This is a question I’ve gotten over and over again throughout my years in the business. It usually comes when the market is rising, like it currently is. Conversely, when it is flat or down I hear, “Will it ever come up to the prices we saw before?” The answers are yes and yes.
Hill & Co.’s marketing department recently took an in-depth look at the average sales price over the last 20 years for both single-family homes and condominiums citywide. Of course, some neighborhoods are seeing a faster rise in home values than others, but that’s to be expected. It’s better to look at the numbers citywide rather than focus on a specific neighborhood because that tells the real story.
What did we discover with our research? The average price for a single-family home in San Francisco at the end of the first quarter was $1,222,028. Interesting, but how does it compare to 2007, at the height of the market? Get ready for a surprise. In 2007 the average price for a single family home was $1,204,167 — below the price at the end of the first quarter of 2013! Personally I said, “wow!” Clients have been asking me how we now stand in relation to that high water mark based on all the good real estate press of late. Now we have the definitive answer. In addition, the average number of days on market in 2007 was 41 and for the first quarter in 2013 it was 40 days. Then there’s this; the average price of a single family home in 1993 was $323,112; in 2003 it was $810,000 – a figure below the lowest average price we saw during the recent drop. That low was $948,399.
So how did condominiums fare? The previous high for condominiums came in 2008, where we saw an average sale price of $848,296. At the end of the first quarter in 2013, the average sale price was $932,944. The average number of days on market in 2008 was 61, and for first quarter of 2013 it was 46 days — significantly less. In 1993 the average sales price for condominiums was $283,284 and in 2003 $505,465. The lowest average during the “down” years was $737,240. As with single-family home values, we can see that steady increase over the years.
Will these prices remain high and continue to rise? That is literally the million-dollar question. But consider this: New housing starts are still low locally and nationwide, so demand will continue to outstrip supply in the foreseeable future. Two additional factors suggest sustained appreciations. Interest rates remain very low and the Bay Area has a very healthy job market. We benefit from multiple streams of job production in contrast to most cities and regions, which typically rely on one or two industries. We have genetics, high tech, venture capital, finance, tourism, education, medical, research, sports, and entertainment sectors all contributing to the health of our economy. Add to this mix the fact that people from overseas want to buy property here, and you see why home values are consistently high in our little seven-by-seven city by the bay!
I would be happy to provide you with copies of the charts and stats that support the information I have presented here. But, most important, I would encourage you to speak with your real estate professional if you are thinking of buying or selling a home in San Francisco. It is a great time to do so. The real estate market has rebounded, and San Francisco properties have proven to be great investments over the years.