5555 Eastlake Blvd.
Carson City, NV
Offered at $4,495,000
For more information about this property or a referral to other areas of Northern California, please contact me.
5555 Eastlake Blvd.
Carson City, NV
Offered at $4,495,000
For more information about this property or a referral to other areas of Northern California, please contact me.
Across the Bay Area, how many listings sell without price reductions, how quickly do they sell, and at what percentage of asking price? What role does employment play in the real estate market? Which are the biggest and smallest county markets, and how do prices and rents compare?
The white-hot – some would say overheated – core of the Bay Area homes market is San Francisco and Silicon Valley, and the heat radiates out from there, diminishing as one gets further away. This core is defined by the incredible strength of the economy, much of it supercharged by the high-tech boom. However, there are also cultural and lifestyle factors, as well as what might be called the creativity/innovation-cluster effect, all of which have almost gravitational attractions. Indeed, San Francisco is almost a perfect example of the “super city” concept, drawing in people from all over the country and the world like a giant magnet.
Because it’s close and a (relatively) easy commute to these areas, and so affordable by comparison, Alameda County (which includes Oakland) is also crazy hot. Marin has a strong market but is less feverish, firstly because getting to Silicon Valley isn’t as easy – one has to fight one’s way across the whole city to get to Highways 101 and 280 south – secondly, because it’s a very wealthy and expensive county, so it doesn’t offer quite the attraction of big home price discounts, and perhaps thirdly, because Marin has the highest median age in the Bay Area (45 years), and much of the high-tech employment boom is characterized by (pre-family forming) youth who prefer a more urban environment.
As one gets further north, east and south of the inner core, the markets become less overheated: It’s not that these markets are weak – in fact, some are quite hot and they’ve all been strengthening for the last 3 years. It’s simply that they’re not characterized by a feeding frenzy of almost overwhelming demand meeting limited inventory. Except for sellers eager to maximize their homes’ sales prices, that’s not necessarily a bad thing.
It should be noted that many of the charts below reflect February sales data. Generally speaking, Bay Area markets have become significantly hotter as the calendar gets deeper into prime spring selling season.
Most of these charts speak for themselves, so we’ve kept commentary to a minimum.
As an illustration of perhaps the Bay Area’s most important market dynamic, this chart below delineates new job creation over the past 6 years. In San Francisco, for example, there are over 95,000 more employed residents than in 2009, and according to the San Francisco Business Times (3/6/15), there are currently 8600 unfilled software engineer positions in the city. During the same 6-year period, approximately 10,000 new housing units were built in the city. That ratio of new employment to new housing equals a desperately competitive housing market.
Other factors play important roles in the Bay Area markets – such as affluence and education levels – and many of these are assessed on a county by county basis in our 2014 report on San Francisco Bay Area Demographics.
And updated maps of comparative home values around the Bay Area can be found here:Bay Area Home Price Maps
1131 Fallen Leaf Rd
South Lake Tahoe, 96150
Offered at $7,995,000
For more information about this property or a referral to other areas of Northern California, please contact me.
2648 Comistas Drive
Offered at $1,550,000
Overbidding & Inventory; Bay Area Home Price Map; Renting vs. Buying;
Different Markets = Different Bubbles, Crashes & Recoveries
Preliminary statistics and, even more so, indications on the ground in the current hurly burly of deal-making are sending strong signals of another very competitive real estate market in San Francisco as we approach spring. If it continues to develop as it’s looking right now, this would make the 4th intense spring season since the market recovery began in early 2012.
Once again, buyer demand has surged early in the new year without a corresponding increase in listing inventory: High demand meets low supply generates competitive bidding – sometimes fiercely so – and upward pressure on home prices. This doesn’t mean every listing is selling over asking price or even selling at all – even in a red hot market, 20% – 30% of homes are price reduced before selling or withdrawn from the market without a sale taking place (usually due to overpricing). There are also hotter and cooler pockets within the market: Right now, more affordable homes – for example, condos under $1 million – appear to be in particularly high demand.
Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier, i.e. they are a month or so behind what’s actually occurring in the market as buyers and sellers make deals. Sales volume in January and February was down 20% year over year, reflecting a market that pretty much shut down in the last two weeks in December, and then started the year with extremely low inventory.
