Newsletter

January 2012 Update: Real Estate Cycles and Turning Points

It seems to be part of the human condition that financial and real estate markets go in cycles. What’s interesting is that when the cycle is on the upswing or a bubble is inflating, how vociferous the opinions are that the upswing will never end; and how after the crash, how many then insist, often with great virulence, that the markets will never improve again in our lifetimes. We see variations of this forecasting certitude constantly from those emotionally or financially invested in a certain viewpoint, not to mention bloggers and media with infinite white space to fill – and, of course, real estate agents often do this as well. However, most of the time, one must simply wait and see how the cycles turn in their own time and circumstances, and turning points are best perceived in retrospect.

All this leads to our point: absent some new natural or economic disaster – which is certainly possible – it appears that San Francisco real estate began turning the corner on the latest down cycle in 2011. Two and a half years following the financial markets crash, the dynamics in the city started to change early last year: prices seemed to have bottomed out and stabilized, Bay Area and city economic conditions started to markedly improve, distress home listings began to decrease, interest rates hit new lows, SF rents increased, vacancy rates dwindled, builders started moving forward on new projects, general optimism grew (most dramatically in the last quarter) – and optimism plays a huge role in turnarounds – and the financials of home buying made more sense than they had in many years.

Indeed in 2011, the biggest story regarding the SF homes market was the drastic lack of inventory – typically 35-45% below the previous year – which was inadequate to satisfy surging buyer demand. Historically, according to the laws of supply and demand, this begins to put upward pressure on prices – which is what we’ve been beginning to see in some of our neighborhoods.

It should be noted that San Francisco often behaves differently than other markets and recovers more quickly, and also that within the city itself, the markets in different neighborhoods can move at different speeds or even, for periods of time, in different directions. There is a link at the bottom of the newsletter to far more detailed analyses of the SF market by neighborhood, property type and bedroom count. There are also definitions and caveats regarding the statistics used below.

Statistics are generalities that may fluctuate for a number of reasons. All data herein is from sources deemed reliable but may contain errors and omissions and is subject to revision. These charts do not include sales not reported to MLS, such as occur in some new-development projects. How any statistic relates to the value of any specific property is unknown without further analysis.

2011 Unit Sales
The number of sales as reported to MLS climbed about 7% in 2011 from 2010, bouncing back from the trough of 2009, though still far below the peak years. All SF property types saw increases in sales. However, if inventory had not been so drastically low all year long, the increase in unit sales would certainly have been much greater.

S&P Case-Shiller Home Price Index
If Case-Shiller did an Index just for the city of San Francisco itself, instead of the 5-county “Metro Area,” we believe it would indicate a significantly greater recovery than indicated in this chart. San Francisco is strongly outperforming the markets in the other counties included in their local Index. (And SF itself only makes up a small percentage of that Index.) For a more detailed explanation of the S&P Case-Shiller Index:
Case-Shiller Deciphered

Average Dollar per Square Foot Values
Looking at the last 6 quarters, we see a very gradual increase from mid- 2010 of average-dollar-per-square-foot values for SF houses of $750,000 and above, except for the hiccup which occurred during the 3rd quarter of 2011 when the European debt crisis and the U.S. debt limit boondoggle greatly increased financial anxieties. The latest quarter saw the highest value, by a tad, since 2008. This chart also shows how the market is divided between the lower-priced housing segment (for SF) hard hit by distress sales and the mid-to-high priced segment which has been little affected by distress sales. Remember that quarterly fluctuations of average and median figures are not particularly meaningful – what are important are consistent longer term trends.

Percentage of Listings Accepting Offers
The main 3 residential property types in the city have been hitting their highest percentages in recent memory for listings going into contract (accepting offers). This is a very clear graphic of the dynamic of very strong buyer demand meeting a very low inventory of homes available to purchase. The dip in the third quarter was, as mentioned, probably due to the burst of financial markets anxieties that occurred over the summer.

Sales Price to Original List Price
This chart shows the enormous difference that proper pricing, preparation and marketing make in achieving the highest sales price in the lowest amount of time. Most of the homes that do sell actually accept offers relatively quickly at very close to, or even a little over, the list price. About half as many sell after price reductions, with big discounts on list price and large delays in closing the sale. And then, even in a market of strong buyer demand, about a third of listings expire or are withdrawn without selling, typically due to being perceived as overpriced.

Months Supply of Inventory (MSI)
MSI measures how long it would take to sell the entire inventory of homes currently for sale, at existing market-activity rates. The lower the MSI, the stronger the demand as compared to supply: We don’t recall ever seeing overall MSI rates this low. As a comparison, the MSI in the United States as a whole right now is 7 months. In certain SF market segments, the MSI is down to 1.5 months or lower. In the 4th quarter, there was a story of one listing, admitted egregiously underpriced, receiving 26 offers – which gives an idea of the level of unsatisfied demand in some neighborhoods.

Number of Homes for Sale
This chart tracks the number of homes listed as available on MLS on the last day of each month. It is true that inventory always plunges during the holidays and then starts to recover in January, but throughout 2011 the number of homes available to purchase in any given month has been far below the levels of previous years. And if one factors in the huge decline over the last few years in new-development condos on the market, it looks even worse. Inadequate to buyer demand, this has led to an increase in multiple offers and buyer stress — and increasing values in some of the city’s neighborhoods.

SF Luxury Home Sales in 2011
Homes selling for $1,500,000 and above make up about 10% of San Francisco’s sales and this is a snapshot of where they occurred by neighborhood and property type. For houses, the biggest prices still come in the Pacific/ Presidio Heights area, where one mansion on Broadway sold for $29,500,000. For condos, the highest dollar-per-square-foot figures are found in Russian Hill and South Beach for luxury units with astounding views: a penthouse in the St. Regis in South Beach/ Yerba Buena sold for $28,000,000. But in number of sales, the central Noe Valley/ Castro/ Cole Valley district has grown immensely over the past 10 years and is now firmly established for a particular type of affluent buyer, many of whom want easier access to Silicon Valley.

SF Distress Home Sales
As a percentage of sales, distress home sales peaked in January 2011; overall, they made up about 20% of total unit sales last year, but were largely clustered in certain neighborhoods, often in the less affluent areas of the city, and in the lower price ranges. To a large degree, they have not impacted values in many of the city’s more affluent central and northern districts. As seen here, the number of such listings has been markedly declining in 2011. Compared to other areas of the Bay Area, state and country, SF has been relatively unaffected by foreclosures, and so far the much dreaded “shadow inventory” of foreclosed-upon home listings has never arrived in the city.

