While the number of single-family homes and condos that traded hands in San Francisco last month jumped 44.5 percent from an upwardly revised 346 in February to 500 in March with typical seasonality in play, the volume was 5.3 percent lower on a year-over-year basis versus a 7.9 percent increase across the greater Bay Area or a 9.0 percent gain when excluding San Francisco.

At the same time, the median price paid for those 500 homes in San Francisco ($1,100,000) was 4.3 percent lower than at the same time last year and 15.4 percent below the record $1.3 million median sale price recorded in April of 2016, while the Bay Area median ($709,000) was 10.2 percent higher, year-over-year basis. In fact, San Francisco was the only county to record a year-over-year decline.

As we noted six months ago, the recorded sales volume in San Francisco was being goosed by contracts for condos in new developments that were signed (“sold”) many months prior but were closing escrow in bulk as the buildings came online in the middle of 2016, while signatures on new contracts were down 25 percent in 2016 despite an average of nearly 50 percent more inventory throughout the year and new condo sales dropped to a multi-year low at the beginning of the year.

And while many continue to finger a “lack of inventory” for the anemic sales trend in San Francisco, listed inventory in the city remains at a five-year high.

In Alameda County, recorded homes sales in March (1,526) were 10.6 percent higher on a year-over-year basis with a recorded median sale price of $730,000, up 13.7 percent versus the same time last year.  Sales in Contra Costa County (1,508) were 2.2 percent higher with a median price of $545,000, which is 8.2 percent higher versus the same time last year.

Home sales in Santa Clara County (1,615) were 5.9 percent higher versus the same time last year with a median price of $899,500 (up 8.4 percent) and sales in San Mateo County (577) were up 6.5 percent with a median sale price of $1,052,500, up 11.7 percent versus the same time last year.

And up north, recorded sales in Marin (263) were unchanged from the same time last year but with a median price of $930,000, which was 2.5 percent higher. Sonoma County sales in March (532) were 2.1 higher versus the same time last year with a median price of $555,000 (up 11.6 percent) and sales in Napa (146) were 16.8 percent higher on a year-over-year basis with a median price of $597,500 (up 5.7 percent).

Keep in mind that while movements in the median sale price are a great measure of what’s selling, they’re not necessarily a great measure of appreciation or changes in value and are susceptible to changes in mix, as opposed to movements in the Case-Shiller Index.

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Comments from “Plugged-In” Readers

  1. Posted by Sabbie

    It’s pretty crazy out there this spring in certain markets. I have spoken to agents who say hundreds of people are coming to the open houses, they are getting around 10 offers per property. I also got an unsolicited email yesterday from an agent stating that she had multiple clients looking to buy all cash under $1.6m and cannot get their offer accepted (I wonder who…) Inventory in some secondary cities has fallen by over 50% year over year. I think this market has one more blow off top left in her.

    That being said the hard economic data coming out (like GDP this morning) is pretty bad, we’re seeing the first slight uptick in mortgage delinquencies, and anecdotally I keep hearing from people whose startup is not doing so hot. Cloudera just IPOd at half its private valuation.

  2. Posted by Pero

    Can you please split out the price for condos and SFH? To better understand the inventory and price dynamics, it would be valuable to separate the two.

    • Posted by sfdragonboy

      I agree with you separated information would be way more useful. Granted small sampling, but I follow my neighborhood sales (Sunset) pretty much and I am not seeing lower selling prices of under 1.1M for the most part at all. Come on, did we all not just saw that 25th Ave home go for 1.55M and had 18 offers? And the winner was actually second with 100% cash!!! I feel for the highest bidder!!!

      • Posted by SocketSite

        Holy cow! An above-average house which was listed at $500,000 under the going average rate for homes in the neighborhood sold for $500,000 “over asking” and with 18 offers? That’s inconceivable and front page news (at least on SFGate).

      • Posted by anon

        True, the “over asking!!!” and “18 offers!!!” part of the story is nonsense. However, that outer sunset homes are fetching $875/sf is remarkable. And the 100% cash part of the story is meaningful, although just anecdotal. Nothing even resembling a downturn.

        • Posted by SocketSite

          The YTD median price paid for a home in the Central (not Outer) Sunset is currently running below last year. If that trend holds, it will be the first time it has declined on a year-over-year basis since 2011.

