MARKET REPORT CHECK-IN
San Francisco’s residential real estate ended 2015 at or near all-time highs, according to a new market report by Paragon Real Estate Group. The median house sales price of $1,250,000 was up about $125,000 from December 2014, though it was down about $75,000 from a peak of $1,325,000 in the second quarter of 2015.
Condominium median sales prices in the city rose by roughly an equivalent amount as houses, about $130,000, according to Paragon. As of December 2015, the median condo price was $1,125,000.
For comparison, the real estate firm’s report notes that the median sales price for existing homes across California was $476,000 as of September 2015; the comparable national price was $220,000 as of October.
THE PRICE OF RENTING IN S.F.
In mid-2015, the Priceonomics.com website reported that the median monthly rental in San Francisco was $3,452 for a one-bedroom apartment, $4,400 for a two-bedroom, and $5,215 for a three-bedroom. “For some context,” the website noted, “if you make $100,000 per year, a three bedroom in San Francisco would eat up 100 percent of your post-tax salary.”
It’s not just the city. Rentjungle.com reported that “As of October 2015, average apartment rent within 10 miles of San Francisco, California, is $3,457.” It tagged one-bedrooms as being priced at $2,896 a month.
Meanwhile, Zumper.com‘s national rent report for November 2015 put San Francisco in the number one slot for the cost of a one-bedroom, which it gave as $3,670. Close behind was New York City at $3,280. San Jose was in fourth place at $2,180 and Oakland was right behind in fifth place at $2,160.
San Francisco’s rents are high because of its strong economy, constrained inventory, and high cost of development. But Harvard’s Joint Center for Housing Studies reported that there is an increase in renters due to a continued fall-off in homeownership nationwide. It noted that 2014 saw the 10th consecutive drop in homeownership, and “the downtrend continued in early 2015 with a first-quarter reading of just 63.7 percent—the lowest quarterly rate since early 1993. The 233,000 drop in homeowner households last year brought the total decline since the 2006 peak to 1.7 million.”
THE $1 BILLION BUILDING?
Millennium Partners, the developers of a 190-unit condominium skyscraper at 706 Mission Street, expect a March start to the construction of their 501-foot building, according to latest reports. The project has been delayed for years by lawsuits and other considerations.
The developers expect completion by early 2019, reports Roland Li in the San Francisco Business Times. “With units averaging 2,700 square feet and prices expected to exceed $2,000 per square foot, sales at the tower could break an average of $5 million per unit and $1 billion in total sales.” The developer’s cost would include a $5 million payment to the city for affordable housing.
The Mexican Museum is expected to fill four stories of the building, moving there from its current location in Fort Mason Center.
Developments that are believed to have impacts on city infrastructure and community facilities are assessed impact fees, and with the city undergoing considerable building of late, those fees are adding up. In early January, Mayor Ed Lee’s office reported that more than $250 million from development im-pact fees will be invested in several neighborhoods.
San Francisco Planning Director John Rahaim said, “As our neighborhoods grow with new residents and jobs, so does the need for improved public infrastructure.” The neighborhood projects expected to benefit from the impact fee funding include the 17th and Folsom Street Park, Harrison Street improvements on Rincon Hill, transportation improvements at Market Street intersections, streetscape improvements, and more.
MOVE TO DOUBLE AFFORDABLE HOUSING REQUIREMENTS
District 6 Supervisor Jane Kim is hoping to have voters in June approve a plan to double the percentage of units that market-rate housing developers must provide at below market rates. Currently, 12 percent of units need to be below market rate; Kim’s plan, if approved, would raise that to 25 percent.
Sarah Karlinsky, senior policy advisor for the nonprofit urban planning group SPUR, argued in December that such a plan could damage the consensus behind 2012’s Proposition C, which set aside $1.2 billion for affordable housing and reduced the on-site inclusionary housing requirement. “There is significant risk of destroying the coalition of market rate and affordable housing advocates that has been able to do so much good for San Francisco by replacing the loss of redevelopment funding,” Karlinsky wrote in a SPUR brief.
“Bubble 2.0 is being driven by the exact same thing that drove Housing Bubble 1.0 … unorthodox, unfundamental demand using unorthodox capital.”
—Mark Hanson, real estate analyst, quoted in Zillow Market Trends