SF Home Sales by Price Range
The largest percentage of SF home sales occurs in the $500,000 to $750,000 range. One of the biggest changes over the past few years has been the enormous growth in unit sales in the under-$500,000 price segment, much of which has been driven by distress sales. Even from 2010 to 2011, the lower end price segment has increased as a percentage of sales – and this continues to impact overall median sales price, which is simply that price at which half the homes sold for more and half for less.

Average Days on Market (DOM)
This chart shows the large difference in how long it takes to sell distress homes as compared to regular homes (about a month longer); the effect that pricing, preparing and marketing the home correctly can make in days on market (over two months); and the different speeds of sale for the 3 main residential property types. (Distress sales are not broken out for TICs, because they have been relatively unaffected by foreclosures.) General appeal homes that are effectively priced, presented and marketed often receive offers within 2-3 weeks of coming on market.

How Buyers Find the Homes They Purchase
A simple graphic of how things have changed in real estate buying and marketing in the past 10 years. An effective marketing plan has to include very comprehensive components of high-quality online marketing and broker-to-broker marketing – this is what reaches by far the most buyers. Professionally taken real estate photos are now an absolute necessity since they are how most buyers and agents will first see and evaluate your home. (All Paragon listings are photographed by professional real estate photographers.) Effective neighborhood marketing and open houses come next. The value of print advertising in newspapers and real estate magazines has become negligible.

Mortgage Interest Rates
Between the decline in prices since 2007-2008 and the decline in interest rates, the monthly cost of owning the same home has generally declined 30-40% in San Francisco over the past 4-5 years. (Chart below is from Bankrate.com.) Conversely, SF apartment rents have been increasing lately (especially due to the growth of high-tech employment). One of the standard ways economists evaluate whether a real estate market is correctly priced or not is by comparing the cost of renting vs. the cost of owning the same home. This equation has gone through a huge change since 2008.

“There are three kinds of lies: lies, damned lies and statistics.”
Benjamin Disraeli

Statistics without informed context are usually worthless, easily manipulated and often misleading.

One can make virtually any case — positive or negative — by choosing a single average or median statistic relating to a short period of time and a small data set, and then cherry picking what you’re comparing today’s data to (last month, last year, or the peak of the market). Conversely, too large a data set may be misleading: the overall national trend may misrepresent California’s, and the state’s can be different from the Bay Area’s, the Bay Area’s from the city’s, and within San Francisco itself, distinct neighborhoods are often different markets going in significantly different directions.

In particular, absent some huge economic event, such as the September 2008 financial markets meltdown, monthly fluctuations in median home sales prices are usually meaningless. Median prices often fluctuate up and down within a 5 to 10% range from one month to the next, even in stable markets.

One can only be sure market values are trending up or down if that trend is consistent over the longer term, minimally 4 to 6 months. Any definitive trend in prices and values should also be reflected in other market statistics such as average dollar per square foot, days on market, months’ supply of inventory, percentage of listings accepting offers, percentage of distress sales, and so on.

When assessing market changes calculated by computerized algorithms using very general data sets – such as Case Shiller’s or Zillow’s — one should be clear on the details. For example, the Case Shiller Index for “San Francisco” reflects an analysis of a “metro area” comprising 5 counties with wildly varying markets (Pinole to Pacific Heights). And for the city of San Francisco, one should look at the Case-Shiller “High Tier” price Index, not the general Index. It also makes sense to assume a sensible margin in error. As an egregious example, Zillow’s property valuations usually build in a 10-25% margin of error on either side of their “Zestimate” of value. A 1-3% value change indicated by the Case Shiller overall home Index for the SF metro area, then applied by a commentator to condo values in SOMA or house values in the Marina, should be taken with a grain of salt.

Always look for consistent, longer term trends across a wide range of market quantifying statistics.

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. The median sales price for homes (in all their infinite variety) is not like the price for a share of stock (all the same), and monthly fluctuations in median price 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, such as fluctuations in average unit size. Averages may also be distorted by a few sales that are abnormally high or low, especially when the number of sales is low. Average sales prices are usually higher than median sales prices.

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 above 6 months, 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. Generally speaking, about 60-80% of listings report square footage and dollar per square foot averages are calculated on these listings alone. 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.

SAN FRANCISCO REALTOR DISTRICTS

District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain

District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights

District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview

District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands

District 5: Noe Valley, Eureka Valley (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights

District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights

District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina

District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin

District 9: SoMa, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena

District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission

Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.

January 12, 2012 / 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.)


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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.


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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.


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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.


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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.


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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


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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


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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


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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.


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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.


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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


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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 , ,
What Costs How Much Where in San Francisco

Low, High & Median Sales Prices & Average Dollar per Square Foot
By Neighborhood, Property Type & Bedroom Count
2/16/10 – 2/15/11

The charts below track San Francisco MLS home sales by price, size and average dollar per square foot ($/sq.ft.) for the year ending February 15th. Only homes listed as having at least 1 parking space are included.

Within the charts, neighborhoods are listed by median sales price. “Avg Sq.Ft.” signifies the average size in square feet for all those units that reported square footage. If a price is followed by a “k” it references thousands of dollars; if followed by an “m”, it signifies millions of dollars. “REO” refers to the sale of bank-owned properties (typically pursuant to foreclosure).

See the notes below the charts for important context to the analysis. Depending on your screen settings you may wish to adjust your viewing “zoom level” to below 100%.

* San Francisco TIC sales have been dramatically affected in the last few years by changes in financing conditions and condo conversion rules. Recently, more TIC listings expire without selling than actually sell. The TICs that do sell are generally perceived as particularly excellent values when compared to condos of similar size, location and quality. That is, a TIC usually has to stand out as a great value to attract attention from buyers, and the TICs sold are cherry-picked from the general inventory. Because the number of sales is low in the TIC chart, the resulting statistics are less reliable as indicators of general trends or comparative neighborhood values. TIC listings commonly do not publish square footage figures, so no $/sq.ft. analysis is possible.

The MEDIAN SALES PRICE is that price at which half the properties sold for more and half for less. It may be affected by “unusual” events or by changes in buying trends, as well as by changes in value.

Low Price & High Price are self-explanatory, but the low price might be for a property that needs significant work just to be habitable. Within a single neighborhood, it is possible for the low and high prices to be millions of dollars apart – the difference between a small, distressed, bank-owned 2-bedroom condo and a large, pristine 2-bedroom penthouse with spectacular views.

