Archive for the ‘Market Statistics’ Category

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

Share

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

 

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

Share

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

Share

Triple-Digit Temps, Six-Figure Overbids

 

It’s heating up — and I’m not just talking about the triple-digit temperatures around the Bay Area!

More than 145 properties have come on the market in San Francisco in the past seven days, signaling what promises to be a heated post-Labor Day selling season for local real estate. September is historically the biggest month for new listings, and while some things change — year-over-year lower inventory, fewer average days on market, higher median prices, etc. — this looks to be one trend that’s remaining constant.

 

Already this month, nearly a dozen homes have traded for 30% or more over list price; Even with the forthcoming wave of new inventory, sellers who price and market right have a good shot at realizing six-figure overbids. This article from the Wall Street Journal outlines some ways both home sellers and buyers can succeed at bidding wars, surely implemented with success by the sellers of some of San Francisco’s Top 20 Overbids.

Those competing for these properties are primarily high-paid tech professionals (the number of employed San Francisco residents is at a record high) and overseas buyers looking for investment properties. Just recently, San Francisco was named as one of the top cities for Chinese investors. Meanwhile, economic volatility abroad is underscoring the safety and profitability of real estate as an investment, and San Francisco real estate in particular has a proven track record of resilience. With that said…

Two looming events may impact local market performance in the next few weeks: interest rate hikes mandated by the Federal Reserve, and new disclosure rules effective October 3rd that will (at least temporarily) lengthen the escrow process. How will these play out? We’ll have to wait and see.

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

Share

Let the Autumn Selling Season Begin!

September is almost always the month with the largest number of new home listings in San Francisco: The number of new listings hitting the market in September 2014 was 15% higher than the #2 month (May 2014) over the past 21 months. Because Labor Day is so late this year, September only has 3 weeks of selling days after the holiday weekend, and if this is a big listing month – it looks like it might well be – we may find a whole lot of listings crammed into those 3 weeks. Usually, the 5 weeks after Labor Day feed the activity of the entire autumn sales season in SF.

So home buyers may want to prepare.

Because of the financial markets recent volatility, it’s possible that some significant percentage of buyers will be warier and hold off until there is more clarity. [This happened a couple years back with the national debt reauthorization standoff in late September/early October.] Media hysteria is not helping, and a raise in interest rates would probably trigger more volatility – at this point, someone stepping on a cat’s tail in Shanghai will probably trigger more volatility. The next Fed meeting is on September 16 & 17th, and there may not be clarity about an interest rate change until then – which won’t stop non-stop speculation.

On the other hand, the Fed might announce (at any time) that no interest raise will occur (or minimize the scale of an increase), there might be a sustained market recovery this week, and last week’s craziness will quickly fade into insignificance.

image001

 

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

Share