The first thing to remember is that there is a time lag - usually 3 to 6+ weeks - between a new listing coming on market, an offer being negotiated and accepted, and when the transaction actually closes sale. This means that almost all of the sales price data we have, as of the first week of April, still reflects the market BEFORE the shelter-in-place rules went into effect. In virtually all Bay Area counties, first quarter and March median sales prices were quite strong.
This report will look at the effect of the crisis on supply and demand by reviewing week by week statistics, sales price trends reflecting the market before the crisis, and longer-term trend data to give context to how the market typically performs at this time of year. Spring is usually the most active selling season and often sees the highest median sales prices of the calendar year, due to both the level of buyer demand and the seasonal surge in the luxury home market. (A higher percentage of luxury home sales pulls up the overall median sales price.)
We do not know how the crisis will ultimately play out, depending as it does on so many, rapidly changing, socio-economic factors.
Shelter-in-Place Effect on Inventory & Deals
- by Week
The following 4 charts detail the plunge in listing and accepted-offer activity, and the surge in listings being pulled off the market by sellers, over the past 4 weeks. Typically, at this time of year, the first 3 charts would be seeing steady climbs over February numbers, and the 4th chart would have a very low, flat trend line.
Though the numbers are way down, some listings have still been going into contract.
The Luxury Home Market
The luxury market is fiercely seasonal, and typically spring (Q2) sees the peak in annual sales volumes. Higher-price home sales are often more deeply affected by financial-market crises since affluent households tend to have more wealth tied up in the markets, and watch their movements more closely.
These next 2 charts look at weekly trends in the markets for homes of $2.5 million+ and of $5m+.
Normal Market Seasonality Trends
These 2 charts illustrate how seasonality typically affects supply and demand, both climbing rapidly from the beginning of the year through late spring.
Compass is a real estate broker licensed by the State of California operating under
multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075,
1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material presented
herein is intended for informational purposes only and is compiled from sources deemed reliable
but has not been verified. Changes in price, condition, sale or withdrawal may be made without
notice. No statement is made as to accuracy of any description. All measurements and square
footage are approximate. Equal Housing Opportunity.
As we're all dealing with the effects of COVID-19 on our lives, I want to share encouraging news
As we're all dealing with the effects of COVID-19 on our lives, I want to share encouraging news: the government has
approved the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act which will help millions of people in this critical time. Perhaps even you.
This sweeping legislation is unprecedented in the history of our nation and provides significant economic assistance to address the impact of COVID-19.
The CARES Act is over 800 pages long, but here are some of the economic provisions most relevant for you.
What this means for you
and your loved ones
If you're eligible for a cash payment
Most individuals earning less than $75,000 can expect a one-time cash payment of $1,200. Married couples would each receive a check and families would get $500 per child. That means a family of four earning less than $150,000 can expect $3,400.
If you or someone you know has a lost a job
States will still continue to pay unemployment to people who qualify. This bill adds $600 per week from the federal government on top of whatever base amount a worker receives from the state. That boosted payment will last for four months.
If you're a small business owner
The bill provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.
There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books, or pay for rent, mortgage and existing debt could be forgiven, provided workers stay employed through the end of June.
If you're a freelancer or independent contractor
Typically, self-employed people, freelancers and contractors can't apply for unemployment. This bill creates a new, temporary Pandemic Unemployment Assistance program representing $600 per week through the end of the year helping people who lose work as a direct result of the public health emergency.
If you would like to learn more about all the contents in the CARES Act, please see this article.
Please do not hesitate to reach out should you have any questions, or if you would like to chat.
Compass is a real estate broker licensed by the State of California operating under
multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075,
1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material presented
herein is intended for informational purposes only and is compiled from sources deemed reliable
but has not been verified. Changes in price, condition, sale or withdrawal may be made without
notice. No statement is made as to accuracy of any description. All measurements and square
footage are approximate. Equal Housing Opportunity.
Generally speaking, after years of high appreciation rates, annual 2019 Bay Area median home prices went down a little bit, went up a little bit or basically remained unchanged as compared to 2018. SF hit new quarterly price highs in spring of 2019 (amid all the IPO excitement), but ended up the year at about flat for houses and a little up for condos. (Since there has been so much new luxury condo construction in recent years, year-over-year median price comparisons may not be exactly apples to apples.)
