Month: November 2012

Posted on

Real Data SF November Newsletter

Welcome to the very first edition of Real Data SF, a monthly newsletter about the San Francisco real estate market.

If real data, with lots of charts and analysis is your cup of tea, then please read on. Because that’s what I’ll be doing here. In addition, there’ll be the occasional recipe, restaurant review, and heads-up on fun stuff to do in SF. Comments, feedback, suggestions, always welcome of course. Now let’s crunch some numbers!

San Francisco’s Housing Market Kicks in the After-Burners

Many people who don’t necessarily follow real estate that closely aren’t aware that SF’s residential market has been on fire since the start of 2012. Take a look at this chart:

Starting in January, demand – followed by prices – took off. After a steep climb through April, prices took a breather through the summer – only to take off again in autumn.

What’s more, because this chart includes both distressed and non-distressed sales across all neighborhoods in SF – from Seacliff mansions to Bayview bungalows– it doesn’t reflect the extent to which the middle and upper end of the housing market has recovered. If you look at non-distressed sales above $1.5 million – and that’s hardly a luxury home in SF any more – prices on a per square foot basis are within striking distance of their 2008 all-time highs, fueled by an enormous rally in the third quarter.

Will this continue? Though activity typically slows down during the winter and holiday months, we’re not sure it’s going to happen this year. Why? High demand and very low inventory.

For more charts, including one that shows our bubble-pop-recovery cycle all the way back to 1982, click here.

Only sales reported to MLS are included in this analysis. All figures are derived from sources deemed reliable, but should be considered approximate. The data may contain errors and omissions, and is subject to revision. (c) Paragon Real Estate Group

Posted on

SF Luxury Home Report

The San Francisco Luxury Home Market

A Market Overview by the Paragon Real Estate Group

The luxury home market in San Francisco – typically defined as houses, condos, co-ops and TICs selling for $1,500,000 or more – experienced a big surge in activity in the second quarter of 2012. The third quarter saw a decline typical for the summer months, but was still 50% higher than the third quarter of last year. With the increased demand has come a significant increase in values throughout the city.

The SF luxury home segment is currently made up of three dynamics: 1) general-appeal (often spectacular), well-priced listings that buyers are jumping all over and often bidding up far over the asking price, 2) listings that the market has deemed considerably overpriced – by hundreds of thousands or even millions of dollars – that the market is generally ignoring, and 3) niche or special-circumstance properties for which there is an extremely limited buyer pool – even if priced fairly, these can take some time to sell.

******************************

Sales Over, Under & At List Price

In the third quarter, a high percentage, 44%, of luxury home sales in San Francisco sold for above asking price; 15% sold for at least 10% over asking price – an indication of very strong demand; 42% sold below original list price; and 14% closed at list price. It should be noted that a fair number of high-end homes have sold off-market in 2012, i.e., not listed or reported to MLS, from which we derive our data.

Average Dollar per Square Foot

Luxury homes throughout the city have seen a substantial jump in dollar per square foot values since 2011. Values vary widely by neighborhood and property type, and can generally range anywhere from $500 to $2000 per square foot. The highest per square foot values are typically found in the most prestigious mansions on the north side of town and in penthouse condos in the South Beach/ Yerba Buena and Pacific Heights/ Russian Hill areas. Absolutely spectacular views are a common aspect of these sales.

Luxury Home Unit Sales

The second and third quarters of 2012 saw the highest number of luxury home sales of any quarter since 2008. The decline in the third quarter was typical for this market segment during the summer months, and was over 50% higher than the third quarter of 2011.

Sales Price to Original List Price by Days on Market

Most of the luxury homes that sell are sold relatively quickly after the listings arrive on market, and these sales are selling for an average of 102% of list price. Those listings that go through price reductions sell at a significant discount to original price and spend almost 3 months longer on market. And even in a strong market, a solid percentage of listings don’t sell at all, almost always due to being perceived as overpriced.

Inventory of Available Listings

As is typical, September was the month with the highest number of new listings hitting the market, which often leads to an autumn surge in closed sales. It is almost certain that the number of new listings and available inventory will now continue to dwindle until the new year begins. More often than not, the luxury home market goes into a semi-hibernation from Thanksgiving to mid-January.

