A Hot Autumn Market in San Francisco? (Part 1)
Will the Fall Market Stay Hot or Shift Cooler?
September Typically Begins with Huge Surge in Listings
September 2017 Report
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Generally speaking, late summer market dynamics (or, for that matter, during the mid-winter doldrums) are not of great significance and do not tell us much about where the market is heading. September, however, is usually the single month with the greatest number of new listings hitting the market in San Francisco, and that surge fuels sales through mid-November, when activity begins to plunge. The coming two months will be the next major indicator: Will the SF market continue to maintain the intense high-demand, low-supply heat of this past spring, or will it cool? While the entire market is affected by seasonality, the luxury home segment is fiercely so, and the next couple months will be the peak selling period for high-end homes until spring 2018 rolls around.
City-Wide Home Appreciation Trends since 2005
Median Sales Prices & Average Dollar per Square Foot Values
As of September 1, the 3-month-rolling median sales price was $1,418,000 for SF houses, and $1,160,000 for condos. The average dollar per square foot value was $907 for houses and $1056 for condos.
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San Francisco Neighborhood Appreciation Rates
2011 to 2017 YTD, Median Sales Price Change
Median sales prices are not perfect indicators of changes in values for specific homes: They can be and often are affected by factors other than changes in fair market value, and shorter-term anomalies are not uncommon. What is certainly true is that every part of the city has seen tremendous appreciation since the recovery began in 2012, however the percentages on the charts below should be considered very approximate indications of the scale of change.
These charts delineate 2011 and 2017 YTD median sales prices by neighborhood, as well as the percentage change between the two. The 2 charts on house appreciation are followed by 2 on condo appreciation. If you wish information on a neighborhood not included in the charts below, please let us know.
SF HOUSE Median Sales Price Appreciation Rates 
NOTE: A perfect example of how median price changes can misrepresent changes in fair market value can be seen above: Typically, Noe Valley and Eureka Valley (Castro) have very similar median house prices, but in 2017 YTD, the Eureka Valley median price unexpectedly jumped by an astonishing $500,000 (23%), putting it far above Noe, and giving it a much higher overall appreciation rate. However, the average size of houses sold in Eureka Valley so far in 2017 suddenly jumped by 22% from 2016: That is, its houses didn’t just suddenly and inexplicably have a tremendous jump in value: the average size of homes sold changed, probably temporarily. Monthly median price changes in particular, trumpeted everywhere in the media as vitally important, are often unreliable due to seasonality and the small size of the data set. 
SF CONDO Median Sales Price Appreciation Rates
Thousands of newly constructed condos, which typically sell for higher prices than resale condos, have hit the market in recent years, which means year-over-year comparisons are not always apples to apples. Generally speaking, comparable-condo appreciation rates have been well below house appreciation rates since 2015, because of the difference in the supply available to purchase.
All our real estate market analyses can be found here: Paragon Market Reports
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The September Rush of New Listings
General Market 
Luxury Home Market
For some reason, September 2016 saw a stupendous rush of luxury home listings coming on market, which among other effects led to the highest monthly number of luxury house sales ever in October 2016. (As an aside, luxury condo and co-op sales hit their highest sales volume this past June.)
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Where to Look in Your Price Range
In August, we updated our complete series of charts delineating where one is most likely to find a home in any specific price range. Below are 2 of the charts, and the entire series can be found here: SF Neighborhood Affordability. 
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National Housing Affordability
This next chart illustrates home affordability for selected metro areas across the country as calculated by the National Association of Realtors. The 7 Bay Area counties, in our 2 metro areas, are the least affordable in the nation - not the happiest of distinctions, except for those planning to sell and move out of the area. 
San Francisco, California & the United States
The appreciation of home prices in San Francisco since 2011 has out-performed overall state and national markets by a substantial margin.
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County House Markets
Since San Francisco is considered the big city in the Bay Area (though San Jose is actually larger), it seems counter-intuitive that its house market is one of the smallest, but this is a major part of its ruling dynamic: Very little supply compared to intense demand. Owners in the city (and the nation) are getting older, and selling their houses ever more infrequently. And virtually no new houses are being built within SF itself.
Condo sales significantly outnumber house sales in SF, and the supply of condos available to purchase has surged with new project construction. This has made that market segment somewhat less heated; condo owners also tend to sell more frequently than house owners. However, the condo market in the city is much more expensive than in other counties.
Additional Chart: Bay Area Condo Markets
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Ultra-Luxury House Sales in San Francisco
Houses Selling for $5 Million & Above
A quick look at the very highest end of the SF market. Though other districts, such as the greater Noe-Eureka-Cole Valleys district, have increasingly surged into the luxury home segment, when it comes to the realm of the really big, most expensive houses, the district comprised of Pacific & Presidio Heights, Cow Hollow and Marina dominates with 75% of sales. House sales there can exceed $30m, though that is still very rare.