Overbidding List Prices
This chart above illustrates seasonal trends in competitive bidding, which underlies the phenomenon of homes selling for over asking price. For the last few years, the average percentage of sales price to list price has been peaking in spring. But already in February, prices averaged a whopping 8% above asking – very few other markets in the country are seeing anything similar. Drilling down by property type, SF house sales in February averaged 12% over asking, condos averaged 7% over, and 2-4 unit buildings 2%. Houses are becoming a smaller and smaller percentage of city home sales (since virtually no new ones are being built), which has generally made them the most competitive market segment.
In previous years, the percentage over asking has peaked in May, reflecting offers negotiated in late March, April and early May.
Seasonality in the Bay Area often has more to do with summer and winter holidays than the actual weather since, unlike back east, January and February often look more like spring here. New listings and overall inventory bottom out in December, and then slowly rise in the new year. What is super-charging the market is that buyers woke up after the holidays and jumped back in the market much earlier than sellers have put homes up for sale in quantity. For the past 3 years, this unbalanced dynamic between the high pressure of buyer demand pushing against an insufficient supply of listings continued through spring, causing dramatic home-price increases, until the market slowed during the summer. We shall soon see if prices can jump higher once again in coming months.
Days on Market before Acceptance of Offer
Months Supply of Inventory
The greater the demand, the faster listings go into contract (i.e. accept offers), and the lower the average days on market (DOM) and months supply of inventory (MSI).Both these statistics are currently in deep “seller’s market” territory. Of course, this could change dramatically if we get a sudden tsunami of new listings or if a large, negative economic event happens, but right now, we don’t have any reason to expect either to occur in the next few months.
As points of comparison, the national average days-on-market is more than twice that of San Francisco’s (approximately 69 days vs. 30), and the national MSI figure is almost 3 times higher than the city’s (approximately 4.7 months of inventory vs. 1.6). Many new listings in San Francisco are going into contract within 7 to 14 days of coming on market, as eager buyers swarm over them.
Bay Area Median House Prices
This map gives a very general idea of comparative home values around the Bay Area. Remember that median prices will often disguise enormous variety in the underlying individual home sales.
We’ve also updated our SF neighborhood map for house and condo prices, which can be found online here: San Francisco Median Home Price Map
Renting vs. Buying in San Francisco
Someone moving to or within San Francisco basically has 2 choices: Renting at market rate or buying at market rate. And rents have gone up so much locally that after accounting for multiple tax benefits, low interest rates, principal loan-balance pay-down (which adds to home equity) and estimated long-term appreciation, buying often looks like the financially attractive course. Above is one chart of a much more detailed analysis comparing the cost of renting a 2-bedroom San Francisco apartment at the current median asking rent, with the monthly cost of buying an SF home at the current median sales price after adjusting for tax deductions and principal pay-down.As seen above, the net monthly cost of buying can be less renting.
There are many personal and monetary issues that pertain to this decision and our analysis is based on a number of financial assumptions – interest, inflation, appreciation and tax rates; downpayment amount; maintenance and insurance costs – that you may not agree with or might not apply to you. You can review our full analysis and also perform your own calculations here: Renting vs. Buying in San Francisco
Different Markets, Bubbles, Crashes & Recoveries*
The real estate market is often spoken about as if it was a single monolithic entity performing in a consistent way – but nothing could be further from the truth. Markets vary enormously between states, cities, neighborhoods, property types and price segments. The S&P Case-Shiller Index looks at the Bay Area market* by breaking all house sales into 3 price segments – low, mid and high price tiers – each containing one third of the total number of sales.The exact price range of each tier changes as the market appreciates or depreciates, or more sales occur in one price range than another: Right now, the “high-price tier” starts at $872,000. In February of 2012, the high tier started at a threshold of $537,000.
Breaking down the market by price segment is a vast over-simplification – there are many other factors at play – but generally speaking, the lower the price range, the more the housing segment was impacted by subprime/ predatory lending in 2003 – 2006. In turn, that caused the larger price bubble, and then the bigger crash as the foreclosure/ distressed-property crisis took hold.
Most Bay Area counties are dominated by homes in 2 price tiers, low and mid, or mid and high, but there are pockets of homes in all tiers within most counties. The numbers in the 3 charts below all relate to a January 2000 value designated as 100. Thus a reading of 199 indicates a home price 99% above that of January 2000.
Bay Area Low-Price-Tier Houses – Currently under $542,000
The low-price third of sales was massively impacted by subprime lending – people buying homes they couldn’t actually afford. It experienced an insane appreciation rate of 170% from 2000 to 2006, creating an enormous bubble. It then crashed by a catastrophic 60% due to the distressed-home phenomenon. As distressed sales dwindled, the recovery since 2012 has been spectacular, up 81%, but prices are still well below peak values and may not re-attain them for years. (If prices go down 60%, they must go back up 148% to get back to where they started.) Many homes in Alameda, Contra Costa, Napa, Sonoma and Solano* counties fall into this market segment.
