San Francisco Real Estate Market Update: December 2017

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The November San Francisco real estate market moved along pretty much as expected, with continued low inventory and the majority of properties selling above list price. Condo prices hit an all-time high of $1,230,000.

The proposed tax changes are very likely to affect future buyer behavior as they lose purchasing power with the loss of full deductibility of state income taxes and property taxes. That loss of purchasing power will likely dampen sales price increases. Stay tuned…

Single Family Homes:
November’s median sales price eased off a bit from October’s all-time high of $1,588,000, down to $1,500,000. However, prices are still up 10.7% compared to last year.

While new listings typically fall off in November, this year’s were exceptionally low at just 112, 19% fewer than last November. The number of new listings on the market year-to-date is down 5% from 2016 while the number of sales is up 4.2%. Inventory remains very low at a 1.4 months supply, the lowest level since December 2016.

The incredibly tight supply coupled with strong demand kept the level of overbids high as well, staying at 115%, much higher than last November’s 107%. 81% of single family homes sold above the list price.

Condo/Loft/TIC’s:
As mentioned above, the median sold price hit an all-time high in November. On a three-month rolling average, the median sold price is up 7.7% compared to last year.

Inventory is down 23% from October and 19% compared to November, 2016. Like single family homes, the number of Condo/Loft/TIC listings are down year-to-date compared to 2016, by 5.6%, while sales are up 3.2%.

59% of condo/loft/TIC listings sold above list price, down from 67% in October and 64% last November. The median overbid was 102%, the same as last November.

San Francisco Real Estate Market Update: November 2017

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The Swiss bank UBS published its Global Real Estate Bubble Index recently, stating that San Francisco is the most overvalued real estate market in the US. Their analysis focused on the rise of home prices in San Francisco compared to the rise in median incomes. Their report stated that home prices have risen 65% since 2012 while the average income has risen only 10%.

While they are, essentially, correct about the rise in the housing prices (taking both single family and condo prices into account), they are off on the income rise. Per the US Department of Commerce, median household income rose 42% from 2012-2016. While there is no income data out yet for 2017, we can safely assume that it has risen in 2017, given the incredibly tight job market. Therefor, income appreciation has lagged at least 40% behind housing cost appreciation, resulting in a significant drop in housing affordability.

Single Family Homes:
October’s median sales price jumped sharply to an all-time high of $1,588,000, up 13.4% above October, 2016.

The number of new listings on the market year-to-date is down 5% from 2016 while the number of sales is up 2.9%. This has caused inventory to drop 29% compared to last October and is at its lowest level, 1.9 months, since February.

The incredibly tight supply coupled with strong demand kept the level of overbids high as well, up to 115.6%, higher than last October’s 108%.

83% of single family homes sold above the list price, and the median sales price was 113% of the list price.

Condo/Loft/TIC’s:
Median sold prices are dead even with last October’s at $1,140,000. They are up 5.8% on a 3-month rolling average compared to last year.

Following a very big month in the number of condo/TIC sales, 303, inventory is down 16% from September and 26% compared to last October. Like single family homes, the number of Condo/Loft/TIC listings are down year-to-date compared to 2016, by 6.6%, while sales are up 2.7%.

The flurry of sales brought sold prices up above list prices, to 104%, the highest level since May, 2016. This compares to this September’s 101%. And, 67% sold above list price, up from 55% in September.

Southern/Central Marin County Real Estate Report October 2017

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Single Family Homes:
September’s median sales price dropped slightly from August to $1,440,000. Prices are up 5.4% year-on-year.

Inventory continues to be very low, at just 2.2 months, the result of fewer homes coming on the market while sales stay fairly constant. The number of new listings on the market year-to-date is down 7.6% from 2016 while the number of sales is up 4.2%.

The median percentage of list price received was 98%, up just slightly from August’s 97%. This is off from April’s peak of 103% and down again from July’s 99%. It is up from last September’s 97%.

Condo/Townhomes:
Because there are fewer Condo/townhouse sales, looking at a three-month rolling average for median prices makes the most sense, so that’s what we’re going to be looking at. On that basis, median sold prices are 4.7%, to $696,667, compared to September 2016’s $665,667.

In September, the median percentage of list price received was 100%, down from September, 2016’s 101%.

The number of condo/townhome listings are also down year-to-date compared to 2016, by 4.9%. And, like single family homes, sales are up over that same time frame by 9.7%. This combination has led to the exceptionally low current inventory of 1.4 months, half of what it was last year at this time.