DOLLAR PER SQUARE FOOT is based upon the home’s interior living space and does not include garages, storage, unfinished attics and basements; rooms and apartments built without permit; decks, patios or yards. These figures are typically derived from appraisals or tax records, but can be unreliable, measured in different ways, or unreported altogether: thus consider square footage and $/sq.ft. figures to be very general approximations. All things being equal, a house will have a higher dollar per square foot than a condo (because of land value), a condo will have a higher $/sq.ft. than a TIC (quality of title), and a TIC’s will be higher than a multi-unit building’s (quality of use). All things being equal, a smaller home will have a higher $/sq.ft. than a larger one.

The AVERAGE SIZE of homes of the same bedroom count may vary widely by neighborhood: for example, the average size of a 4-bedroom house in Pacific Heights is 38% larger than one in Noe Valley; and the average of a Marina 2-bedroom condo is 25% larger than one in South Beach. Besides the affluence factor, the era and style of construction often play large roles in these disparities.

Some neighborhoods are well known for having additional ROOMS BUILT WITHOUT PERMIT, such as the classic 1940′s Sunset house with “bedrooms” and baths built out behind the garage. These additions often add value, but being unpermitted are not reflected in $/sq.ft. figures.

Many aspects of value cannot be adequately reflected in general statistics: curb appeal, age, condition, views, amenities, outdoor space, “bonus” rooms, parking, quality of location within the neighborhood, and so forth. Thus, how these statistics apply to any particular home is unknown.

In real estate, the devil’s always in the details.

February 26, 2011 / by / in
February 2011 Newsletter

SF House & Condo Listings Accepting Offers
Activity by Week: sales activity really picked up since mid-January, with the last week of the month showing the highest number of accepted offers of any week in the past 6 months. In number of listings accepting offers, the full month of January 2011 was up 28% from January of 2010 and up 76% from January 2009 (the market’s nadir). 2010 Overview Analysis

Paragon Real Estate Group
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Percentage of House & Condo Listings Accepting Offers
Charted by Week: With buyer demand increasing and relatively low inventory levels, the last week of January saw a spectacular rise in the percentage of listings accepting offers in San Francisco.

Paragon Real Estate Group
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SF Home Listings for Sale
The dark red columns show the number of listings for sale at any time during the month; the lighter columns show the number of active listings on the LAST day of the month. Except for December 2010 and December 2009, January 31st saw the lowest number of active listings on the market for the last 25 months. (This chart shows the last 13 months.) Inventory levels should climb dramatically as we move toward spring.

Paragon Real Estate Group
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SF New House & Condo Listings
Charted by Week: new listings have been arriving on market in relatively moderate numbers, especially as compared to the beginning of the autumn 2010 season in mid-September. It appears that the number of new listings is not currently meeting buyer demand.

Paragon Real Estate Group
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SF Median Home Sales Price
For houses, condos, TICs by Month: as is typical in January, the median home price dropped. This is for 2 main reasons: firstly, for whatever reasons, a greater percentage of buyers of more expensive homes check out once the holiday season begins in mid-late November, and this affects the median sales price for the subsequent months of closings. Secondly, while many sellers pull their listings from the market for the holidays, banks do not: bank-owned home sales thus climb as a percentage of sales, and since bank-owned sales are heavily clustered at the lower price points, that drags the median price as well. January’s median sales price was virtually the same as in January 2010, which is in keeping with the overall stability of median prices in the City over the past 7 quarters. Indeed, despite jogging up and down on a monthly basis, comparing 2010 with 2009, the overall median sales prices for both houses and condos in SF were virtually unchanged. More on SF Median Prices

Paragon Real Estate Group
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Months’ Supply of Inventory (MSI)
For SF Houses & Condos by Month: except for April 2010 (with its tax credit crush of sales), the MSI in January was the lowest for the last 13 months, and signficantly below the level of January 2010. If we look at just houses, the strongest selling property type, the MSI drops to a very low 2.8 months of inventory. MSI for bank-owned and short sale homes in SF dropped to an even lower 2 months of inventory, signaling a very hot market for these typically lower-end “distress sale” homes.

Paragon Real Estate Group
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SF Distress Home Unit Sales
(By Month) In this chart, distress sales are defined as both bank-owned (REO) property sales and short sales (the lender must agree to a reduced payment on the outstanding loan for the sale to close), though one should note that these are somewhat different animals. In short sales, the seller still lives in the home and it usually does not look “distressed” as is often the case with bank-owned homes. (Short sales can be very time consuming and aggravating, due to the requirement for lender approval.) The monthly number of distress sales has stayed relatively stable in 2010, and though this January’s number was higher than that of January 2010, as a percentage of total sales it was virtually unchanged year over year. As seen in a later chart, distress sales are mostly clustered in the lower price ranges of home sales in the City.

Paragon Real Estate Group
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Percentage of Distress Sales by District
The top chart shows the percentage of distress sales (both REO & short sales) by quarter in the less affluent Realtor districts of 3 & 10 (Bayview across to Oceanview), while the lower chart shows the percentage of such sales in the affluent districts of 5 (Noe/ Castro/ Haight) and 7 (Pacific Heights/ Marina). The cross-hatched portion of the column reflects the number of distress sales. In SF, the whole phenomenon of distress sales largely began in late 2008/ early 2009. As one can see, the less affluent districts 3 & 10 have been hugely affected, with the percentage of distress sales running 38% – 45% in the past 4 quarters. The more affluent districts 5 & 7 have been relatively unaffected by distress sales, with the percentage usually running in the 3 – 6% range (and those predominately in the lowest price ranges for homes in those neighborhoods). In both charts, the percentage of distress sales in the 4th quarter of 2010 was the lowest for the year.

Paragon Real Estate Group
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2010 Bank-Owned (REO) Home Sales by Price Range
In 2010, homes below $650,000 were much more dramatically affected by foreclosures and the resulting bank-owned home sales than those at the higher price ranges. Under $650,000, the percentage of REO sales is 29% for houses (and then, mostly in the less affluent areas of the city), and 13% for condos. Once above $650,000, the percentage drops to a relatively negligible 3-4% of sales. Above $1 million, it falls to well below 2%, not enough to impact values in these price ranges and the neighborhoods one finds them.

Paragon Real Estate Group
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Median Price for SF Distress Sale Homes
Reflecting the fact that most distress sales (both REO & short sales) occur at the lower price ranges, the median price for such sales in the City has been generally running in the $450,000 to $500,000 range, well below the overall median sales price for SF homes (approximately $700,000 when including distress sales; approximately $750,000 when not).

