According to the S&P/Case-Shiller Home Price Index, single-family home values in the San Francisco MSA ticked up a nominal 0.2% from November to December 2013, gaining a total of 0.5% in the fourth quarter of the year. Up 22.6% on a year-over-year basis, the San Francisco Index remains 17.3% below a May 2006 peak.

For the broader 10-City composite, home values were unchanged from November to December and remain up 13.6% year-over-year. At the same time, S&P’s summary headline has changed from “Winter Shows No Signs of Cooling in Home Prices” to “Home Prices Lose Momentum” in the course of a month.

“The S&P/Case-Shiller Home Price Index ended its best year since 2005,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly Composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum.

After 26 months of consecutive gains, Phoenix posted -0.3% for the month of December, its largest decline since March 2011. Phoenix once led the recovery from the bottom in 2012, but Las Vegas, Los Angeles and San Francisco were the top three performing cities of 2013 with gains of over 20%. The Sun Belt, with the exception of Dallas, Miami and Tampa, saw lower annual rates in December when compared to their November numbers. The six cities with the highest year-over-year figures saw their rates decline (Las Vegas, San Francisco, Los Angeles, Atlanta, San Diego and Detroit) and most cities ranked at the bottom improved (Denver, Washington and New York) – Charlotte and Cleveland were the two exceptions.”

While home values ticked up for the top and bottom thirds of the San Francisco market, they slipped again for the middle, the second monthly decline since February of 2012.

S&P/Case-Shiller Index San Francisco Price Tiers: December 2013 (

The bottom third (under $492,740 at the time of acquisition) gained 0.9% from November to December (up 33.5% YOY); the middle third dropped 0.5% from November to December (up 24.6% YOY); and the top third (over $793,393 at the time of acquisition) gained 0.4% from November to December, up 17.8% year-over-year.

According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA are back to July 2003 levels (37% below an August 2006 peak); the middle third is back to September 2004 levels (18% below a May 2006 peak); and the top third is just below June 2005 levels and 5% below its August 2007 peak.

Condo values in the San Francisco MSA were unchanged from November to December 2013, the third month in a row without any gains. That being said, condo values remain up 24.6% year-over-year and within 4.8% of their December 2005 peak.

S&P/Case-Shiller Condo Price Changes: December 2013 (

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).

31 thoughts on “San Francisco Home Price Appreciation Slows, Condo Values Stall”
  1. I’m so glad to read this because (a) I just closed escrow on my latest flip so the profits are in the bag and (b) the hordes of rabid house investors are outbidding me everywhere I look. A little less enthusiasm from the investor class would be a good thing.

  2. So who can explain to me what is going in Los Angeles? High housing construction, less nimbyism, no tech hipsters with lots of cash to spend, more land. Why is Los Angeles doing so well when it is so much less important than San Francisco and the Bay Area economically?

  3. “hordes of rabid house investors are outbidding me everywhere I look”
    Really? I’m beginning to hear house-flipping ads on the radio now, too.
    This reminds me almost exactly of an event in the last decade, but I can’t quite put my finger on it…

  4. “Why is Los Angeles doing so well when it is so much less important than San Francisco and the Bay Area economically?”
    Ooh, ooh, I know the answer to this one, pick me!
    Because it’s different here!

  5. LA and SF:
    – A place on the Global map that has always attracted a large inflow of talent
    – The possibility to “make it”
    – Local specialized industry with a global reach that has nicely recovered
    – Awesome climate
    Aside from the usual stereotypes going both ways, LA has more similarities with SF than differences.
    Plus, LA has only recovered 1/2 of the last bubble’s losses, when SF has fully recovered, and then some more in many areas.
    LA Haters can start flaming me now.

  6. Why so childish, Two Beers?
    Why the need to go into the vortex that is, “let’s insert a strawman synopsis of Los Angeles” confused?
    The West is doing pretty well in general, looks like. This fata is from November/December, and it’s all trending slightly up. I told you the market wasn’t slowing down a month or so ago.
    [Editor’s Note: Keep in mind the rate of appreciation has been slowing for the past nine months, 98 percent of 2013’s gains were recorded in the first nine months of the year, and sales in San Francisco proper are off to a relatively slow start in 2014.]

  7. “Why so childish, Two Beers? ”
    It’s an old, and reliable, saw that when everyone is running into a market, the market is topping out. Nothing childish about it.

  8. Not sure if this is a real top or a bubble. I got broadsided in 2002 by calling a top that only came 4 years later. I was close enough for the 2009-2010 bottom, but this cycle is a bit harder to call as we are only in the partial recovery phase for many markets.
    Some banks are coming back to subprime.
    For instance Zero Hedge has an interesting take on Wells Fargo come back into the subprime market.
    Banks need business. Low rates have helped create the 2011-2013 comeback but now that the Fed slows its involvement into MBSs rates have gone up enough to slow mortgage activity. Banks will have to do a 2-pronged approach:
    1 – attract client capital (CD rates are up, if anyone has noticed)
    2 – increase risk
    This could mean we’re in the same place as 2002. Emphasis on “could”

  9. The Joe Kennedy attribution and “it’s different here” are apples and oranges. Clearly it isn’t all that different here. Just look at the West. So why insert that mischief? It was an honest question.

