January San Francisco Real Estate Insider
Looking back at an overview of the 2019 Bay Area market, after years of high appreciation rates, median home prices went down a bit, went up a little bit or remained unchanged as compared to 2018; depending on where you lived. San Francisco hit new quarterly price highs in spring of 2019 (amid all the IPO excitement), but ended up the year flat for houses and a little up for condos. Since there has been so much new luxury condo construction in recent years, year-over-year median price comparisons from 2016 to 2019 may not be exactly apples to apples.
Looking ahead; for 2020, economist Ken Rosen at UC Berkeley said he expects the Bay Area median price to remain basically flat, within a general range of +/- 2%. Again, this is Bay Area (not Sea Cliff, Pacific Heights, Noe Valley, etc.). I can’t predict the future, but that certainly doesn’t sound unreasonable and happily avoids the sensationalism of many other media-grabbing forecasts.
One of the big factors in San Francisco house price appreciation since 2012 has been that fewer house owners are selling (dark green portion of chart below). If demand increases, but supply drops, that puts upward pressure on prices. Overall, house prices have out-appreciated condos over the past seven years due to two factors: All the new condo construction and the fact that condo owners sell their homes more often than house owners. Both those factors increase supply to help meet increased demand.
San Francisco Home Prices by Neighborhood
Below are just two of the updated tables in our much longer analysis of home prices by property type and bedroom count for every neighborhood in the city. If you'd like the complete report, please let me know.
San Francisco Luxury Home Markets by District
The luxury market remains strong in San Francisco. $3,000,000+ homes an be found in more neighborhoods than ever. You always have the north side neighborhoods for luxury, but that market has gone father south in the City; its still going. What was the top single family sale in San Francisco? 2900 Vallejo Street sold at $27,000,000.
Economic Factors Affecting Real Estate Markets
What is in store for 2020 as it relates to San Francisco and the market?
Some of the positive factors I see for a strong market are:
Jobs: core Bay Area companies cannot hire enough highly skilled/highly educated workers to fill current openings. The demand for talent will not likely slow in the next six to nine months.
The stock market continues to perform, creating more wealth (and confidence)
Interest rates are close to historic lows
San Francisco is one of the most dynamic, innovative & technologically advanced cities in the world. We will continue draw the best and brightest and they will need a home.
Some of the concerns that could impact the real estate market:
Taxes; we have the highest taxes in the nation and neighboring / regional no-state income tax states are calling. Everyone has their own breaking point.
Out migration of both businesses and residents.
The cost of entry to San Francisco housing. ~$1.6m for your first house?
Quality of life issues in San Francisco. Although this is a regional issue, San Francisco continues to struggle with quality of life crimes (i.e. car break in’s, smash & grab theft, etc.) along with mental health and addiction issues on our streets. Hopefully, Gavin can get something done for us.