          • Posted by anon

            I was just quoting the article you linked to: “The average price per square foot in the Outer Sunset right now is $875 per square foot, according to Trulia.”

          • Posted by markets_aren't_a_panacea

            yes, but is this sfh, which is what that article is referring to or is it including condos. Out here in the outer richmond, i dont see anything cheaper than last year with respect to sfh. The empahasis being SFH. Happy to be wrong but i am not seeing it.

    • Posted by SocketSite

      The recorded sales data is rolled up by CoreLogic.

  3. Posted by Alamo

    Where can we get the raw data you’re using?

  4. Posted by Panhandle Amigo

    The story is very clear. A glut of 0-2 bedroom condos in SF is causing prices to drop in that category. No Single Family Homes are being built, thus, considering the macro & local economy is generally doing fine, prices continue to rise for that category.

    SFH’s will continue to sell like hotcakes this spring.

    • Posted by Pero

      You are 100% correct. The new inventory is mostly 0-2 bd condos. At the same time, SFH prices are stable, if not rising. In fact, there are other real estate sites that report the lowest SFH inventory in SF of the past 5 years. SFH supply in San Francisco is flat and as long as the economy is thriving, interest rates are low and high-paying jobs continue to cluster in the Bay Area, I don’t see a scenario where trend for SFH prices reverses.

      • Posted by SocketSite

        Those other sites are incorrect and their counts are based on a faulty methodology. Adjusting for seasonality and listing patterns specific to San Francisco, single-family home inventory bottomed out in 2014 and has been climbing since.

        As an analytics reality check, so to speak, see what those other sites report with respect to overall sales volume in March. We’re guessing they’re reporting a year-over-year increase. And if so, at least they’re consistently incorrect.

  5. Posted by Panhandle Amigo

    I’ll also add that I believe the commentary around startups failing and its impact on sales isn’t seeing the bigger picture. Sure, lots of smaller startups aren’t being funded quite as much. However, these are typically 5-100 person companies who didn’t have big salaries in the first place. I don’t think the aggregate buying power is that high for this group.

    Then we have the medium-large size companies absolutely *crushing it* right now. All time highs for GOOG, FB, AAPL. Uber, AirBnB, Pinterest, Dropbox basically guaranteed to go public. Since the broader economy is doing well, lawyers, consultants etc are doing well. There are vastly more of these people, with significantly more money, ready to buy.

    • Posted by SocketSite

      And yet actual sales are down, at least in San Francisco, despite an increase in inventory from which those with significantly more money, ready to buy, can to choose; absorption of new construction in the city fell 25 percent last year; and rents have fallen as well.

      • Posted by Panhandle Amigo

        Re: actual sales and absorption being down (are we talking condos only?), perhaps there is a psychology that we’ve hit the peak, and better to wait a year or two.

        Regarding rents dropping, wouldn’t that be a result of the increased supply?

        The mysterious SS editor should get into more editorial or thesis pieces, IMO. There are very few people consistently pattern-matching all of this data, every day, like you. You could quickly become – dare I say – a thought leader in this arena (aka MOAR TRAFFIC), rather than let all of us speculate in the comments 😉

      • Posted by MKP

        I mean, is it not obvious though from the numbers that there seems to have been a consumer choice to look outside of SF? the price and sale declines in SF are not a sign of economic decline or weakness in tech, they are indicative of choice.

        I work in tech, have tons of friends in tech, and anecdotally, as these people look to buy….they are flocking to berkeley and oakland in massive numbers. some want affordability, some want SFHs, some want a slightly less urban lifestyle and others just think its cooler. the east bay is thriving, and you give up nothing by living there. this tech boom has created not only outrageous prices, but also negative connotations with SF (elite, cloistered, narrow minded, self-obsessed…see HBO’s silicon valley) and people are starting to look elsewhere. SF is just not cool anymore.

        [Editor’s Note: Or as we pointed out earlier this year, Demand Really Dropped in San Francisco but Not Around the Bay.]

        • Posted by Panhandle Amigo

          I work in tech as well, and agree with most of those points (don’t agree that you give up nothing by living there…increased commute among them). I’d add that the new inventory being added to SF doesn’t help. It’s soulless, very high per square foot, and generally in rough-around-the-edges SOMA.