San Francisco Luxury HOUSE Sales by District and Price Range

Home sales with a price of $1,500,000 and above now take place across the city, but the sales cluster in certain areas and prices vary widely by location. These 4 charts break the luxury home market into price segments and property types by Realtor district.

SF HOUSES Selling for $1,500,000 to $1,999,999

SF HOUSES Selling for $2,000,000 to $4,999,999

SF HOUSES Selling for $5,000,000 or More 

SF CONDOS, CO-OPS & TICs Selling for $1,500,000 or More 

Posted on

October Stats Show No Sign of Slowdown

October Statistics Show No Slowdown in SF Market

November 2012 Market Update

Last month’s newsletter mentioned anecdotal word on the street that the San Francisco market might be slowing down a bit – it appeared the frenzy had diminished somewhat and that fewer listings were selling instantly with ridiculous numbers of competing offers – and the question was whether this would soon show up in the statistics. It hasn’t. Though September did see a burst of new inventory that temporarily changed the equation between buyers and inventory, now with October’s statistics it’s clear the market is still dominated by a high demand/ low supply/ upward pressure on prices dynamic. However, it should be noted that there is a difference in market heat between a listing receiving 1 or 2 offers compared to it receiving 5 to 20 offers, however that difference might not show up in the statistics as long as one good offer is accepted.

Comparing September-October sales reported to MLS with the same two months in 2011, SF dollar volume home sales were up 41%; at Paragon, our sales were up over 109%. These are not the signs of an ebbing market, nor are the statistics illustrated below.

Typically, at this time of year, the number of new listings begins to markedly decline in preparation for the slowdown that usually begins at Thanksgiving and runs through mid-January. But we saw very little of the usual summer slowdown this year, so we will see how much market activity slackens during this year’s holiday season.

Median Sales Price Jumps in October
The median home sales price is that price at which half the sales occurred for more and half for less. It is a very general statistic and big monthly fluctuations, such as seen in October, should be taken with a grain of salt until substantiated over the longer term. Still, October saw a very large increase over the relatively static median prices seen in the previous 6 months, which followed the big jump in early 2012. Remember that sales prices reflect accepted offer activity in the 4 to 10 weeks prior.

Average Sales Price Jumps
The average price is simply the total dollar volume of sales divided by the number of sales. Like median price, it is a general statistic affected by a variety of factors and often fluctuates without great significance on a monthly basis. Among other factors, a decline in distressed home sales and/or an increase in high-end home sales, both of which are occurring now in SF, can have an outsized effect on average sales price. We will see if October’s big increase is sustained in future months or is simply one of those anomalous fluctuations which occur in real estate.

Buyer Demand Remains at Peak Level
The percentage of listings accepting offers in October was probably about as high as it has ever been, close to twice the level of October 2011. The decline seen in September was the result of a large influx of new listings hitting the market in mid-month.

New Home Construction Blasting Off
After crashing in 2008, developers are building again in a big way: over 4000 housing units are currently under construction in San Francisco, with many thousands more in the planning/permit phases. The lack of new homes on the market in the past few years has greatly impacted the supply side of the supply and demand equation. However, with the significant time lag between construction beginning on the larger projects and new condos arriving on market, the effects of this building surge will be a while before being felt.

Distressed Home Market Dwindling
The city was never as hard hit as many other areas by distressed home sales (bank-owned and short sales), and now they are declining rapidly with the market recovery. The number of distressed home listings has declined by 80% since it peaked in November 2010. On this course, this segment will soon be only a negligible part of the SF market.

Listings for Sale Still Very Low
After the spike in September from the large influx of new listings – September is typically the month with the greatest number of new listings – the number of homes for sale is declining again and will almost certainly continue to do so until early 2013.

Months’ Supply of Inventory (MSI)
MSI is a measure of how long it would take to sell the current supply of listings at the existing rate of sales. In October, it was about as low as it has ever been.

Average Days on Market (DOM)
Strong buyer demand plus low inventory typically leads to lower average days on market, and this is what occurred in October.

The Longer Term View
Pulling back from monthly data to look at the longer term cycles of real estate gives greater context to what’s happening in our current recovery.

In October, we completed quarterly updates for San Francisco’s luxury home market, the SoMa-South Beach condo market, the Noe Valley-Castro-Cole Valley home market, as well as for many of the city’s other neighborhoods. If you would like to review these analyses, please reply to this email with your specific request and the information will be sent to you.