This month, let’s dig back into the numbers and see what about the local real estate market makes us smile, makes us worry, or makes us want to lose our lunch.
“In 2018, San Francisco’s median house sales price was $1.6 million,” writes Misha at RealDataSF.com. “That’s an increase of 13 percent over the previous year.” She says the median condominium sales price rose about 5 percent to $1.21 million.
But that doesn’t necessarily tell the complete story. Overbidding “dropped dramatically for single-family homes in the last half of the year, even though it remains at high levels,” Misha writes, also citing an increase in price reductions.
HOW THEY SEE US
Are we pretty? Well, Redfin’s market report for San Francisco says the average (and let’s not get into a fight over “average” versus “median” here) home price in the city was $1.2 million, at $947 per square foot. Of more interest to me is some of the sales it cites, such as someone who paid about $1 million for a two-bedroom, one-bathroom condo, or someone who paid just a bit less than that — $950,000 — for a one-bedroom, one-and-one-half bathroom condo. Unless those condos are painted with gold leaf or are made out of dark chocolate, those prices are set to decline.
LET THE FIGHT BEGIN
Oh — but Zillow reports the median home value in San Francisco is $1.38 million, an increase of 5.8 percent over the previous 12 months. It gives the median list price per square foot as $1,058.
In his State of the State address as the newly installed governor of California, Gavin Newsom included housing as one of his priorities and put the onus on local governments to live up to their commitments to allow more housing and in particular more affordable housing.
The California Association of Realtors welcomed the governor’s comments and noted, “Last fall, California voters resoundingly rejected the expansion of rent control. Californians understand that the solution to high rents is not more rent control; it’s building more supply.”
Newsom set the tone for his first term when the state filed suit against Huntington Beach for not complying with state housing laws. According to the Los Angeles Times, Newsom is determined to override local barriers to allowing more development.
Recently, former District 6 Supervisor (and former mayoral candidate) Jane Kim told me local governments such as San Francisco only have so many tools in their toolkit to incentivize affordable housing; that falls mainly to mandating percentages of affordable units in market-rate housing (or the paying of a fee for that affordable housing to be built elsewhere). Decades ago, the federal government was actively involved in spurring development of housing. You remember those days? When there was enough housing?
WINNING BY LOSING
Think San Francisco is still the country’s hottest real estate market? For better or worse, that title is now worn by our southern neighbor, San Jose. Zillow gave top honors to San Jose in its prediction of the hottest market, citing that city’s “strong projected home value growth and the strongest job numbers.” If you’re looking to buy in San Jose, though, either be quick or look elsewhere; Zillow says after rising 10 percent last year, San Jose home values will grow 12.7 percent in 2019.
As for San Francisco, it took sixth place in the list, after San Jose, Orlando, Denver, Atlanta, and Minneapolis.
If you’ve got $10.95 million and want a view of Alcatraz and Ghirardelli Square, consider the Russian Hill home that is back on the market. Located at 898 Francisco Street, the 1914 Tudor Revival home has six bedrooms and six-and-one-half bathrooms. Just another pricey San Francisco mansion, you say? Perhaps. But here’s the reason it’s attracting attention: Actor Nicolas Cage owned the home from 2006 until 2008, according to SFGate.com, taking a $900,000 hit when he sold it during the real estate crash.
“Our ability to predict the exact moment a market will go bust isn’t very good, so you therefore need to think more about managing your risk now rather than timing your moves later. If you’ve been thinking about selling property, think sooner rather than later. If you’ve made a long-term investment and can ride out a dip in prices, don’t worry too much. If you’re flipping properties, shorten your time horizon. If you’re investing in rental property, stay away from the upper end. For an actual bubble-and-bust, I’m most worried about San Francisco itself, already heavily over-priced, and with prices up 14 percent in the past year. . . .”
—Ingo Winzer, president of Local Market Monitor, writing at Forbes.com
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