Archive for September, 2015

San Francisco Market Overview: September 2015

 

September is historically the month San Francisco sees the greatest number of new listings come on the market, and this year it hasn’t disappointed! Since the 1st of the month, more than 800 single-family homes and condos have hit the market, blowing last year’s count out of the water. Further sweetening the situation for prospective home buyers, there are more condos for sale now than any time in the past two years and the most sub-million dollar single-family homes we’ve seen all year.

While median prices for both property types have remained consistently above $1,000,000 for the past seven months, the month-over-month rate of appreciation has cooled recently leading some economists to believe the market is leveling off. Still, there are plenty of buyers out there and the key to home values will continue to be the pace of job growth. On that note, employment is at a record high in San Francisco, and the East Bay (where many people priced out of SF are already putting increasing pressure on the housing market) is in for some major job growth in the coming months, years and decades.

Uber’s recent purchase of the former Sears building in downtown Oakland could prove a huge boon for the city. Aside from the estimated 600 new residents it will bring to the East Bay, it could open the floodgates for startups to establish headquarters in the area. Additionally, Berkeley has a billion-dollar real estate pipeline — one of the largest building booms in its 147-year history — that’ll bring jobs and residents to the area over the next 40 years. If conventional wisdom is correct, the real estate market in the East Bay will be heating up — way up!

A recent study by rental website Zumper found that for every $1 billion in venture capital injected into a local economy, 1-bedroom rents will increase $69 per month, and 2-bedroom rents will increase $99 per month. In San Francisco, $1,069 or 33% of a median 1-bedroom rent can be attributed to this stimulation. As housing prices accelerate around the Bay Area, it should become increasing clear that the housing crunch is a regional issue rather than a strictly San Francisco one, and the solution to it will be best achieved in a coordinated effort.

 

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Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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New Inventory: Relief For Home Buyers?

At last, the promised new inventory has arrived. While we generally see a spike in listings during one of our two selling seasons — spring and fall — the past several years have been dismal in terms of turning out new listings. Not so this year.

The question is: Will that translate into any relief for buyers?

 

I recently attended a symposium on the state of housing in San Francisco. If you have a couple of hours to kill, you can find the entire panel discussion audio here. While I found the discussion fascinating (it is my job after all) there are a couple of stats that particularly caught my attention:

  • Since 2010, we’ve added 10,000 residents to San Francisco every year, increasing our population by 50,000
  • During that same time frame, 80,000 new jobs have been created and only 10,000 new housing units have been added, well over 70% of which are rentals
  • According to Ted Egan, San Francisco’s Chief Economist, each year 70,000 people move into San Francisco (which means 60,000 move out)
  • Wholesale new construction costs are currently running $950-$1000/square-foot in San Francisco, which drops by only $50-$100/square-foot in Oakland; sale prices in the East Bay continue to garner significantly less than San Francisco

I have certainly spoken to more than one agent recently who had offer dates come and go, or only had one party come to the table. My personal take continues to be this: Fall is a really good window to buy, and I’m advising my sellers hold off until spring to list their property for sale (situation and replacement property depending). That said, I am actively looking to work with more buyers this fall — If you know someone interested in buying please pass my name along. I’ll be happy to speak with them even if they’re not sure yet.

 

Are you receiving my monthly San Francisco newsletter? You can subscribe here.

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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Think Long-Term: Best Performing San Francisco Real Estate Investments

 

This past week, 2470 Broadway in Pacific Heights came on the market in San Francisco with a $6,995,000 list price. Purchased by the current owner in 1976 for $176,000, this price represents a nearly 10% average annual appreciation. It’s a story not dissimilar to that of the former Alioto mansion at 2898 Vallejo, purchased in 1973 for $225,000 and sold in 2013 for $11,700,000. These long-term real estate holdings with appreciation rates well above the San Francisco average left me wondering: Which neighborhood (and what property type therein) is the best long-term investment, historically?

Comparing neighborhood median sales price data for single-family homes and condos/co-ops/TICs, respectively, from 1993 (the earliest available data from the San Francisco MLS) to 2015 YTD medians and calculating the average annual appreciation from January 1, 1993 to September 25, 2015 revealed some surprising findings. North Panhandle (11.03%), Hayes Valley (10.94%), Inner Mission (10.31%), Haight Ashbury (10.05%) and Buena Vista / Ashbury Heights (9.81%) represent the five top-performing single-family home markets in San Francisco during that period. With regard to condos/co-ops/TICs, Downtown (10.19%), Haight Ashbury (9.67%), Anza Vista (9.29%), Inner Mission (8.87%) and Mission Dolores (8.87) compose the five top-performing markets since 1993.

It’s been said that San Francisco real estate is a better investment than the stock market. With nearly half the markets analyzed having average annual appreciation above 7% — the assumed long-term average annual return of a diversified stock portfolio — it appears to be true! Check out this CNN Money calculator and see how your home’s appreciation compares, and click below for neighborhood data.