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Bay Area Home Price Appreciation
per the S&P CoreLogic Case-Shiller Index
Earlier in this report, it was mentioned that median price changes can sometimes be unreliable as indicators of actual appreciation. However, the S&P Case-Shiller Home Price Index measures appreciation using its own special algorithm tracking resales of the same home, and it does not use median sales prices. This first chart below, based on Case-Shiller, is a simplified, smoothed-out look at the up and down cycles over the past 33 years in the higher end of the Bay Area real estate market, which predominates in most of the city, Marin, San Mateo and areas like Piedmont, Diablo Valley and Lamorinda. Because it covers 5 counties, it merges the differences between their separate markets into a single trend line.
This second Case-Shiller chart illustrates how homes in different price segments around the Bay Area have recently been appreciating at considerably different rates. C-S divides all the Bay Area house sales into thirds by number of sales: low-, mid- and high-price. As illustrated in the lower green line, the higher-priced segment went flat in appreciation in 2016, but then jumped back to life in 2017. The most affordable price segment (top blue line) has been experiencing the highest pressure of buyer demand and competitive bidding, and since April 2016, has out-appreciated the most expensive segment, 12.4% to 4.3%, i.e. almost triple the rate of increase. The middle price segment (gold line) has been in between, appreciating by 7.8%.
These dynamics are generally true within each county, as buyers, somewhat desperately, search for homes they can still afford, in the area they wish to live.
The numbers on this chart all refer to a January 2000 home price of 100. Thus 262 signifies a price 162% higher than in 2000.
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Months Supply of Inventory (MSI)
The lower the months supply of inventory, the higher the demand as compared to the supply of homes available to purchase, i.e. lower MSI equals a hotter market. The entire Bay Area has been experiencing very, very low MSI figures recently, with San Mateo at rock bottom. (Its median house sales price has just recently been exceeding the median price in the city.) Alameda and Contra Costa Counties, generally offering considerably more affordable home prices than Silicon Valley, San Francisco and Marin are also at extreme lows.
Within SF itself, the MSI for houses alone, and especially in the more affordable neighborhoods, is substantially lower than the MSI for condos, though both have been very low since spring began. 
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Mortgage Interest Rates
Since the election, interest rates have seen a wild ride, first up and then down. As of the end of August, rates hit their lowest point so far in 2017, a significant financial advantage for buyers.
Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.
All our many Bay Area real estate analyses can be found here: Paragon Market Reports
Over the past 12 months, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage. (Sales reported to MLS per Broker Metrics.)
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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.
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.
© 2017 Paragon Real Estate Group
San Francisco Real Estate: The Paragon Mid-Year Report
Highest median home prices ever; a new peak in SF luxury home sales;
the huge, new-construction pipeline; SF neighborhood home prices and trends;
San Francisco & Bay Area home price maps
July 2017
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A Very Hot Spring
SF Median Sales Price Appreciation
by Quarter since 2012 
After hitting new monthly highs in May, San Francisco houses and condos hit new quarterly peaks in Q2 2017. However, median house price appreciation, $100,000 above its previous high, has been more dramatic over the past 2 years than median condo price appreciation, which has mostly plateaued due to the surge in new-project condos coming on market. As illustrated above, it is not unusual for median prices to peak for the year in Q2, and a significant part of this dynamic, besides the competitive heat of the market in springtime, is the large jump in high-end home sales seen at this time of year. More expensive home sales closed in Q2 than in any quarter in the past. Which leads to our next chart:
San Francisco Luxury Homes Sales
by Month since 2014 
Sales of luxury condos surged dramatically this spring to hit their highest number ever in June on a monthly basis, and in Q2 on a quarterly basis. Luxury house sales of $3m+ also barely exceeded the previous quarterly high in sales, but its component months were well below earlier monthly peaks. Note that condo figures do not include new luxury condo sales unreported to MLS.
Our complete report: The San Francisco Luxury Home Market
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Two new August 2017 reports:
Best SF Neighborhoods for Homes in in Your Price Range
SF Bay Area Real Estate Markets & Demographics
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Building Cranes Everywhere
Approximately 64,000 housing units, 31 million sq.ft. of commercial space
& 25 hotels with 4685 rooms are now in the SF new construction pipeline -
with 5700 units, 10 million sq.ft. and 5 hotels currently under construction. 
In the above chart on new housing construction, the main issue for the SF residential sales market is new condo construction and its effect on the supply and demand dynamic. Over 5000 new condos have been built in the past 4 to 5 years, with another 2000 expected to hit the market in the next 2 or 3. This surge of supply has been a substantial factor in the overall plateauing of condo median sales prices in the city since 2015, and some declines in those neighborhoods where new construction has been concentrated. However, it is true that new construction has been shifting much more toward building rental housing than condos intended for sale, which should help relieve pressure on condo prices and continue to exert downward pressure on rents. The rental scenario is discussed further at the end of this report.
