Market News

U.S. Cities Where Homes Sell the Fastest

“Although the U.S. housing market continues to struggle, many local markets are doing significantly better than the country as a whole, with some places virtually missing the housing bust altogether.

While shifts in home values are important in any market, it’s important for sellers to determine the length of time a property can expect to be on the market before it will be sold. The faster that homes sell, the faster an inventory backlog can be cleared, suggesting heightened demand and an upward trajectory in prices. Additionally, if a home is on the market for an extended period of time, it may may turn off prospective buyers and force sellers to accept less-favorable offers.

To find the cities where this trend is the most extreme, real estate website Zillow.com analyzed the numbers to identify the cities where homes sell the fastest, according to the median number of days on the market. The numbers presented here are representative of home sales between mid-April and mid-July 2011.”

Click here to read the rest of the article.

September 26, 2011 / by / in ,
Weekly Charts

These charts track SF market activity through 9/11/11 for houses, condos, TICs and 2-4 unit buildings.

Inventory finally started to creep up a little – though still terribly low by historical standards — fueled by an influx of new listings. Hopefully, this will continue in the coming weeks. Last September saw a huge surge of over 1100 new listings – the highest in over 2 years, which powered much of the autumn market.

New Listings:

click to enlarge

Inventory of Homes for Sale:

click to enlarge

Listings Accepting Offers: 4-business-day weeks following Monday holidays are typically on the lower end as far as listings going under contract. The week following Labor Day had a higher number than the week following Memorial Day and the same number as the week following the 4th of July. It was a very slow week for actual closings.

click to enlarge

September 17, 2011 / by / in ,
The San Francisco Residential Real Estate Market – The Story is Still Low Inventory

September 2011 Update

August 2011 Market Snapshot
As compared to August of 2010, we had 25% fewer listings for sale as of 8/1; 6% fewer new listings; 28% more listings accepting offers; 7% more closed sales; 30% fewer expired/ withdrawn listings; and 28% fewer listings for sale as of 8/31. Every statistic points to a market with too little inventory to satisfy buyer demand. It is now common for appealing, well-priced homes to receive multiple offers within 1 or 2 weeks of coming on market. (Note that closed sales lag accepted offers by 4-8 weeks, so August’s closed sales mostly reflect accepted offers in late June and July.)


click to enlarge

SF Homes for Sale
The inventory of SF homes available to purchase continued to decline in August. There were approximately 550 fewer MLS listings for sale in August of 2011 as in August of 2010 – and that does not factor in the large parallel reduction in new-development condos on the market. Last year in September, we saw the biggest burst of new listings of the past 2+ years, which helped power sales volume through the autumn. A good many buyers (and their agents) would be grateful to see a similar surge in listings this September.


click to enlarge

Percentage of Listings Accepting Offers
One of the clearest statistics of the current (low) supply and (high) demand dynamic is the percentage of listings which accept offers within a given month. August, which is typically a slow month, continued the trend begun earlier in 2011 with a very high percentage of listings going under contract. August’s 22% – 23% is a tremendous jump from the 14% of August 2010, and is among the highest of recent years.


click to enlarge

Average Dollar per Square Foot for SF Houses
Most of the distress house sales in San Francisco are in the lower price ranges (lower for the city) and in the less affluent neighborhoods, and that is where they impact values. Once one gets above $750,000, distress house sales are relatively rare and impact values very little. Here we see the huge difference in average dollar per square foot values between homes above and below $750,000. Two different markets: higher priced houses gaining in values, while lower priced houses (with a large percentage of distress sales) so far continuing to decline.


click to enlarge

Average Dollar per Square Foot for SF Condos
Lower priced condos are often heavily impacted by distress sales, while higher priced condos are not. In the second quarter of 2011, dollar per square foot values for condos $650,000 and above were at their highest since 2008. Average dollar per square foot is a very general statistic of a large basket of very different properties in very different locations. As always, sustained longer term trends are what are meaningful.


click to enlarge

4-Bedroom House Values
We just completed our semi-annual analysis of SF home sales by neighborhood, property type and bedroom count, looking at the number of MLS sales; low, high and median prices; average size and average dollar per square foot. For the complete report:
Values by Neighborhood & Property Type


click to enlarge

2-Bedroom Condo Values
The number of MLS sales; low, high and median prices; average size and average dollar per square foot. For our complete report:
SF Values by Neighborhood & Property Type


click to enlarge

S&P Case-Shiller Index
The Case-Shiller Index that most applies to SF is their “High Tier” Home Price Index. (Indeed, an Upper High Tier Price Index would be even more applicable.) This Index for the 5-county San Francisco Metro Area recorded its fourth increase in as many months. We put much less stock in monthly fluctuations than in longer term trends – right now the trend is mildly upward. The chart numbers reflect price changes based upon an assumption of January 2000 values equaling 100. Thus 144 = a value 44% above January 2000. A change from 184 to 144 reflects a 22% decline. For more information about Case-Shiller:
Case-Shiller Index Deciphered


click to enlarge

Months’ Supply of Inventory (MSI)
MSI in San Francisco is as low as it has been in years, reflecting motivated buyers snapping up homes in a low-inventory environment. For just houses, MSI is lower still, and in some hot neighborhoods, MSI is under 2 months of inventory, which is considered very, very low.