 

northwest

Central Richmond, Inner Richmond, Jordan Park / Laurel Heights, Lake Street, Outer Richmond, Seacliff, Lone Mountain

central west

Golden Gate Heights, Outer Parkside, Outer Sunset, Parkside, Central Sunset, Inner Sunset, Inner Parkside

southwest

Lake Shore, Merced Heights, Pine Lake Park, Stonestown, Lakeside, Merced Manor, Ingleside Heights, Ingleside, Oceanview

twin peaks west

Balboa Terrace, Diamond Heights, Forest Hill, Forest Knolls, Ingleside Terrace, Midtown Terrace, St. Francis Wood, Miraloma Park, Forest Hill Extension, Sherwood Forest, Monterey Heights, Mount Davidson Manor, Westwood Highlands, Westwood Park, Sunnyside, West Portal

upper market

Glen Park, Haight Ashbury, Noe Valley, Twin Peaks, Cole Valley / Parnassus Heights, Buena Vista / Ashbury Heights, Corona Heights, Clarendon Heights, Duboce Triangle, Eureka Valley / Dolores Heights, Mission Dolores

central north

Anza Vista, Hayes Valley, Lower Pacific Heights, Western Addition, Alamo Square, North Panhandle

north

Marina, Pacific Heights, Presidio Heights, Cow Hollow

northeast

Downtown, Financial District / Barbary Coast, Nob Hill, North Beach, Russian Hill, Van Ness / Civic Center, Telegraph Hill, North Waterfront, Tenderloin

central east

Bernal Heights, Inner Mission, Mission Bay, Potrero Hill, South of Market, Yerba Buena, South Beach, Central Waterfront / Dogpatch

southeast

Bayview, Crocker Amazon, Excelsior, Outer Mission, Visitacion Valley, Portola, Silver Terrace, Mission Terrace, Hunters Point, Bayview Heights, Candlestick Point, Little Hollywood

 

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Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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To Buy or to Rent: That is the Question

top-10-one-bedroom-rents-in-september-2015

Unless you are fortunate to live in a rent controlled building, you may have noticed your monthly rent rise dramatically in recent years. Checking in at $3,530 per month, the median rent for a one-bedroom has been the highest in the country for six months following a 13.5% rise last year (and up as much as 29.2% in Noe Valley). For many renters, what they pay out every month could easily be a mortgage payment on a comparable place– the monthly Principal + Interest on a $1,000,000 home is $3819.32, assuming 20% down and a 30-year mortgage fixed at 4%. As of today, there is more than 330 single-family homes and condos/TICs/lofts that are Active on the MLS listed for under $1,000,000.

Plugging in local San Francisco data (August 2015 sales figures) to the New York Times’ Rent vs. Buy calculator reveals some compelling numbers. Buying a condominium at August 2015’s $1,045,000 median sale price or a single-family home at the $1,225,444,000 median is a better financial decision even if you could rent for free!

 

San Francisco condominium Rent vs. Buy results:

condo

San Francisco single-family home Rent vs. Buy results:

home

 

The assumptions I made in the above calculations are as follows:

  • Purchase price: $1,045,000 for condos, $1,225,444 for single-family homes
  • Length of time in home: 5 years
  • Mortgage Rate: 4%
  • Down payment: 20%
  • Length of Mortgage: 30 years
  • Home price growth rate: 13.3% for condos, 20.0% for single-family homes (12-month average, the NYT calculator maxes out at 15%)
  • Rent growth rate: 13.5% (median one-bedroom increase in 2014)
  • Investment rate of return: 7% (approx. long-term average annual ROI of stocks)
  • Inflation Rate: 2%
  • Property tax rate: 1.19%
  • Marginal tax rate: 28%
  • Taxes filed on a Joint Return
  • Costs of buying a home: 3% (approx. closing costs)
  • Costs of selling a home: 8% (approx. closing costs + marketing + customary 5% commission to brokers)
  • Maintenance/renovation: 1%
  • Homeowner’s insurance: 0.1% (approx. $50-$100+ per month depending on property type)
  • Monthly utilities: $100
  • Monthly common fees: $600 for condos, $0 for single-family homes
  • Common fees deduction: 0%
  • Security Deposit: 1 month
  • Broker’s fee: 0%
  • Renter’s Insurance: 0.1%

 

San Francisco condominium median price growth, 2005 to present:

San Francisco single-family home median price growth, 2005 to present:

 

Are you getting my monthly San Francisco newsletter? You can subscribe here.

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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3rd Annual San Francisco Building Boom

 

Friday, September 18th I had the pleasure of attending the 3rd Annual San Francisco Building Boom presented by the San Francisco Association of REALTORSⓇ, a panel discussion of the new residential building projects transforming our city. Please listen to the discussion here and enjoy!

20150918 - SFBB_Flyer

 

Are you getting my monthly San Francisco newsletter? You can subscribe here.

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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