Interestingly, this price segment was not impacted by the popping of the dot-com bubble, perhaps because these homeowners were less likely to be speculating in the technology stock market.
Bay Area Mid-Price Tier Houses – Currently $542,000 to $872,000
The mid-price segment was less hammered by subprime, but still significantly impacted. Its appreciation rate was 119% from 2000 to 2006 and its market then crashed about 42% before starting its recovery in 2012. This segment is now up 55% from the bottom and close to its 2006 peak value. Many homes in northern Marin, the southern border neighborhoods of San Francisco, northern San Mateo and various areas of the other counties fall into this price segment.
Bay Area High-Price Tier Houses – Currently over $872,000
Most of the houses in San Francisco, San Mateo and southern Marin, as well as affluent areas in other counties, fall into the high-price third of Bay Area sales, which was not deeply affected by subprime lending and foreclosure sales. Though its bubble and crash seemed dramatic enough to those experiencing them, they were much smaller: It appreciated 84% from 2000 to 2006, including a hiccup drop in 2001 after the popping of the dot-com bubble, and then fell about 25% (compared to 60% for the low-price tier). Its strong recovery since 2012, up about 44%, has now put this segment approximately 8% above its previous peak value in 2006.
Many neighborhoods in San Francisco, Marin and San Mateo would easily qualify for an “ultra-high” price segment, and it remains generally true that the higher the price, the smaller the crash. For example, most of the more affluent neighborhoods in the city peaked in value in 2007 or early 2008, then dropped 15% to 20% after the 2008 financial-markets crash.Due to the high-tech boom, many areas of San Francisco and San Mateo have significantly outperformed their price-tier in recent years.
Though the price tiers had radically different bubbles, crashes and recoveries, all 3 are now almost exactly the same in relation to the year 2000, showing appreciation of 97% to 99% over the past 15 years. This suggests equilibrium is once again being achieved between them.
* Technically the Case-Shiller San Francisco Metropolitan Statistical Area is comprised of San Francisco, Marin, San Mateo, Alameda and Contra Costa counties, but we believe its general trends apply to other Bay Area counties as well.
San Francisco Combined House & Condo Median Sales Price
Selected U.S. City Median Rents
Chart courtesy of California Association of Realtors
11769 Tundra Drive
Truckee, NV 96161
Offered at $1,080,000
6601 Elverton Drive
Oakland, CA 94611
Offered at $1,875,000
“Renting can make sense as a lifestyle choice or because of income constraints.
As a means to building wealth, however, there is no practical substitute for homeownership.”
New York Times, “Homeownership & Affluence,” 11/30/14 op-ed article
Please Note: Rent vs. buy calculations can be performed a wide variety of ways, and results will depend on your own financial circumstances and economic projections, which you should review with your accountant. The below calculations represent simply one scenario.
This rent vs. buy analysis compares the monthly housing cost of buying a San Francisco home at the Q4 2014 median sales price of $1,050,000 – adjusting for tax deductions and principal pay-down of the mortgage – with the cost of renting a San Francisco 2-bedroom apartment at the Q4 2014 median asking rent of approximately $4500/month (per Rentbits.com). It also attempts to compare, while adjusting for inflation and other factors, projected asset appreciation between investing the downpayment monies (instead of buying a home) and using them in one’s home purchase.
Assumptions: 20% down-payment ($210,000); 30-year fixed-rate loan at an APR of 4%; and closing costs; property taxes; ongoing insurance and maintenance costs; annual inflation (2%), outside investment returns (3% after taxes) and home appreciation rates (5%) – all at what seem to us to be reasonable projections. We’ve used a combined income tax rate of 25% for the mortgage interest and property tax deduction. But especially when projecting variable economic factors over long periods of time, many of these figures will simply be best guesstimates. You may perform calculations based upon your own specific financial situation and future projections, and also see the definitions for all the terms used in this analysis here:
The New York Times also has a rent vs. buy calculator:
If you wished to perform this analysis comparing a 1-bedroom apartment rental with a 1-bedroom condo purchase, the median San Francisco asking rent would be approximately $3300 to $3400 per month, and the median purchase price in Q4 2014 was about $740,000. Interestingly, the ratio of median asking rent to median purchase price is almost exactly the same as in the scenario used above. If you currently have an SF apartment under rent control, you can still use the calculator, plugging in your current rent – annual increases in rents allowed under SF rent control are typically about 60% of the CPI inflation rate.
