The Case-Shiller Index just released their November report, which is reflected in the two charts below. Remember that this is for the top third of sales price-wise in the 5-county San Francisco “metro statistical area.” The city of San Francisco has recovered more quickly and dramatically than the 5-county area as a whole.
Each month, Case-Shiller recalculates the price ranges of the low, middle and top tiers (thirds) of sales by the number of units sold. One indication of what has happened over the past year is that in December of 2011, the top third (“High-Tier”) of sales started at a sales price of $573,000; in November 2012, the top third of sales started at $685,000.
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Our in-depth analysis of the Case-Shiller Index can be found online here: http://www.paragon-re.com/Case_Shiller_Index_Deciphered_for_SF
San Francisco Rankings, Real Estate Prices & Trends, and the Biggest Home Sales of 2012
January 2013 Paragon Market Report
Here is a look at how a diverse group of major and minor organizations have recently ranked San Francisco on a wide variety of important and whimsical measures. Where disagreements existed — 3 different surveys ranked SF as the 1st, 2nd and 3rd “Greenest City” in America, and 2 surveys ranked us as second and third smartest city in the country — we naturally chose the highest grade as most accurate.
The ranking report is followed by some fascinating snapshots of the San Francisco and Bay Area real estate markets.
Median Home Sales Prices around the Bay Area
This mapped analysis calculates median prices from both distressed and non-distressed property sales around the Bay Area as reported to MLS. Median price is a very general statistic and many cities include districts of wildly varying value. For example, San Francisco contains neighborhoods whose median prices vary by over $4,000,000: The overall statistic mixes them all up together and comes up with $810,000. Maps with SF neighborhood values are included later in this report.
The 2012 Rebound
Exactly a year ago, we suggested that, based upon the changing market and economic dynamics we perceived developing in 2011, the SF real estate market was on the cusp of a major turnaround in 2012, possibly similar to what occurred in 1996 when the market blasted off after years of doldrums. And that is what happened, not only for the city, which led the way early in the year, but for the Bay Area, state and country somewhat later. Note that the SF house median price quoted here for 2012 is for 4th quarter non-distressed sales only.
San Francisco Neighborhood Values
This map charts median sales prices and average dollar per square foot for houses by city neighborhood. And this link goes to a map for SF condo values:
SF Condo Values Map
Year over Year Changes in Values
Very generally speaking, and depending on neighborhood and property type, SF home values have risen by 10% to 20% over the past year. Here is a chart assessing the surprisingly consistent change in overall SF condo value statistics and this link looks at SF house statistics.
SF House Value Statistics
SF Homes Sales by Price Range
One client once called this the “high-heel shoe” graph of San Francisco home prices. One of the big components of the 2012 market was the resurgence in luxury home sales, the chart for which can be found using this link:
SF Luxury Home Sales
Sales by Property Type
Gradually, with the addition of the big new developments in the SoMa-South Beach district (and other areas of the city), condos have become the largest single category of property type sales in the city. This trend will only accelerate with the new burst in construction plans. And this link leads to a chart showing the resurgence in unit sales. Unit sales would have been much higher in 2012 if inventory had not been so drastically low:
Unit Sales Trends
Distressed Sales: Goodbye to All That
Distressed home sales have been a market aberration caused by the collapse in loan underwriting standards and the refinancing frenzy of the bubble years. Fair market value is defined as “the price a willing, able and reasonably knowledgeable buyer would pay to a seller not under distress.” But bank and short sales radiate distress: underwater sellers, overwhelmed and unresponsive banks; often the physical condition of the homes themselves is distressed. Buyers demanded a huge discount to deal with them. In SF, this market segment was largely confined to the lower price ranges and less affluent neighborhoods. Now, with the market recovery, the city’s distressed home market is rapidly dwindling and should soon disappear altogether.
Percentage of Listings Accepting Offers
This one statistic provides the context to everything we’ve seen in the market this past year: ferocious, pent-up, buyer demand met a drastically inadequate inventory of homes for sale, leading to much more competition for listings and strong upward pressure on prices.
Median SF home prices vary on some of the charts above, depending on whether the price specified is for both distressed and non-distressed properties together, only non-distressed homes, for the last 4 months of 2012 or for the last quarter of the year, or whether price limits were placed on the analysis (limiting sales to under a certain sales price). This is natural: the statistics will change depending on the parameters of the analysis, and it’s always useful to look at the market from slightly different angles.
Statistics are generalities and should be considered approximations: How they apply to any specific property is unknown. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. If you have any questions, please don’t hesitate to contact us.
