2018's San Francisco residential real estate market was a tale of two seasons. Spring took off like a rocket as prices surged once again, defying historical trends that would indicate a slow-down after a decade of rapid appreciation. But the Fall market dampened that enthusiasm. Inventory was way up but sales did not keep pace and the overall median price showed only modest upside. Spring 2019 is the real determinant. Will buyers continue to hold back and refuse to pay every higher prices or will they charge ahead with confidence as earlier? Will sellers compromise and take the same - or less - than they could have had a year ago or hold out for every higher prices?
Time will tell.
Statistically, the median price for all properties reached a peak in March 2018 at $1,406,000, the highest number ever. Prices dipped in the Summer, which is a normal, seasonal happening, but did not skip up in the Fall, holding in the $1.3s. Although every month was still higher than last year except November (down $25,000) year-over-year appreciation held in the single digits, with the fourth quarter up less than 4%. Perhaps more importantly, inventory (active listings) in September was at its highest since 2011, although December saw a raft of withdrawals and sales leaving inventory more than 15% lower than last year. Did buyers flood into the market post-election or was this an anomaly? Anecdotally, the few listings available in the first half of January have been swamped but we will need at least a few months to see any trend.
Let us all remember to have some perspective regarding the extent of any market shift. The single family house appreciation in 2018 - $185,000 - was the highest for any single year ever. Condos did not do as well but still were up $60,000. Months supply, even with September's inventory surge, stood at 3.2 months, hardly a buyer's market (6 months is the generally-accepted tipping point). The equity markets were volatile at the end of the year and certainly we continue to face political and international uncertainties but the Bay Area continues to shine as a bright and forward looking economic engine with its real estate a desirable haven.
Want to know more about the market as it develops or about your particular house or neighborhood. Give me a call and we can talk about it. I'm never too busy.
District by District
On the city's westside, the big story of this year was the surge in District 1 (Richmond). Traditionally more desirable than its neighbor south of Golden Gate Park, District 2 (Sunset), at times in the past 2 years they have appeared to meet as District 2 values increased more rapidly. But in 2018, the Richmond took off in the Spring and has maintained it's $200,000 premium. By contrast, District 2 and 3 (in the southwest corner of the city) kept pace with the city as a whole. The numbers for December (always at or near the lowest of the year):
District 1 median $1,530,000, up 2%
District 2 median $1,300,000, down 4%
District 3 median $1,120,000 down 1.8%
In the center of the city, District 4 filled with tree-lined single family areas like St. Francis Wood, Miraloma Park and West Portal advanced to equal or surpass District 5 (Haight, Castro, Noe Valley), which has generally outpaced its southern neighbor by at least $100,000. District 6 (Lower Pac Hts, NOPA, Hayes Valley) faltered especially in the Fall. Does this mean that buyers are retreating to "safe" neighborhoods or is it increasing desirability of single family homes over condos/TICs? Again, time will tell.
District 4 median $1,602,500, up 3.1%
District 5 median $1,700,000, up 6.3%
District 6 median $1,180,000, down 8.1%
The northside showed some slowing as District 7 (Pac Hts, Marina) dropped from its perennial top spot for October, recovering in December. District 8 (Russian/Nob/Telegraph Hill, Downtown) held steady in the Fall, but experienced almost no appreciation, which in San Francis is a "slow down." It's hard to make any overall prediction from these numbers, other than perhaps to speculate that a $2,000,000 median price is, for now, unsustainable, even in the toniest areas.
District 7 median $1,900,000, down 5%
District 8 median $1,149,000, down 3%
Finally, the eastside continued the steady upward climb it has been on for years, but without any big jump. District 9 (South Beach, SOMA, Mission, Bernal) held onto the gains from last Spring. District 10 (Bayview, Portola, Excelsior) which had a run up lasting from the Spring into August retained it's over $1,000,000 median price, reached only in July 2018. With easy access to Silicon Valley and downtown jobs and the lowest priced single families in the city, these areas seem poised for more growth.
District 9 median $1,224,500, up 3.4%
District 10 median $1,040,000, up 11.2%
This Spring promises to be an interesting time for real estate in San Francisco as sellers may determine that the very top of the market has been reached and buyers may resist further price increases. The market will work that out, but any prediction of a "crash" appear unrealistic given the generally rosy employment indicators for the city, low interest rates and predictions of at worst a mild recession to come.
More neighborhood statistics on my website here.
San Francisco Transforming
San Francisco is a city of re-invention. Our latest addition? St Joseph's Art Society is the creation of Ken Fulk, our city's "master showman." Mr. Fulk transformed a derelict SOMA church into an incubator for art and spectacular event space. It includes a cocktail lounge, book shop and even an apothecary. The gild shines for blocks! Details here.
Ever wonder how neighborhoods transform from low-scale and abandoned to skyscraper density? How did the Transbay Center develop? What's the Hub? How did Hayes Valley become hipster land? The American Planning Association is going to talk about it at their convention in our town in April! Details here.
What about the future? Some decry the "Manhattanization" of downtown, but buyers have flocked to it. Worries, or hopes, that new units would depress prices proved unfounded and nearly all new units available now have sold out with prices holding steady or surpassing expectations. And the pipeline is skinny for 2019 due to a variety of factors. Details here.
There are two new towers currently selling, neither ready for occupancy, that may give us some architectural credit. Avery, by Rem Koolhaas' OMA, looks a little like stacked rows of I-Beams reaching for the sky; it may balance the spires and curves of other recent towers. Mira's twisted facade ripples like water, a take by architect Jean Gang on our ubiquitous bay windows. Details here and here.
DR MARTIN LUTHER KING JR
January's holiday is Martin Luther King Day, the day we take to heart his dream - that we all live in equality and are judged by our character, not our skin color. America holds the promise of freedom for all and from all oppression. Let us make it so.
The speech is here.