Paragon Real Estate Group
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Homes Sold vs. Listings Expired or Withdrawn
The green bars delineate closed sales per month and the purple bars delineate listings expired and withdrawn. While the market has definitely heated up since mid-September, a large number of listings still expire or are withdrawn without selling, typically due to being perceived as overpriced. (December is usually the peak month for expired/ withdrawn listings.) If not priced fairly, as defined by the market, the home typically won’t sell, or even attract offers.

Paragon Real Estate Group
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Mortgage Rates
For the past 12 months per Bankrate.com: interest rates have been climbing since their incredible lows in October, though they remain low by historic standards and are roughly comparable to where they stood 8-10 months ago. Many pundits believe rates will continue to increase in 2011. Rate increases could affect the market in two totally different ways: buyers may pull out of the market as the cost of home buying increases, or buyers may rush into the market having come to the conclusion that prices have bottomed out, and they best move quickly before interest rates climb further. Needless to say, interest rates can affect the cost of home ownership very significantly (unless one is paying all cash): an increase of 1 percentage point is roughly comparable to paying a 10% higher purchase price.

Paragon Real Estate Group
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Mortgage Rates since 1971
Here’s a good chart to put into context the recent rise in rates since last October.
Paragon Real Estate Group
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February 7, 2011 / by / in
Weekly Market Charts

These charts track activity by week for the past 6 months through January 16, 2011 for SFDs, Condos, TICs & 2-4 Unit Buildings. The market is starting to wake up after the holidays.

New Listings: Starting to accelerate after the big slow-down of late December.
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Listings For Sale: Increasing slowly but still very low by general standards.
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Listings Accepting Offers: Accelerating as the market warms up.
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Percentage of Listings Accepting Offers: On a percentage basis, we’re back up over 5% (per week), which is among the highest percentages of the past 6 months. Of course, this is a function of both buyer demand (increasing) and inventory available (increasing, but still very low).
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Interest Rate Chart from Bankrate.com: rates have significantly climbed from their 40-year lows, but at under 5% are still very low by historical standards.
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January 22, 2011 / by / in ,
Market Update: Pricing Reigns Supreme

2010 saw a very strong spring market turbo-charged by federal and state tax credits, a much slower summer, and then a strong finish from Labor Day on. The 4th quarter of 2010 had more accepted offers than the 4th quarters of 2009, 2008 & 2007. Comparing 2010 to 2009, overall median sales prices for SF houses and condos barely budged. The luxury home market woke back up. Interest rates jumped at the end of the year, but are still very low. Of those homes that did sell in 2010, most sold relatively quickly, without price reductions, at or a little above or below list price: the market identified them as good deals. A minority of sales sold after one or more price reductions, taking much longer and at a substantial discount to the original price. And many listings didn’t sell at all because buyers perceived them as overpriced.

There seems to be a positive momentum to the market as 2011 begins. A large influx of new listings will arrive in coming weeks as both buyers and sellers jump back in after the holidays.

Statistics are generalities, subject to fluctuation due to a variety of reasons. Median prices may be affected by other factors than changes in value. Averages may be distorted by a small number of sales substantially higher or lower than the norm. New-development condo sales not reported to MLS are not included in this analysis. All information herein should be considered approximate. It is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted.

Paragon Real Estate Group
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San Francisco Unit Sales: 2007 – 2010
Comparing 2010 to 2009, the market strengthened and sales went up in every property type except TICs. From 2007 to 2009, the total number of sales fell 23% (plus an approximate 15-20% decline in values). Now, house sales are almost back to 2007 levels; condo sales are 17% up from 2009 but still 14% below 2007; TIC sales are 62% below 2007; 2-4 unit buildings are up from 2009 but still down 28% from 2007; 5+ unit buildings recovered a bit but are still 34% below 2007.

Paragon Real Estate Group
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Median Sales Price & Average Dollar per Square Foot
These 2 charts are for SF house and condo sales over the past 3 years. From late 2007, early 2008, the median price dropped about 15% and the average dollar per square foot about 18%. However, there has been a remarkable stability over the past 7 quarters: the median was within 1½ % of $700,000 in 5 of the 7 quarters (the 2 other quarters were about 5% above that); and the average dollar per square foot remained within about 2% of $550/sq.ft.. 2009 to 2010, the overall median prices for both houses and condos was virtually unchanged.

Paragon Real Estate Group
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Median House Sales Price by Neighborhood
Median price in thousands of dollars. The median price is that price at which half the sales occurred for more and half for less. For more information on median price trends and average dollar per square foot, click on the below link:
Median Price Overview

Paragon Real Estate Group
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SF Condos: Average Dollar per Square Foot
Dollar per square foot is calculated on liveable square footage, which doesn’t include garages, attics, storage or outdoor space. This calculation is based on those sales that reported square footage. Square footage figures are often unreliable or unreported, and average $/sq.ft. figures can fluctuate, but as a general statistic, this gives a relatively fair picture of the progression of condo values by neighborhood in San Francisco. Remember that the average age, size and condition of condos can vary widely by neighborhood.

Paragon Real Estate Group
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SF Home Sales by Realtor District
The big districts for house sales were southern District 10 (hit hard by distress sales), western District 2 (Sunset/ Parkside), central Districts 4 (St. Francis Wood/ Forest Hill/ Miraloma Park) and 5 (Noe/ Castro/ Haight). District 9 (SOMA/ South Beach/ Mission), with dozens of large condo developments, had twice as many condo sales as District 8 (Nob/Russian/Telegraph Hills) and District 5. TIC sales have dramatically declined in the city and are mostly found in Districts 5, 8 (Nob/Russian Hills) and 6 (Hayes Valley/ NOPA). The big districts for 2-4 unit building sales are 5 and 1 (Richmond).
SF Realtor Map

Paragon Real Estate Group
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Sales by Price Range
For sales of SF houses, condos, co-ops and TICs over the past year, the largest price segment by far was $500,000 to $750,000, with the next largest being the segments on either side. Once the million dollar mark is passed, the quantity of sales in each segment steps down dramatically.

Paragon Real Estate Group
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SF Luxury House Sales
Luxury house sales – sales of $2m and above – bounced back dramatically in 2010, but are still below 2008 levels except in District 7 (Pacific & Presidio Heights, Cow Hollow & Marina), which saw a large surge this past year.