© Paragon Real Estate Group, January 2013
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.
The June S&P Case-Shiller Index report released today continued to reflect the surge in Bay Area home values. Remember that Case-Shiller measures house values in a 5-county area and generally reflects the heat of the market 4-6 months ago. So far in 2012, the city of San Francisco itself is outperforming the 5-county area.
Our full report on Case-Shiller is online here: http://www.paragon-re.com/Case_Shiller_Index_Deciphered_for_SF
The May reading for the S&P Case-Shiller Index, released today, substantiated what we’ve known for quite some time: the SF home market (though the Index is for the 5-County Metro Area) is rapidly accelerating. Since the Index is a rolling 3-month average and published 2 months after the title month, it is always 3-4 months behind what is actually occurring in the market between buyers and sellers.
Our entire report on the Case-Shiller Index is on the Paragon Market Dynamics section here: http://paragon-re.com/Case_Shiller_Index_Deciphered_for_SF
In my opinion, most real estate brokerage companies’ and their agents’ websites/blogs don’t provide a lot of useful market information. And that’s being polite. There are some exceptions, however, and one is Paragon Real Estate Group. Continue reading “Giving Credit Where It’s Due”
Every time there’s a housing slump, there’s discussion about whether the top end or the bottom end is fairing better or worse. Here’s a June 2009 article from The Examiner, declaring that luxury home prices in SF are picking up. And here’s a report published by First Republic Bank, which puts out a so-called “prestige home index,” for various cities in California, stating that luxury home prices in San Francisco continue to fall. Here’s the accompanying chart from First Republic.
And around the beginning of the year, the folks at Paragon Real Estate published an interesting report, How_Much_Have_San_Francisco_Home_Values_Declined_Feb_09, that broke down price declines based on price range.
But what really constitutes “the luxury market” in a town where you can’t buy a shack for less than half a mill and where the average price for a home was over $1 million in July?
To begin to answer these questions, I first looked at the distribution of sales prices over the last few years. I wanted to create a “snapshot” of the overall market, while including enough data to make the results meaningful. Here’s a chart that shows how sales were distributed in each price category.
Clearly, and not surprisingly, the vast majority of properties sold in the $501,000 to $1.5 million range. In fact, out of 5,532 home sales over a two-and-a-half year period, only 489, or 8.8% sold for over $2 million. Over $5 million? Just 64 sales.
Again, not surprising. $5 million is a lot of mullah in anybody’s language, though this is a pretty toney town and looking at the mansions up at Pac Heights and Seacliffe (I added the “e”, thank you very much), I expected that there would be more sales in the stratospheric range.
But there aren’t, so whadyagoingtodo? First, you’re going to be very careful about jumping to any conclusions, because there just isn’t a lot of data. What’s more, properties at these price levels really do tend to be “unique” – that’s part of their value — and they don’t turn over frequently. This increases the difficulty of reaching meaningful conclusions about price fluctuations in this high-flying, thinly traded market.
Now that we’re done with the disclaimers, let’s see what I came up with. I picked a minimum sales price of $5 million as fitting the definition of “luxury” rather than just very expensive.
First, I looked at sales volume, another of those metrics frequently discussed in the context of price fluctuations. The assumption is that when there are a lot of sales prices tend to go up; fewer sales, prices go down.
Clearly, sales volume is down for 2009 on an annualized basis, but prices have nevertheless increased from 2008. Not much of a correlation there.
Next I looked at the average number of days on the market (“DOM”) for these properties to sell. In a previous post, I’ve argued that this metric really does seem to have a strong inverse correlation with price: if it’s taking longer for houses to sell, prices tend to go down; if houses are selling quickly, prices tend to go up. The following chart shows DOM plotted on the right-hand axis with the time-scale reversed so that longer time periods are at the bottom and shorter periods are at the top. I’ve also shown the number of units sold per year.
Here things seem to line up pretty well. In 2009 so far, there’s been a shortening of DOM and prices have recovered somewhat from 2008. But again, we’re working with very small numbers of sales, so I’d be careful drawing any definitive conclusions. In fact, if you just focus on the median sales price, it seems to me that prices have remained pretty much within the same band of value since 2004, except for a spike in 2007 when the overall market was at its hottest.
So, gentle reader, next time you’re shopping for that $5 million house, don’t expect to pick it up at fire sale prices.
As for the rest of us, the truth is that pretty much anyone who can afford a house in San Francisco is already living in luxury.