Other articles you might find interesting:
The Case-Shiller Index for the San Francisco Metro Area covers the house markets of 5 Bay Area counties, divided into 3 price tiers, each constituting one third of unit sales. Most of the San Francisco’s and Marin’s house sales are in the “high price tier”, so that is where we focus most of our attention.” The Index is published 2 months after the month in question and reflects a 3-month rolling average, so it will always reflect the market of some months ago. The Index for December was released on the last Tuesday of February.
The 5 counties in our Case-Shiller Metro Statistical Area are San Francisco, Marin, San Mateo, Alameda and Contra Costa. Needless to say, there are many different real estate markets found in such a broad region, and it’s probably fair to say that the city of San Francisco’s market has generally out-performed the general metro-area market.
The first two charts illustrate the price recovery of the Bay Area high-price-tier home market over the past year and since 2012 began, when the market recovery really started in earnest. In 2012, 2013 and 2014, home prices surged in the spring and then plateaued in the summer-autumn. The surge in prices that occurred in spring of 2013 was particularly dramatic, reflecting a frenzied market of huge buyer demand, historically low interest rates, increasing consumer confidence and extremely low inventory. In San Francisco itself, it was further exacerbated by an expanding population and the high-tech-fueled explosion of new wealth. The market then calmed down somewhat in the second half of 2013, but then heated up yet again in early 2014. In fact, the spring 2014 market was, if anything, even more ferocious than the previous year (at least in San Francisco).
After the feverish spring market of 2014, home prices in the high-price tier flattened and then ticked down a little, while more affordable home segments continued to tick up. It’s not unusual for the market to cool off and plateau during the summer months. The Case-Shiller Index reports released at the end of December, January and February reflect the autumn selling season, which starts after Labor Day. (Note that transactions negotiatedin September generally start closing in October.) According to the Index, Bay Area home prices ticked up in the 3 months at the end of 2014 by about 1%, plus or minus depending on price tier — i.e. prices remained basically flat. Note that small monthly fluctuations are not particularly meaningful until substantiated over a longer term.
We are currently waiting to see what the spring market of 2015 will be like, but initial indications point to another feverish market of extremely low supply against highly competitive buyer demand.
For more regarding how seasonality affects real estate: Seasonality & the Real Estate Market
Case-Shiller Index numbers all reflect home prices as compared to the home price of January 2000, which has been designated with a value of 100. Thus, a reading of 199 signifies home prices 99% above those of January 2000.
Short-Term Trends: 12 Months & Since Market Recovery Began in 2012
Longer-Term Trends & Cycles
The third and fourths charts below reflect what has occurred in the longer term (for the high-price tier that applies best to San Francisco and Marin counties), showing the cycle of recession, recovery, bubble, decline/recession since 1996, and since 1988. Note that, past cycle changes will always look smaller than more recent cycles because the prices are so much higher now; if the chart reflected only percentage changes between points, the difference in the scale of cycles would not look so dramatic.
Different Bubbles, Crashes & Recoveries
This next chart compares the 3 different price tiers since 2000. The low-price-tier’s bubble was much more inflated, fantastically inflated, by the subprime lending fiasco – an absurd 170% appreciation over 6 years – which led to a much greater crash (foreclosure crisis) than the other two price tiers. All 3 tiers have been undergoing dramatic recoveries, but because the bubbles of the low and middle tiers were greater, their recoveries leave them well below their artificially inflated peak values of 2006. It may be a long time before the low-price-tier of houses regains its previous peak values. The high-price-tier, with a much smaller bubble, and little affected by distressed property sales, has now exceeded its previous peak values of 2007. Most neighborhoods in the city of San Francisco itself have surpassed previous peak values by substantial margins.
It’s interesting to note that despite the different scales of their bubbles, crashes and recoveries, all three price tiers now have similar overall appreciation rates when compared to year 2000. As of October 2014 (not shown below), this range has narrowed to 98% to 99%. This suggests an equilibrium is being achieved across the general real estate market.
Different counties, cities and neighborhoods in the Bay Area are dominated by different price tiers. Bay Area counties such as Alameda, Contra Costa, Napa, Sonoma and Solano have large percentages of their markets dominated by low-price tier homes (though all tiers are represented to greater or lesser degrees). San Francisco, Marin, San Mateo and Santa Clara counties are generally mid and high-price tier markets, and sometimes very high priced indeed. Generally speaking, the higher the price, the smaller the bubble and crash, and the greater the recovery as compared to previous peak values.
