Another Challenging Spring for Buyers; Sellers Rejoice as Home Prices Hit New Highs

17 Jun Another Challenging Spring for Buyers; Sellers Rejoice as Home Prices Hit New Highs

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Hi!

Here is another newsletter packed with great updates! The chart showing appreciation in Noe Valley and Central Richmond over the past three years is chilling for buyers. I always find the charts showing how many homes in various price points have sold in different neighborhoods really helpful. For instance, if you are looking for a home over 5 million in Noe Valley, only 7 sold there and its surrounding areas in 2015, whereas 24 have sold in Pacific Heights and vicinity so that tells us it might be easier to find luxury inventory in Pacific Heights. That is not to say that luxury inventory couldn’t be found in Noe Valley; it means that you might need to be prepared to stomp your competition.

The Inner Richmond has also seen very big gains. I guess my buyers aren’t the only buyers that have decided to open their search up to that area this year. Interestingly, these appreciation charts start at 1.5 million probably because it is increasingly difficult to buy a home for less than that amount in San Francisco. It’s not that it can’t be done- it just takes some creativity and to neighborhoods that one may have not considered previously.

Interest rates seem to be climbing. In the past, I haven’t noticed that it had much of an impact on the market prices going down in San Francisco, but it does affect the areas where buyers can purchase. A 1% increase in interest rates factors out to be about a 10% loss on purchasing power for buyers.

The newsletter finishes with the highest home sales in various areas throughout the city. It’s mind-blowing to see some places crossing over the $2,000 per square foot price. When I toured Lumina, they mentioned there are several stacks of condos with views in the $2,500 per square foot range. Wow!

Finally, congrats to my sellers who are in contract on their home on Mangels Avenue for a record-breaking price per square foot number for the neighborhood. To bring that house on the market, we took out the stone floors downstairs and replaced them with matching hardwood floors, and added hardwood to the kitchen as well. It’s small improvements like these that make a HUGE difference in how a home feels and can lead to record-breaking prices. Do you know someone who could use some advice on how to prepare their home to sell it for a record-breaking price? I’d love to meet them!

Here is the website for Mangels Avenue. Don’t miss the interactive map- that’s one of my favorite features: http://www.75mangels.com

 

San Francisco Real Estate Report

Another Challenging Spring for Buyers;
Sellers Rejoice as Home Prices Hit New Highs

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Escalating Home Prices; Fierce Overbidding; Luxury Home Sales;
Interest Rates; Employment Trends; Biggest Home Sales of 2015 YTD
June 2015, Paragon Real Estate Group

4 Angles on San Francisco Home Price AppreciationShort-Term Trend Line: Since the Recovery Began in 2012
Longer-Term Trends: 1993 – 2015
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Neighborhood Appreciation Snapshots
May 2011 – May 2015
Central Sunset, Central Richmond & Noe Valley:
Median House Sales PricesSoMa, Eureka Valley & Marina:
2-Bedroom Condo Median Sales PricesLink to San Francisco Neighborhood Map
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Luxury Home Sales by District 

High-end home sales and prices in the city have been increasing rapidly, with interesting shifts occurring between older high-prestige neighborhoods like Pacific Heights and Russian Hill, and areas such as Noe Valley and South Beach, where surging sales of very expensive homes are a more recent phenomenon. Part of this shift is being fueled by the explosion of younger, high-tech wealth; another part is the recent construction boom of high-rise, ultra-luxury condo buildings south of Market Street.There is an enormous variety in high-end real estate in San Francisco, from mansions to penthouses, Victorians to new, ultra-high-tech construction, as can be glimpsed in the list of sales at the end of this report. One of the more common amenities is spectacular views.
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Home Sales by Price Segment, 2015 YTD

Four years ago, one found the most homes for sale in the $600,000 to $750,000 price segment. Now it can be very challenging to find one in that price range: $1 million to $1.5 million is currently the “sweet spot” for San Francisco home prices.

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Overbidding List Prices

When the average SF home sale is selling for 10% over the original asking price, the market is characterized by fiercely competitive buyer bidding wars. Another indicator: Almost 93% of home sales in May sold without going through any price reductions, an astonishingly high percentage.

These charts above and below, along with the one at the top of this newsletter delineating quarterly median price movements, also illustrate the seasonal nature of real estate sales. For 4 years running, the hottest, most competitive markets have been during the spring selling season. The market often cools down during the summer.