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Home Price Maps
We have just updated our median home price maps for the entire Bay Area by city, for San Francisco by neighborhood, and then specifically for the Marin, Lamorinda & Diablo Valley, and Wine Country markets. To access them, click on the map image below and then roll your cursor over the maps on the webpage. 
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SF Neighborhood Home Prices & Trends
House & Condo Prices by Bedroom Count 
Our full collection of home price tables: Median Sales Prices by Bedroom Count
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Appreciation Trends since 2005
for Selected San Francisco Neighborhoods 
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Sales by Price Segment within Neighborhoods
Median sales prices typically disguise a wide range of prices in the underlying individual home sales, which is what these charts illustrate.
Dozens more neighborhood analyses can be found here: San Francisco Neighborhood Prices & Trends.
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Bay Area Rent Trends
This is from our mid-year report on the multi-unit residential market, which can be found in its entirety here: Bay Area Apartment Market Report 
San Francisco still has the highest rents in the nation (the light blue columns in the chart above), exceeding even Manhattan (in second place, delineated by the dark blue line), but they have been dropping since recent peaks in late 2015/early 2016. There are two main factors: 1) per Ted Egan, the chief economist of the City of San Francisco, high-tech hiring has been slowing since 2016, and 2) over 8000 new rental units have been built in the past 5 years, with at least 10,000 more expected to hit the market in the next 5. Generally speaking, rents around the Bay Area have either declined, in what had been the hottest markets, or seen their appreciation rates significantly slow, over the past year or so.
All our Bay Area real estate analyses can be found here: Paragon Market Reports
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Crazy Hot Spring Market - Again
As Buyers Compete for an Inadequate Supply of Home Listings,
San Francisco Median House Sales Price Soars to $1,500,000 in May
June 2017 Report
Home price appreciation, overbidding asking prices, supply and demand
dynamics, the SF luxury home market & new housing construction
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Three Views of SF Median Sales Price Appreciation
Monthly House & Condo Median Sales Prices since 2012 
We are not that enthusiastic about using monthly median prices, because San Francisco does not have that many sales in any given month (400-550), divided among 4 property types in 70-odd neighborhoods with different values. Monthly data can also be affected by short-term events, such as bad weather, a spike in interest rates, a new-condo project closing many sales, or a sudden political or economic event. All those factors mean that monthly prices can fluctuate dramatically without great meaningfulness as to changes in fair market value.
However, that being said, the spring market 2017 definitely became feverish and in May, the SF median house sales price jumped to $1,500,000, its highest point ever, about $100,000 (7%) above its previous monthly peak. The SF median condo sales price also hit a new peak at $1,200,000, $20,000 (1.7%) above its previous high. Note that it is not unusual for median sales price to spike in spring and then decline thereafter as the market starts to cool for summer (i.e. spring median prices do not immediately become the new normal). Other counties around the Bay Area also hit new peak median house sales prices in either April or May: $1.49m in San Mateo, $1.35m in Marin, $1.28m in Diablo Valley/Lamorinda, and $875,000 in Alameda.
Year-over-Year 3-Month Median Sales Prices
March-May, since 2005 
Comparing March through May sales year-over-year, houses and condos also hit new peaks: the SF median house price increased 4.6% from the same period in 2016, and the SF median condo price increased 4.5%.
Rolling 3-Month Median Sales Prices since 2005
In both this chart and the one above it, one sees the plateauing of condo median prices in 2015-2016. The condo market cooled much more than the house market in 2016, mostly due to an influx of new construction condos coming on market just as high-tech hiring slowed.
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Comparing Us and Them
San Francisco & National Appreciation Trends since 1987
through March 2017
The numbers on the Case-Shiller chart below all relate to a home price of 100 in January 2000: 50 denotes a home price 50% below then; 230 signifies a price 130% above January 2000. 
This chart compares the S&P Case-Shiller Home Price Indices for the 5-county San Francisco Metro Area high-price-tier market (which reflects the city of San Francisco best) in the blue line and the United States market in the green line. It goes through March 2017, which is the last report Case-Shiller has released as of early June, so it will not reflect the appreciation of April and May.
The appreciation trend lines are really quite similar except for 3 periods: Right after the 1989 earthquake, the rise and crash of the dotcom bubble, and the recent high-tech boom in the Bay Area. Looking beyond the difference in appreciation rates since 2012, 70% vs. 40%, the difference in dollar appreciation in median house prices over the 5 years is enormous: over $500,000 for SF vs. $70,000 for the U.S.