          • Posted by MKP

            re increased commute – perhaps that is true, but commuting from oakland to the fidi takes as much time as commuting from many parts of SF.

            totally agree with you on the new stock coming online in SF. its just not that appealing! soulless, not-particularly lux skyboxes…

          • Posted by heynonnynonny

            Remember, the people making money in tech commute to the south bay, not downtown.

            AirBnb can’t IPO with its uncertain legal status. The majority of their listings in SF are explicitly illegal, and that’s on their home turf after buying the mayor and a bunch of supervisors. Not a good sign.

            Uber can’t IPO until they license the tech “allegedly” stolen from Waymo – and Uber has bluffed itself into a laughably bad negotiating position. Most likely Uber can’t go public until the alpha asshole weakens enough that the investors can put in a new CEO – that’s the message behind the recent NYT profile of Kalanick.

            Dropbox could IPO but there will be a bunch of people surprised that they aren’t millionaires once the investors get paid.

            It wouldn’t take many new millionaires to move a shallow market, but we don’t know how many people borrowed against assets that have since been marked down, either.

        • Posted by Sabbie

          And it’s not only the west coast, Bloomberg just ran an article on Northeast folks migrating back to the Sun Belt for the first time in decades.

          • Posted by curmudgeon

            they’ve never stopped migrating to the sunbelt. There was a slowdown during the recession when EVERYONE stopped moving. But I don’t believe there has ever been a decade since WWII that people in the northeast didn’t migrate to the Sunbelt.

        • Posted by nopa_sf

          My colleague just made an offer on a house in Pleasanton. It was listed at 1mln15, he offered 30K above, and was overbid by 80K over asking all cash. There were 4-5 offers in total. Totally crazy, house is a basic cookie cutter suburbia, not a single thing distinctive about it… I don’t get it. It’s boring as hell. Not even walking distance to bart.

          • Posted by Frank C.

            Easy answer: schools. Hard to find decent performing schools even in suburban Bay Area. Now, if he has no kids and no plans and is moving there, that’s weird.

    • Posted by two beers

      The “broader economy” is _not_ doing well. A small percentage of the population has vacuumed up all of the gains to productivity since the crash. Current GDP consists largely of assets trading back and forth — hardly a “product.”

      GDP is not an accurate measure of the economy unless you know what the product is and how that product is distributed. Most people’s income has stagnated or dropped since the crash, and with asset bubbles driving costs of living higher, most people are further behind.

      If you’re putting all your economic eggs in the tech sector basket, what do you think will happen in the next tech crash? Or do you think tech never crashes?

      • Posted by SFRealist

        Yes, the elusive tech crash.

        Just wait for people to switch to non-iOS non-Android mobile devices. And for everyone to quit Facebook. And to use a new (non tech ?) search engine to find things online. Or are we also going to stop using the internet entirely?

        Waiting for the tech crash is not a strategy to deal with our real estate prices.

        • Posted by two beers

          “Elusive”?! Tech has crashed about once a decade since the transistor was invented. It crashed twice in the ’00s.

          • Posted by SFRealist

            I’m not saying tech will never crash. I’m saying there are no signs of it crashing in the immediate future.

          • Posted by Jake

            yup, agreed, a near-term SF tech crash may have been averted by the reduction in VC funding and toughening of terms over the past few years, which has obviously affected RE prices in SF. Unlike the dotcom, the VCs and investment banksters didn’t quadruple down on their 2012-3 IPO windfalls and drive SF and SV into another 1999ish bubble. Lucky us.

      • Posted by Frank C.

        Tech can contract noticeably, shedding many tens of thousands of jobs region-wide as runways end and investors stop their lifelines, without crashing like previous crashes and driving the region into a major recession. Real estate can decline “only” 15% in real dollars, or something like that. It doesn’t have to be zero decline or a massive (40%+) crash. I am baffled why people can’t see shades of gray.

        • Posted by anon2

          Many markets do respond to small disturbances with small corrections. But sometimes there are momentum effects where rising prices put further upward pressure on prices and falling prices put further downward pressure on prices. This can cause price swings larger than you’d expect.

          Below you posit that Uber, Pintrest & Dropbox may be gone in the not too distant future. And certainly there have been many startups in the past that have simply evaporated. How does billions (or tens of billions) of value suddenly vanish into thin air? Because in many cases their value is pure momentum. They’re only worth a billion because there’s a chance they can be sold to greater fools at two billion.

