San Francisco Real Estate Market Update, August, 2010 September 9, 2010
Posted by Jessica Waterston in Current San Francisco Real Estate Graphs, Current San Francisco Real Estate Update, For Real Estate Buyers, For Real Estate Sellers, Most Recent News.add a comment
Despite the constant news of dramatic changes in the real estate market – Values soar! Values crashing! Market up or down ___% from last month! Double dip recession! – the home market in San Francisco has exhibited a remarkable stability over the past year. As shown in the charts below, median prices for both houses and condos are virtually unchanged from one year ago; buyer demand remains steady; months’ supply of inventory remains steady; foreclosure sales are stable; low interest rates continue. Statistics jump around within a relatively narrow percentage band: there has certainly been no definitive trend up or down. It is neither a crazy buyers’ market nor a crazy sellers’ market: it’s a relatively healthy, balanced market, where the basic rules of real estate generally apply: well-priced, well-prepared, well-marketed homes typically sell quickly and homes without those characteristics don’t.
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Homes Accepting Offers The number of SF homes – houses, condos and TICs – accepting offers is remaining stable, though running a little higher than this time last year. (April was an abnormally busy month due to the expiring Federal tax credit.) |
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SF House Median Sales Price The Median Sales Price is that price at which half the properties sold for more and half for less. Though it has gone up and down a bit over the past year, the median sales price for SF houses in July 2010 was virtually unchanged from that in July 2009: no definite trend up or down has manifested itself. The average median for the past 13 months is $756,000. |
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SF Condo Median Sales Price The median sales price for SF condos has remained remarkably stable for the past 12 months, with the average median sales price for the past 13 months being $675,000. Certainly no definitive trend in value up or down is apparent from the median price. |
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Distressed Home Median Sales Price Distressed properties are those that are being sold by banks pursuant to foreclosure, and short sales, which require banks to reduce the outstanding loan amount for the transaction to close. The median price for such sales has generally fluctuated between $450,000 and $525,000, which, looking at the earlier charts, one can see is a substantial discount from overall median house and condo prices in San Francisco. However, the majority of such sales are located in the less affluent neighborhoods of the city. |
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Luxury Homes: For Sale vs. Under Contract The red bars show the number of active luxury home listings in any given month (in this case, defined as houses and condos with list prices of $1,500,000 and above), and the blue line shows the number of listings which accepted offers. In July, the percentage of higher-end listings which accepted offers was about 15% |
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Inventory of Homes for Sale The dark red bars show the total number of homes that were for sale during the given month, with the lighter bars showing how many were actively for sale on the last day of the month – the difference being those listings that accepted offers, expired or were withdrawn. As we get deeper into summer, both numbers have declined slightly. |
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Average Days on Market (DOM) This chart measures the average number of days between going on market and accepting an offer. The average in July was 55 days, the lowest in 13 months but basically unchanged since March. In July, houses had the lowest average DOM with 48 days; condos were at 59 days; and TICs were at 75 days: this reflects the respective heat of each market segment. The average days-on-market for “For Sale” homes is 79 days, since it tracks those listings that have not received an acceptable offer. |
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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: the lower the MSI, the greater the demand. MSI for all SF homes has stayed generally stable at 3-4 months, which is considered moderately low. However MSI varies widely by property type: for houses, the MSI is a low 2.9 months; for condos, 4.4 months; for TICs, 5.4 months; and for 2-4 unit buildings, a relatively high 7.4 months of inventory. |
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Distressed Homes as % of Sales The hash-marked sections delineate the number of distressed property sales (bank-owned and known short sales) against total home sales. The percentage of such sales is noted at the top of each bar: generally jogging up and down between 14% and 17%. Since 2010 began, within any given month, there are usually 400 – 450 distressed properties for sale; 110 – 130 distressed-home new listings; 80 – 100 accept offers; 55 – 75 close escrow; and 30 – 40 expire without selling. |
