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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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When Zen Meets Myst

 

 

You get to see a lot of homes in this business.  And to be honest, pretty soon one “gorgeously renovated, top-of-the-line remodel” looks pretty much like the next.  The same glass tile backsplash; the same exotic wood flooring; and goodness knows, the same white, or taupe, or ever-so-elegant pastel color palette.

But once in a while you come across a house that is so unusual, so unapologetically personal, that you simply have to marvel at the vision of the architect and the courage of the owner.

 

467 Duncan is such a house.  Completely rebuilt around 2005, it looks like the sort of Zen temple you might find in the lost world of Myst.

Where to start?  Perhaps the spiral staircase enclosed in an open air tower that leads up from one master bedroom to a cat-walk across the roof and then down to another bedroom, and to a hidden side-garden, and – through a curving copper door – surprise!, back into the living room!

Or I could mention the stair detail in the wall (see the picture below) that leads to a literal cat-walk  at ceiling height, so that the owners’ cats would have a cool way to get from room to room.

Or the bedrooms, with real shoji screens,exquisitely restrained wood cabinetry and a perimeter of loose black river pebbles.  “Organic” doesn’t begin to describe.  This is architectural sculpture.

Four bedrooms, three baths, and over 2,850 sf, it’s been priced at $2.4 million and now it’s at $2.175.  I’ve seen plenty of houses with no character and less to offer sell for much more.

But. But….  How do you value a house like this?  It’s so personal that no amount of staging can stage the personality out of it.   Its uniqueness defies an easy “fix.”  Or any fix for that matter.  Raze it and start again?  Not at that price.  And besides, that would be criminal.

So 467 Duncan waits like an inscrutable puzzle in Myst for the right owner to come and unlock its secrets.  So far it’s been waiting 70 days.

I’m sending the owner and the agent the Zen equivalent of luck.  They deserve it.

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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.

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Newsletter: Is the SF Market Easing a Little?

Is the Ferocious SF Market Easing a Little?

October 2012 San Francisco Market Update

September brought a burst of new inventory that helped satisfy some of the fierce buyer demand for San Francisco homes. Anecdotally, word on the street is that the market may have calmed down a little after Labor Day: not every listing is selling immediately amid high numbers of competing offers — though this may simply reflect the temporary increase in new listings, or sellers too hopeful in their asking prices. But it also appears that home price appreciation has been stabilizing or at least slowing in the last quarter after the big jump earlier in the year. It’s still too early for conclusions: Since most statistics are like looking in a rearview mirror, what is happening today will only become clear in coming months.

Even if the market has eased a little, it is still very strong and very competitive by any historical measure.

Below are 2 updated, mapped analyses of median sales prices and average dollar per square foot values. Almost all the current values reflect a significant jump from 2011: for the city overall, the increase has been in the 10 to 12% range, but it can vary from 4% to 18% by neighborhood and property type.

Median Sales Prices

After the big jump early in the year, median price appreciation for both house and condos appear to have stabilized or slowed – at least for the city as a whole. (Market conditions vary widely by neighborhood.) The median sales price for non-distressed SF condos now slightly exceeds the median price in 2007, the last peak of the market, while that of SF houses is only 5% below 2007. We have similar charts going back 15 to 30 years available on our website.

Inventory

September had the highest number of new listings of any month in the past year, though well below previous Septembers: 760 new home listings in September 2012 vs. 888 in 2011 and 1138 in 2010. This significantly, if temporarily, expanded the choice of homes available to buyers. But now, in October, the number of new listings is dwindling again and inventory is still drastically low by any historical measure. Overall, in the third quarter, there were 1100 fewer listings than in the same period last year, but the number of sales increased by 21%.

2-Bedroom Condo Median Prices

In the 5 areas shown, condo values jumped across the board, though the most dramatic increase from the bottom of the market has been in South Beach/Yerba Buena — where in the last 2 quarters, the median price surged ahead of that for Pacific and Presidio Heights. Noe and Eureka Valleys and surrounding neighborhoods, SoMa and Hayes Valley/NoPa have also seen large increases. If you’d like data on a neighborhood not listed, please let us know.

Average Dollar per Square Foot House Values

Though pretty much all SF neighborhoods are seeing increases in dollar per square foot values for houses, the more affluent districts 5 (Noe/Eureka/Cole Valleys) and 7 (Pacific Heights-Marina) have seen some of the largest jumps. In the last 2 quarters, District 5 hit a point matching the peak of the market in 2007. If you’d like data on a neighborhood not listed, please let us know.

Luxury Home Sales

Comparing the 3rd Quarter 2012 with 3rd Quarter 2011, MLS listings of San Francisco homes of $1,500,000 and above increased by 23% and sales soared by 54%. This map shows where those sales occurred: 18 in the Sea Cliff/ Lake Street/ Richmond district; 26 in the Pacific Heights/ Marina district; 21 in Russian/ Nob/ Telegraph Hills; 19 in the greater SoMa/South Beach area; 53 in the Noe/ Eureka/ Cole Valleys district; 10 in the St. Francis Wood/ Forest Hill district; 2 in Potrero Hill and 3 in Bernal Heights. The highest prices are still generally achieved in the band of very affluent neighborhoods running across the northern boundary of the city, though growth in the number of luxury home sales is strongest in the central and northeastern areas.

Months Supply of Inventory (MSI)

Still bumping along at the lowest levels in memory. MSI reflects the amount of time it would take to sell the current inventory of homes for sale at the existing rate of sales. Lower MSI means higher demand as compared to supply.

Percentage of Listings Accepting Offers

Houses, condos and TICs all hit historic highs in the 54% to 60% range earlier in the year, but have now fallen back a bit. In the third quarter, TICs saw a rather large decrease, but their percentage is still much higher than in the last four calendar years. The percentages for houses and condos are still extraordinarily high. This statistic is one of the clearest measures of supply and demand.

Average Days on Market

For those listings that did accept offers in September, the average days on market was the lowest in a long while. Many new listings, especially those considered most appealing and well-priced, are accepting offers within 7 to 10 days of coming on market.