          While many of these companies literally go to zero, housing has some intrinsic value so there is a higher price floor. But I think that “modernization” of finance, low interest rates, foreign investment and general attitude changes from buyers are all factors increasing the momentum component of local housing prices.

          Looking at startup valuations is useful not just as an analogy, because a key point is that there’s a selection bias in who chooses to work for these money losing long shot companies. And it’s these same people with their same attitudes who are participants in the local housing market. If you are willing to invest your career in a money losing long shot you are probably more likely to go for a money losing long shot for your housing needs.

    • Posted by Frank C.

      You make excellent points generally – although I’d say Uber flames out, Pinterest is very weak, and Dropbox is fairly weak. Regardless, most people don’t understand the overall strength of the sector, EVEN IF several 10’s of thousands of jobs region-wide disappear. It’s certainly true that foreign money has over-funded the startup segment of the regional tech sector, and there will be some losses and noticeable reduced price pressure. But a falling out of the bottom is, IMO, fantasy.

      • Posted by Panhandle Amigo

        Thank you Frank. Agreed that people focus on smaller headlines of individual startups going under as a sign it’s all crashing down. I disagree with you on those companies, though.

        Uber is so incredibly misunderstood. People latch onto a clickbait headline that Uber lost $1B and believe the company will flame out. Uber runs an app that connects drivers to passengers. They collect ~25% of every fare as a middleman without owning any physical goods involved, and their service can grow exponentially. Think about that business. They are aggressively focused on growth to take market share so people are hooked on Uber before anyone else can clone the service. Uber is going to do very well.

        Pinterest is also a software only business with unbelievable “buying intent” by their userbase. Promoted Pins are going to be a massive success, likely better on a per click basis than FB. Pinterest will do well.

        Dropbox is probably the weakest that I listed but they have hundreds of millions of active users and are profitable.

        • Posted by SocketSite

          Which once again brings us back to the actual numbers and trends at hand…

        • Posted by Frank C.

          I know those companies and am familiar with your arguments. Disagree with you on both. Cheers! I think both are gone within 5 to 7 years.

          • Posted by jwb

            I’d be surprised if Uber isn’t gone in 5-7 *months*. They have to raise money and are going to either get terrible terms, or no terms. Meanwhile Waymo has a gun to their head.

        • Posted by Rose Neilan

          Yes, people may be hooked on Uber initially, but the thing is, customers can easily switch companies. After reading about Travis Kalanick’s bad boy behavior and shady business practices, I’m going to try Lyft on my upcoming trip. Unlike switching banks, it’s pretty darn easy to try a new app.

    • Posted by Jake

      VC funding is down for startups in SF, SV, and USA and has been for a few years now.

      The valuations for privately held companies ain’t “crushing it” as a group like they were ~2014. Many down rounds, lots of lost paper wealth, and enough looong delayed “basically guaranteed to go public” companies in SF to swell the sublease market.

      The only thing keeping this float afloat is the willingness of the public to buy new shares in money losing companies, like Cloudera. If they ever lose their taste for buying losses…

      • Posted by SFRealist

        That is not true.

        What’s keeping tech afloat is out continued willingness to use Google and Facebook and buy iDevices. All are at or near record highs (Apple’s revenue last quarter was $80 billion. In one quarter)

        • Posted by SocketSite

          Which brings us back to the actual numbers and trends at hand (see above).

        • Posted by Sabbie

          It’s not all about people using Google and FB, they are in the business of selling ads, if there is a recession then businesses cut back on ad spending, and people also cut back on buying shiny gadgets.

          • Posted by SFRealist

            Sure, but they’ll a lot less advertising losses than magazines, billboards, newspapers, etc.

            People will cut back on buying toys, but not as much as they’ll cut back on buying cars and trips to Vegas.

        • Posted by Jake

          Of course it is true and you can see it in the actual numbers and trends above. They show SF RE prices have been going sideways for about two years, after what had been a period of very strong buyer momentum that drove prices to historic levels. So what changed in the past 2-3 years in SF techiestate that might effect SF real estate? Or do you think they are entirely uncorrelated.

          My simple, and worth what you paid for it, answer is that after the Twitter post-IPO fizzle VCs let up on the accelerator by a few billion/year into SF, they negotiated tougher conditions on series D..Z rounds, the IPO window tightened, more smokey firesale exits by acquisition; and generally a tightening of the fatted cache, at least for those with negative cashflow, which is almost as common in SF as the braised bellies of the overpaid.

