Preliminary Indications of Direction of the San Francisco Real Estate Market

San Francisco Real Estate Market Graphs Charts

17 Apr Preliminary Indications of Direction of the San Francisco Real Estate Market

Dear Friends & Clients,

The market seems to be moving along quite well in most segments. We’ve had great success getting buyers into contract in preemptive situations. We’ve lost a few that have gone for numbers we really didn’t think possible, which is definitely an indication of an upshifting market. We’ve also been having fun on the listing side and recently set a new record at a condo building in North Beach.

The Krishnan Team is now my DREAM team. We have every position filled with what seems like the most perfect person. This year, I am doubling down on my expenses in order to up my game to even higher levels than before. We want to knock it out of the park for every client, every time. We strive to have the best marketing in the business. We are currently comprised of five licensed agents.

Some people have asked about working with a team, and whether they will get less of me because the work is collaborative. The reality is you get MORE. I now have two full time office employees working 50 hours a week; add that to my 70 hour week, plus a few more hours from our buyer’s agents, and we are clocking well over 200 hours a week working for you, as compared to a standard agent’s 50 hr week.

A few introductions: Valerie Del Valle was hired to help me with listings and client communications. She has now been with the team for 90 days and she is killing it! I couldn’t be happier with her performance. Most recently, we hired another buyer’s agent who will add an extra set of eyes specifically to my personal buyers, helping track and scour for inventory, follow up and review disclosures thoroughly, and help with showings. Ashely Beasecker came to us from a top-producing team at Climb and we feel very fortunate to have her.

Personally, I’ve been on a cleanse with NO alcohol, sugar, processed food, or wheat for the past 18 days and I’m going strong. I even went 10 days without meat! (I know! What?!) I’m impressed with my willpower and I’m finding that my ability to stick with this is giving me strength in other areas of my life. I’m finding getting up earlier to work out and meditate easier and I feel great. Who knows, maybe I’ll give it all up forever?!

I hope that life is finding you well and that you are meeting your goals professionally and personally. If you’d like to chat about the market or just catch up about your kids or your latest cleanse or mediation retreat, call me anytime.

& The Krishnan Team


San Francisco Real Estate in Early 2017

Preliminary Indications of Market Direction

April 2017 Report



In recent months, there have been multiple reports in local media about Big Drops in San Francisco Home Prices! But, umm, we are not seeing it, neither on the ground in the hurly burly of buyers and sellers making deals, nor in the year-over-year quarterly statistics of supply and demand. News articles often make a big deal regarding the median sales price in a single month, but monthly data is often gravely deficient as an indicator, fluctuating up and down without much meaningfulness due to a number of factors. January and February are particularly bad months to draw conclusions from: The lowest sales volumes of the year, reflecting deals negotiated during the December-January market doldrums, with weather issues sometimes thrown in besides (for instance, in early 2017). Last but not least, the media often mixes property types to come up with a single median sales price, and that is generally not a good idea either.

1 San Francisco Real Estate Market Charts Graph Infographic - Home Appreciation
This chart above illustrates San Francisco quarterly median sales price movements since 2012, which, as one can see, is also prone to significant fluctuation. In Q1 2017, the median house price basically plateaued year over year, while the median condo price actually increased from Q1 2016. (Historically, it is not unusual for Q1 median prices to drop from Q4 due to seasonal reasons, mainly the characteristic big slowdown of luxury home sales in mid-winter.) Q1 is the quarter of the year with the least number of closed sales, so too much should not be made of its data, but we have summarized annual Q1 dynamics for the past 4 years in the 2 charts below. For context, remember that 2014 and 2015 were particularly feverish markets. A much better assessment of the direction of the 2017 market will be possible after Q2 data is in: March through June is usually the most active selling season of the year.

Year-over-Year Comparisons of Q1 Statistics

Chart 1: San Francisco House Market Overview

2 San Francisco Real Estate Market Charts Graph Infographic - SF House Market

Chart 2: San Francisco Condo Market Overview

3 San Francisco Real Estate Market Charts Graph Infographic - SF Condo Market


Annual Median House Sales Price Trends:
5 Selected San Francisco Neighborhoods, since 2004

4 San Francisco Real Estate Market Charts Graph Infographic - SF neighborhoods

Generally speaking, in higher priced areas, median house prices have been plateauing or dropping a little, while the more affordable neighborhoods have continued to appreciate: This is a relatively common dynamic around the Bay Area.

The only way to assess value or appreciation for a particular home is by performing a comparative market analysis tailored to its specific location, condition and circumstances. Of all the neighborhoods graphed above, the Marina has by far the fewest house sales and the widest range of individual home sales prices, so it is most susceptible to median price fluctuations caused by other factors besides changes in value – for example, a substantial change in the listings available to purchase in a given year. We do not believe that the same Marina house selling in 2015 would have sold for 15% less in 2016: something less, perhaps; 15% less, very unlikely. This is a good illustration of the dangers of making too much of median sales price changes.

