2019 Wrap-Up

There was a lot of talk in 2019 of a market that was turning down. Especially early in the year, many predicted increasing interest rates and an overall economic recession that would drive prices down or at least prevent substantial appreciation. On the other hand, many also predicted a dramatic run-up as "unicorn" IPOs injected the San Francisco market with new millionaires willing to pay more for their dream home. It turns out that neither extreme came to pass and the 2019 market can best be described as a stable seller's market with steady appreciation.

The monthly mean sale price hit a new record in October 2019 of $1,455,000, up from the previous two years' highest months (March 2018 - $1,406,000; November 2017 - $1,325,000). The trend line over the last 3 years is unmistakably up, with one glitch. 2017 saw prices increase steadily and just at the end reached above $1.3 million. Spring 2018 saw a big jump up over $1.4 million followed immediately by a pull back below $1.4 million for the rest of that year that had some predicting the end of our long-term bullish market. But 2019 recovered all of that and more, reaching a new record over $1,450,000 which held steady almost all year. November and December 2019 were a bit down from last year (December's median was .08% lower than last year), but that seasonality is fairly normal and not terribly significant given the low number of sales during the holiday time.

What about other indicators? Price per square foot mirrored the median price story, increasing up above $1100/sq.ft. for the first time in 2019. Inventory - the number of active listings - was up slightly in 2019, hitting an 8-year record in September (nearly always the highest month). But it is important to note that what was once considered normal inventory (~2000 active properties) is now a distant dream as we have been below (usually well below) 1500 active properties continuously since 2012. Certainly if significant numbers of properties were to enter the market in 2020, that would put pressure on prices, despite continuing population and job growth which have the opposite effect. Time will tell.

Single family homes tell a very similar story to the market overall, rising to $1.7 million median price in early 2018, falling off after that, but then recovering in 2019 to reach a new record of $1,750,000 in June 2019. There was a bit of a fall-off after that, however, down to $1,650,000 at the Fall peak in October. Condo/coop/TIC prices, on the other hand, marched steadily up, hitting a new all-time record median in October 2019 of $1,325,000.

In summary, San Francisco's (and the entire country's) continuing economic strength and very low interest rates, combined with constraints on supply, are causing continuing significant appreciation. That said, there are very slight indications that the rapid run-ups of previous years may not continue in 2020. Of course, that depends greatly on whether sellers come to the market AND whether buyers start to show signs of skittishness, both of which are highly dependent on public perceptions that can be easily turned by political and other events. Your individual situation is (and should be) driven by your own needs and desires, combined with the micro market you are in and more macro considerations. I am always happy to help you strategize and examine the risks and rewards of selling or buying now (or not).
Drop me a note or give me a call (415.531.2800). 

2019 District Markets

As many of you know, the San Francisco Association of Realtors divides the city into 10 geographic districts, each with a number of sub-districts, intended to group properties in a "neighborhood" together. The lines are not perfect of course (leading to complaints like "there is no way that's Noe Valley!") but the divisions do give us a way of looking at prices in different areas over time as all MLS sales are reported within these boundaries.

The only overall trend evident in 2019 was the rise in market value of the city's westside. District 1 (The Richmond, Sea Cliff, Presidio Hts and Laurel Heights) shot up about $150,000 in the Spring 2019 and then held fairly steady until rising again at the end of the year to close 8.7% above last year at a record median price of $2,350,000. District 2 (Sunset, Parkside, GG Hts) stayed fairly steady throughout the year but was up at the end 10.3% to $1,950,000 (although that "increase" really reflects recovery from a dip at the end of last year). District 3 in the southwest corner of the city around Lake Merced, as well as Ingleside and Oceanview, has few sales and therefore more fluctuation in median price. However, it spiked up in August to over $2 million for the first time every, and closed the year at $1.7 million, a respectable 6.4% over last year. District 4, the suburban style neighborhoods west of Twin Peaks (like St Francis Woods, West Portal, Miraloma Park) fell in value dramatically at the end of 2018, spending the year climbing back up. In December it held at a $2,150,000 median price, a whopping 17.6% above last December, but well below the August 2018 record of $2,375,000.