          The great revenue and profit streams of the usual oligopoly remain, though with less surface froth subsides driven by the weakening VC winds.

          • Posted by SFRealist

            Wait, are you saying that tech has already crashed? That would be interesting, considering record high stock prices for Apple, Google, Facebook (also Salesforce, etc)

          • Posted by SocketSite

            Wait, are you saying that Apple, Google, Facebook (also Salesforce, etc) are at record highs yet the sales volume of homes in San Francisco is down (while trending up elsewhere around the Bay); absorption and pricing for new construction in the city has fallen along with rents in general; and employment in the city ticked down in the first quarter?

          • Posted by Jake

            Nope, I did not say tech crashed, only that funding tightened, which has been reported for a couple years or so. You need to learn the difference between the relatively few yuge mature public profitable companies that dominate the core of SV and the relatively many immature private unprofitable companies that so heavily affect the top of the SF RE market.

          • Posted by SFRealist

            Jake, you said, “The only thing keeping this float afloat is the willingness of the public to buy new shares in money losing companies, like Cloudera.”

            That sentence is not true. The thing keeping the tech afloat is the big companies. Cloudera is now worth $2B, or 2% of Apple’s revenue last quarter.

            Meanwhile, Apple is $750B, Google $630B, FB $435B. Cloudera is 0.1% the size of those three combined.

          • Posted by Jake

            SFRealist, you continue to misunderstand. I’m talking about the billions invested annually in money losing SF tech companies that has an oversized impact on the top of the SF RE market. The SF RE market being the subject of this article. The SF RE market that has been moved repeatedly by those VC/investmentbankster/IPO fortunes for at least 20 years.

            I am talking about how those billions became a few billion/yr less about the same time as the SF RE market went sideways. I am talking about how quickly that spigot opens and tightens/closes and how that can be seen in this data.

            I am not talking about the entire technology industry of the entire 9 county Bay Area. If YoutubeTV crushes Netflix, that would be good for SF RE, but not so good for Los Gatos and San Jose RE. And if Amazon TV or Comcast TV or … crushes them both, then not so good for Bay Area RE. Where the suppliers of the tech are matters and SF has a very high concentration of not profitable tech providers that only stay afloat from the generosity of strangers, greedy strangers.

          • Posted by heynonnynonny

            Jake, why do you say that it’s unprofitable SF tech companies driving SF RE higher, rather than profitable SV companies? Some years ago I was told that half of FB engineering lived in SF.

          • Posted by SFRealist

            This may be where we don’t see eye to eye. These cities aren’t very far apart. People commute to work in different cities–for proof just look at how jammed Caltrain and BART are. I see the Bay Area as more of one big market. I have plenty of friends who live in SF and commute to the big companies in the valley. My company has people who live in SF, the valley and the East Bay.

          • Posted by Jake

            h…y, it is not an ‘either or’ of unprofitable/profitable companies affecting the economy, it is an ‘and.’ If there weren’t any profitable companies, then the pool of dumb money for dumber ideas companies would mostly dry up: “So you’re telling me there’s a chance?”

            And, the question raised by the data SS posted in this article is: why, despite the profitable companies chugging profits and boosting market caps and furiously hiring non-diverse workforces, etc; why the enduring flatness of the SF RE market? Perhaps it is related to the small deflation (a mere billion or few $/yr less) of the VC investment bubble of the 2010s. If only twitter and zynga and … had soared instead of soured, we’d have a dozen more IPO parties and a hundred more upround celebrations at Lucky Strike and SPiN.

            FWIW, fewer SFers commute to work in either SM or SC counties than the reverse. SF is a net importer of labor from SM and SC counties, as well as from every other Bay Area county. Does the net surplus of SF jobs drive SV property values?

            SFR, I’m as much of a regional gloablist as all the other non-12th-generation San Friskans. Nevertheless, my eyes see well-sourced stats confirming long held trends that show relatively few SFers commute to the fabled Santa Clara County where Los Gatos and San Jose are located. FTR, about 1% of SC county jobs are held by SF residents.

