• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

2016 end-of-year report on San Francisco real estate prices and sales

Status
Not open for further replies.

XiaNaphryz

LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
http://paragon-re.com/Gold_Google_Facebook_San_Francisco_Real_Estate

There's a ton more charts at the link including neighborhood specific breakdowns, here are a couple that stood out to me.

1kLJXTn.jpg
ZMFlYN2.jpg
j7Sweb6.jpg


Some general figures.

jXlWTVO.jpg


San Francisco median house prices continued to appreciate in 2016, albeit, at 6%, at a considerably slower rate than the previous 4 years, while condo prices basically plateaued (and indeed dipped in some neighborhoods). As with almost everything to do with real estate values, it boils down mostly to supply and demand

BgGyHJa.jpg
Ri3tcDo.jpg


In 2016, the supply (and sales) of house listings in the city continued to dwindle, while a surge of new-construction condo projects hitting the market appreciably increased the inventory of condos available to purchase.
In 2003, house sales in San Francisco were over 50% higher than in 2016. According to a study by the National Association of Realtors, the median time house owners are staying in their homes has jumped from an average of 6 years in 1987-2008 to 9 years since: Owners are getting older, not changing jobs as often, and baby boomers are aging in place as NAR put it. House owners sell their homes much less frequently than condo owners, who tend to be younger. In SF, there is also the factor of a reluctance to sell when that means facing a very challenging market for buyers. And with very low interest rates, and very high rents, some owners are renting out their houses instead of selling.

It all boils down to a continuing strong demand for houses meeting a steadily declining supply: Even with a market that cooled somewhat in 2016, competition between buyers continues to push house prices up, especially in more affordable neighborhoods. The equation is different for condos, which has become the dominant property-sales type in the city: A cooling market is meeting increased supply. There has been no crash in condo prices, but areas with the greatest quantity of new condo construction have seen small declines.

EI4wAL3.jpg
hBl1gby.jpg


Coming out of the recession in 2011, the San Francisco market became increasingly frenzied through the spring of 2015. In late 2015, as housing affordability became a critical issue, and the local high-tech economy saw some cooling, and financial markets worldwide experienced increasing volatility, the SF real estate market began to cool and normalize. Buyer competition for new listings softened, overbidding declined, days-on-market increased, appreciation declined or plateaued, and so on. And the condo market cooled more than the house market due to issues discussed above.

2016 saw a reasonable adjustment to a desperately overheated market, but nothing that suggests, so far, an imminent, dramatic downturn. Indeed, by national standards, most of our current statistics still define a relatively robust market. In a recent interview, Ted Egan, chief economist of the City of San Francisco, put the odds of a new recession at 10% or less.

ihtI0GC.jpg


This chart is a somewhat lighthearted, but we believe accurate look at how various 2011 investments would have played out through 2016. (FB is dated from its 2012 IPO.) When calculating appreciation, purchase and sale dates are critical factors, and changing those can alter the results significantly: Using 2011, the last bottom of the real estate market, as the purchase date certainly plays to the advantage of home price increases. If you bought gold or soybeans in 2011, you really should have sold them a couple years ago at the height of the commodity price boom.

Besides the appreciation percentage noted, buying a home in 2011 with all cash would have generated large, additional financial returns in the form of extremely low monthly housing costs. Buying it with 20% down supercharges the return on cash investment, and that is before adding in other advantages: Even with an 80% loan, by 2016 your monthly housing costs, with recent low interest rates and tax advantages, would be well below market rents. Then there is the huge capital gains exclusion on the sale of a primary residence, which would not apply to other investments.
 

Meatfist

Member
Absolute insanity. The high costs are coming further and further inland too as people are forced to take longer commutes just to afford housing. I'm frantically saving to buy a house in Fresno because of the rapid increase in real estate prices, and I have no doubt it'll get worse once all of the high-speed rail projects come to fruition
 

Dynamite Shikoku

Congratulations, you really deserve it!
It's insane in Sydney too. Only the rich can buy now (and they are buying, a lot), but the government acts like nothing is happening at all. It's unbelievable. In 10 years regular people won't be able to even rent.
 

