More on Paragon’s February 2015 report
Let’s continue the discussion from my last post about Paragon’s February 2015 San Francisco market report. This report found that, just as a previous condo-construction boom from the late 1990s until the crash of 2008 portended a new boom these days.
Over the past 15 years, condos have been selling at higher dollar-per-square-foot values, but at the same time average unit sizes are getting smaller. The rule of thumb is that the smaller the unit, the higher the per-square-foot value, in addition to other considerations that affect value, such as quality and graciousness of construction, views, amenities and neighborhood ambiance. The average per-square-foot value for new condos is now in excess of $1000 in the city, with some (Lumina!) running $1400 to $1500 per square foot on units that are going into contract.
Now let’s look at home appreciation versus inflation. Since 1988, home price appreciation has greatly outpaced CPI inflation. As an example that may simplify this, if you had put down $100,000 on a $500,000 home purchase with a 30-year loan in 1988, per the Case-Shiller index at year-end 2014 your home would be worth about $1,900,000. If you then take off closing costs and pay down the remaining balance, your $100,000 down payment would have transformed into about $1,650,000 million in proceeds.
Paragon has just updated its semi-annual breakdown of San Francisco home values by property type, bedroom count and neighborhood. You’ll find that report here. You’ll also find Paragon’s updated report on market seasonality here; it measures the ebb and flow of buyer demand up against the supply of homes available for purchase. Finally, you might want to check out Paragon’s January Commercial Brokerage report on Bay Area investment real estate.
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