The May numbers are in with new all-time median price records city-wide. This is no surprise; inventory is still way down so the available properties can count on intense competition. This Spring's statistics also indicate that we have reached a new "normal" of many fewer transactions, perhaps driven by low inventory, which may result from sellers unable to move up easily given the rapid appreciation of recent years. With prices continuing to escalate, however, the logjam must break eventually. In short, San Francisco's market remains very strong.
The median sale price for all properties for the entire city was up 6% year over year to $1.3 million, besting the previous high set in April 2016 by $20,000. Single family homes jumped dramatically to a median price of $1,512,338, more than $100,000 higher than the previous highs in May 2015 and October 2016, and 12% higher than last May. Condo/TIC/coop prices shot up also, 10% higher than last year and a new record median of $1,200,000. Are these new highs sustainable? It would appear so, because inventory is still at an historic low, even while the city's population grows. The number of active listings was down 23.6% from last May; there were 568 properties available. Before 2011, a "normal" amount of inventory in the Spring would be over 1000 properties, and last Fall it looked like the trend of lower inventory we have seen in the past 5 years was starting to turn around. Some speculated also that the slower Spring was due to rain and residual uncertainty from the national political situation. But now we are back in a low supply situation which, if it continues, should continue to push prices upward.
2-4 unit buildings did not see the same surge, with the median price actually lower by $80,000 than last year. But anecdotally, apartment buildings are again in demand and indeed sales are faster (17 days on the market versus 22 last year) and inventory way down (only 35 active listing this year; last year at the same time there were 54). May's median price may simply reflect a spate of smaller building sales and April's median price was sharply up. We will look at the first half of the year next month to see if a real trend can be found. (As always, small numbers of 2-4 unit sales skew these figures, as well as the fact that a large percentage of sales of apartment buildings (and other commercial properties) are not reported through the MLS.)
A look at the various districts shows us how these overall numbers can be misleading when you are looking at your own property or planning on buying one. Price appreciation was not consistent across the board. District 8 (downtown, Russian/Nob Hill) was the biggest winner, up 11% year over year to a median price of $1,140,000. And District 2 (Sunset) continued its steady climb up reaching a median price of $1,300,000, 8.3% above last year. But District 3 (Lake Merced, Stonestown, Ingleside, Oceanview) and District 10 (Bayview, Portola, Excelsior) appreciated "only" 4.2% and 4.6% each (with median values of $1,020,000 and $879,000 respectively). That puts District 3 falling back to "normal" after a surge earlier this year and District 10 continuing a steady climb that has been going on for several years.
None of the areas saw major price decreases, but there were minor ones. District 1 (Richmond) was down 0.3% to $1,500,000. District 6 (Lower Pac Hts, Hayes Valley, Western Addition, NOPA) fell 1.3% to a median $1,150,000. , District 9 (SOMA, Mission, Bernal, Potrero) and District 7 (Pac Hts, Marina) both have now recovered completely from the dip they saw starting the second half of 2016. District 9 was nevertheless down slightly (0.9%) to $1,150,000, and District 7 was down 1% to $2,080,000. Finally, District 4 (West of Twin Peaks) and District 5 (Haight, Cole Valley, Eureka Valley, Noe Valley) were up 4.3 and 3.3% with median prices of $1,425,000 and $1,622,500, respectively.
Perhaps more interesting is the inconsistent inventory changes across the neighborhoods. Some areas had wildly fewer listings than last year. Districts 1, 2, 3, 4 and 6 were all more than 30% down (3 and 6 more than 40% down). The others had less inventory as well but not as dramatically lower - Districts 5, 7 and 9 were down around 10-13% and District 10 down 19%. But District 8 defied the norm, with an upswing in properties for sale of 4.8%. These inventory numbers are not predictive of sale prices immediately (for example, District 8's median price was up 11%, even with more properties available) and can fluctuate substantially month to month. But if they remain very low in a particular area, prices will rise as the buyer pool competes for just a few properties. (All district statistics are three month rolling averages, to mitigate for low numbers of sales.)