  10. I hope what we’re seeing is the beginning of a sustained plateauing. The wildness of the past year has seen a lot of mistakes being made. People seem to be betting on appreciation, and that’s never good.

  11. This is true.
    It may be sticker shock, or buyers are waiting for the newly built inventory to come on line, but I’m getting lots of people coming to look at my (Condo) listings, but offers are harder to come by and I’m not getting anything above list price.

  12. I don’t know. I can’t predict the future. There are different ways of looking at things/charts, what have you. A broader view would have spring 2004 – 3q 2008 looking like a plateau, sure. Then a crash. A closer view at just those years would be prices generally increasing all the way till fall 2008, then crash. Anyway, I don’t really care for the way you write, Tipster or not. Your chief aim seems to be mischief.

  13. “I told you the market wasn’t slowing down a month or so ago.”
    “[Editor’s Note: Keep in mind the rate of appreciation has been slowing for the past nine months…]”
    “I don’t know. I can’t predict the future. ”
    Sometimes you even have trouble with the present!

  14. The market is running out of steam a bit like in 2001-2002. The reaction at the time was to encourage homeownership among a wider range of social classes. This came from the top as Alan Greenspan lauded the avent of subprime mortgages, and GWB was very giddy about the ownership society that was supposed to solve issues encountered by recent citizen / minorities.
    Now it’s the banks who have barely recovered from the crash’s aftermath of stale inventory and government fines. They need the revenue to stay ahead and the easiest way they can do that is relaxing lending rules. Success from WFC might lead other banks to throw their hats into the ring and what’s next could be a 2004-2006 bubble redux.
    If that’s the case, we have a good couple of years of market delusion with more Jimmy stories of easy money.

  15. I was commenting on the present at that time, and then the recent past when I made the comment today. Clearly. Yet somehow you are twisting even the simplest of statements. How boring.

  16. What?
    You mean the 99% of Millenials with student loans, not employed in tech, and haven’t won the startup lottery don’t have 600K to spend on that fixer upper starter home?
    I’m shocked.

  17. Student debt will be absorbed into the next wave of refis that will inevitably be coming with the mortgage market expansion.
    A 2010 graduate buys house in 2014 at price $X but has $60K in student loans. In 2016 if his house is (paper) valued at $X + $200K, the mortgage broker will make a refi that includes the student debt (and the credit car debt, and the car loan debt).
    This is how a mortgage system goes after the quick buck today and dooms itself tomorrow. I have a deep faith in people and their inability to ever learn from their previous mistakes.

  18. Well, I can predict the future. And it looks good.
    Hang on to your properties. Buy long. Real estate in SF will continue to be a good investment; there may be a few very minor blips, but guess what?
    We’re not creating more land in SF.
    We’re creating more demand. Demand keeps prices up.

  19. it is natural for markets to slow down and even experience nominal pull-backs after periods of rapid appreciation. The market needs to digest the massive price increases we have seen recently and after 6 months folks will be used to the new normal, and as long as the local economy is still humming along you could expect another leg up.

  20. @two beers
    House flipping ads on the radio? I’ll take you one further. House flipping shows are back on several TV channels. Look carefully and you’ll notice: © 2007.
    (I wish I was making this up.)

  21. Too much dumb money chasing too few deals. If this keeps up I will have to go back to doing real work for a living.

  22. “Keep in mind the rate of appreciation has been slowing for the past nine months, 98 percent of 2013’s gains were recorded in the first nine months of the year”
    That isn’t a great surprise to me though, seasonality and all that. I;d say that the index staying level through late fall and winter is actually a sign of strength, resilience etc.
    If it stays level or falls through spring then I’d agree it’s sign of stagnation, plateauing etc…

  23. In other words, the YOY increase appears to have remained very steady and around the 20-25% level for pretty much all of the year.
    That to me gives a much more accurate picture than comparing slowing signs of appreciation from spring and summer to those in December. That will always be hugely distorted by seasonality.

  24. That isn’t a great surprise to me though, seasonality and all that. I;d say that the index staying level through late fall and winter is actually a sign of strength, resilience etc.
    Seasonality is definitley in play. That being said, the rate of appreciation was increasing in last nine months of 2012 versus slowing in the last nine months of 2013 and 81 percent of 2012’s gains were recorded in the first nine months of the year versus 98 percent in 2013.
    Also note, while the year-over-year change increased by 5.5 points in the fourth quarter of 2012, it fell by 2 points in the fourth quarter of 2013, the first quarter in which the year-over-year numbers were in decline since 2011.

  25. Because spring 2012 was the beginning of the current market runup much like fall 2004 was the beginning of the runup from two markets ago. After a runup of a year or so, it stands to reason that seasonality will resume to have more effect.

  26. Yeah, I remember the psychology of early 2012. I was looking at 2-unit buildings in the 94114 in the 2nd 1/2 of 2011. Things were still taking 4 to 6 months to close at the time. Then came december and all the older inventory had been gobbled up. What happened in 2012 is nothing short of amazing:everyone who had been taking his gentle time in the 3 years past and hadn’t settled yet started panicking. That’s when the crazy overbids started to happen and it lasted for a good 18 months. You still see overbids and some level of panic today but not close to the hysteria of that time. Maybe it will come back in the spring. Twitter money is coming. WhatApp billions will start to flow. This is not over I think.

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