While the pace continues to slow from the record setting gains recorded in April and May, single-family home and condo values in San Francisco continued to tick up in September.
According to the latest S&P/Case-Shiller Home Price Index, single-family home values in the San Francisco MSA rose 0.8% from August to September 2013. Up 25.7% year-over-year, the San Francisco Index remains 17.6% below a May 2006 peak.
For the broader 10-City composite (CSXR), home values gained 0.7% from August to September and are up 13.3% year-over-year but remain 20.4% below a June 2006 peak.
“Twelve cities posted double-digit annual returns. Regionally, the West continues to lead with Las Vegas gaining 29.1% year-over-year followed by San Francisco at 25.7%, Los Angeles at 21.8% and San Diego at 20.9%. San Francisco and Los Angeles showed their highest annual returns since March 2001 and December 2005. Although Chicago has not reached double-digit growth, the city recorded its highest year-over-year gain since November 2005.
The strong price gains in the West are sparking questions and concerns about the possibility of another bubble. However the talk is focused on fear of a bubble, not a rush to join the party and buy. Moreover, other data suggest a market beginning to shift to slower growth rather than one about to accelerate. Existing home sales weakened in the most recent report, home construction remains far below the boom levels of six or seven years ago and interest rates are expected to be higher a year from now.
Housing continues to emerge from the financial crisis: the proportion of homes in foreclosure is declining and consumers’ balance sheets are strengthening. The longer run question is whether household formation continues to recover and if home ownership will return to the peak levels seen in 2004.”
On a month-over-month basis, prices ticked up across all three San Francisco price tiers but at less than one percent for those in the middle and top tiers.
The bottom third (under $494,717 at the time of acquisition) gained 1.0% from August to September (up 39.2% YOY); the middle third gained 0.4% from August to September (up 27.0% YOY); and the top third (over $814,084 at the time of acquisition) gained 0.6% from August to September, up 19.3% year-over-year versus 18.5% in August.
According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA are back to June 2003 levels (38% below an August 2006 peak); the middle third is back above August 2004 levels (18% below a May 2006 peak); and the top third remains just above April 2005 levels and 6% below its August 2007 peak.
Condo values in the San Francisco MSA rose 0.5% from August to September 2013 and are up 27.2% year-over-year, within 4.6% of their December 2005 peak.
Our standard SocketSite S&P/Case-Shiller footnote: The S&P/Case-Shiller home price indices include San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA) and are imperfect in factoring out changes in property values due to improvements versus appreciation (although they try their best).
∙ Home Prices Advance in Third Quarter [Standard & Poor's]
∙ Home Prices In San Francisco Tick Up But The Pace Is Slowing [SocketSite]