For 2020, economist Ken Rosen at UC Berkeley has said he expects the Bay Area median price to remain basically flat, within a general range of up or down 2% - in other words, similar to what happened last year. We can’t predict the future, but that certainly doesn’t sound unreasonable, and happily avoids the sensationalism of many other media-grabbing forecasts.
One of the big factors in SF house price appreciation since 2012 has been that fewer house owners are selling (dark green portion of chart below). If demand increases, but supply drops, that puts upward pressure on prices. Overall, house prices have out-appreciated condos over the past 7 years due to 2 factors: All the new condo construction and the fact that condo owners sell their homes more often than house owners. Both those factors increase supply to help meet increased demand.
San Francisco Home Prices by Neighborhood
Below are just two of the updated tables in our much longer analysis of home prices by property type and bedroom count for every neighborhood in the city. If you'd like the complete report, please let me know.
Compass is a real estate broker licensed by the State of California operating under
multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075,
1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material presented
herein is intended for informational purposes only and is compiled from sources deemed reliable
but has not been verified. Changes in price, condition, sale or withdrawal may be made without
notice. No statement is made as to accuracy of any description. All measurements and square
footage are approximate. Equal Housing Opportunity.
This is a list of 20 trends I see happening in real estate in 2020....although it is to be noted how many predictions seem to be wrong these days....
1. The first half will be busy. The second half will be distracted by the Presidential Election.
2. San Francisco prices will be flat or slightly up from 2019.
3. The supply of homes will remain low and demand will continue to be high.
4. Properties that check all the boxes will continue to garner lots in interest with multiple bids and selling over asking.
5. Winning offers will have more contingencies compared to what we have seen in the last decade.
6. Both under-priced listings, when the seller is not willing to sell at the listed price, and overpriced listings may take longer to sell, and often only after price adjustments.
7. Sellers will expand on home improvements before selling as buyers become less inclined to buy homes that need work.
8. Mortgage rates will remain low but could come under pressure as rising energy costs and wages trigger inflation.
9. Climate change is now a buying factor. In high risk areas, fire and flood insurance policies will continue to rise, or insurers may stop providing insurance altogether, which means it will be nearly impossible to secure a mortgage in those areas.
10. Recovery Technology: recovering from storms, floods, fires, etc will require technology to speed things up and minimize damage and disruption.
11. Urban migration will continue as walkability increases in desirability. However, suburban migration will expand due to affordability concerns, especially for millennials.
12. The trend of people moving outside California to cheaper states will continue to get bigger with economic strains that are making it harder to afford living here.
13. The shortage of affordable housing options will expand. Smaller, more affordable homes will have extreme competition from first-time buyers, investors, and down-sizing baby boomers.
14. The lower end of the market will see the most price increases due to limited inventory and high demand.
15. Buyers will seek homes scaled to their needs, avoiding homes with rooms and features they are almost certain will never be used.
16. Sharing amenities and services will grow in popularity. The need for granny flats or accessory dwelling units will grow to accommodate aging parents....or aging kids.
17. Sustainability will become even more of a focus, reducing waste and being more environmentally responsible. Because we care about the future of our planet AND to reduce ownership costs.
18. Smaller towns and suburbs will city-fy in their attempts to keep people from moving to more urban areas. Urban areas will attempt to create more of a village feel to prevent suburban flight.
19. Bigger, taller: expect zoning laws to be modified to allow more building density to bring down housing costs and reduce commutes.
20. A US-China Trade deal may lower the cost of some building supplies, offsetting rising labor costs. However, it will not be enough to bring down housing costs.
While Halloween decorations are beginning to adorn homes around the City, the real estate market this fall is looking far from scary. Fueled by low mortgage rates and a strong economy, buyer and seller activity remain strong.
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A Scary Housing Market?
While Halloween decorations are beginning to adorn homes around the City, the real estate market this fall is looking far from scary. Fueled by low mortgage rates and a strong economy, buyer and seller activity remain strong.