Paragon Real Estate Group
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SF Luxury Condo Sales
High-end condo sales – sales of $1.5m and above — have not recovered as well as luxury house sales, except in Realtor District 5 (Noe/ Castro/ Haight), where after a huge decline in 2009, there was a huge increase in 2010 (though still slightly below 2008). The Pacific Heights area (District 7) also saw a small increase in 2010.

Paragon Real Estate Group
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Distress Home Sales by District
Bank-owned property sales and short sales (loan amount greater than market value) can be found throughout the city, but are heavily concentrated in specific areas. Distress house sales are concentrated in the southern band of neighborhoods running from Bayview west to Oceanview (Districts 10 & 3). Distress condo sales are mainly found in the eastern band of neighborhoods that experienced massive new development in the last 15 years (District 9). Compared to other counties, San Francisco has been much less affected by distress sales, with the overall percentage in the past year running at roughly 15-16% of total sales.
SF Realtor Map

Paragon Real Estate Group
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Listings Accepting Offers; Listings Expiring
The dark blue columns delineate the number of listings accepting offers in any given quarter over the past 3 years; the purple columns show listings that expired or were withdrawn (without selling). In the top chart, last spring’s market surge shows clearly. The 4th quarter of 2010 was more active in offers being accepted than the 4th quarters of 2009, 2008 or 2007, and the usual slowdown between 3rd and 4th quarters did not occur. However, a high number of listings expired without selling in the 4th quarter of 2010 as well. Many of these will be relisted in January at reduced prices.

Paragon Real Estate Group
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Months’ Supply of Inventory & Days on Market
These 2 charts pertain to SF house sales only, which is the hottest segment of the market. The gray columns show months’ supply of inventory over the past 2 years, which at 2.5 months, is now at its low for that time period. Inventory will increase significantly in January. The dark blue columns show the average number of days it took a house to accept an offer (by quarter over 3 years).

January 6, 2011 / by / in ,
The San Francisco Real Estate Market: December 2010 Update

Despite mostly negative reports from other parts of the country, the San Francisco home market has performed relatively well since the autumn market began after Labor Day. Indeed, the number of listings accepting offers in November was well above last year’s and the median home price is at its highest since the April tax-credit crush. Typically the market slows down dramatically from mid-November to mid-January, but so far it is slowing far less than usual.

Generally speaking, 30-40% of San Francisco new home listings accept offers within 30 days of going on market (i.e. quickly). They are perceived as good values, often attract multiple offers, and the sales prices for such homes are still, on average, slightly above the list price. (Houses perform better than condos, and condos perform better than TICs and multi-unit buildings.) Another 20% of new listings sell after 1 or more price reductions: on average, they’re on the market for over 100 days before offer acceptance, and sell at a sales price to original list price percentage that is 10-14% lower than that of homes selling quickly. And then 30-40% of listings expire without selling, typically due to being perceived as overpriced. The San Francisco home market is active, but buyers aren’t buying everything (as it seemed they did in the bubble years) – they’re buying only those properties they consider fair or, better yet, compelling values.

Statistics are generalities, often subject to surprising fluctuations due to a variety of reasons. Median prices may be affected by other factors than changes in value. Averages may be distorted by a small number of sales substantially higher or lower than the norm, especially where the sample size is small. New-development condo sales not reported to MLS are not included in this analysis. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted.

Homes Accepting Offers
Paragon Real Estate Group
The number of SF homes – houses, condos, TICs & 2-4 unit buildings – accepting offers is remaining generally stable. Though the market typically starts to slow markedly in November, this has not occurred this year, and the number of listings accepting offers in November was only slightly reduced from October, and was 17% above November of 2009, and 90% above November 2008 (the market crash era).

Median Sales Price
Paragon Real Estate Group
The Median Sales Price is that price at which half the properties sold for more and half for less. The median price for all home types in San Francisco was $775,000 in November which is its highest since April. However, median price is a very general statistic, which can be affected by a number of factors (such as an increase in high-end home sales), and it’s not unusual for it to fluctuate up and down by month. It’s certainly too early to conclude SF home values are on a sustained upward trajectory.

Median Price: Distress vs. Non-Distress Sales
Paragon Real Estate Group
A distress sale is a bank-owned property sale (usually pursuant to foreclosure) or a short sale (the lender must reduce the loan amount to allow the sale to close). The cross-hatched and solid bars delineate the median prices of distress property sales and non-distress homes respectively: in SF, distress properties have a much lower median sales price than non-distress sales — in November, $435,000 vs. $802,000. This is due to 3 reasons: firstly, the majority of distress sales in the city occur in the least affluent neighborhoods and housing costs less there anyway; secondly, distress properties often look distressed, and thirdly, buyers expect major discounts on a such sales. (Otherwise, they wouldn’t bother with the considerable hassle of dealing with the bank sales departments.) Of the 43 distress home sales in November, only 2 were above $750,000. September and October each has 11 distress home sales over $750,000.

Homes for Sale
Paragon Real Estate Group
The number of listings actively for sale declined significantly in November, but is still running 17% above November of last year. The cross-hatched section of the bars delineates the number of distress properties actively for sale: in November, they totaled 483 or about 18% of all active listings. Again, though these sales occur throughout the city, most of them are clustered in specific neighborhoods. San Francisco has been much less impacted by foreclosures and short sales than most other California counties.

Luxury Homes Accepting Offers
Paragon Real Estate Group
In this analysis, luxury homes are defined as houses and condos listed at $1,500,000 and above. October was the strongest month for luxury home sales in the past 25 months, and November was not far behind. Such sales in November of 2010 were 61% above those in November of 2009, and 350% above November of 2008 (the nadir of the market, right after Lehman Bros.).

New Listings
Paragon Real Estate Group
As is typical for this time of year, the number of new listings crashes in November (and December), and then revives again in January. The cross hatched portions of the bar delineate new distress-home listings, which at 129 in November, are at the second highest number of the past 25 months. (The average number of new distress-home listings over the past year was 116 per month.)

Average Days on Market (DOM)
Paragon Real Estate Group
This chart measures the average number of days between going on market and accepting an offer for all home types: at 58 days in November, it was the lowest, by a few days, of the past 25 months. Breaking it down further, houses had an average DOM of 52 days, condos were at 67 days, and luxury homes ($1.5m and above) were at 57 days. Those homes that do sell generally sell relatively quickly.