Note on the chart that after a divergence, it is not unusual for the trend lines to converge once again.
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Market Heat by San Francisco District
Overbidding House List Prices
The house market is hotter than the condo market, and the more affordable house market (affordable by San Francisco standards) has turned into a feeding frenzy this spring. By the measure of overbidding, the Sunset, Parkside and Golden Gate Heights district remains the hottest the city, as it was when we last measured in October 2016. These are stupendous median percentages over house asking prices. In the condo, co-op and TIC market, overbidding is at lower percentages, generally running in the 5-11% range, but going as low as 0% in the South Beach/SoMa district with its big influx of new construction inventory.
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Percentage of Sales Selling for Over List Price
The percentage of house sales under $3m that sold during the past 3 months for OVER asking price was a whopping 81%. That is feverish. Other market segments were also strong, but not quite as hot as that for non-luxury houses.
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4 Measures of Supply & Demand Dynamics
January 2007 - May 2017
In each of the following charts, there are distinct changes reflecting 1) the market recession after the 2007 peak, 2) the 2012-2015 recovery, 3) some cooling in the market in 2016, and 4) the market heating up again in spring 2017. Note the differences in some of the trends lines between the house and condo market. San Francisco is the only county in the Bay Area where the market is dominated by condo listings: Thousands of new condos have been built since 2000 with many more in planning.
New Listings: The decline in the frequency of owners putting their homes on the market has played a critical role in pressurizing the markets in SF and, indeed, around the country.
Active Listings: The number of active listings on the market at any given time is determined by the number of sellers putting their homes on the market and the intensity of buyer demand jumping on those new listings (and taking them off the market).
Months Supply of Inventory (MSI) measures the interplay of supply and demand: The lower the MSI, the stronger the buyer demand as compared to the supply of listings available to purchase.
Average Days on Market: When demand increases, especially against a declining inventory, competitiveness between buyers increases and, typically, average days on market decline.
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San Francisco Luxury Home Market
Here are 7 charts from the more than 20 new analyses we have posted to our luxury report, which can be found in its entirety here: San Francisco Luxury Home Market
The luxury home market in the city has mostly bounced back from the cooling it experienced late-2015 through 2016, but, generally speaking, is still not quite as strong as it was in spring 2015. The first chart below breaks out luxury home sales by dollar per square foot values. The 3 MLS sales for over $3000 per square foot in the past year were all in the new Pacific Heights luxury condo project, The Pacific. 
San Francisco Luxury House Sales
House sales of $3m+ are concentrated mostly in 2 districts: The $3m to $5m market is dominated by the greater Noe, Eureka & Cole Valleys district; the $5m+ market is dominated by the Pacific & Presidio Heights, Cow Hollow and Marina district. On a dollar per square foot basis, the best values are in the St. Francis Wood/Forest Hill area, an area of large, gracious houses on larger than usual lots. 
The majority of luxury houses in San Francisco were built
before 1920; the great majority before 1940. 
San Francisco Luxury Condo, Co-op & TIC Sales
May 2017 saw the second highest monthly number of luxury condo sales ever, just below the number of sales in March 2015.
The biggest change in the luxury home market has been the dramatic drop, almost 50% year over year, in luxury condo sales reported to MLS in the greater South Beach/ SoMa/ Yerba Buena district, even as listing inventory there has hit new highs. This is the area where large, very expensive, high-rise projects continue to come on market, and, to some degree, they may be cannibalizing MLS sales in the resale market. Foreign buyers have played a significant role here in recent years and it is possible (we do not have hard data) that this demand has declined due to political issues here and in China. This is also where the unfortunate issues at the Millennium Tower (slight sinking and tilting; multiple lawsuits) are being extensively reported upon. Even though the construction issues at the Millennium are unique to itself, it may be that the storm of negative publicity is making affluent buyers more cautious about buying in the surrounding area. If so, that effect will presumably wear off in time, which may make this a good time to buy while inventory is high.
For the time being, the luxury condo market has shifted its center back to older, northern, highly affluent neighborhoods like Pacific Heights and Russian Hill. 
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New Housing Construction
Socketsite.com and the San Francisco Business Times performed excellent analyses recently of the state and pipeline of new housing construction in San Francisco, which we have illustrated in the two charts below. (Unfortunately, the annual Planning Department Housing Inventory Report, which usually comes out in May or June, has been delayed, probably until August or later.)
All our Bay Area real estate analyses can be found here: Paragon Market Reports
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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.
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.
© 2017 Paragon Real Estate Group
A Second Wind for San Francisco Real Estate?
The Market Shifts Again after Cooling in 2016
May 2017 Report
(Continued in Part 2 blog post)
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It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis, which we are happy to provide upon request. Please call or email if you have any questions or need assistance in any way.
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 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.
© 2017 Paragon Real Estate Group