click to enlarge

Average Days on Market (DOM)
This statistic lines up with all the others. The hotter the market, the faster buyers act to buy appealing listings. And the current average of 58-60 days, while historically low, is distorted by distress sales (a much longer process), sales that fall through (and come back on market, typically to sell to a second buyer), and especially distress sales that fall through, all of which raise the average DOM significantly. For example, the average days-on-market figure for distress condo sales is now 95 days. In fact, most of the homes selling today are accepting offers within 2 to 3 weeks of going on market.


click to enlarge

30-Year Mortgage Interest Rates
The upside of all the financial markets turmoil is incredibly low interest rates, which, of course, make a huge difference in the ongoing cost of home ownership. Along with rising rents in the city, this is one of the big reasons why the Rent vs. Buy equation is changing so dramatically. In early 2010, pundits predicted that 30-year rates would be over 6% by now, but instead we’re hitting new lows. Rates can fluctuate dramatically. Chart by Bankrate.com. To make your own Rent vs. Buy calculations:
Rent vs. Buy Calculator


click to enlarge

DISTRESS HOME SALE can be one of two things: the sale of a bank-owned property typically pursuant to a foreclosure (also called an REO sale), or a so-called short sale, in which the seller-owner must get lender approval for a “short” payoff, a reduction in the loan amounts due on the property in order for the sale to close. These 2 kinds of distress sale are actually different animals, though both can be long, tiresome endeavors to close because one is dealing with bank bureaucracies. (In 2010 in California, about 40% of short sales fell through without closing sale.) However, in an REO sale, the seller is the bank (which may own hundreds or thousands of these properties), the property often looks “distressed” and the bank has very limited disclosure responsibilities (which is a liability to buyers). In a short sale, the seller is usually the individual owner-occupier, the property condition is and shows much better, and full seller disclosure laws apply (the buyer knows more about what he or she is buying). Both types of distress sale can be very good deals for savvy buyers and indeed investors are buying many of the REO properties around the country. But there are potentially greater risks and almost always greater hassle factors involved.

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.

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. Note that this statistic is distorted by distress sales, which often have a very high DOM, by that minority percentage of listings that sell after multiple price reductions, and by deals that fall through after offer acceptance (the listings come back on market, but the DOM clock keeping ticking). Appealing, well-priced new listings often accept offers within 7 to 14 days of coming on 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.

In real estate, sustained longer term trends across a variety of statistical measurements are the meaningful ones – and these are what we try to provide in our analyses. The fluctuations of monthly statistics — often quoted without context in news articles — are usually virtually meaningless (but make dramatic headlines).

Statistics are generalities, subject to fluctuation due to a variety of reasons. All information herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted. Sales not reported to MLS are not included in this analysis.

September 7, 2011 / by / in , ,
High-tech boom brings a sense of déjà vu in San Francisco

“The number of technology jobs in San Francisco will soon surpass the record of 34,000 set in 2000, during the dot-com boom. It’s transforming once-troubled neighborhoods and setting off a scramble for pricey apartments.

Reporting from San Francisco— When Twitter inventor Jack Dorsey decided to start a new company last year, he bypassed Silicon Valley and set up shop in San Francisco.

The 34-year-old, who said he was drawn to the “variety and vibrancy” of city life, is one of a growing number of entrepreneurs resisting the gravitational pull of high-tech’s epicenter 30 miles to the south.

The result is a dramatic surge in economic activity not seen in San Francisco since the height of the dot-com boom more than a decade ago. It’s a rare bright spot in the nation’s troubled economy.

“Technology has firmly established a foothold in the city,” said Jeremy Stoppelman, founder and chief executive of Yelp, the online reviews site based in San Francisco.”

Click here to read the rest of the article.

August 19, 2011 / by / in ,
Interest rates drop again

Julian made some excellent points at this morning meeting, especially his thoughts that the current stock market volatility does not compare to the September 2008 financial markets meltdown. Remember his website: www.thebasispoint.com. He mentioned how current conditions have once again plunged interest rates to the realm of historic lows. Here are the 5 year and 3 month charts from Bankrate.com:

30-year Fixed Rates over Past 5 Years:

click to enlarge

Over Past 3 Months:

click to enlarge

August 11, 2011 / by / in ,
Assessor Phil Ting: “We still have the strongest real estate market in the state.”

“San Francisco Assessor-Recorder Phil Ting announced Thursday that the value of the city’s real estate grew by nearly $2 billion in the past fiscal year, a contrast to decreasing property values in most other parts of California. The total roll assessment value, a combination of residential and commercial property values, grew by 1.3 percent to $163 billion during the fiscal year that ended June 30.

