The median price paid for a home in San Francisco measured a record $870,000 in May, up 24.1 percent year-over-year, 6.7 percent month-over-month. Keep in mind that a change in median price is a great measure of how the market’s appetite is changing and what people are buying, but it’s not a great measure of actual appreciation.
In terms of the sales volume for homes in San Francisco, according to DataQuick’s latest news release, a total of 530 properties changed hands in May, down 14 percent on both a year-over-year and month-over-month basis. That being said, we’re skeptical of DataQuick’s reported numbers for last May and peg the year-over-year sales decline at closer to 6 percent. An average of just over 600 homes have sold each May since 2004.
While the inventory level of homes and condos for sale in San Francisco remains down around 20 percent on a year-over-year basis (i.e., there’s a smaller pool of properties from which buyers can choose), listed inventory has remained relatively unchanged month-over-month (i.e., the supply of new listings is meeting the sales demand).
For the greater Bay Area, recorded sales volume in May was down 4.0% on a year-over-year basis but up 12.1% from the month prior with a recorded median sales price which was up 29.8% year-over-year, up 1.8% month-over-month.
Foreclosure resales and short sales made up about 21 percent of the Bay Area market in May, down from 24 percent in March and 42 percent a year ago.
As always, keep in mind that DataQuick reports recorded sales which not only includes activity in new developments, but contracts that were signed (“sold”) months prior but are just now closing escrow (or being recorded) and any properties that were sold “off market.”
∙ Continued Upward Trend for Bay Area Home Prices; Sales Dip [DQNews]
∙ San Francisco Home Sales Well Above Average In April [SocketSite]
The January 2012, that I personally consider as the very end of the downturn in SF, saw a median price of $602K.
Today we are at 870K.
This is a 44% bounce.
I’m loving the new look of the graph! Presumably the 835k loses much of its relevance from here on as a new Year Zero is established!.
Might be nice to add a point for the prior cycle low (seems to be around 560k in late 08/early 09).
Median price up a whopping 55% or so since then, although I suspect up to half of that may be due to mix.
Where’s tipster??
House prices are up but more importantly the quality of the housing stock is way up.
Sigh. I continue to hope that housing prices plummet. I’m not predicting, just hoping.
who wants to place bets as to when the Median passes the $1M mark?
Summer 2015?
And yes, housing stock is changing FAST. Anything sold for less than $500K is certain to be remodeled asap.
Actualy, perhaps mix isn’t as much of a factor as I;d first though. Can’t make the data go back further, but as per Redfin the median per sq ft (far from perfect itself, but touted here as being far more reliable then median.) was in the low 500s late 2011/early 2012. Now its 757 matching the 44% bounce suggested above.
Yikes.
don’t think you will find many takers on the $1m median bet. The SF market is perpetually defined by low volume of deals on low volume of inventory. even when things were more backlogged it was pretty thin comparatively speaking. the SF market remains a volatile one and is not for the faint of heart or wallet.
As I understand it the median for SFHs has crept above $1m for the first time in the last two months. Condos, are of course lower (maybe around the 800k mark?) so I think its the mix between these two going forward that will be as important as anything.
I’m not exactly a naysayer because I’m not bearish, but . . .
The 100% booming bullishness makes me a little uncomfortable. Whether it’s here or talking to the few people I know trying to buy right now, people are crazy, one-way, ready to bid more than they can, tired of losing, no supply out there, you can’t lose so lever up way over your skis unless you are paying cash and then spend more than you are comfortable with because it’s a one way elevator ride . . .
Like I said, despite the massive Fed experiment to save housing in the US, I’m not bearish, but literally it’s 100% out there that it’s a one-way boom and this is your last shot to get in.
I agree everyone is going nuts. But people over 40 know there is no such thing as a last shot to get in.
I missed my very first “last shot to get in” in 1989 (too young), but then I had my shot in 1994-2003 (loaded up) then I “missed out” on those last shots in 2005-2007 (too busy selling!), loaded up again in 2010 (I recall a few friends scratching their heads at the time).
See the cycles, don’t be afraid and don’t follow the dumb money.
The current hysteria is fun to watch . Tech money is ADHD and not too big on learning from the past. After all they’re trailblazers. Nothing can stop them…
But what amazes me with tech money is the crazy notion that someone who succeeded in his domain will automatically succeed in another.
On the record once again – this has been driven by unreal mortgage rates. Those have now ticked up considerably. About 50 bps in the last month or so. Still low, but it will dampen the enthusiasm. This will show up in the data in a few months as the locked-in rates closing now roll off.
I’m ecstatic about this as we just closed on our little condo at just over the median after buying it 15 years ago, again right at the then-median. But I also know artificial pricing when I see it.