            And as I pointed out a few weeks ago on SS to you and others absorbed by the caltrain-is-so-jammed-it-makes-whine-on-the-intertubes narrative: a few of their trains are full, most aren’t, even during the multi-hour commute peak on nearby 101. Which raises the question of why Caltrain commuters, which are from the wealthiest counties (SF, SM, SC), expect/demand train service levels undreamt of by those from less wealthy Bay Area counties (AL and CC)? Privileged much?

          • Posted by anon2

            “why, despite the profitable companies chugging profits and boosting market caps and furiously hiring non-diverse workforces, etc; why the enduring flatness of the SF RE market?”

            And if it’s flattening now with both the profitable and unprofitable companies, what happens when the unprofitable companies implode? And demand is boosted in a rising market because everything is “affordable” in a rising market and investors chase rising prices. If prices start to slip, far fewer people can or want to buy into a declining market at these prices.

          • Posted by SFRealist

            So tell me, if your statistics say SFers don’t commute to Santa Clara County, aren’t you missing something? What do those statistics say about San Mateo County?

          • Posted by Jake

            Again, SFR, you are missing even the simplest facts. The stats show some SFers commute to SC, but so few they account for a tiny percentage of the SC worker droids. The stats, which are US Census ACS, also show some SFers commute to Canada and some to Maine and some to Alabama. Probably should consider them part of our local housing market, then.

            The Census ACS also shows that for every 4 SFers that commute to work in San Mateo county, there are 7 San Mateans that commute to SF for work. FWIW, SM county is a net exporter of workers to both SF and SC counties.

            The Census divides the Bay Area into 2 MSAs because two large job centers import in workers from neighboring counties: in SF centered around Market St, and in SV centered around Sunnyvale. The relative access to both of these justifies/props up SM housing prices, which usually have the highest by median in the Bay Area.

          • Posted by SFRealist

            Ok. If you don’t think that the thousands of people who live in San Francisco and work at Google/Apple/Facebook (not to mention all the other companies in the valley) affect San Francisco housing prices, there’s probably nothing that can be said to persuade you.

          • Posted by SFRealist

            In the same vein, I’m baffled about the hostility to Caltrain. It’s mass transit which is overcrowded every day and is obsolete and people want to use their own tax dollars to modernize it, which will increase ridership.

            Apparently that is somehow a negative.

          • Posted by anon2

            If there’s a downturn, demand slackens, startups implode, larger companies trim the fat, you really expect the remaining Apple/Google employees to make up for all the slack in demand in a city a hour away from their HQ’s?

          • Posted by Jake

            SFR, I never said they have no affect. Once again you have misrepresented the simplest of facts. Of course they have some affects. Every drop in the bucket…

            I’ve tried to explain that whatever affects they do have do not explain the sideways movement of the SF RE market expressed in the graph above. I’ve tried to explain that a much much better explanation is the decline in VC funding and IPOing that slightly predates the change in SF RE trajectory.

            I think the evidence is compelling, but then I have looked at the numbers. If you have a better explanation, then please offer it. Meanwhile, in this and previous posts you seem to suffer from a malady described recently by Diane Swonk wrt Trump’s econ plan: “a resistance to deal within the constructs of mathematical reality.”

            You’ve also misrepresented the situation wrt to “people want to use their own tax dollars to modernize” Caltrain. Some do some don’t, including US Representatives from the State of California that don’t want to spend hundreds of millions of US taxpayer dollars on this obsolete train. AFAIK, Caltrain has no plan to fund their planned modernization entirely from the tax dollars within their jurisdiction, though I would welcome them to increase the ticket fees to cover the costs.

            I am not persuaded that spending billions to make a train line with the wrong route and low ridership volume slightly less obsolete is the best use of the limited transportation funds. And I am not alone. Every drop in the bucket…

          • Posted by Dave

            Caltrain is problematic for several reasons – one being psychological. It’s not seamless in a way BART is – in getting to downtown SF. As it is, when I worked at the ranch, I’d wait for the train going directly to SF rather than catch an earlier train where I’d have to transfer at MacArthur to an SF train.

            If I had my way I’d build an elevated track for BART above the Caltrain ROW. Of course the Peninsula/SV crowd would block that as they will try to block HSR coming up the Peninsula if it ever gets to the point where it looks like it might actually happen.

            Caltrain is also emblematic of all that is wrong with Bay Area public transport – another independent transportation agency with its separate bureaucracy/fiefdom.