Peninsula Real Estate Market Update – September 2017

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Summary: Heading into the Fall, the real estate market on the Peninsula remains a strong seller’s market. Most metrics are slightly off from July, but remain near record highs. Looking at rolling 3- or 6- month averages reduces the seasonal fluctuation of these values and shows that the real estate market continues to rise. The exceptionally robust local economy fuels these strong sales prices and low inventory numbers.

Details: The San Mateo County single family home median sales price dipped a bit from last month, ending at $1,370,000. The continued tight supply coupled with strong demand saw overbids up slightly from last month to an average of 108.1% over list price.

The median sale price of condos was up again in August, at $748,950. Strong demand pushed overbids up from last month, to 105.9%.

The number of new single-family home listings coming on the market was up 9.1% from July. Due to the seasonal changes in inventory levels, comparing rolling 6-month averages is more meaningful, and shows inventory down 5.2% overall compared with the same period last year. Closed sales were up 4.9% from July, and up 2.7% comparing a rolling 6- month average to last year. These factors have led to another drop in inventory levels, down to 1.0 months. It’s still a strong seller’s market.

There was a huge 29.6% drop in the number of new condos/townhomes coming on the market this August versus August 2016, though the rolling 6-month change is a more modest 8.1%. August inventory stands at 0.7 months, a decline of 56.3% compared to July 2016, and 43.2% comparing a rolling 3-month average.

Southern/Central Marin County Real Estate Report September 2017

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Single Family Homes:
August’s median sales price popped back up from July to $1,485,000. Prices are up 8.4% above August, 2016. And, since August, 2012, the median sold price in central/southern Marin has risen 68.8% from $880,000.

Inventory continues to be very low, at just 1.5 months, the result of fewer homes coming on the market while sales stay fairly constant. The number of new listings on the market year-to-date is down 12% from 2016 while the number of sales is up 2.1%.

The median percentage of list price received dropped for the fourth straight month, to 98%. This is off from April’s peak of 103% and down again from July’s 99%. It is up from last August’s 96%.

Condo/Townhomes:
Median sold prices are down 3.6%, to $675,000, compared to August 2016’s $700,000. However, the median sold price is up 66% compared to August 2012’s $407,000.

In August, median percentage of list price received was up from July’s 99% to 103%, and also ahead of last August’s 98%.

The number of condo/townhome listings are also down year-to-date compared to 2016, by 6.8%. And, like single family homes, sales are up over that same time frame by 7%. Current inventory stands at a very low 1.1 months supply.

Peninsula Real Estate Market Update – July 2017

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The San Mateo County single family homes median sales price slipped back again in June from April’s an all-time high, ending up at $1,420,000. The incredibly tight supply coupled with strong demand drove overbids to 109.8%, the highest level in the past five years.

Condos/townhomes eased off their all time high of $850,000 that they reached in May, to $820,000 in June. They sold at a median overbid of 104.6%, down from last June’s 105.5%.

The number of new single family home listings coming on the market continued its downward trend in June. New listings were down 16.7% compared to June, 2016, and are down 5.1% year-to-date. That decline in new listings, coupled with a 4.8% increase in the number of homes sold, has led to 0.8 months of inventory, the lowest level in the past five years.

While there were more new condos/townhomes coming on the market this June than last, the year-to-date number is 3.9% lower than 2016, leading to inventory remaining at its lowest level, 0.8 months, since December, 2015.

The exceptionally strong San Francisco/San Mateo/SantaClara economy continues to be behind these exceptionally strong sales price and low inventory numbers. Unemployment stands at just 3.0%, down from 2016’s 3.4%. The Bureau of Labor Statistics show growth in the number of jobs in every category they track in their latest report, comparing 2017 to June, 2016. And while the increase in the number of new jobs is slowing, jobs are still being added.

Napa Valley Real Estate Report July 2017

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In June, Napa’s median single family home sales price jumped to a new high of $712,000. That is up 7.7% from last June’s $617,000. The median sales price reflects 96% of the median original list price, the same as last June’s.

Condo/townhomes’ median sales price dipped a bit to $460,000 from May’s $495,000. Year-on-year, the median sale price was up 7.7% and on a threemonth rolling average, it is up 5.2% above the same time frame in 2016. Condo/townhomes sold at 99% of their original median list price, down from 101% in May.

The number of new single family home listings coming on the market this year continues to be down sharply from 2016. In June 2017, they were down a whopping 34% compared to June 2016. Year-to-date, they are down 16%. This sustained decline in new listings, coupled with a 4.2% increase year-to-date in the number of home sales, has led to an inventory of only 2 months.