Year over year, new listings were down 23.7% for single family homes but increased 0.2% for Condo/TIC/Coops in September. Pending Sales increased 2% for single family homes and 2.7% for Condo/TIC/Coop properties. The median sales price was up 3.3% to $1,550,000 for single family homes and 14.8% to $1,320,000 for Condo/TIC/Coops.
Single Family Homes Year over Year Activity
Condo/Coop/TIC Year over Year Activity
As the temperatures starts to cool, we will see a seasonally cool down in the housing market. Buyers will find fewer homes coming on the market, but also less competition for those homes. These market fundamentals suggest no significant changes from recent trends.
Did You Know?
Uber Copter allows you to take a helicopter to and from the airport in Manhattan at around double the cost of a car....but at a fraction of the time!
More than two-thirds of U.S. homes sell for $400,000 or less, according to U.S. Census data and the National Association of Realtors. (WSJ)
Immigrants have driven two-thirds of U.S. economic growth since 2011. They founded 30% of U.S. firms, including more than 50% of startups valued at over $1 billion. (The Balance)
San Francisco Happenings
Union Square Art + Fashion Wine Walk
Thur | Oct 17 | 5:30- 8:30 PM
Half Moon Bay Pumpkin Festival
Sat & Sun | Oct 18 & 19
Grand National Rodeo
Sat | Oct 19 | 7:30 PM
37th Annual Sandcastle Classic
Sat | Oct 26 | 11:00 AM - 3:30 PM
Do you know anyone looking to move to what's next? Let's chat.
Warren Buffet made about 95% of his wealth since the age of.....60! The average person becomes a millionaire closer to the age of 60, and women hit this milestone sooner than men, under 59 years of age.
Re-financing volume are up over 160% from a year ago. (CNBC)
10,000 Americans turn 65 years old EVERY DAY...and this will continue to 2030. (Crain's)
Recession Obsession
Recession talk has become somewhat obsessive over the past few weeks and many have reached out to me for my opinion on this subject. Whilest I am not an expert, I thought I would share some facts about recessions since - and including - the Great Depression (a once-in-a century occurrence):
There have been 14 recessions total since and including the Great Depression of 1929, or one every 6.4 years. We have not had a recession in 10 years.
64% of recessions since 1929 lasted under 1 year.
Unemployment rose above 10% in only three recessions. In the past 50 years, unemployment averaged 8.25% during recession.
In the past 50 years the average GDP decline was just 2.2%. Currently the USA GDP is growing over 2% annually.
ATTOM Data Solutions looked at home prices during the five recessions since 1980 and found that only twice—in 1990 and 2008—did home prices come down during the recession, and in 1990 it was by less than a percent. During the other three, prices actually went up.
Buying a home during a recession
Many buyers think waiting till a recession hits will allow them to buy 'bargains'. This may be true for some all-cash buyers, although history has taught us that when a recession hits:
The best properties are often withdrawn from the market IF there are signs of price declines.
Interest rates may be lowered, but obtaining financing becomes tougher as banks usually tighten lending standards.
If you lose your job, its almost impossible to obtain a mortgage.
Cash buyers are always waiting for opportune moments to buy. Competing with these buyers is tough enough during good times. Its worse during tough times.
Rents tend to rise during recessions as fewer people qualify for a mortgage to be able to buy. Homeowners who have to foreclose also add new demand for rental housing.
Much of the housing demand is driven by employment. A spike in unemployment could negatively impact demand, particularly if an intensifying trade war leads to export tariffs, which could put jobs at risk. But with unemployment at 2.4% in San Francisco, it would take a pretty dramatic rise to cause home prices to drop.
In addition, tariffs on imports and tight immigration policy could push constructions costs even higher - all which could impact supply and ensure that housing prices will not slow down , if any at all.
Most importantly, we need to remind ourselves that even in the WORST recessions life goes on: people get married, divorced, die, give birth, etc and the vast majority continue working and earning.....and living.
San Francisco Happenings
Mid-Autumn Festival at Off the Grid: Fort Mason Center.