Remember that if a price drops by 50%, then it must go up by 100% to make up the loss: loss percentages and gain percentages are not created equal.
The two “2014” readings for each tier in the chart below, refer to January 2014 and May 2014. We will update this chart in late March 2015 when the January 2015 Index is released.
And this chart compares home price appreciation since the recovery began in 2012 for the low-price and high-price tiers. As one can see the two tiers have come together in 2014.
San Francisco County
And then looking just at the city of San Francisco itself, which has, generally speaking, among the highest home prices in the 5-county metro area (and the country): many of its neighborhoods are now blowing past previous peak values. Note that this chart has more recent price appreciation data than available in the Case-Shiller Indices. This chart shows both house and condo values, while the C-S charts used above are for house sales only. Median prices are affected by other factors besides changes in values, including seasonality, new constructions, inventory available to purchase, and significant changes in the distressed and luxury home segments. Short-term fluctuations are less meaningful than longer term trends.
And this chart for the Noe and Eureka Valleys neighborhoods of San Francisco shows the explosive recovery seen in many of the city’s neighborhoods, pushing home values far above those of 2007. San Francisco, San Mateo and Santa Clara counties are most effected by the high-tech wealth effect on home prices. Noe and Eureka Valleys are particularly prized by this buyer segment and the effect on prices has been astonishing.
620 Gravatt Drive
Berkeley, CA 94705
Offered at $1,750,000
Many more condos are sold in the South Beach/ Yerba Buena/ South of Market (SoMa)/ Mission Bay neighborhoods of San Francisco than any other area of the city, and since new construction is surging here, that trajectory will only continue. The market here is quite hot pursuant to the same trends as the city as a whole: high demand, low inventory, rapidly appreciating prices. The great majority of condos that are sold have been selling without any price reductions and averaging a sales price over asking price.
Since opening our doors in 2004, Paragon has transacted over $800 million in business in these neighborhoods, acting as agent in over 950 sales and leases.
South of Market (SoMa District) Condo Values
Luxury Condo Sales in Greater SoMa-South Beach Area
Sales of luxury condos in this area have been soaring and often sell for among the highest dollar per square values in the city, especially upper units with spectacular views in buildings such as the Millennium and Four Seasons.
San Francisco Luxury Condo Sales, $1,500,000 & Above
As one can see in this chart, the greater South Beach-SoMa area has a large and growing footprint in the luxury condo market segment in San Francisco.
Sales reported to MLS 6/1/14 – 2/15/15. When identified, outlier sales that distort the average $/sq.ft. value were deleted. Below Market Rate (BMR) units were excluded from this analysis. Median and average statistics often conceal wide varieties of values in the underlying individual sales – and how they apply to any particular property is unknown without a specific comparative market analysis. Data from sources deemed reliable, but may contain errors and subject to revision.
* When only a small number of sales report square footage, the average dollar per square foot value is less reliable.
3999 Beach Road
South Lake Tahoe, 96150
Offered at $2,895,000
These charts show the breakdown of San Francisco home sales as reported to the city’s Multiple Listing Service for periods of 6 to 8 months ending January 31, 2015. We picked this period because, generally speaking prices stabilized after the frenzy and rapid price appreciation of the spring 2014 market. These analyses are sorted by city districts and neighborhoods by the number of transactions in different sales-price segments. Note that median sales prices will change every time the time period or neighborhoods included in an analysis change.
The first chart below the San Francisco neighborhood map is an overview for the entire city.
These 2 charts below track San Francisco luxury home sales by price range and neighborhood for the full year of 2014. Rather arbitrarily, we designate the luxury segment as those condos, co-ops and TICs selling for $1,500,00 or more, and those houses selling for $2,000,000 and above. Considering the appreciation of the market in recent years, we may have to adjust those thresholds soon.
Incline Village, 89451
Offered at $1,799,000
Median Sales Prices, Neighborhood Values, Seasonality & Demand,
Condo Construction, New SF “Airbnb” Law, Appreciation vs. Inflation
February 2015, Paragon Real Estate Group
The market just begins to wake up in January, so its statistics are not particularly illuminating. The last 3 springs in San Francisco saw frenzied markets, which took its home values to new heights. While waiting to see what develops in 2015, this report will drill down on other angles of our distinctive real estate market.