San Francisco's market remains very strong. This month's numbers reached new highs, but there is also no sign of an amazing jump like the one in 2015 (when median prices jumped from less than $1 million to $1,175,000 in 12 months). Rather, prices are steadily climbing due to high demand, constricted supply and low interest rates. This makes for an excellent market to sell, if you are ready, or to buy if you need to. Give me a call so I can analyze your specific situation and use my experience and skills for you.
San Francisco is well known for its difficult regulatory environment. Intended to make sure the city retains its charm, is safe and provides for all of its residents as much as possible, the overlapping agencies that govern business activity, including real estate development, can sometimes be a hindrance and take unnecessary time, adding to the cost of projects. Of course, no one wants to do away with the process entirely but lately there have been fresh looks at making it more rational and easier for everyone - small neighborhood businesses, individual homeowners, and big developers - to navigate. One innovation is the announcement of a one stop permitting center at a new tower that should be up by 2020 at 1500 Mission in the "Hub" neighborhood taking shape around Van Ness and Market. The new city office will house planning, public works and building departments all under one roof so people can avoid having to shuttle between them for the same project. That will not eliminate the multiple levels of review, conflicting departmental directives, neighborhood comment process and (sometimes) political football, but at least it's a step toward some rationality, which can lower costs. Why? The permitting process takes time and costs money (for carrying costs as well as additional professionals who navigate through it), but also means increased uncertainty and risk. Of course, the cost of building is also driven by labor costs, and economic factors like supply and demand, but if we can protect our beautiful city while at the same time allowing improvements to be reviewed and approved more efficiently, we will all be better off. Details here and here.
Transit Expansion Now (or Soon)
It is no secret that San Francisco's (and the Bay Area's) transportation infrastructure has reached a breaking point. Traffic is up and there is no room to build additional freeways which would increase our carbon footprint in any case. Rideshare services may have alleviated the taxi shortage, but at the cost of additional cars on the road. And bicycles cannot handle all trips. But we have failed to invest in trains and other projects that can move large amounts of people efficiently. Two initiatives seek to increase transit now (or soon).
First, the city has again begun to look into extending to Fort Mason the above-ground F-line service that runs down Market and around the Embarcadero to Jones/Jefferson. The extension will require re-opening and retrofitting a 1914 tunnel originally built for the Panama Pacific International Exposition. If that can be done, we would have better service for tourists staying near Fisherman's Wharf, as well as Marina residents who could travel to the Ferry Building or up Market without changing modes. Details here.
Second, to support continued growth of ferry service from around the Bay to downtown, construction is now underway to renovate one of the existing gates at the Ferry Building and build two new ones. This requires extensive infrastructure work but, once finished, we will have the capacity to accept new service from Richmond, Treasure Island and Berkeley (in the short term) and Antioch, Hercules, Martinez, and Redwood City down the line. Ferries are one of the easiest ways to increase transit options and historically an important part of the Bay Area's transit system (over 250,000 people per day arrived by ferry at the Ferry Building in the early 1930s before the Golden Gate Bridge and Bay Bridge opened). Details here.
Of course, neither of these projects will completely satisfy the increased demand, and other more longterm solutions (like a second BART tube and increased subway service in the city) are under study, but we have to start somewhere. All aboard!
The whole Bay Area exploded with joy to see the Warriors grab their fifth national championship this week. Of course, the team is in Oakland now, but construction of the new arena in Mission Bay, the Chase Center, is speeding along. Lines of concrete trucks are pouring in and dumping their loads as fast as they can. Scheduled for completion in time for the 2019-20 season, the arena will have local food vendors, massive retail and a public plaza on the waterfront. It will not only bring the NBA back to the city, but also provide a world-class venue for entertainment events that now go to Oakland and San Jose. And it is one of the last major components of the Mission Bay neighborhood that houses thousands, provides world-class medical services and a center for the biotech industry. Go Warriors and Go San Francisco! Details here, here and here.