CFAH

San Francisco home prices ticked up in February and condo values jumped according to the latest S&P/Case-Shiller Home Price Index. According to the Index, single-family home prices in the San Francisco MSA rose 0.5% from January to February 2013. Up 18.9% year-over-year, the San Francisco Index remains 32.1% below a May 2006 peak.
For the broader 10-City composite (CSXR), home values gained 0.3% from January to February 2013, up 8.4% year-over-year, 29.9% below a June 2006 peak.

Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price increases. Atlanta recovered from a wave of foreclosures in 2012 while the other three were among the hardest hit in the housing collapse. At the other end of the rankings, three older cities – New York, Boston and Chicago – saw the smallest year-over-year price improvements.

Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy. The 2013 first quarter GDP report shows that residential investment accelerated from the 2012 fourth quarter and made a positive contribution to growth. One open question is the mix of single family and apartments; housing starts data show a larger than usual share is apartments.

On a month-over-month basis, prices rose across all three San Francisco price tiers.
S&P/Case-Shiller Index San Francisco Price Tiers: February 2013 (www.SocketSite.com)
The bottom third (under $384,759 at the time of acquisition) gained 0.6% from January to February (up 21.6% YOY); the middle third gained 1.8% from January to February (up 18.8% YOY); and the top third (over $677,427 at the time of acquisition) gained 0.6% from January to February, up 12.9% year-over-year versus up 10.8% in January.
According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA are back to February 2001 levels (52% below an August 2006 peak); the middle third is back to July 2003 levels (32% below a May 2006 peak); and the top third is back to May 2004 levels, 20% below an August 2007 peak.
Condo values in the San Francisco MSA jumped 2.3% from January to February 2013 and are up 28.1% year-over-year but remain 21.7% below a December 2005 peak.
S&P/Case-Shiller Condo Price Changes: February 2013 (www.SocketSite.com)
Our standard SocketSite S&P/Case-Shiller footnote: The S&P/Case-Shiller home price indices include San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA) and are imperfect in factoring out changes in property values due to improvements versus appreciation (although they try their best).
S&P/Case-Shiller: Home Prices Rise in February 2013 [Standard & Poor’s]
Following A Strong 2012, SF Home Prices Moderate Entering 2013 [SocketSite]
Single-Family Housing Starts Slip But Multi-Family Starts Surge [SocketSite]

Comments from Plugged-In Readers

  1. Posted by Pablo

    Does anyone know the change in the average 30 year fixed mortgage rate over the past 12 months? how much (if any) is this contributing to the price increase?

  2. Posted by no_ vally

    I’d love for some enterprising quant person to take the CS data and actually apply it to the real San Francisco housing market. Whenever we get a CS update I look at the metrics and think “really, the bottom third is Single Family Homes that sold for under $384,759? Cmon, I honestly don’t think that species even exists in the city of SF.” And the cut off of $677,427 for the second third also seems like a rare SFH transaction in today’s market. Essentially it leaves what feels like 80% of all sales grouped into the top third.
    I’d personally love to see the thirds broken out based on actual SFH sales data, where I’d guess (leaving out D10) the bottom third is sales <$700k, middle third up to $1.2mm, top third above that. Anyone have the time and resources to do a real analysis?
    [Editor’s Note: Keep in mind that the Case-Shiller price tiers aren’t based on the current value of homes in the market, but rather the cost basis for the home sale pairs in the market that are analyzed. In other words, a home that was purchased for $650,000 twenty years ago and just sold for $2 million today would actually be part of in the middle tier, not the top.]

  3. Posted by jondojendo

    how could prices still be 32% below the peak? it doesn’t make any sense.

  4. Posted by The Milkshake of Despair

    “In other words, a home that was purchased for $650,000 twenty years ago and just sold for $2 million today would actually be part of in the middle tier, not the top.”
    Which seems completely whacked to me. Why not use the more recent sales price to categorize homes into tiers? That will homogenize the groups a lot better.
    The reason cannot be technical: it is just as easy to group by most recent sale than what is done now. So what is the explanation for this aspect of the C-S methodology?

  5. Posted by REpornaddict

    “how could prices still be 32% below the peak? it doesn’t make any sense.”
    Beacuse think “San Francisco” not San Francisco. Heavy weighting towards Contra Costa etc. I know people in East Bay who are still underwater, were never able to refinance to take advantage of lower interest rates etc etc

  6. Posted by badlydrawnbear

    how could prices still be 32% below the peak? it doesn’t make any sense.
    Because the % increase/decrease is relative to the starting point.
    A fall of 50% from 100 = 50 and an increase of 50% from 50 = 75 (still 25% below the peak).

  7. Posted by Rillion

    I know people that are still underwater inside the city limits of San Francisco.

  8. Posted by Brahma (incensed renter)

    REpornaddict: I realize that there are in generla more lower priced homes in Contra Costa than in S.F., but why would Case-Shiller heavily weight Contra Costa?
    If anything, I’d suppose that more properties change hands on an apples-to-apples basis, and therefore be included in the Case-Shiller pool, in San Francisco than in outlying East Bay areas.

  9. Posted by REpornaddict

    Brahma – CoCo has around 3 times the number of sales that SF has each month, so its price changes will be heavier weighed in the SF MSA index.

  10. Posted by Gee Ess

    I too am having a hard time reconciling the data with anecdotal evidence on the ground. The prices I’m seeing SFHs going for today in my neighborhood (Potrero Hill) I’d estimate are about 0-5% below peak. It’s almost nuts. This also must be one of the lowest volume neighborhoods for SFHs though (except maybe Mission Dolores? or SOMA which has virtually zero.)
    Yes, this neighborhood is a small part of the overall market. But there are many other “desirable” neighborhoods like it. It does make we wish we had some finer-grained metrics. Some people like to argue that no part of SF is “immune” to market problems. I agree that downturns catch up with everyone, but the degree of suffering can vary ALOT, and that’s very meaningful. Better data would help clarify the situation and settle such silly quibbles about whether being in “real SF” matters.

  11. Posted by hangemhi

    How is it news that Case Shiller has virtually nothing to do with the City of SF? See the Beacon story a few down from this one for how ridiculous it is to even bother to look at Case-Shiller. I mean the friggin Beacon is back. So are crappy condos in horrible SOMA alley ways. Plus, Case-Shiller data is months old…. these are February closings, which means they were actually “sold” (went into contract) at least 30 days prior so this is really a picture of what happened in December and January and here we are in May IN THE BAY AREA – NOT IN THE CITY OF SF.
    If this were a blog about Bay Area (SF MSA) real estate the constant Case Shiller updating would make sense, but it is completely useless for the City of SF analysis

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