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Percentage of Listings Under Contract This chart shows the percentage of home listings which accepted offers within the given month. Except for the surge in April and the doldrums of the holidays, that percentage has typically remained between 16% and 20%. In July, houses had the highest percentage under contract (22.5%), followed by condos (15.4%), TICs (13.5%), and 2-4 unit buildings (10.7%): the higher the percentage under contract, the hotter the market segment. |
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Sales Price to Original List Price The darker blue bars show the percentage of original list price , typically about 100%, achieved by SF home sales that occurred without a price reduction, i.e. they sold quickly. The lighter bars show the percentage of original list price achieved by those listings that went through one or more price reductions before selling. The difference is typically 10 – 13% of the original list price amount. (January’s numbers are almost certainly caused by faulty reporting.) A well-priced, well-prepared and comprehensively marketed home (of general appeal) will usually sell quickly for the highest price. |
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New Listings The number of new listings in the city are up a little over July of last year, but down from the peaks of the spring selling season. Usually, the market will see a surge of new listings after Labor Day. |
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Homes Sold vs. Listings Expired & Withdrawn The green bars denote sold homes and the purple bars denote expired and withdrawn listings. In July, when many of the spring listings that did not sell expired, the number of expired/ withdrawn listings was almost equal to the number that sold. Listings expire or are withdrawn typically due to being perceived as overpriced. |
How is San Francisco Economy Doing? September 9, 2010
Posted by Jessica Waterston in For Real Estate Buyers, For Real Estate Sellers, Most Recent News.add a comment
So how is the San Francisco economy shaping up? It seems so fragile and uneven — mirroring the economy nationwide.
The short answer: It’s a mixed bag.
Ted Egan, San Francisco’s chief economist, gave a presentation Tuesday at a San Francisco Chamber event and summed up how the city and nation are doing.
Here are the highlights:
On the troubling side, Egan said, “A worrying sign continues to be housing. I can’t say where we’re at in terms of the housing market right now.” So it’s not at all clear when home prices will finally start a steady increase, which would bolster consumer confidence.
On national employment, Egan said, “We’re not seeing sustainable job growth.” Indeed employment has been flat for three months now after rebounding late last year.
Still, Egan found reason for optimism for San Francisco.
Despite the city’s 9.7 percent unemployment rate, it is in better shape than every other major city in the state. Oakland has a 17.7 percent unemployment rate and San Jose has 12.6 percent unemployment.
San Francisco has been resilient, Egan said, because of several different areas of job growth despite the downturn.
Consider: Between the second quarter of 2008 and the fourth quarter of 2009, the following job categories have grown more than 20 percent: software, internet publishing, intellectual property transactions, directory publishers, translation services and performing arts promotion and management.
Meanwhile, venture capital investments, the fuel behind most San Francisco startups, has returned to pre-recession levels of almost $3 billion spent in the second quarter, Egan said.
“It’s only a matter of time before these economic engines restore the overall regional economy to health,” according to Egan.
The question no one can answer yet, however, is how long that will take.
Read more: S.F. economy showing pluses, minuses – San Francisco Business Times
Sales and Medium Price Rise in San Francsico June 23, 2010
Posted by Jessica Waterston in Current San Francisco Real Estate Update, For Real Estate Buyers, For Real Estate Sellers, Most Recent News.add a comment
Rebounding technology stocks and limited housing supply are lifting San Francisco real estate as buyers compete for properties and drive up prices.
Sales of houses and condominiums in San Francisco jumped 50 percent in the first quarter from a year earlier and the median price rose 5.4 percent to $685,000, according to a multiple listings analysis by Terradatum Inc. House values will gain 7 percent this year, the biggest annual increase since a 9 percent advance in 2005, Rosen Consulting Group forecast last month.
“San Francisco has conditions of very restricted supply and lots of things that can push demand: an attractive climate, innovative economy and high quality of life,” said Harvard University economist Edward Glaeser, who has studied U.S. housing bubbles.
The city and metropolitan area has ranked first or second among the most-expensive U.S. housing markets for 19 of the past 20 years, according to data compiled by the National Association of Realtors. The San Francisco Bay Area’s focus on technology and exports make the region an early beneficiary of the U.S. recovery, said Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto.
Prices for existing single-family homes rose in 60 percent of U.S. cities in the first quarter, the Chicago-based Realtors group reported last month. San Francisco metro area values increased 16 percent in March from a year earlier, the biggest jump of any city in the S&P/Case-Shiller home-price index. The 20-city composite measure climbed 2.3 percent.