Note: On February 1st, San Francisco’s new short-term residential rental ordinance, the so-called “Airbnb law,” went into effect. In order to legally rent out your home for less than 30 days, there are a number of requirements pertaining to registration, insurance, advertising and taxes, as well as limitations on such rentals. Information and forms can be found here: SF Planning Department.
San Francisco Median Sales Prices, 1993 – 2014
Unit Sales Trends by Property Type
The first chart above graphs median sales prices by year. Looking only at the 4th quarter of 2014, house and condo median prices climbed to all-time highs of $1,125,000 and $999,250 respectively, and the TIC median price increased to $829,500.
The second chart above illustrates sales volume by property type. Houses turn over much less often than condos or TICs – i.e. house owners generally live in their homes longer before selling – and with virtually no new houses being built in the city, house sales as a percentage of total sales are declining, but this has also made them the market’s highest-demand, most competitive segment. Condos now dominate SF home sales and will continue to do so with the many new-condo projects being built. TIC sales are down almost 60% from 2007, probably due to financing conditions and changes in condo conversion and tenant eviction laws. The number of listings fell last year putting additional pressure on the market.
San Francisco New Construction & Population Trends since 1940
After reading our recent reports on new development and factors behind the market, one of our clients suggested graphing out the quantity of new housing built in the city over time. Based on census figures, the resulting (very approximate) chart illustrates the decline in new-home construction in the 1980’s and 1990’s, which helped exacerbate our current housing crunch.
Another note: the housing “units” built in 1940-1950 were not only much more numerous, but were typically 2-3 bedroom houses, while since 1980, the units built have generally been 1-2 bedroom condos and apartments (which makes sense with our changing demographics – more singles and couples, fewer families – but obviously hold fewer people per unit). And now a big topic in development is building urban “micro-units” of 250 to 350 square feet.
Our chart on SF population growth follows as a counterpoint.
Condo Values & Sizes by Era of Construction
A previous condo construction boom ran from the end of the 1990’s until 2008, when it crashed for 4 years – and now we’re in the midst of a new boom.Condos built in the last 15 years are selling at higher dollar per square foot values, but average unit sizes have also been getting smaller – and all things being equal (they rarely are), the smaller the unit the higher the per square foot value. Of course, there are other considerations besides size that affect value: quality and graciousness of construction (i.e. Marina-style and Edwardian flats), views (most likely in high-rises), amenities (security, gyms, outdoor space, etc.) and neighborhood ambiance (Russian Hill vs. Noe Valley vs. SoMa). The average $/sq.ft. for new condos now exceeds $1000 in the city, and, according to estimates, at the new, luxury, South Beach development, Lumina, it is now running $1400 to $1500/sq.ft. on units going into contract.
As increasing quantities of “luxury” condos come on market in coming years, it will be interesting to see how the market reacts and absorbs the new inventory.
Home Appreciation vs. Inflation
Since 1988, home price appreciation has hugely outpaced CPI inflation, though as seen below, the difference can swing dramatically depending on the exact point within a financial cycle.On a cash investment basis, if you had put $100,000 down on a $500,000 home purchase with a 30-year loan in 1988, by the end of 2014, per the Case-Shiller Index, your home would be worth approximately $1,900,000. After deducting 7% closing costs and paying off the remaining loan balance, your $100,000 down-payment turned into approximately $1.65 million in proceeds (if you didn’t continually refinance out your growing equity to buy new toys).
This is a very simplified calculation of a complex financial scenario that includes leverage, financing terms and interest rates, inflation, appreciation, multiple tax benefits and housing costs – you should talk to your accountant – but it still illustrates why a recent New York Times op-ed piece (11/30/14, “Homeownership & Wealth Creation”) said, “Renting can make sense as a lifestyle choice or because of income constraints. As a means to building wealth, however, there is no practical substitute for homeownership.”
San Francisco Neighborhood Values
We just updated our semi-annual breakdown of SF home values by property type, bedroom count and neighborhood. Below are the tables for 3-bedroom houses and 2-bedroom condos while the full report can be found here. If you want data on a neighborhood not included, please call or email.
Seasonality & Demand
This graph from our updated report on market seasonality measures the ebb and flow of buyer demand as compared to the supply of homes available to purchase. For the last 3 years, spring has been the highest demand season of the market, leading to significant home price appreciation.
Bay Area Rent Appreciation
This chart is from our January Commercial Brokerage report on Bay Area investment real estate. The full report has further detail on average rent rates and trends, and other apartment building financials.
These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and how they apply to any specific property is unknown without a tailored comparative market analysis. All numbers should be considered approximate. Please contact us with any questions or concerns.