Author: Paragon Market Analytics

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December Newsletter: SF Neighborhood Values

San Francisco Neighborhood Values

December 2012

The general market dynamics in November were little changed from October, so for a different perspective, below are long-term trends in average sales prices and average dollar-per-square-foot values in a variety of areas around the city. The last sales period assessed on the charts is made up of the three months September through November; the neighborhoods chosen were picked for their high volume of sales for the property type being tracked — generally speaking, the greater the volume of sales, the more reliable the statistics.

Pretty much all areas of San Francisco are now showing the same general trend line, a distinct and substantial recovery in values, though some neighborhoods began their recovery earlier in the year and have seen greater increases year to date.

If you’d like to review the overall real estate market dynamics of San Francisco — months supply of inventory, days on market, the number of new listings coming on market, percentage of listings accepting offers, and so on — these can be found online here: SF December Market Report


Inner & Central Richmond House Values
House sales here over the past three months had an average sales price of $1,186,000 at an average of $575 per square foot. Compared to 2011, those figures reflect a 13% to 14% increase.


Central & Outer Sunset & Parkside
This table shows the changes in average sales price and dollar per square foot since 1995. One can also see that the average size of the houses sold can fluctuate (which will affect the average sales price). Distressed home sales are in rapid decline here, as they are throughout the city. The average dollar per square foot is up about 9% since 2011.
Chart


Bernal Heights House Values
With an average sales price of $896,000 and a distressed home market that has basically disappeared, the Bernal Heights averages are up about 19% from the bottom of the market in 2011. And getting very close to the previous peak in values in 2007.
Numbers Table


Noe & Eureka Valley House Values
Average house sales price in this extremely hot market area was $1,665,000 in the past 3 months, which is actually higher than previous peak values in 2008. However, we’ll have to wait to see what occurs over the longer trend since seasonality is one of the factors in prices. Average dollar per square foot is still somewhat below the 2008 peak.
Chart


Noe, Eureka & Cole Valleys: Condo Values
Condo values in these highly sought after Upper-Market neighborhoods have followed a similar trajectory. The average condo sales price here over the past 3 months was $1,000,000.
Numbers Table


Prestige Northern Neighborhoods
The most expensive area for houses in San Francisco is in the northern band of old-prestige neighborhoods running from Telegraph Hill in the east to Sea Cliff in the west. As the luxury market has rebounded in a big way in 2012, we’ve seen increases in value in the 18% to 20% range since the market bottom in 2010.


South Beach – Yerba Buena Condo Values
The greater South Beach area has seen a rebound in condo values in the 15% to 20% range. This area has some of the most expensive condos in the city, many featuring spectacular views.
Numbers Table


Pacific Heights-Marina Condo Values
At $1,235,000, the average condo sales price in the neighborhoods of Pacific & Presidio Heights, Cow Hollow and the Marina is now back up to the previous peak-value level of 2008. While the condos in South Beach have all been built in the last 15 years or so, condos in these older prestige neighborhoods are in buildings typically built 70 – 100 years ago.


Portola & Mission Terrace House Values
The southern-most neighborhoods of San Francisco were those hit hardest by the distressed sale crisis. But the distressed property market is rapidly dwindling here and prices have been rebounding dramatically in the past 6 months. The recovery here started a step behind the recoveries in the most affluent neighborhoods, but is now accelerating rapidly.

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September Case-Shiller Index Released

For the high-tier price index, there was virtually no change from August to September, though the lower price tiers continued to increase (these tiers are especially affected by the decline in distressed home sales). Here are 2 updated charts if you’d like to use one or more of them, one long-term, one short-term.

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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.

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August Case-Shiller Index

The Case-Shiller Index for August for the 5-county San Francisco Metro Statistical Area was released today. It showed a small improvement from July’s reading and is now at its highest point since December 2008.

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NYTimes Article: In San Francisco, Glass-and-Steel Condos Rising by the Bay


Darcy Padilla for The New York Times

ROUGHLY two decades ago, during an earlier Internet start-up boom, many entrepreneurs and fast-typing coders and engineers set up shop in a still-gritty area of this city: South of Market Street.

The young tech crowd rented — and sometimes bought — in commercial buildings in this former warehouse area, converting them into “work-live” spaces where they operated their nascent companies and slept (once in awhile).

See the the complete article at NYTimes.com: http://www.nytimes.com/2012/10/21/realestate/in-san-francisco-glass-and-steel-condos-rising-by-the-bay.html

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San Francisco Residential Market Trends in Realtor District 5: Noe/ Castro/ Haight

A statistical market overview for Noe Valley, Eureka Valley & the Castro, Cole Valley,
Mission Dolores, Haight Ashbury, Ashbury Heights, Clarendon Heights, Parnassus Heights,
Corona Heights, Glen Park, Twin Peaks & the Duboce Triangle

Below are a variety of charts detailing market conditions and trends in the neighborhoods of San Francisco’s central Realtor District 5. District 5 is one of the more homogeneous districts in San Francisco in terms of property values, but still any analysis of an area with so many properties of different type, location, condition and quality can only be a very general overview.

District 5 soared in value between 1996 and 2008 and was one of the last districts to peak in value before the market meltdown in September 2008. Values fell 15% to 20% very quickly and then stabilized in 2009 and 2010. The market started to turn around in 2011 and, now in 2012, the competition between buyers has become ferocious: inventory is very low and many of the listings are selling very quickly in multiple-offer, competitive-bidding situations. This is exerting considerable upward pressure on prices: generally speaking, values are soaring once again.

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MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.

AVERAGE SALES PRICE is calculated by adding up all the sales prices and dividing by the number of sales. It is different from median sales price, but like medians, averages can be affected by other factors besides changes in value. For example, averages may be distorted by a few sales that are abnormally high or low, especially when the number of sales is low.

DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market.

MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and 7 months and above, a “Buyer’s market.”

DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.