November 26, 2013
San Francisco House And Condo Values Tick Up But Slow Their Roll
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]
First Published: November 26, 2013 7:45 AM
Comments from "Plugged In" Readers
I closed last Nov, and just got appraised and approved for a HELOC. Appraisal was 29% higher than price paid. Very surprised..
Posted by: moto mayhem at November 26, 2013 9:07 AM
I live in a pretty desirable city in the east bay and follow real estate here. My spousem and I half heartedly bid on houses in the 2006 to 2009 time frame, and were often outbid by 40% or more, in competition with 20+ other bidders. Prices were ridiculous - these was no one left to get off the bench. After the market cooled, we bought, under ask, no other bidders, in early 2010. Market drifted until 2012 when price started ticking upward. This fall, prices are FAR beyond the 2008 peak. Those prices look downright cheap. $600 per square foot used to be the outer limit. Now I'm seeing 700,800 even 900 per square foot. Nice houses in good locations are closing 3 weeks after the listing goes public. It's insane compared to the insanity of 2008!
Posted by: djt at November 26, 2013 9:31 AM
I'm seeing prices continue to increase in the city proper through the supposed "slow season". $1000/sqft seems to be the new norm for any of the prime neighborhoods.
Nicely finished SFHs in Pacific Heights are now north of $1200/sqft (pushing $4m for 3k sqft, no views) and Lower Pac Heights is now trading regularly at over $1k/sqft with nicely finished also exceeding $3.5m.
I can't imagine what things will be like once the Twitter lockup expires and Square/AirBNB files - insanity.
Posted by: SF owner at November 26, 2013 10:15 AM
djt said: I live in a pretty desirable city in the east bay and follow real estate here.
I'm still trying to puzzle through your post. Piedmont is the only city that I see north of $600/sq.ft. (and just barely). That said, it does feel quite insane over here; a couple of duplexes I was tracking went for $250k-$350k over list.
Posted by: EBGuy at November 26, 2013 3:29 PM