“We’re very, very fortunate in San Francisco,” Ting said. “We still have the strongest real estate market in the state.” He said many homeowners are still worried about the real estate market but predicted “we’re going to see a continued resurgence” in the coming years.”

The full article is here: http://sfappeal.com/news/2011/07/assessor-recorder-sf-has-the-strongest-real-estate-market-in-the-state.php

The Assessor’s office news release: http://www.sfassessor.org/Modules/ShowDocument.aspx?documentid=878

August 9, 2011 / by / in ,
San Francisco Commercial Rents

The tech sector followed by the financial/business sector has fueled the growth in San Francisco causing rental rates to increase more during the 2nd quarter than in any other of the previous 10 quarters.
For Q2, 2011:

  • The city wide vacancy rate continued to drop for the quarter to 13.3% with Class A and Class B at 10.9% and 17.3%, respectively within the Central Business District (CBD).
  • Asking rental rates increased for the fifth straight quarter to $37.01 and $29.17 for Class A and B buildings, an increase of 5% and 7%, respectively in the CBD.  The SOMA district posted the largest increase of 8.6% to an average rental rate of $36.58 for all classes of buildings.
  • The largest leases signed during the quarter were the EPA – 285,000 RSF renewal at 75 Hawthorne, Twitter – 210,000 RSF relocation to 1355 Market Street, Farella Braun & Martel – 112,000 RSF renewal at 235 Montgomery and Farallon Capital Management LLC – 65,553 RSF renewal at One Maritime Plaza.
  • There was significant increase in sales transactions, nearly 40% from the previous quarter, with 101 Spear Street, 409 & 499 Illinois, 201 3rd Street, 500 Terry Francois Blvd and 350 Rhode Island all changing hands.
  • San Francisco’s unemployment rate declined to 8.4% at the end of May, 2011, a significant drop from 10.1% in Feb 2011.

Looking forward:

  • With rising rental rates and dropping vacancy rates, the market is beginning to shift to a Landlord favored market with Landlords providing fewer concessions and being selective when choosing Tenants for their buildings.  As a result, Tenants will want to lock in early to get the best deal possible.
  • Buildings will continue to change hands which may cause spikes in operating expense pass throughs for existing Tenants.


click to enlarge


click to enlarge

Provided by:  Julie Down, Real Estate Advisors

July 30, 2011 / by / in ,
Rising Rents = Upward Pressure on Home Prices

It’s a truism that the correlation between what a property will sell for vs. what it will rent for is one of the fundamental ways to assess whether a home is reasonably priced. In a recent Economist article, they said they believed that based on this equation, US homes were now very slightly undervalued. As rents go up, housing prices typically rise as well.

There have been many other articles about rents increasing in SF and the Bay Area. Here is a recent article from the Chronicle, an excerpt from the SF Controller’s Economic Barometer report for April, and a chart of SF rental asking rates created by Rentbits.com.

And don’t forget that we now have a sophisticated Rent vs. Buy calculator on our website: www.paragon-re.com (though you have to carefully fill in each financial assumption).

Apartment rents increase as vacancies fall
“Rent increases replaced landlord giveaways as U.S. apartment vacancies dropped in the second quarter to the lowest in more than three years, bolstered by rising demand on the West Coast, according to Reis Inc…Effective rents, or what tenants actually pay after perks such as a free month, climbed in 80 of the 82 metropolitan areas surveyed…San Jose led rent growth last quarter, followed by New York’s Westchester County and San Francisco, according to Reis.”

Read more: sfgate.com

From SF Controller’s Office Economic Barometer Report for April 2011:

“Market rents in housing continue to show growth…with one-bedroom asking rents on Craigslist averaging 15% higher than they were in April 2010.”

From www.Rentbits.com, based upon asking rents in San Francisco:


click to enlarge

July 29, 2011 / by / in ,
Despite Fears, Owning Home Retains Allure, Poll Shows

“Despite Fears, Owning Home Retains Owning a house remains central to Americans’ sense of well-being, even as many doubt their home is a good investment after a punishing recession.

Nearly nine in 10 Americans say homeownership is an important part of the American dream, according to the latest New York Times/CBS News poll. And they are keen on making sure it stays that way, for themselves and everyone else.

Support for helping people in financial distress over housing is higher than support for helping those without a job for many months.

Forty-five percent of the respondents say the government should be doing more to improve the housing market, while 16 percent say it should be doing less. On the politically contentious issue of direct financial assistance to those having trouble paying their mortgages, slightly more than half of those polled, 53 percent, say the government should help. And almost no one favors discontinuing the mortgage tax deduction, a prized middle-class benefit that has been featured on some budget-cutting proposals.”

Click here to read more.

July 2, 2011 / by / in ,
Skip to content