If you would like median home price trends for another San Francisco neighborhood, please let us know.


Average Sales Price to Original List Price Percentage

By Month: House, Condo, Co-op, TIC & 2-4 Unit Building Sales

As seen in this chart, overbidding typically heats up as the market moves into spring. So far, this year has been no exception, though the overbidding percentages are somewhat lower than in recent years.

5 San Francisco Real Estate Market Charts Graph Infographic - Average Sales Price to Original

Annual Market Trends

For clarity and meaningfulness, we much prefer annual trend analyses, with their much bigger data sets, and have recently completed a comprehensive review of virtually every statistic we could think of on that basis. Doing so allows us to stand back to see the broader view of what is happening in the market, instead of getting obsessed by what happens to be in front of our shoe. Looking at annual trends, virtually all the market statistics illustrate the same general conclusion: The market became progressively stronger coming out of the 2009-2011 housing recession; the frenzy peaked in 2015; and the market cooled a bit in 2016, condos more so than houses. This is a generalization of the macro-trend: Different market segments have been going in somewhat different directions and speeds in the city and around the Bay Area in the past year or so.

Below are a few of the many analyses. The full review is here: Long-Term Annual Trends in San Francisco Real Estate

First 2 charts: The hotter the market, the greater the percentage of listings that sell quickly, and the more ferocious the competitive bidding on those listings.

6 San Francisco Real Estate Market Charts Graph Infographic - Selling within 30 days

Even with some cooling, the overbidding on appealing new listings has remained quite dramatic: Our current percentages over asking would stun anyone from almost any other market in the country. (However, underpricing has also become a more common strategy here than in other markets.)

7 San Francisco Real Estate Market Charts Graph Infographic - Average Sales to List Price

Annual Trends Chart 3: As a market begins to cool, the number of listings that expire or are withdrawn without selling increases. This is typically due to increasing supply, softening demand, sellers looking for more money than buyers are willing to pay, or all three.

8 San Francisco Real Estate Market Charts Graph Infographic - Listings Expired or Withdrawn

Annual Trends Charts 4 & 5: As new condos and new rental apartments came on the market in greater numbers in the past year, it cooled those two market segments, much more so than the house segment, of which hardly any are built new in the city anymore. (The more affordable house market in the city has remained remarkably hot.) The rental market was affected most as more new rental units came on market than at any time since WWII: Though SF still has the highest rents in the country, they have dropped from their peak in 2015.

9 San Francisco Real Estate Market Charts Graph Infographic - SF Housing Construction
10 San Francisco Real Estate Market Charts Graph Infographic - SF Residential Rents

Chart 6: To a large degree due to big changes in tenant eviction and condo conversion laws, the TIC market has gone through a large decline in sales volume. It is also true that after decades of turning multi-unit buildings into condos and TICs, the supply of such properties available to do so has declined. Generally speaking, TIC median sales prices plateaued from 2015 to 2016 at about 14% below the median condo price.

11 San Francisco Real Estate Market Charts Graph Infographic - SF TIC Market

San Francisco Luxury Home Market

Three sample charts from our big report on the high-priced home segment. Generally speaking, the luxury market has cooled more than the more affordable segments, and the luxury condo market has cooled more than the luxury house market. This is mostly due to the recent surge of new-construction luxury condos onto the market in the city.

The first two charts below are snapshots of either the house or condo segment of the luxury market in two of our major districts.

12 San Francisco Real Estate Market Charts Graph Infographic - Pacific & Presidio Heights Cow Hollow Marina
13 San Francisco Real Estate Market Charts Graph Infographic - Noe Eureka & Cole Valleys Luxury Condo

This next chart illustrates one of the bigger changes in SF high-end home markets. Many more listings, resale luxury condos in particular, are expiring or being withdrawn from the market without selling.

14 San Francisco Real Estate Market Charts Graph Infographic - Luxury Home Listings Expired

Interest Rates

Constantly shifting economic and political factors continue to affect rates: Mortgage interest rates are significantly up since the election, fluctuating up and down since the year began, but still far below historical norms. This is a factor everyone is watching carefully because of its potential impact on affordability, already a big issue in the Bay Area.

15 San Francisco Real Estate Market Charts Graph Infographic - Mortgage Interest Rate Trends

Apartment Building (Multi-Unit Residential) Sales

We have also released our quarterly report on the multi-unit residential property markets of San Francisco, Marin and Alameda Counties: Bay Area Apartment Building Market. Below is one of its many analyses.

16 San Francisco Real Estate Market Charts Graph Infographic - SF Multi-Unit Residential Building Market

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