Months’ Supply of Inventory (MSI)
Paragon Real Estate Group
MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: generally speaking, the lower the MSI, the greater the demand. MSI for all SF homes was 3.8 months in November, which is moderately low. However MSI varies widely by property type: for houses, the MSI was lower at 3 months; for condos, it was 3.9 months; for TICs, 6.3 months; and for 2-4 unit buildings, 5.2 months of inventory. The MSI for luxury homes was 3.8 months.

Expired/Withdrawn Listings
Paragon Real Estate Group
On one hand, the SF home market has been stable both in regards to buyer demand and to property values – and November was an excellent month in sales activity – but on the other hand, quite a few listings expire without selling, typically because they are perceived as overpriced. November had the highest number of expired/withdrawn listings since last December – December generally being the highest month as properties are withdrawn for the holidays, often to be re-listed in January (not unusually at reduced prices).

Return on Investment
Paragon Real Estate Group
Comparing stocks with homes is like comparing apples with hardboiled eggs, but it’s still interesting. This chart is based upon all-cash purchase (no leverage). Stock performance does not include dividends and real estate performance does not include value of housing provided or potential rental income. Real estate appreciation is calculated on changes in median sales price for 2 & 3 bedroom houses and 2 bedroom condominiums in a sampling of SF districts. (Appreciation based upon changes in average dollar per square foot was 59% for houses and 64% for condos.) The chart does not adjust for transactional costs or for the $250,000/ $500,000 capital gains exclusion for primary residence sales. All numbers should be considered approximations.

2-4 Unit Buildings Accepting Offers
Paragon Real Estate Group
November was reasonably active for the sale of 2-4 unit residential buildings – one of the top 5 months of the last 25. Changes in financing conditions, tenant eviction law and the TIC market have affected this market in the past 2 years.

TICs (Tenancies-in-Common)
Paragon Real Estate Group
This chart shows the number of TICs for sale vs. the number sold in any given month. Due primarily to major changes in TIC financing conditions, the number of TIC sales in the city has fallen dramatically as compared to the period before September 2008. In November, there were 269 TIC units for sale, 39 new listings, 30 accepted offers, 16 sold (closed escrow) and 50 listings expired.

Paragon Performance
Paragon Real Estate Group
This chart shows the average percentage of sales price to original list price when acting as listing agent for luxury homes of $2,000,000 and above. Of the major city brokerages, Paragon consistently achieves the highest Sales Price to Original List Price percentage and lowest Days on Market for luxury homes (and indeed for all home sales as well). Homes that are priced correctly, prepared to show in their best possible light, and marketed comprehensively unsurprisingly achieve the highest sales prices in the shortest amount of time. Since September 1st, Paragon’s percentage market share for luxury homes is up over 47% year over year, we are currently the #2 luxury home brokerage in the city by unit sales for homes $1,500,000 and above.

December 20, 2010 / by / in ,
The San Francisco Real Estate Market – December 2010 Update

The San Francisco Real Estate Market – December 2010 Update

Despite mostly negative reports from other parts of the country, the San Francisco home market has performed relatively well since the autumn market began after Labor Day. Indeed, the number of listings accepting offers in November was well above last year’s and the median home price is at its highest since the April tax-credit crush. Typically the market slows down dramatically from mid-November to mid-January, but so far it is slowing far less than usual.

Generally speaking, 30-40% of San Francisco new home listings accept offers within 30 days of going on market (i.e. quickly). They are perceived as good values, often attract multiple offers, and the sales prices for such homes are still, on average, slightly above the list price. (Houses perform better than condos, and condos perform better than TICs and multi-unit buildings.) Another 20% of new listings sell after 1 or more price reductions: on average, they’re on the market for over 100 days before offer acceptance, and sell at a sales price to original list price percentage that is 10-14% lower than that of homes selling quickly. And then 30-40% of listings expire without selling, typically due to being perceived as overpriced. The San Francisco home market is active, but buyers aren’t buying everything (as it seemed they did in the bubble years) – they’re buying only those properties they consider fair or, better yet, compelling values.

Statistics are generalities, often subject to surprising fluctuations due to a variety of reasons. Median prices may be affected by other factors than changes in value. Averages may be distorted by a small number of sales substantially higher or lower than the norm, especially where the sample size is small. New-development condo sales not reported to MLS are not included in this analysis. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted.


Homes Accepting Offers
The number of SF homes – houses, condos, TICs & 2-4 unit buildings -accepting offers is remaining generally stable. Though the market typically starts to slow markedly in November, this has not occurred this year, and the number of listings accepting offers in November was only slightly reduced from October, and was 17% above November of 2009, and 90% above November 2008 (the market crash era).


Median Sales Price
The Median Sales Price is that price at which half the properties sold for more and half for less. The median price for all home types in San Francisco was $775,000 in November which is its highest since April. However, median price is a very general statistic, which can be affected by a number of factors (such as an increase in high-end home sales), and it’s not unusual for it to fluctuate up and down by month. It’s certainly too early to conclude SF home values are on a sustained upward trajectory.


Median Price: Distress vs. Non-Distress Sales
A distress sale is a bank-owned property sale (usually pursuant to foreclosure) or a short sale (the lender must reduce the loan amount to allow the sale to close). The cross-hatched and solid bars delineate the median prices of distress property sales and non-distress homes respectively: in SF, distress properties have a much lower median sales price than non-distress sales — in November, $435,000 vs. $802,000. This is due to 3 reasons: firstly, the majority of distress sales in the city occur in the least affluent neighborhoods and housing costs less there anyway; secondly, distress properties often look distressed, and thirdly, buyers expect major discounts on a such sales. (Otherwise, they wouldn’t bother with the considerable hassle of dealing with the bank sales departments.) Of the 43 distress home sales in November, only 2 were above $750,000. September and October each has 11 distress home sales over $750,000.


Homes for Sale
The number of listings actively for sale declined significantly in November, but is still running 17% above November of last year. The cross-hatched section of the bars delineates the number of distress properties actively for sale: in November, they totaled 483 or about 18% of all active listings. Again, though these sales occur throughout the city, most of them are clustered in specific neighborhoods. San Francisco has been much less impacted by foreclosures and short sales than most other California counties.


Luxury Homes Accepting Offers
In this analysis, luxury homes are defined as houses and condos listed at $1,500,000 and above. October was the strongest month for luxury home sales in the past 25 months, and November was not far behind. Such sales in November of 2010 were 61% above those in November of 2009, and 350% above November of 2008 (the nadir of the market, right after Lehman Bros.).


New Listings
As is typical for this time of year, the number of new listings crashes in November (and December), and then revives again in January. The cross hatched portions of the bar delineate new distress-home listings, which
at 129 in November, are at the second highest number of the past 25 months. (The average number of new distress-home listings over the past year was 116 per month.)