Friday Sept 13 | 5:00- 10:00 PM
De Young Museum: Free Saturdays for SF Residents Saturdays | 9:30 AM - 5:15 PM
Hayes Valley Urban Air Market Sunday Sept 15 | 11:00 AM - 6:00 PM
Updated June 1, 2019: This map reflects median home sales prices in San Francisco neighborhoods for the 12-month period through May 2019. Median sales prices are generalities that often fluctuate and can be affected by other factors besides changes in fair market value. They typically disguise a huge range of prices in the underlying individual sales, and how these median sales prices relate to any particular home is impossible to say without a specific comparative market analysis. All prices should be considered approximate. Data per sales reported to MLS, deemed reliable, but may contain errors and subject to revision.
The latest Case-Shiller Index for the SF Metro Area was released, and showed a significant jump back up in prices from the large drop that occurred in the second half of 2018 - and is now close to the peak prices seen in late spring/early summer 2018.
According to the latest report from the state Employment Development Department, California added 46,000 jobs in April – the largest monthly gain since March 2017.
While monthly job additions have varied a lot since the beginning of the year, California led all states in the monthly increase. The state has added 271,600 jobs over the last year, which is a 1.6 percent year-over-year increase – slightly behind the 1.8 percent overall national growth rate.
The state’s unemployment rate remained steady at 4.3 percent in April. Labor force declined, however, by 52,200 in April, after some solid increases in first three months of the year. Compared to a year ago, the labor force has increased by 203,900 people.
With 46,000 jobs added over the month, 9 out of 11 industries added jobs in January, with largest gains in educational and health services, up 17,300 jobs, followed by leisure and hospitality, up 12,100 jobs. Information and minting and logging posted monthly losses.
In annual comparison, 10 out of 11 industries added jobs with health services showing the largest gains, up 78,800 jobs, followed by professional and business services, up 66,900 jobs. Only financial activity posted an annual loss of 2,700.
Regionally, Los Angeles finally showed a rebound after a rocky start to 2019. Los Angeles County added 19,300 jobs over the month and 56,100 over the year. The region’s labor force, however, declined by 20,000 which is not encouraging for hiring trends going forward. Nevertheless, monthly gains were largely focused in leisure and hospitality, with a larger than usual seasonal addition. Construction also saw above-average April gains bringing the sector’s employment to the highest level in more than a decade. On the annual basis, the health and wellbeing of an aging population continues to influence large gains. Job additions in healthcare and social assistance, up 18,800, accounted for ninety-two percent of the overall sector job growth to reach a new all-time high. On the other hand, losses were focused in financial services, particularly, finance and insurance, though apparel manufacturing was down as well.
In the Bay Area, gains were broad based across the regions and most regions saw unemployment rate decline again falling below the year-ago bottom. In San Francisco-San Mateo region, up 5,000 jobs, monthly gains were led by healthcare job additions, followed by leisure and hospitality, and solid gains in information.
In the Santa Clara-San Benito region, up 6,400 jobs, gains were also led by leisure and hospitality, but also specialty trade contractors, and information. Computer and electronic product manufacturing posted 1,100 losses.
In Alameda and Contra Costa, up 6,800 jobs, similar trends followed with healthcare and social assistance leading the gains followed by leisure and hospitality.
High-Demand Spring Market Slightly Below Last Year's Home Price Peaks
May 2019 Report
With April’s end, we now have 2 months of spring season data unaffected by the end of 2018, when financial markets plunged. As of early May 2019, stock markets have recovered to hit new highs, interest rates are far lower than last year’s peak, and our local, unicorn IPOs have begun to roll out after a media frenzy of speculation on their potential effects on the market.
The market has heated up considerably from the slowdown in the second half of 2018, with strong buyer demand for a very limited inventory of listings. Median home sales prices have returned to highs close to those in spring 2018, but, so far, last year’s peaks have not been exceeded. This is a big change from the year-over-year appreciation rates of the past 6-7 years.
However, there are still 2 months of spring sales data to come in (before the typical summer slowdown), and word on the street is that some new listings are again generating feverish bidding wars between buyers.
Monthly Median House Sales Prices
Monthly median sales prices are often affected by other factors besides changes in fair market value – for example, the extreme seasonality of luxury home sales – but the above chart helps illustrate trends over the past 2 years: Spring 2018 was one of the hottest markets in history, with dramatic year-over-year price appreciation. The market then cooled, stock markets turned scary, and interest rates climbed. 2019 has heated up again, but, so far,
without any y-o-y median price gains.
