The Market Springs Up (mostly)

We continue to see appreciation in the San Francisco residential market with housing pressure driving prices up to new record highs this Spring. Despite consistent talk of an impending bubble burst, there is no sign of that overall, although particular parts of the market are showing some softness. For all properties, the median sale price in April was at $1,385,353, the second highest ever (March holds the record at $1,405,500 but the slight decrease is not significant). That's an astounding 10.8% increase year over year. Single family houses were at a median of $1,650,000 down a smidge from their record high in February of $1.7 million, and almost 20% higher than last year. But single families have been strong for awhile. The real news is that condos/TICs/coops roared back so far this Spring, hitting a new record median in March ($1,250,000) and down only slightly from that in April ($1,235,000). The latter is a 12.3% increase year over year. Anecdotally, the standard wisdom is that lower-priced properties (mostly condos/TICs, but also small houses and those in less expensive parts of the city) are selling very briskly, which accounts for the uptick. But more expensive properties are languishing and indeed some believe they have reached their peak and the market is now adjusting as the limited pool of buyers for high-end houses pulls back. There is some evidence to support this - properties that sold for over $2,000,000 in April decreased in sales price from a median of $2,722,500 to $2,522,500. Is the entire market turning? No, but maybe discretionary sales are now a bit more difficult.

What do other statistics say about the current market? Inventory is still way way down - 18% less than last year and returning to the very low numbers we last saw in Spring 2014 and 2015. This lack of inventory is almost certainly causing the continuing price increases especially in market segments where buyers are plentiful (generally, the lower levels). And properties continue to sell quickly, hitting a new record low days on market of 14 in April. But, in an an indication of moderation, the percentage of properties selling over the list price and the percent of the list price received, although up from the doldrums of the winter, are still below their peak in 2015. Keep in mind that these are median numbers for all properties all over the city (for example, properties over $3,000,000 have a median days on market double that of all properties); your home may vary from these statistics considerably.  In summary, it looks like this Spring has been another healthy one with good appreciation in the market overall and no reason to expect any decline anytime soon.

2-4 unit buildings bucked the general trend in April but the Spring market generally was reasonably strong in this sector also. The median price fell to $1,880,000, down 7% from last year. Although apartment buildings moved fast, there was quite a bit more inventory (49 versus 36). One has to use caution with monthly statistics for apartment buildings, however, as the small number of sales reported can skew the numbers. For example, if you compare the three month period from February to April in both 2017 and 2018, the median price actually went up slightly (3%). So, with these buildings in particular, it is important to have a full-time agent on the ground and to examine the particular building against true comparative sales, not overall statistics. (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 city's different neighborhoods also gave us somewhat mixed results in April. The general picture is a trend toward equalizing values as less desirable districts appreciate faster than more expensive ones. But even this trend is not uniform. The strongest market by far was in District 3 around Lake Merced. This single-family heavy area also has massive apartment developments so it reflects the strengths across housing types. It was up 29% year over year to a median price of $1,290,000 putting it far above its neighboring district on the southeast side of town, District 10 (Bayview, Excelsior) which increased only 11.9% to $973,500. Amazingly, District 8, with some of the city's most iconic neighborhoods (Russian/Nob/Telegraph Hill, North Beach) but which also includes part of the newly hip mid-Market area is now behind District 3, despite advancing 20%.

The other evidence of merging values can be found in the center of the city, where District 4 (west of Twin Peaks) advanced 15.4% to overtake perennial second-place finisher District 5 (Castro, Noe, Haight), which was the only area to lose value, by 1%. Both areas now have median prices around $1.7. But so does District 1 (Richmond) even though it is traditionally thought of as further our, foggier and less "cool." Rounding out this equalizing trend are Districts 6 (Lower Pac Hts, Hayes Valley, NOPA) and District 2 (Sunset) both showing healthy appreciation of around 15% and ending at about $1,400,000 median price.but traditionally was up 10% to $1,097,500. And last are District 7 (Pac Hts, Marina), the most expensive area which gained no value and closed at $1,825,000. The one exception to the trend (other than District 10 noted above) is District 9 (Mission, SOMA, Potrero, Bernal) which is lagging perhaps because of the many new apartment towers there saturating the market with new condominiums. It advanced 3.6% to $1,160,000, making it the second cheapest area after a long ride up in the past few years. These changes, both equalization and new differentiators are a sign of a changing market perhaps, at least when compared to the past few years. (All district statistics are three month rolling averages, to mitigate for low numbers of sales.)

Of course, the Spring market includes May and often runs into June, so these numbers do not tell the entire story for this crucial time of the year, but they certainly indicate a strong market that shows no sign of any "collapse." 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

Financing News

Although there is a lot of talk about cash buyers, most real estate transactions still involve a mortgage. So financing issues are important to a lot of my clients and I like to keep current on that business. First, everyone is probably aware that interest rates have crept up in the last several months. This makes buyers nervous about their ability to afford a loan payment, and rightly so, but it is not a "sky is falling" event. Rates are still at very low levels when compared to the historical average and well-qualified applicants are managing to find a loan. But sellers should pay attention to the trend as every uptick decreases the number of people who can afford a home at its current price. If rates do advance significantly, that will put downward pressure on prices. It is hard to tell if prices would actually fall, however, since we have such low inventory in San Francisco and competition for many units is so overwhelming.