Average Days on Market (DOM)
This chart measures the average number of days between going on market and accepting an offer for all home types: at 58 days in November, it was the lowest, by a few days, of the past 25 months. Breaking it down
further, houses had an average DOM of 52 days, condos were at 67 days, and luxury homes ($1.5m and above) were at 57 days. Those homes that do sell generally sell relatively quickly.


Months’ Supply of Inventory (MSI)
MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: generally speaking, the lower the MSI, the greater the demand. MSI for all SF homes was 3.8 months in November, which is moderately low. However MSI varies widely by property type: for houses, the MSI was lower at 3 months; for condos, it was 3.9 months; for TICs, 6.3 months; and for 2-4 unit buildings, 5.2 months of inventory. The MSI for luxury homes was 3.8 months.


Expired/Withdrawn Listings
On one hand, the SF home market has been stable both in regards to buyer demand and to property values – and November was an excellent month in sales activity – but on the other hand, quite a few listings expire without selling, typically because they are perceived as overpriced. November had the highest number of expired/withdrawn listings since last December – December generally being the highest month as properties are withdrawn for the holidays, often to be re-listed in January (not unusually at reduced prices).


Return on Investment
Comparing stocks with homes is like comparing apples with hardboiled eggs, but it’s still interesting. This chart is based upon all-cash purchase (no leverage). Stock performance does not include dividends and real estate performance does not include value of housing provided or potential rental income. Real estate appreciation is calculated on changes in median sales price for 2 & 3 bedroom houses and 2 bedroom condominiums in a sampling of SF districts. (Appreciation based upon changes in average dollar per square foot was 59% for houses and 64% for condos.) The chart does not adjust for transactional costs or for the $250,000/ $500,000 capital gains exclusion for primary residence sales. All numbers should be considered approximations.


2-4 Unit Buildings Accepting Offers
November was reasonably active for the sale of 2-4 unit residential buildings – one of the top 5 months of the last 25. Changes in financing conditions, tenant eviction law and the TIC market have affected this market in the past 2 years.


TICs (Tenancies-in-Common)
This chart shows the number of TICs for sale vs. the number sold in any given month. Due primarily to major changes in TIC financing conditions, the number of TIC sales in the city has fallen dramatically as compared to the period before September 2008. In November, there were 269 TIC units for sale, 39 new listings, 30 accepted offers, 16 sold (closed escrow) and 50 listings expired.


Paragon Performance
This chart shows the average percentage of sales price to original list price when acting as listing agent for luxury homes of $2,000,000 and above. Of the major city brokerages, Paragon consistently achieves the highest Sales Price to Original List Price percentage and lowest Days on Market for luxury homes (and indeed for all home sales as well). Homes that are priced correctly, prepared to show in their best possible light, and marketed comprehensively unsurprisingly achieve the highest sales prices in the shortest amount of time.

Since September 1st, Paragon’s percentage market share for luxury homes is up over 47% year over year, we are currently the #2 luxury home brokerage in the city by unit sales for homes $1,500,000 and above.

December 14, 2010 / by / in ,
Giant Demand in “Giants’” Town

Buyer demand has been strong since the autumn sales season began in mid-September. Overall median home prices continue to remain stable – as they have for the past 12-16 months – jogging up and down within a narrow band of value. Inventory is about 12% higher than 1 year ago, but Months’ Supply of Inventory remains at about 4 months of inventory, which is considered a relatively balanced situation between buyer’s and seller’s markets. However, for every 10 listings that have sold in the past 4 months, another 8 have expired without selling: buyers are choosing those properties they consider fairly priced (which typically sell quite quickly) and ignoring the rest. Average Days on Market for those houses, condos and TICs which did sell in October was 54 days: the lowest in over 2 years.

Below are specific San Francisco home sales which closed at or near the median prices for houses and condos sold in the neighborhood specified – however, they are not necessarily representative of typical values.

At the bottom of the newsletter are links to additional market trend analyses.

Specific SF HOUSE Sales at Median Price — by Neighborhood

Pacific Heights, $3,500,000, 4BR, 4.5 BA Victorian on California Street, 4509 sqft, panoramic views, decks, 6 fireplaces, 2 car parking, $776/sqft
Sea Cliff, $3,000,000, 1951 4BR, 3.5BA on El Camino del Mar; 3491 sqft; water, Golden Gate and Mt Tam views; Zen garden, 8000 sqft lot, 2 car parking, $859/sqft
Clarendon Heights, $2,800,000, modern 3-level 6BR, 5.5BA on Villa, 4580 sqft, panoramic views, all new systems, 4 car parking, $617/sqft
Russian Hill, $2,250,000, 1906 3BR, 2.5BA on Hyde, 2090 sqft, deck, garden, library, 2 car parking, $1077/sqft
Telegraph Hill, $2,000,000, 1912 3BR, 2.5BA Edwardian on Vallejo cul de sac; spectacular views of bay, bridge and downtown; roof deck, separate apartment, leased parking
Marina, $1,875,000, 1930 3BR, 2.5BA on Cervantes, 2180 sqft, seismic upgrades, bonus office, 2 pkg, $860/sqft
St Francis Wood, $1,825,000, 1956 4BR, 3.5BA on San Pablo, 3740 sqft, ocean views, bank-owned sale, 2 pkg, $488/sqft
Lake Street, $1,759,000 (median is $1.85m), 1913 3BR, 2.75BA, North of Lake Craftsman on 18th, 3465 sqft, family room, needs restoration work, 1 pkg, $508/sqft
Eureka Valley, $1,475,000, 1905 4BR, 2.5BA Victorian on Noe, 2389 sqft, family room, sunroom, 1 pkg, $617/sqft
Cole Valley, $1,450,000, 1907 3BR, 3BA on Cole, 2040 sqft, new systems and foundation, garden, deck, 2 pkg, $711/sqft
Forest Hill, $1,400,000, 1926 3BR, 3BA detached Spanish-Med on Magellan, bonus family room, deck, yard, 1 pkg
Lower Pacific Heights, $1,232,000, 1883 4BR, 2BA Victorian on Pine, needs complete renovation, 1760 sqft, 2 pkg, $700/sqft
North of Panhandle (NOPA), $1,230,000, 1910 2BR, 1.5BA Craftsman Edwardian on Hayes, 1950 sqft, seismic upgrades, decks, 2 pkg, $631/sqft
Noe Valley, $1,200,000, 1902 renovated 2BR, 2BA Victorian on Jersey, den, deck, yard, 1 pkg
West Portal, $1,095,000, 1926 4BR, 2.5BA detached Spanish-Med on Lenox, 2036 sqft, large yard, 1 pkg, $538/sqft
Diamond Heights, $1,035,000, 1975 3BR, 2.5BA contemporary on Berkeley, 2892 sqft, roof deck, Glen Canyon view, 2 pkg, $358/sqft
Potrero Hill, $950,000, 2BR, 1BA Marina-Style house on Wisconsin, north slope, bay and bay bridge views, beautiful garden, bonus office, 1 pkg
Glen Park, $929,000, 1909 2BR, 1.5BA corner-lot Victorian on Congo, 1471 sqft, garden, den, bonus rooms, 1 pkg, $632/sqft
Central Richmond, $925,000, 1919 3BR, 2BA Edwardian on 18th, 1827 sqft, 2 parking, $506/sqft

