Market News

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.


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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:


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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 ,
Weekly Charts

These are weekly market activity charts for the past 6 months through June 12, 2011 for San Francisco houses, condos, TICs and 2-4 unit buildings. The market slowed down for the Memorial Day holiday, but picked up a bit in the second week of June.

Accepted-offer activity is below the levels seen in May — the market often slows in summer — but it is above that seen last year in the first two weeks of June. Inventory is signficantly lower than last year at this time.

Listings Accepting Offers
The numbers of listings accepting offers declined from May, but is still about 7% higher than this time in June 2010.


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Percentage of Listings Accepting Offers
The percentage of listings accepting offers has also declined from May, but is well above last year’s. The first 2 weeks of June 2010 had percentages of 4% and 4.7% compared to this year’s 5.3% and 6%.


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Listings for Sale
Inventory of available homes for sale has ticked up a little from May, but is fully 17% below this time last year — 388 fewer listings.


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New Listings Coming on Market
The addition of new listings to the market has been relatively stable, but we never got a large surge of new listings this spring.


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June 20, 2011 / by / in ,
Distress Sales by District

House distress sales remain concentrated in the southern border neighborhoods in districts 10 and 3 (especially as a percentage of sales in those areas).

District 9 dominates distress condo sales.

May 18, 2011 / by / in
City Controller’s – Economic Barometer for SF

The Controller’s Office just issued their Economic Barometer report for February 2011. As you can see in the last column, almost all the trends are now marked “Positive.” 1-BR apartment rents are up 17% in 12 months.

They mark Median Home Sales Price Trend as “Negative”, but February’s median reflected an unusually high number of distress sales as a percentage of sales, which dragged the median sales price down overall, without reflecting the stability in values and the strengthening of the market that we started to see in late January. Distress sales as a percentage of sales in SF declined from 26% in February (the highest ever) to 18% in April.

I think in March and April’s Barometer reports, we’ll see further improvement in these economic measures.

Below is the chart, and the full report can be found here: http://sfcontroller.org/Modules/ShowDocument.aspx?documentid=2048

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May 13, 2011 / by / in
Excellent, Positive News for San Francisco



Tech jobs near all-time highs, fuel office-space boom

PriceWaterhouseCoopers: S.F. an opportunity leader

“Actually, it’s the third-most opportunity-rich city in the world, according to PricewaterhouseCoopers, the global accountancy and business consulting firm….Analyzing data from 26 world cities – “all capitals of finance, commerce and culture” – San Francisco ranks just behind New York and Toronto, and ahead of London, Paris, Singapore, Hong Kong and Chicago, among others in the top 10, according to the report.”

And, the award for the United States’ best vacation spot goes to: … San Francisco.

“That’s according to U.S. News’ latest USA Destination Rankings, which also chose San Francisco as the “best summer destination.” …Worldwide, San Francisco ranks No. 4, behind Paris, Barcelona and London (travel.usnews.com).”

Read More…

May 4, 2011 / by / in
Weekly Market Charts

Here are weekly market charts for MLS activity of houses, condos, TICs and 2-4 unit buildings in San Francisco for the past 6 months through the week ending on April 24th. By May 7th, the monthly newsletter will come out with monthly and quarterly trends in a greater range of analyses.

All data within is from Broker Metrics from data reported to SF MLS.

Listings Accepting Offers
The surge in buyer demand which started in late January increased to its highest level year to date in this latest week.

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Percent of Listings Accepting Offers
Lower inventory and increasing demand led to the highest percentage of listings going under contract for quite some time.

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New Listings Coming on Market
Perhaps it’s just a weekly anomaly, but a very low number of new listings came on market this past week. Which indicates that if there had been more new listings, we probably would have seen even a greater surge in sales.

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Listings for Sale
Inventory of listings actively available for sale actually dropped, which is unusual for this time of year.
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Median Sales Price
Weekly fluctuations in median sales price are not particularly meaningful, but we can see that the big drop seen in January and February (mostly a seasonal phenomenon)has reversed itself in March and April.

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Sold vs. Expired & Withdrawn Listings
Even with the surge in buyer demand and listings accepting offers, for every two listings that closed escrow in the past 4 weeks, one expired or was withdrawn without selling — typically due to being perceived as overpriced. A strong market, but that doesn’t mean everything is selling. Closed escrows are typically 4-8 weeks behind accepted offers.

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May 2, 2011 / by / in ,
Weekly Market Charts

These are weekly market dynamics charts for the past 6 months for activity in the San Francisco home market — houses, condos, TICs & 2-4 unit buildings — through the week ending April 17th. The data is from Broker Metrics, which crunches the numbers from the SF MLS system.


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Home Listings Accepting Offers
The surge in market activity, as measured by properties going under contract, has remained at a very consistent and high level ever since it began in mid-January. My very rough estimate of deals that accept offers and then fall through (to come back on market) is somewhere in the 8% range.


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Percent of Listings Accepting Offers
Percent of listings accepting offers is one of the clearest indications of supply and demand. The last 12 weeks have all seen percentages above 6%. Prior to mid-January, there were no weeks above 6% (and not too many above 5%) since the tax credit crush of spring 2010. This indicates a very high, consistent level of buyer demand vs. available inventory.


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Median Sales Price
Weekly fluctuations in median sales price are not particularly meaningful, but here one can see the rebound in median sales price since the low points of January and February. Median price is often affected, as it was early in the year, by other factors than changes in value, such as inventory (especially as concerning the percentage of distress properties) and changes in buyer trends. It’s best to look at median prices over multi-month periods to discern real trends.


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New Listings Coming on Market
The number of new listings coming on market has been relatively stable as the 2011 market got underway, but it is still far below the surge of new listings one saw in September (as the autumn market began). In 3 weeks in September , 795 new listings came on market; in the past 3 weeks, 575 new listings have come on market. The number of new listings is not currently meeting buyer demand.


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Homes for Sale
The inventory of homes for sale is increasing very slowly and is far below the level seen in the autumn. High buyer demand plus low inventory equals a competitive market for motivated buyers.


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Accepted Offers vs. Expired Listings
As a market strengthens, the number of listings expiring or being withdrawn without selling typically declines, which is what we have seen in the last few months. However, plenty of homes still do not sell (most commonly due to being perceived as overpriced): for example, over the past 4 weeks, for every 10 listings that have accepted offers, another 4 have expired or been withdrawn without selling.

April 22, 2011 / by / in ,
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