Second, many people are wary of TICs because they require a special kind of financing called a "fractional" loan (where the loan is secured by a fractional interest in the entire building, rather than an entire piece of property). Only a handful of Bay Area banks make fractional TIC loans and traditionally the rates for those loans were higher than standard mortgages. But that trend has begun to lessen in recent years, and there are TIC loans at 4% now. So if you find a TIC you like, do not be afraid to go after it, although be aware that the financing and other details will take an experienced agent to handle.

Finally, even regular loans have begun to change. Do you have to put down 20%? Not necessarily as there are now loans with downpayment requirements as low as 5% (maybe even less for certain specialized loans, such as for doctors or those who can qualify for a VA loan). Be sure to check all the costs for these types of loans, however, and ask what the loan limit is. Will you be able to count your stock options or other non-liquid assets as income? In the past, the answer was no, but lenders have begun to wake up to the new economy and its alternative compensation structures. 

The bottom line is that you should start your lending conversation with an experienced real estate broker and mortgage officer early on so you know what you can -- and cannot - afford. Then stick close to those people as your allies in the search for real estate - or as frontline advisers to buyers of the home you are selling.

More details herehere, and here - or call me!

Inner Mission

Although generally thought of today as ground central for the gentrification battles of our rapidly evolving city, the Inner Mission has quite a long and interesting history with several big changes. Originally centered around the mission church established by the Spanish at the mouth of Mission Creek (which used to flow all the way up to Dolores and was fed by several smaller creeks) what we know as the Mission no longer includes the mission church since it is west of Valencia in a separate neighborhood called Mission Dolores. After the town of Yerba Buena was established in what is now the financial district, a long road where Mission Street is now connected that town and gradually development began including the city's first sports stadium where Garfield Square is now (Folsom & 25th Street), a large conservatory, zoo and beer parlors. But the gold rush and particularly the 1906 earthquake and fire resulted in rapid urbanization of the area making it more or less the layout we have today, densely packed with residential and commercial development.

The first inhabitants were working class German, Irish and Italian people. By the 1920s a large Polish community had taken over a section of the Mission. And two other stadiums sprang up in the Mission also, one at 14th and Valencia known as Recreation Park and Seals Stadium where Franklin Square (Bryant & 16th St) is now. Mission Street and nearby streets became crowded with large movie theaters, shops and restaurants, including San Francisco's oldest continually operating theater, the Roxie (open since 1909). Then, in the 1940s-60s the area's demographics changed as Mexican-Americans displaced from Rincon Hill by the building of the Bay Bridge ramps migrated to the area, eventually making it the center of San Francisco's Latino culture. In the 1960s and 70s large numbers of Central Americans arrived and, at the same time, the western part of the area started to become popular with middle-class whites including particularly LGBT people spilling over from the Castro area. In fact, the city's lesbian culture was centered on the Valencia Street corridor through the 80s. Since the 1990s the area has continued to offer a first home to recent foreign immigrants from many countries while the the gentrification has continued, moving inexorably east and south and now penetrating to all parts of the neighborhood (and beyond).

In the past 10 years the area has seen very rapid appreciation in housing values as well as development on vacant lots and renovation of many existing structures. Median prices for all properties have risen from $600,000 to over $1,300,000, including a 17% increase in the past year (as opposed to the 11.7% increase citywide). In an effort to prevent or slow gentrification, the community has organized to lobby against some developments and a moratorium on additional market-based building was proposed, but failed at the ballot box in 2015. Changes continue apace but the Mission also includes a very large number of historic buildings that go through additional review aimed at preserving the city's character, and nothing gets built in San Francisco quickly. We all hope that all of our neighborhoods, including the Mission, continue as bastions of acceptance and freedom for our current residents and newcomers alike. But hat does not mean they stop changing; all we can do is be involved to shape the change that will come and, we hope, make it a change for the better.
More details herehere and here


Memorial Day

Traditionally seen as the beginning of Summer, Memorial Day arose after the Civil War as a day to honor the fallen in that conflict. Originally dubbed Decoration Day, it was evolved after WWI to include all the deceased from all military conflicts. May 30 was chosen as the date of commemoration because there was no major battle on that day, making it more universal. Over the years, Americans started to use the day to visit cemeteries to honor deceased relatives and friends, whether military or not. But it did not become a federal holiday until 1971 when Congress moved it to the last Monday in May to insure a three-day weekend (along with Washington's Birthday, Labor Day, Columbus Day and Veterans Day). So when you are out at the beach, off for a weekend trip or shopping the sales on Memorial Day, take a moment to think about those who have gone before and remember them.