the classic overflow effect for people who wanted a similar neighborhood ambiance to Noe or Eureka Valley, but could no longer afford their much higher prices. Outer Richmond was also a standout: It has the lowest house prices in the northern third of the city. And the Sunset & Parkside district is filled with mid-price 2 and 3 bedroom houses, has a variety of attractive neighborhood commercial districts, ocean or parks on 3 sides, and easy access to highways south to the peninsula. All these factors have made it into a much sought-after location to purchase a home in recent years. The market there is insanely hot now.

The most expensive neighborhoods in the city have lower, but still very high rates of appreciation. And in dollar terms, their appreciation returns are by far the highest in the city.

CONDOS: Calculating appreciation rates for SF neighborhood condo prices is an iffier process, because so many large, new condo projects have come on market, significantly impacting inventory and sales prices, and making it much more difficult to perform apples to apples comparisons. Therefore, our calculations, above and below, are performed for the entire city instead of for separate districts. It is certainly true that, due to supply and demand issues, condos have typically appreciated at somewhat lesser rates than houses, which have become the scarce commodity in SF. There has been some variation in condo appreciation rates depending on location, supply and price segment.


Up, Down, Up: A Longer-Term Look
at SF Home Value Changes since 2000

Bubble, Crash & Recovery
by District & Price Segment

Home value appreciation in the charts below is broken down by 4 distinct time periods: 1) 2000 to peak of bubble (2006-2008, depending on price segment); 2) peak of bubble to bottom of market (typically 2011); 3) the 1st 4 years of the recovery, 2012 to 2015; and 4) 2015 to present.

House appreciation is broken down into 4 broad price segments as exemplified by the markets in 4 city regions: The least expensive segment is represented by house sales in the broad swathe of southern neighborhoods running from Bayview through Portola, Excelsior, Crocker Amazon and Outer Mission (Realtor district 10). The mid-price segment is illustrated by sales in the Sunset & Parkside district (Realtor district 2). The central Noe, Eureka & Cole Valleys district (district 5) is used to represent the expensive segment; and the very expensive house segment is illustrated by the northern, old-prestige neighborhoods running from Sea Cliff, Lake Street & Jordan Park through Pacific & Presidio Heights, Cow Hollow and Marina to Russian, Nob & Telegraph Hills (which are the very affluent parts of 3 different Realtor districts).

These areas were used because of their quantity of sales and the relative homogeneity of values within them. For condos, appreciation rates were calculated on the entire SF condo market. The calculations below were made by averaging both median sales price and average dollar per square foot appreciation rates. Present values are based on sales occurring in Q4 2017 and Q1 2018.

2000 to Peak of Bubble,
Crash to Bottom of Market

Less expensive homes saw by far the biggest bubbles (2000 to 2006-2008) and crashes (2008-2011), mostly due to the predatory lending/ subprime financing crisis. This was a phenomenon across Bay Area markets. (Note that different price segments peaked in different years from 2006 to mid-2008.)

Bottom of Market to 2015,
2015 to Present

The first 4 years of the recovery which began in 2012 saw high home-price appreciation rates across the city. In 2015, the market shifted – there was considerable financial market volatility in late 2015 and the first half of 2016, a precipitous drop in IPO activity, and the high-tech boom cooled temporarily – and appreciation rates diverged, with less expensive homes significantly outpacing more expensive neighborhoods. One factor was that buyers were desperately searching for homes they could still afford.

Overall Dollar & Percentage Appreciation
2000 to Present

By total percentage appreciation since 2000, Sunset/Parkside ranks first. By actual dollar appreciation, the most expensive home prices increased the most, typically by well into seven figures.

San Francisco Condo Appreciation
2000 to Present, All Districts

Generally speaking, the SF condo market has not seen appreciation rates as high as for houses. Mostly, this has to do with increasing supply due to the boom in new condo construction, but it was also affected by factors in 2015-2016 already described above.

Percentage of Sales over List Price
by Property Type

This chart illustrates the difference in demand by property type.
Houses have been the hottest segment in recent years.

San Francisco New-Housing Trends

New construction, projects authorized, and affordable housing figures
based on SF Planning Department data recently released for 2017

Additional reading for those interested: Paragon Main Reports Page

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 certain statistics such as median sales prices, to some small degree.

© 2018 Paragon Real Estate Group

SF.curbed Puts SF Home Goods & Design Shops on Digital Map

Ah, the joy of shopping for new home goods or furniture in San Francisco. This is a city to really get into the world of maximalism or euro-chic or traditional Victorian for your home or apartment makeover. Or maybe you’re looking for a fresh home design. What to do to find a great shop? Of course. Go to sf.curbed.com’s interactive online map to click on one of 36 pins to quickly explore in your home while dreaming about redoing your home.

The map provides on the right side an actual map of SF that is zoomable and populated with 36 numbered pins that depict just where all these shops are in the city. From over in the Sunset, down to Hunters Point and up to North Beach and a whole bunch bunched up in north, east and central SF.

Click on the pin and you’re zoomed down the left side of the map page to a picture of the shop and an informative, witty blurb on the shop and its address, and a visit website button. Or just use the left column that’s number 1 to 36 to scroll down and see what catches your fancy.

Click here to see the map.

Airbnb’s Payne Mansion Transforming to Hotel and Restaurant

1409 Sutter Street last year was Airbnb’s most expensive listing, a real SF mansion with all the perks of ritzy living. The Airbnb listing was simultaneous with the Payne Mansion being on the market over the past few years, at one time looking for $13.5 million. Step in Bernard Rosenson from southern California who is picking up the property and turning it into an upscale hotel and restaurant. The hotel will be called Mansion on Sutter and the restaurant is named 1881, for the year the mansion was built. Rosenson expects to open the hotel/restaurant in July this year.

Payne Mansion has been a hotel in its past, so the makeover is nothing radically new. Currently the mansion has 10 bedrooms that include a presidential suite and three executive suites. It hasn’t been announced how many rooms the new hotel will offer.

The mansion is presently outfitted with eight bathrooms and two event spaces, and Airbnb renters, if they wanted, could book the whole mansion for $10,000 a night.