Midway through the Spring 2016 Selling Season - May 2016 Update

San Francisco Median Home Price Appreciation

Short-Term & Long-Term Trends

As seen in the first chart below, the combined house-condo median sales price hit a new high in April. However, the year-over-year rate of appreciation appears to be slowing, and as the second chart illustrates, so far this year, while median house prices continued to increase, condo and TIC prices have generally plateaued. 2012-2015, spring was the most dynamic, high-demand/low-supply selling season of the year.


Market Dynamics by Property Type & Price Segment
 

As mentioned in our April report, different segments of the market appear to be diverging. The below charts separate the San Francisco homes market into house and condo/ co-op/ TIC segments, then further subdivide each by 4 price ranges. The lowest, most affordable, price segments are defined by the median sales prices for the first 4 months of the year. The highest price segments (or luxury home sectors) are defined, approximately, by the top 10% of sales.

Very generally speaking, the house market has remained hotter than the condo market, which appears to have cooled to some degree (but nothing remotely approximating a “crash”), and more affordable homes are seeing significantly greater demand than luxury homes, where the pool of potential buyers is much smaller. The luxury condo market, in particular, may be being impacted by an increase in large, new, luxury condo projects arriving on market, especially in those districts where they are mostly being built. The number of resale luxury condo listings in San Francisco hit an all-time high in April.

The analyses do not include new-project condo activity unreported to MLS, which is now a significant portion of the market: Unfortunately, our access to definitive data regarding current activity in new condo sales is limited.

More on the luxury market: SF Luxury Home Market Analytics

More on the luxury market: SF Luxury Home Market Analytics


Percentage Changes in Median Sales Prices
& Average Asking Rents, 1994 to Q1 2016

The first chart tracks year-over-year changes in annual median sales prices for San Francisco houses. The year of greatest percentage appreciation was 2000 at the height of the dotcom bubble (though on a dollar appreciation basis, recent years far exceeded earlier periods). This is a generalized overview: Homes in different neighborhoods and in different price segments often saw wide variations in annual appreciation rates.

More on real estate cycles: 30+ Years of Bay Area Real Estate Cycles 

More on real estate cycles: 30+ Years of Bay Area Real Estate Cycles 

This second chart illustrates appreciation in average asking rents. Note how much rents declined after the dotcom bubble ended, while the effect of the 2008 financial markets crash was much milder. We have heard from multiple city sources that available rental inventory has significantly increased and renter demand significantly decreased in recent months, which may reflect a possible softening in new, high-tech hiring. We shall see if this begins to show up more definitively in upcoming rent and employment statistics. Or it may simply be a temporary lull in the market.

More on SF & Bay Area Rents: Rent Trends Report  Our Q1 report on the apartment building market: Bay Area Apartment Building Market

More on SF & Bay Area Rents: Rent Trends Report 

Our Q1 report on the apartment building market: Bay Area Apartment Building Market