 

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Economic Indicators

 

 

Two of the biggest factors affecting the San Francisco real estate market are extremely low interest rates, which have a large impact on the ongoing cost of homeownership, and surging, well-paid employment. According to Ted Egan, San Francisco’s Chief Economist, high-tech jobs alone jumped by 18% in the 12 months through March 2015, and as of April, the city’s unemployment rate, at 3.4%, was the lowest since the height of the dotcom boom.

Interest rates are almost 40% below those in 2006 – 2007. With home prices having increased so much recently, future interest rate changes will be something to watch carefully for their impact on affordability. Rates have been inching up recently and just hit 4% for the first time in 2015, but they are still very low by any historical measure.

 

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Highest Home Sales by Neighborhood, 2015 YTD

This is a sampling of highest sales prices achieved in selected San Francisco neighborhoods in 2015 YTD, as reported to MLS. Note that this is not a comprehensive list of the city’s highest priced home sales.

$31,000,000. Pacific Heights: 7-bedroom, 16,400 sq.ft. mansion on Broadway, $1890/sq.ft.

$11,000,000. Sea Cliff: 5-bedroom, 3600 sq.ft., ocean-front house on Sea Cliff Ave., $3068/sq.ft.

$9,250,000. Pacific Heights: 2-bedroom, 3500 sq.ft., 1927 co-op on Alta Plaza Park, $2643/sq.ft.

$9,100,000. Russian Hill: 2-bedroom, 3300 sq.ft. co-op at Royal Towers, $2742/sq.ft.

$7,000,000. Noe Valley: 5-bedroom, 1907, 4450 sq.ft. house on Elizabeth Street, $1571/sq.ft.

$6,500,000. Alamo Square: 6-bedroom, 1902, 7800 sq.ft. mansion on Fulton, $833/sq.ft.

$6,285,000. St. Francis Wood: 5-bedroom, 6700 sq.ft. mansion on half-acre lot on San Anselmo Ave., $938/sq.ft.

$5,600,000. Dolores Heights: 4-bedroom, new construction house on Noe Street

$5,500,000. Nob Hill: 3-bedroom, 2721 sq.ft. TIC at Park Lane, $2021/sq.ft.

$5,475,000. SoMa: 3-bedroom condo at Four Seasons

$4,995,000. South Beach: 3-bedroom penthouse condo on South Park

$4,200,000. Glen Park: 4-bedroom, new construction, 3400 sq.ft. house on Laidley, $1235/sq.ft.

$4,000,000. Yerba Buena: 2-bedroom, 1952 sq.ft. condo at Millennium, $2049/sq.ft.

$3,900,000. Lake Street: 3-bedroom, 2952 sq.ft., 1914 Edwardian, $1321/sq.ft.

$3,850,000. Golden Gate Heights: 5-bedroom, 4062 sq.ft. 1974 house on Pacheco, $948/sq.ft.

$3,150,000. Bernal Heights: 4-bedroom, 2293 sq.ft., 2011 house on Folsom, $1374/sq.ft.

$3,100,000. Inner Mission: 3-bedroom, 2800 sq.ft. house on Shotwell, $1107/sq.ft.

$3,000,000. Inner Richmond: 3-bedroom, 4225 sq.ft. 1912 Edwardian on 10th Ave., $710/sq.ft.

$2,885,000. Inner Sunset: 3-bedrrom, 2640 sq.ft. 1904 Edwardian on 6th Ave., $1081/sq.ft.

$2,715,000. Hayes Valley: 4-bedroom, 3808 sq.ft. TIC on Waller, $713/sq.ft.

$2,510,000. Forest Hill: 5-bedroom, 3300 sq.ft., 1926 house on Taraval, $761/sq.ft.

$2,400,000. Potrero Hill: 3-bedroom, 2434 sq.ft., 1908 Edwardian on Kansas, $986/sq.ft.

$1,900,000. Sunnyside: 4-bedroom, 2715 sq.ft., 2003 house on Mangels, $700/sq.ft.

$1,280,000. Portola: 5-bedroom, 3128 sq.ft. new construction house on Madison, $409/sq.ft.

$900,500. Bayview: 4-bedroom, 1626 sq.ft., 1996 house on Armstrong, $554/sq.ft.

 

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and how they apply to any specific property is unknown without a tailored comparative market analysis. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier, i.e. they are a month or so behind what’s actually occurring in the market as buyers and sellers make deals. All numbers should be considered approximate. Please contact us with any questions or concerns.

© 2015 Paragon Real Estate Group
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