Interest rates matter for a large section of the market, even though prices in SF are being pulled from the top by cash buyers. Every segment is affected by these cash deals and I agree this lockstep march up wouldn’t be possible with higher rates.
But there’s tons of dumb money spent nonetheless. By dumb I mean cash that people do not know what to do with. Some of it is cash outs from the usual suspects (wealthy tech), some of it is successful professionals feeling very secure about their financial future, some of it is accumulated savings from average folks who feel they’ll fall into the 3rd tier of the citizenry that is becoming more numerous by the day.
What amazes me is that no one seems to have learned anything from the previous cycles. But this time it’s different, right? I am a bit uncomfortable about all of this…
No doubt low interest rates play a huge role in recent appreciation. But what’s really going to happen if/when they go up substantially?
Certainly buyers will be able to afford less and that will put negative pressure on prices. On the other hand, in an increasing-rate environment, buyers might feel under pressure to buy sooner, as the amount they would qualify for decreases over time.
Also, inventory might be even more suppressed than it is now, as lots of owners will be very reluctant to sell, having already locked in extremely low fixed rates.
As with economics in general, there are enough variables and feedback mechanisms to make it hard to call with any certainty.
Agreed, from the above, and contrary to what many were claiming 3 or 4 years ago, SF IS different..even if it turned out not to be totally immune. It was pretty much last in, first out of the troubles though…..
Lol- I totally agree that there is bumb tech money out there. Especially in the mission, I’ve seen some crazy prices for ‘cool’ condos.
Like you I missed the 1989 buy time (too young), did well in 1994, and then again in 2005. But I’m curious, why did you sell in 2005-07? I’m assuming you had investment property (not personal residence). My approach is buy, stabilize/cashflow and never sell (or sell as minimally as possible.) I prefer pulling cash out of existing property for the next acquisition. What is your strategy?
Rates affect cash buyers too. Cash sitting in a bank at 1% makes people itchy to put it in something else with more return. If you could make 6% in a bank, you’d need lower RE prices or some other factor (higher rents, more expected appreciation ,…) to compensate.
49yo hipster,
No real strategy, just a mix of improvisation and self-control.
Yes, what I sold in 2005-2007 were rentals. They were overseas but the market was following similar patterns than the US.
My logic when I purchased in the 90s was to buy rentals that would pay for themselves in 5-7 years. When I started to get serious about this, the market had cratered (1997) and I was earning USDs while buying in Europe which was very favorable from 1998 to 2001 (USD > 1.10EUR). The places did actually pay for themselves between 5 and 10 years (very very low purchase price). By the time they were paid off (2004-2005) prices had doubled or tripled, and the EUR was now north of 1.30USD. I sold 80% of my assets and put it into Euro long term bonds that still get me 3% after taxes, which is still more than the net rent/asset I would have collected. I started getting itchy about getting back into RE in 2008 but restrained myself, having learned that markets always take you by surprise. In 2010 I took some of the EUR profits plus some local USD savings to buy in SF. One of the best decisions I ever made. I should have bought more in retrospect. But I like sleeping well at night. I just HATE debt.
Oh, i thought your rentals were in SF, not overseas. My whole strategy is predicated on owning only in SF BTW. I wish I could have purchased in 09-10, but I couldn’t access my equity. Good going if you brought then- investment property I assume? Yeah, debt is scary, but if you get a good fixed loan, and you’re cash flow positive, it’s a pretty solid asset to hang on to in SF, for appreciation and further cash flow with tenant turn over.
49yo, Selling in 2005-2007 was a tough call to make especially since I had paid off all my debts at that time. Some people just decide to never sell and it can work out pretty well. I had 90%+ of my assets in RE and felt the good days of 15%/y appreciation were too good to last much longer. Seeing a full cycle in action prior to that did help in that decision, even if every cycle is different and there’s always the risk of a bad judgement call. The market is always ready to give you the unexpected like this latest run-up.
Yes I agree the market is not really predictable. Also, unleveraged real estate as a long term hold is less attractive to me, as returns are lower. The key is having the right amount of leverage at the right time! But the thing about RE market cycles is that they tend to be long. I think we will be on an upswing for the next 2-4 years. But you also have to be prepared to operate if the market dips again. Good loan structures and cash flow help in that scenario, and of course effect you amount of leverage (as does the lending environment.) timing is everything, and your success in predicting market trends is crucial too. Fun game, that’s for sure 🙂
^ lots of fun so far, actually. I do use leverage when needed, but I try to get rid of it asap. An old habit from the Old Country. One bird in the hand… as they say.