A Dozen Bids
Hyuck Jae Lee and his wife, Seung Hye, beat a dozen other suitors last month for a three-bedroom, 1,400-square-foot (130- square-meter) house in San Francisco’s Inner Richmond, a half block from Golden Gate Park with its museums and meadows that stretch to the Pacific Ocean. The couple won by offering $875,000, or 14 percent above the asking value, after losing a nearby home that sold at that price.
The transaction is expected to close tomorrow, said Suhl Chin, the Lees’ agent at Zephyr Real Estate.
“We feel like we’re stepping into our San Francisco life,” said the 38-year-old Silicon Valley engineer, who works at a chipmaker in Sunnyvale, about 35 miles south. Lee looks forward to playing in the park with his seven-year-old daughter and taking bicycle rides in the city, he said.
Possible Slowdown
There are factors that may slow housing gains throughout the U.S., including the expiration of homebuyer tax credits and end of the Federal Reserve’s purchase of mortgage bonds, Robert Shiller, Yale University economist and co-creator of the home price index, said in a May 25 interview.
A prolonged debt crisis in Europe could batter stock portfolios and stall San Francisco’s rebound, said Kenneth Rosen, a University of California economist and chairman of Berkeley-based Rosen Consulting Group. He gives that scenario a 20 percent chance and said low U.S. interest rates will probably offset any volatility.
Limited availability of jumbo loans that finance the city’s high-priced homes may also drag on the upturn, said Joshua Rymer, chief executive officer of Sonoma, California-based Terradatum, which sells a monthly analysis to the San Francisco Association of Realtors. Jumbo mortgages are larger than government-supported Fannie Mae and Freddie Mac can finance, from $417,000 in most places to $729,750 in high-cost areas.
Citigroup Inc. led a $222 million sale of jumbo-backed securities in April, the first private offering of the debt in more than two years. There were more than $200 billion of the securities issued every year from 2003 to 2006.
“We’re in trouble if someone doesn’t start up that part of the market,” Rymer said.
Technology Jobs
Even with the concerns, high prices are to be expected in a 47-square-mile (122-square-kilometer) city surrounded by water on three sides, Glaeser said. Less than a third of San Francisco’s 361,213 dwelling units are single-family residences, and condominiums account for 12 percent, according to the city planning department. Apartments make up half the total.
A revitalized technology industry “almost certainly” drove the creation of 1,200 new jobs in the city from February through April, said Ted Egan, chief economist in the San Francisco controller’s office.
“I wouldn’t go nuts, but I would expect to see more improvement,” Egan said. “Hospitality and restaurants, health care and education are continuing to grow, and those are the things you’d expect to pull us out of the recession.”
Tech Stock Rally
The Standard & Poor’s Information Technology Index jumped 21 percent in the 12 months through June 4, outpacing a 13 percent gain in the S&P 500 Index. Six of the top 10 members of the technology measure are based in the Bay Area, including Cupertino-based Apple Inc. and Mountain View-based Google Inc. Real estate bubbles conclude with smaller price gains in cities with elastic supply, or more room to build, than in inelastic markets, Harvard’s Glaeser wrote with Joseph Gyourko and Albert Saiz of the University of Pennsylvania in a 2008 paper. That’s because elastic cities build extra supply, causing a glut that push values down, the economists wrote.
A city such as Houston, with an abundance of land, “tethers prices to reality,” while San Francisco’s geographic barriers and global appeal keep values high, Glaeser said.
“In supply-constrained and highly attractive markets there is no natural landing point for prices,” he said.
Katherine Yung and Kevin Brandstetter understand that concept. They were the top bidders out of 26 offers for a 1,600- square-foot house in the Golden Gate Heights neighborhood, paying $931,000, or $162,000 over the asking price. The three- bedroom home has ocean views, an updated kitchen and borders on a small park. It’s quieter than their old apartment.
“Maybe we way overbid, but we came up with a number that was worth it for us,” said Yung, 33, who met her husband in medical school in St. Louis. “Now that we’re in California, it’s nice to see the ocean and the mountains.”