The number of new listings in condos/townhomes on the market year-to-date, 64, is identical to 2016. Similarly, the number of sales is up by just one, to 57. At just 0.8 months, inventory remains near its lowest level on record.

This strong housing sales report mirrors the very strong jobs numbers for Napa reported this month by the Bureau of Labor Statistics, showing an unemployment rate of only 3.1%, its lowest level in the past decade. The number of jobs rose in every category of employment tracked, with the exception of one minor category.

Southern/Central Marin County Real Estate Report July 2017

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Southern/Central Marin’s single family home median sales price took a further step back in June from April’s peak, following May’s decline, ending at $1,474,000. Single family homes sold at a median bid of 100% of median list price, also down from April’s 102%, but higher than last June’s 99%.

Condos/townhomes median sales price came back up in June to $699,000, just off this year’s peak in April but still below last year’s all time high in October of $750,000. The median bid was 97%, well below last June’s 102% of list price bid.

The number of new single family home listings coming on the market this year continues to be down from 2016. In June 2017, they were 21% fewer new listings compared to June 2016. Year-to-date, they are down 8.2%. This sustained decline in new listings, coupled with a 3.6% increase year-to-date in the number of home sales, has led to an inventory of only 1.4 months.

Likewise, there were 35% fewer new condos/townhomes coming on the market this June than last. Year-to-date, there are 15% fewer new listings than in 2016. Sales are also off pace, with 13% fewer sales. Inventory stands at just 1.3 months.

The exceptionally strong San Francisco economy continues to be behind these numbers. Unemployment stands at just 3.0%, down from 2016’s 3.4%. There are more jobs filled in every category tracked by the Bureau of Labor Statistics in June, 2017 than there were in June, 2016. And while the increase in the number of new jobs is slowing, jobs are still being added.

Single Family Homes – Median Sales Price

Condo/Townhomes – Median Sales Price

Single Family Homes – Months of Inventory

Condo/Townhomes – Months of Inventory

Single Family Homes – New Listings v. Sold Listings

Condo/Townhomes – New Listings v. Sold Listings

Median Percent of Original List Price Received Single Family Homes

Median Percent of Original List Price Received Condo/Townhomes

September 2016 KWSF Market Report

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September 2016 – Further Evidence of The Shift

In last month’s Market Report newsletter, we gave our assessment that San Francisco single family home sales prices had peaked early this year and were starting a correction. We now have another price decrease from July to August and are off 9.5% from the peak in February. This represents a significant price correction in the single family home sales market.

Likewise, we predicted that hindsight would show that the condo/loft market had peaked this past June – we stand by that. August is a bit above July but down 6.5% from June. With more and more condos coming on the market, sold prices will continue to weaken.

The number of sales of single family homes was the lowest August for the past 10 years – just 186 sales. Year-to- date, the number of single family home sales is 1401, down 6.9% for the year, and the fewest sales since 2009.

And, as happened last month, the number of new-on-the-market single family home listings continues to be lower than in 2015, now off 6.2% year-to-date.

The number of months of inventory of condos/lofts city-wide has stayed above 2.6 for the past five months, reaching 2.9 in June and July, a territory it hasn’t staying in since mid- 2012.

District 9 is even higher, up 50%, with a 3 month’s supply, the highest since July, 2012. Again, months of inventory is rising in the condo/loft market because the number of units selling is less than the number of new listings coming on the market.

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Napa, the second best place to invest….

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September 2016 – Napa’s Population & Housing Growth

If you’re wondering what’s driving the housing prices up so high in Napa, look at two telling statistics:

  • Population growth
  • Housing units growth

From April, 2010, to July, 2015, the population of Napa County grew by 5,926 residents, while the number of housing units grew by just 713.

Since the household size in Napa is 2.71 people, that means 2,186 new units were required to keep up with population growth. Hence, there was a shortage of 1,473 housing units. In other words, less than a third of the number of new units required to meet population growth was actually built. This applies to both owner-occupied and rental housing.

Napa County’s Housing Element Update report shows a projection through 2040 of population growth continuing to outstrip housing growth.   The result will be housing units continuing to become more and more valuable as demand continues to outpace supply.

For both home owners and investors, this news is good. It means that Napa property values and rents will continue to increase long term and make investing in the county a very solid long-term return.

Investors should do well in all property types, from single family, to condos to multi-family. And while there will always be the cyclicality of the housing market that makes predictions for short term appreciation difficult, long-term appreciation is guaranteed barring a major unforeseen change in population growth or a complete change in the county’s land-use and/or housing development approvals policy.

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