In the center of the city, statistics show a mixed story. District 5 (Noe Valley, Castro, Haight and surrounding hillsides) marched steadily up all year (including in December - up 3.6% year over year), hitting a new record median of $1.9 million in October 2019. Contrast that with 2017 and 2018 when District 5 never topped $1,750,000. District 6 (Lower PacHts, Western Addition, NOPA, Hayes Valley) was basically flat, reaching $1.4 million in the Summer but then falling back below $1.3 in the Fall. District 7 (PacHts, Marina) was up and down dramatically hitting a record high over $2.2 million in June, but then falling off like District 6 in the Fall into the $1.9 or 1.8 range. That represented a recovery from Fall 2018, but essentially put District 7 back to where it was in 2017.

The east side of the city continued the appreciation that has been going on for years. District 9, stretching from the new towers of Yerba Buena and SOMA to the Mission, Potrero and Bernal Hts, reached a new high median of $1,325,000 in November 2019 after steady appreciation all year. That median is more than $50,000 higher than the top prices from 2017 and 2018. It appears that the new construction has been absorbed and the older buildings continue to go up in value due to heavy demand for this area. District 10 (Excelsior, Portola, Bayview) has a similar trend line, reaching a new record median of $1.1 million, about $50,000 higher than last year. Finally, District 8, the center of old San Francisco (Nob and Russian Hill, North Beach and the Civic Center) was more volatile. It reached a new record of $1,245,000 in October 2019, after a lackluster Spring market. That high is only $20,000 more than Spring 2018. Also keep in mind that very expensive view properties in District 8 can skew the median in any one month, so it is best to take a longer view.

Keep in mind that longer-term trends may be more instructive for real estate which is normally held for years. The east side of the city has become more and more popular perhaps because it offers easy access to freeways south. The north side has retained its preeminent position as the home of classic San Francisco architecture and picture perfect neighborhoods, and that charm has perhaps become more valuable in an age of globalization. The central areas, once considered "bohemian" and (to some) less desirable have fully gentrified and are set at a high value. The westside, traditionally more conservative and "far" from downtown, has seen a resurgence because of the popularity of single family homes and the desire to avoid bridge commutes to the East or North Bay. Essentially, the entire city has become very very desirable and buyers are focused more on their individual needs than the relatively small differences in value between areas. 

Of course, any particular property cannot be valued by looking at District statistics or even sub-neighborhoods as there are big differences from block to block and in the properties themselves. For a real analysis of what your home would sell for or what you need to buy what you want, call me - 415.531.2800. (All district figures are rolling 3-month averages to adjust for small numbers of sales in some districts in some months.)

Multi-Unit Buildings & COPA

Although most people think of single family homes or condo/TIC apartments as their only residential options, San Francisco has a lot of small multi-unit properties that can be an option for a new "home." A new issue for some of these buildings is COPA (not the Panamanian airline, but the  Community Opportunity to Purchase Act).

The idea behind COPA is to encourage the retention of affordable rental units in the city,  Generally, COPA applies to buildings with 3 or more units and requires that, before such a building may be sold, it must be offered to "qualified" non-profit organizations that would keep the building as a rental. Also, once the Seller has an acceptable offer from a private purchaser (someone who is not one of these non-profits) the Seller must offer the building to the qualified non-profits on the same terms as the offer. So, the upshot is that selling a 3 or more unit building in San Francisco has gotten a bit more complicated and requires some additional time. Getting all the details right is important (as always) so be sure to talk to an agent (like me!) well ahead of time.

In addition to COPA, there are a myriad of issues that can arise with multi-unit properties including tenant communications, rent and eviction control regulations, both state and local, tax issues and a generally different process of selling and buying, including loan issues. I am well-versed in all these issues and happy to discuss them; just ask. More information here. 

Blue

Although I love colors - all of them - when I'm asked to pick my favorite color I have to say blue. So I did a bit of research and found that my pick is indeed special. Some scientists believe that early humans were largely colorblind, seeing only black, white and red. Our eyes evolved to see other colors later, and blue was the last hue. 

In art, blue pigment was for centuries very expensive because of the rare natural elements and elaborate processes required to make it. For example, in ancient Egypt blue was created by mixing limestone, copper and sand heated to a certain temperature. Lapis lazuli imported from Afghanistan was the basis for ultramarine paints used by medieval European artists. It was so rare that it was as precious as gold. And new ways of making blue, resulting in new shades, continue to be discovered. In 2009 a scientist created YInMn blue by heating yttrium, indium and manganese. 

Blue is the color of trust (perhaps derived from its association with the sky and heaven) and also a "calming" color (perhaps because of the vast blue sea). It also depresses appetite (one reason you almost never see blue lights in restaurants or on food packaging). So, the next time someone tells you not to be "blue" tell them you are trying to lose wait and very relaxed about it! Details here and here.