November 25, 2009

San Francisco MSA Prestige Home Index Down 15.7% Year Over Year

While September's S&P/Case-Shiller index for San Francisco showed a nominal decline for the top third of MSA properties (cost basis over $577,214) from August to September, the latest First Republic Prestige Home Index for the San Francisco MSA (the same Case-Shiller data but for properties with a cost basis of over a million) recorded a 3.8 percent drop from the second to third quarter in 2009, down 15.7 percent year over year.

As a plugged-in reader notes, the San Francisco Index is down 18.2 percent from its peak in the third quarter of 2007. Our standard footnotes with respect to the S&P/Case-Shiller index apply.

September Case-Shiller: Bottom Tiers Up But Flat At Top For SF MSA [SocketSite]
First Republic Prestige Home Index for San Francisco []

First Published: November 25, 2009 11:45 AM

Comments from "Plugged In" Readers

question about this says it uses 8 Bay area come it uses the Case-Shiller analysis/valuations where that survey only focuses on 5 of them?

Either way, 8 counties is getting a bit ridiculous - not sure how many of each county is is the survey, but seems totally inappropriate for what is going on in SF.

Posted by: REpornaddict at November 26, 2009 9:07 AM

A bit more from the website..

The First Republic Prestige Home Index™ is the first statistical model of its kind customized to measure changes in homes valued at more than $1 million in key California urban markets. Some common features of luxury homes in the Index: 3,000 to 6,000 square feet, three to six bedrooms, and three to six bathrooms. San Francisco Bay Area properties include a cross-section of luxury homes in Alamo, Atherton, Belvedere, Danville, Healdsburg, Hillsborough, Lafayette, Los Altos, Los Gatos, Mill Valley, Moraga, Orinda, Palo Alto, Piedmont, Portola Valley, Ross, St. Helena, San Francisco, Saratoga, Sonoma, Tiburon and Woodside.

So, not sure what the extra 3 counties are.

But, more importantly, this index will not track houses in SF of $1m (which is being inferred) - as that price doesn't come with 3-6k sq feet, 3+bdrms, 3+bthrms. Maybe in some of the other 7 counties, and 20+ townscities. clearly SF houses aren't going to form part of this index until much higher price points.

This index, I think, is near irrelevant for San Francisco. Give me the top tier Case-Shiller over this any day of the week!

Posted by: REpornaddict at November 26, 2009 9:27 AM

REP, you misunderstand the index. These were homes that had $1M price tags 20 years ago and are now in the $2.5M range -- so the nicest features on SS. Yes, the selections are geographically diverse, but they all chase the same kind of buyer: high net worth, large annual salaries. And, within reason, the properties are substitues for each other.

I'm sure the East Bay ones are the most hammered in the index; I know the peninsula properties are all over price wise. los altos and atherton are getting squeezed hard; palo alto mostly continues on its merry way. However, is it really that different from what we see in the city? Prime Pac Heights and Russian Hill probably peaked in 01 - like Woodside, Atherton and Hillsborough. But, back then, Noe was just getting started, not unlike Palo Alto.

In any event, the most interesting part of the index to me is the massive runnup 98-01 and how little of that sellers had to give back post dot com crash before the bubble re-inflated.

Posted by: steve at November 26, 2009 9:43 AM

Steve - not sure about your claim that all houses in the index were worth $1m in 89..
I see that 20 years ago and again in q4 94 (when it started?) the average value was basically $1m.
So if that was the average, and all homes were $1m+, then every home in the index must have had a value of exactly $1m?
I don't that thats correct.
Maybe those in the index are those where their last sale was $1m whenever that happened in the last 20 years?
Either way, I think some people are looking at this index to see how properties worth $1+ in SF are doing. I think thats wrong, either because
a) only those with over 3k sq feet, 3bdrms AND 3 bdrms are in- that excludes huge numbers of SF houses worth 7 figs.
b) as you say, the $1m probably refers to a historical price tag not the current one, although I don't agree its one that is 20 years old for all houses.
c) SF is a tinypart of the data, spread over 20+ towns and cities in 8 Bay Area counties. Thats an even bigger geographical spread than the main Case-Shiller index.

Posted by: REpornaddict at November 26, 2009 11:39 AM

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