Wads

Banned
I bought a place in the east bay in late 2015, but it was at the absolute top of my budget. If I had waited a year, I would have been completely priced out of the home market except for 2br condos... how Bay Area is nuts. Or I would have been even further out I guess, but any more distance and I would not be able to commute to SF.
 

Damaniel

Banned
It's insane in Sydney too. Only the rich can buy now (and they are buying, a lot), but the government acts like nothing is happening at all. It's unbelievable. In 10 years regular people won't be able to even rent.

And in Vancouver, and in London, and in a bunch of other places. I'm guessing that most of those sales aren't from the locals, either.
 
Absolute insanity. The high costs are coming further and further inland too as people are forced to take longer commutes just to afford housing. I'm frantically saving to buy a house in Fresno because of the rapid increase in real estate prices, and I have no doubt it'll get worse once all of the high-speed rail projects come to fruition

Don't worry, this won't happen in your lifetime =) Still waiting on BART to come to the South Bay.....
 

XiaNaphryz

LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
Don't worry, this won't happen in your lifetime =) Still waiting on BART to come to the South Bay.....

They'd get a ton more passengers if they somehow managed to get BART up to Solano County as well. A lot of commuters from up there already drive or bus down to get to a BART station.

But they'll likely get to the South Bay before that ever is a consideration.
 

hipbabboom

Huh? What did I say? Did I screw up again? :(
I can't wait for a no money down 40 year flex loans to become a thing again. Maybe then I can buy a million dollar house with no proof of income. What could go wrong. I'm sure the "market forces" have learned from the past and are reflecting on it.
 

toxicgonzo

Taxes?! Isn't this the line for Metallica?
How does one short the San Francisco real estate market? Credit default swaps?

These numbers cannot be sustainable.
 

TyrantII

Member
I can't wait for a no money down 40 year flex loans to become a thing again. Maybe then I can buy a million dollar house with no proof of income. What could go wrong. I'm sure the "market forces" have learned from the past and are reflecting on it.

Nothing to do with that here.

It's super high demand from the proximity to silicon valley and foriegn investment for both that and to launder money away from shifty countries with poor property rights.

Quite simply demand (currently) vastly outstripped supply. That can change quickly, but this is a market that deals with a lot of sales in cash. It ain't cheap credit pushing it.
 

zoku88

Member
To the above, my friend in the South Bay recently bought an apartment. She was telling me how hard it was to buy. Not only do you have to compete with cash buyers, you also pretty much have to waive some inspection rights. The market is too hot.
 

Skel1ingt0n

I can't *believe* these lazy developers keep making file sizes so damn large. Btw, how does technology work?
Straight-up stupid.

Zero interest in living there, anyway; so w/e.
 
There are probably homeless people in San Fran that make over $50k/yr. I hear a lot of them live in tents in wooded areas of the city

You know what's crazy to me. Take East Palo Alto. It's considered "the hood/the ghetto", but the houses there go for 800K+. It's a damn hood with million dollar homes. The residents have to be making good money to live there (or bunch of 2-4 families in a house), but because the rent is so expensive they are essentially poor. I hate the bay area, I need to get out of here
 

iavi

Member
To the above, my friend in the South Bay recently bought an apartment. She was telling me how hard it was to buy. Not only do you have to compete with cash buyers, you also pretty much have to waive some inspection rights. The market is too hot.

Yeah, buying in the CA bay right now is hell.
 

Pejo

Member
To the above, my friend in the South Bay recently bought an apartment. She was telling me how hard it was to buy. Not only do you have to compete with cash buyers, you also pretty much have to waive some inspection rights. The market is too hot.

Yep, I was looking to buy here recently, kept getting outbid by cash buyers on anything I could afford. Insane.
 
Yeah, buying in the CA bay right now is hell.

Oddly enough, it's actually a bit easier now compared to the last few years. It's slowed down a tad and that's even factoring in the slow period during the holidays and right after school starts.
 
Status
Not open for further replies.
Top Bottom