How Far Up Can We Go?

The Spring market is off with a bang. Despite amazing appreciation over the last several years, prices appear to be on another upswing, with the word "frenzy" now a common descriptor. For all properties, the median sale price in February hit $1,315,500, the second highest ever (the highest, in November, was $1,325,000). Single family houses lead the way, hitting a new record median price of $1,715,000, almost 33% higher than last year and much higher than any previous month (the closest was November's median of $1,575,000). Condos/TICs/coops actually lost ground versus last year, down 6.8% to $1,104,500. But this result was not across the board as some area condo prices were way up as well (for example District 8, stretching from the Civic Center to the north waterfront across Nob and Russian Hills was up 48% in the apartment market). Perhaps more importantly here at the beginning of the year is the feeling amongst buyers and sellers. Buyers are overbidding wildly, especially at the lower end of the market (less than $2 million) and for desirable properties in good neighborhoods. But sellers are still holding back, with inventory almost 25% lower than last February. Perhaps March will see a surge in available properties to soak up the buyer demand.

Other indicators support what appears to be another extreme seller's market. Per square foot prices were up in February 7.6% to their highest level ever. Overbidding is again the norm after a slow January, although a median of only 5% over the list price, reflecting more accurate pricing by agents (in previous frenzies like 2015 12% over was the average). Keep in mind that these are median numbers for all properties all over the city, so not really useful as a gauge for individual neighborhoods and types of properties. Can the city absorb another 10% annual increase or will the market stabilize as we move into the heavy months of March through May? Time will tell.

The market for 2-4 unit buildings continued to surge ahead as well. February's median price topped $2 million, 13% higher than last year. And sales were fast, taking a median of only 32 days, as opposed to 47 days for these relatively complex transactions. Despite the continuing price increases, inventory remained stable at 31 properties (versus 30 last year). These overall statistics absolutely cannot be used in evaluating a particular transaction; the condition and location of apartment buildings and, crucially, the tenant profile, greatly influences value. (As always, small numbers of 2-4 unit sales skew these figures, as well as the fact that many sales of apartment buildings (and other commercial properties) are not reported through the MLS.)

The different districts of the city tell quite a divergent story. The most iconic neighborhoods on the northside surged remarkably. District 7 (Pac Hts, Marina) was up 14.3% year over year last month to a median price of $2,002,500. Neighboring District 8 (Nob, Russian and Telegraph Hills, Civic Center) was up 10% to $1,097,500. But even more amazing was the performance of District 4 (west of Twin Peaks), where the traditional houses were up over 23% to a median of $1,600,000. This surpassed District 5, the normal second place district, but this February one of the losers, down 5.3%.

The east side also surged. District 9 (SOMA, Mission, Bernal) was up 8.1% to $1,100,000. And District 10 (Bayview, Portola, Outer Mission) was up another 15% over last year to $950,000. Eastside District 1 (Richmond) and 3 (Stonestown) were both down substantially (11.8% and 5.7 %). Is this a sign that freeway access is valued? Not for everyone, because the northside did well and so did District 2 (Sunset, Parkside), up 12.4% to $1,400,000, now the same as the Richmond. Rather, I interpret this as a continuing merging of the districts as the scant inventory encourages buyers to look all over the city. Some months one area surges, and the next it is different, but the overall trend is definitely up. (All district statistics are three month rolling averages, to mitigate for low numbers of sales.)

These February numbers must be take as preliminary since the bulk of Spring sales occur in March and after. But it looks like another profitable time for property owners. If you are interested in the value of your property or the one you want, give me a call so I can analyze your specific situation and use my experience and skills for you. More statistics, updated constantly, are at

Planning And Store Fronts

There is always a lot of talk about the Planning Department and what it does (or does not do) to make our city more beautiful and responsive to residents' needs. There is no way to address that topic completely in this small space - entire organizations like SPUR have spent years discussing it - but maybe we can gain some understanding by examining just one type of planning conundrum - store fronts. 