Inner Sunset, $833,000, 1948 3BR, 1.5BA contemporary on 18th Ave, FDR, patio, yard, 2 pkg, $499/sqft
Inner Mission, $800,000, 2BR, 2BA Victorian on Harrison, den, deck, bonus rooms, garden, 2 pkg
Central Sunset, $760,000, 1951 3BR, 1BA traditional on 35th Ave, 1400 sqft, expansion potential, 2 pkg, $543/sqft
Bernal Heights, $750,000, 1952 2BR, 1BA on Folsom, 1125 sqft, garden, 2 pkg, $667/sqft
Miraloma Park, $750,000, 1931 detached 2BR, 1BA on Rockdale, 1150 sqft, east views, FDR, deck, garden, 1 pkg, $652/sqft
Midtown Terrace, $750,000, 1957 3BR, 2BA on Dellbrook, 1244 sqft, bonus room with kitchenette, trust sale, 2 pkg, $603/sqft
Outer Parkside, $645,000, 1945 2BR, 1BA corner-lot house, 1089 sqft, ocean view, bonus room, expansion potential, 2 pkg, $592/sqft
Ingleside Heights, $520,000, 1955 3BR, 2BA tunnel-entrance home on Bright, 1394 sqft, 2 pkg, $373/sqft
Excelsior, $500,000, 1947 2BR, 1.5BA contemporary on Vienna, 1278 sqft, bonus BR & BA, short sale, 1 pkg, $391/sqft
Silver Terrace, $450,000, 1942 2BR, 1BA contractor special on Bridgeview, 1375 sqft, 4 pkg, $327/sqft

Specific SF CONDO Sales at Median Price — by Neighborhood

Marina, $1,100,000, 1935 2BR, 2BA Spanish-Med lower flat on Beach, FDR, sunroom, patio, shared garden, 1 pkg, $625/month dues
Russian Hill, $990,000, 1911 top-floor 2BR, 1.5BA Edwardian on Green, 1450 sqft, GG Bridge views, leased parking offsite, $219/month dues, $683/sqft
Pacific Heights, $857,000, 2BR, 2BA condo on Sacramento, 1130 sqft, doorman bldg, GG Bridge views, 1 pkg, $784/month dues, $758/sqft
Cole Valley, $827,000, 1924 2BR, 1.5BA top-floor flat on Belvedere, 1519 sqft, Marin Headlands view, FDR, 1 pkg, $250/month dues, $544/sqft
Duboce Triangle, $850,000, 2BR, 1BA top-floor Victorian on 15th, 1 car parking, $367/month dues
Eureka Valley/Castro, $790,000, 1911 2BR, 1BA top-floor flat on Hartford, 1054 sqft, downtown and Twin Peaks views, deck, $257/month dues, $750/sqft
NOPA, $775,000, 1900 2BR, 1BA lower flat on Grove, 1399 sqft, yard, deck, 2 fireplaces, 1 pkg, $225/month dues, $554/sqft
Noe Valley, $770,000, 1900 2BR, 1BA top-floor Victorian flat on 23rd , 1042 sqft, sunroom, 1 pkg, $241/month dues, $739/sqft
Nob Hill, $770,000, 1992 2BR, 2BA on Sacramento, 1289 sqft, 2 patios, city lights views, 1 pkg, $597/sqft
North Beach, $730,000, 2BR, 2BA lower flat on Vandewater, 910 sqft, walk-out garden, 1 pkg, $250/month dues, $820/sqft
Lower Pacific Heights, $693,000, 1916 3BR, 2BA top-floor Victorian on Baker, 1400 sqft, deck, 1 pkg, $300/month dues, $495/sqft
Hayes Valley, $685,000, 1992 2BR, 1.5BA townhome on lane off Fulton, 1146 sqft, 1 pkg, $411/month dues, $598/sqft
Mission Dolores, $684,000, 1907 3BR, 1BA top-floor Edwardian on Clinton Park, 1147 sqft, deck, office, leased pkg offsite, $220/month dues, $596/sqft
South Beach, $665,000, 2005 2BR, 2BA brick contemporary on King, 987 sqft, ballpark views, 1 pkg, $963/month for dues and parking, $674/sqft
Inner Mission, $649,000, 3BR, 2BA 2-level contemporary on Alabama, 1445 sqft, 1 pkg, $535/month dues, $449/sqft
SOMA, $579,000, 2002 2BR, 2BA, high-rise condo on South Van Ness, 1075 sqft, city and bridge views, 1 pkg, $539/month for dues and parking, $539/sqft
Potrero Hill, $575,000, 1999 1BR, 1.5BA top-floor condo on 17th , 1215 sqft, panoramic views, decks, family room, 1 pkg, $423/month dues, $473/sqft
North Waterfront, $537,500, 1983 1BR, 1BA high-rise condo on Lombard, 923 sqft, doorman bldg, balcony, 1 pkg, $809/month dues, $582/sqft
Western Addition, $535,000, 1963 3BR, 2BA condo on Cleary, high-rise, 1100 sqft, 1 pkg, $685/month dues, $486/sqft

San Francisco MLS sales closing between January 1 and September 30, 2010. Median price is that price at which half the sales occurred for more and half for less, and it may fluctuate for a variety of reasons. Dollar per square foot is based on “livable space”, which does not include decks, garages, unfinished basements and attics, or rooms built without permit (“bonus rooms”). Sadly, square footage figures are often unreliable or unreported. All data herein is from sources deemed reliable but subject to error and omission, and not warranted.

November 5, 2010 / by / in