The most expensive housing market in the country has, for the time being, stopped becoming more expensive.
Year-over-Year Comparisons
The table below compares the March-April market statistics of 2018 and 2019. Prices were stable, overbidding was down, and luxury home sales were up, but most statistics were remarkably similar to last year's. The SF and Oakland-Berkeley markets are currently the strongest in the Bay Area.
Home Sales by Price Range & Bedroom Count
Below is an illustration of sales of houses, condos, co-ops and TICs over the past 12 months, by price segment and by number of bedrooms.
Condos now constitute the biggest share of sales in San Francisco, which mostly explains the high columns for 1- and 2-bedroom sales in the $500,000 to $1.5 million range.
District Sales & Median Home Prices
The next 2 charts break down the last 12 months of sales by Realtor District (delineated on the map above). Some districts were split into 2 for these analyses, but all these areas contain neighborhoods of differing characteristics and home values.
House Sales, Median Prices & Median Sizes
The two biggest districts by volume of house sales - Bayview/ Excelsior/ Crocker Amazon (D10) and Sunset/ Parkside/ GG Heights (D2) - are also 2 of the 3 most affordable districts for purchasing a house in the city. Many of the older districts with bigger, more expensive houses are relatively small markets.
Condo Sales & Median 2-BR/2-BA Condo Prices
Condo sales in SF run across a wide range of eras and styles, from Victorian and Edwardian units in small buildings, through brand new, ultra-luxury high-rise penthouses. The breakout of median sales prices pertain to 2-bedroom, 2 bath condos only.
San Francisco Luxury Homes Markets by District
We typically define the SF luxury house market as houses selling for $3 million+, and the luxury condo, co-op and TIC market as those selling for $2 million+.
SF Luxury House Sales by District
The central Noe, Eureka and Cole Valleys district (D5) dominates the market for houses selling from $3 to $4.99 million. The northern Pacific Heights-Cow Hollow district (D7) dominates the $5 million+ ultra-luxury segment. But high-end home sales are scattered across the city.
Luxury Condo, Co-op & TIC Sales by District
Luxury condo sales are concentrated in 3 districts: District 9, where most of the newer, high-rise, luxury projects are found in the South Beach/Yerba Buena area (which 30 years ago was filled with parking lots and auto-stereo shops), and in the old-prestige, northern neighborhoods of Districts 7 & 8, which include Pacific Heights and Russian Hill. (This is also where the city's high-price co-op units are clustered).
Q1 2019 "Ultra-Luxury" Homes Markets
We start the "ultra-luxury" segments at $5 million for houses, and $3 million for condos and co-ops. There has been a large (and continuing) surge in the construction of very expensive condo projects over the last 15 years, which makes for a greatly increased inventory of high-price condos for sale - and softer market dynamics.
House Size & Era of Construction
Many factors influence home construction size during any particular period: Affluence, economic conditions, household size, buyer age, land costs, population growth, natural disasters, etc. Generally speaking, the median size of houses was larger during the Victorian-Edwardian era, and declined through the 1940's - when enormous swathes of the city were built out in the south and southwest districts. Home sizes then began increasing again, and are now larger than ever - however, few new houses are currently built in the city.
The sizes of houses built in earlier periods have increased over the years due to renovations: Adding that 2nd bathroom, or a 3rd bedroom behind the garage.
Condos have become the major alternative for people purchasing homes of smaller size.
Selected Demographic & Economic Factors
Population Growth
SF has seen a dramatic population increase over the past 10 years, and by percentage growth, SF had the 2nd highest rate in the Bay Area after Alameda County. But new census data indicates the rate of growth is rapidly dropping.
Our latest burst of growth - an increase of about 78,000 or 10% - with all its social and economic effects, looks paltry compared to the 1940's, when the city's population soared by 140,000, a jump of 22% that began with WWII.
Commuting
Venture Capital Investment
In recent years, the Bay Area has been the biggest destination of venture capital investment dollars in the country - and probably the world. These tens of billions of dollars have constituted a massive factor in the local economy, supercharging the creation of new companies, hiring, and, eventually, IPOs. Venture capital is effectively seed money that has exploded into the creation of stupendous amounts of new wealth.
It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis.
These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.
Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.