A quick search reveals two interesting issues for store fronts, transparency and formula retail. Believe it or not, the Planning Department has a separate set of standards for the transparency of store front windows. The idea is to discourage blocked out windows so that the pedestrian experience is enhanced by looking into the stores while walking. San Francisco requires that store windows be left largely unblocked and has a set of specific rules with respect to the percentage of the window that can be covered with product shelving and other furniture. Look at the examples here and you can see that the guidelines, if followed, would certainly make for a more pleasant, beautiful street experience. But I can certainly imagine a blocked window that would be incredibly interesting. Is that not allowed? Who decides if an opaque mesh is art or ugly?

At a more macro level, the Planning Department also regulates the look of "formula retail" which means retail establishments with more than 11 branches. The formula retail regulation aims to prevent the city's neighborhoods from being taken over by national branded stores so that they all look the same as anywhere in the country. The Planning Department's guidelines work with those formula retail locations that are approved so as to make them "fit" into the cityscape. These guidelines are quite detailed and overall seem to address some of the worst examples of unfriendly retail construction. But one has to wonder whether such detailed guidelines might result in a pattern - a "formula" - themselves, leading architects and designers to take the same "safe" approach with each client, ultimately resulting in a bland streetscape that lacks creativity.

There is no question that the Planning Department's efforts have helped this city retain and enhance its charming and beautiful streetscapes. But we need a balance between regulation of every detail to avoid "bad" results and allowing some experimentation that may come up with a new, better way. I cannot say whether that balance is being struck in the right place now - maybe it is, maybe it is not - but we should all think about what we are and are not allowing.

More details here and here.

Bernal Heights

Topped by a massive and mostly treeless hill park, Bernal is one of San Francisco's most beloved neighborhoods, with a story all its own. One of the defining features of Bernal is that it has been separate from the rest of the city in various ways over the years. This gives the neighborhood a unique character and a "specialness." Before the founding of the city, the hill was mostly surrounded by swamps and creeks. The streets of Bernal were laid out during the Civil War but the neighborhood remained undeveloped except for some farms and dairies and was known as a hotbed of lawlessness and scams, including a gold rush prompted by some gold planted on the hill. That all changed, like everything else in San Francisco, after the 1906 earthquake. With few structures built on solid rock, Bernal largely escaped the destruction and fires that ravaged the city. But people surged to the hill and built up commercial corridors and housing, including many "earthquake cottages." 

During and after World War II another population surge occurred as workers at the nearby Hunter's Point shipyard looked for housing. But they were to be cut off from the city again with the building of the 101 freeway on the east side of the hill and the 280 freeway on the south side both finished in the 1960s. Just looking at the maze of freeways south of the hill makes this clear but there is now talk of undergrounding some of those roadways.

Similarly, BART's original plan would have included a station at 30th Street and Mission, specifically to serve Bernal Heights, but that station was nixed and the money set aside for it used to add the Embarcadero station instead. BART is still studying proposals to build that station now. These transportation corridors (and lack of easy rail connection) had the effect of orienting Bernal toward the Mission and generally keeping especially the south and east sides "wild" with small ramshackle housing, narrow, curving streets and a unique only-in-San Francisco feel which it retains to this day.

Bernal's more recent history can be summed up in one word: gentrification. The Cortland commercial corridor long ago welcomed more upscale restaurants and in the last few decades Precita Park and environs has become highly desirable. Prices have been driven up dramatically, even more than in the rest of the city. Since 2008 San Francisco's residential prices have increased from a median of $790,000 to $1,300,000. But Bernal, in that same time period, has shot up from $707,000 to $1,500,000. This outsized appreciation is no doubt due to the charm of the neighborhood, spectacular views from much of the hill, easy accessibility to freeways for Silicon Valley commuters, and abundant parks and local businesses that give the area a feel of being part of San Francisco but also in its own world. Bernal Heights is a true treasure; separation from the city may have made it a lawless wild land before but also protected it and preserved its now invaluable and unique "Bernal-ness."

More details here, here, here and here

Spring Has Sprung!

 Although San Francisco does not really suffer through a real winter, the coming of longer days and warmer weather (and the end to the rains - someday) are always welcome. Spring brings various holidays - Easter, Purim, May Day - and a chance to get outside and see nature literally springing up from the ground. It reminds us that we can all renew ourselves and get another chance at a new life. So go to a park or your backyard, maybe pull some weeds or plant something. Visit a plant store and some greenery. Or just a bouquet of flowers. Spring has Sprung, and you can too!