          • Posted by SFRealist

            Well one obvious explanation that SS mentioned above is that the changing mix of housing for sale in SF. This chart itself does not account for changes in value of property.

            If all of those new condos are, say, $800K, and SFH’s increased in value from $1.1M to $1.2M, this chart would register a decrease because it does not account for changes in the mix.

          • Posted by SFRealist

            Not to put too fine a point on it, but we all pay federal taxes, including people who take Caltrain. The way it works is that those tax dollars are spent on local projects. But the money itself comes from us. None of the representatives who opposed electrification were from the communities that would actually benefit from it.

          • Posted by Jake

            OK, now try explaining the slow down in SF employment after many years of strong growth, as reported by SS one week ago: “year-over-year gains have been trending down since the fourth quarter of 2014, with last month’s year-over-year gain of under a percent the smallest in eight years.” Oh, and matching slow down in the SF office market, as reported recently by SS: “the fourth consecutive quarter of increasing vacancy and the highest vacancy rate since the third quarter of 2014.”

            This is a broad pattern in SF affecting employment, income, and real estate. I’ve provided a handle to Occam’s tri-blade razor. Let’s see if you have a better one.

            WRT Caltrain: thanks for finally acknowledging that there are taxpayers that do not want their tax money spent on this: “we all pay federal taxes, including people who [do not] take Caltrain. The way it works is that those tax dollars are spent on local” and non-local (even out-of-this-world NASA) projects according to the priorities set by Congress and for transportation administered by USDOT. Welcome to the sausage factory.

          • Posted by SFRealist

            That’s actually my point about Caltrain. Sure, there are some people who don’t want money spent on it. There are others who do. Of all the ways to spend our money, this is one that makes the most sense

          • Posted by SFRealist

            I don’t think anyone disputes that the rate of increase in the SF market is lower. But a lower rate of increase is still an increase.

            My actual point is that our economy is still strong. Not perfect, but strong.

            If tomorrow Huawei came out with a new phone running a proprietary OS that was vastly superior to the iPhone, then we’d be in trouble.

          • Posted by Jake

            Well then, you are distinctly in the minority of opinion regarding “of all the ways to spend our money,” as this project has been proposed for many years and has never been the top transportation priority at the federal, state, or local level. I find it laughable to suggest that it should be. But if you really think that, then perhaps you should go down to City Hall and explain it to them, and then to Pelosi’s office, etc. Be of good cheer and spread the laughs all around.

            FTR, it is not clear from the current data that SF RE prices are having any “increase” as you are claiming.

            Regardless, your actual point seems to be that you have no idea/explanation for why the SF RE market has gone sideways for a couple years, or why the SF economy has flattened during the same time, but you are sure that it isn’t because “tech” hasn’t crashed or because you and your friends are too crowded on their way to toiling for “big companies” far from home but not so far from home as to be in a different RE market. All because reasons.

            If Apple moved their entire Bay Area operation to Texas, I would be fine. Sheesh, might create some good buying opportunities in the South Bay.

            And I would be delighted if anyone from anywhere developed a mobile OS “vastly superior” to ios. Particularly if they unlocked more of it. Apple is a royal pain in the api with all their restrictions.

          • Posted by SFRealist

            True! It is unclear from this data that SF real estate prices have had any increase. It is also unclear from this data that SF real estate prices have had any decrease. That’s not what this chart measures.

            What I do know, which was the original point, is that the only thing keeping this float afloat is NOT the willingness of the public to buy new shares in money losing companies, like Cloudera. The thing keeping SF real estate prices afloat is the continuing strength of companies like Apple, Google, and Facebook.

            If iOS is so bad, perhaps you should go to Apple and explain it to them, and then to Google’s office too to correct Android. Be of good cheer and spread your suggested improvements all around.

          • Posted by SFRealist

            Oh, and by the way, there’s no need for anyone to go to city hall to tell them about the benefits of Caltrain. It’s supported by both senators and Pelosi already. In fact, there’s a handy list here of the elected officials supporting it. Granted, given this administration that may not help, but it has plenty of supporters. The alternative is to do nothing and see if that will help traffic. I expect that’s what we will do, and we’ll have a chance to see if doing nothing will help commute times.

          • Posted by Jake

            If funding for money losing private tech companies was severely curtailed (as it was in 2000), then SF office vacancy rates would more than double, tens of thousands of people would lose their jobs, and many hundreds of paper millionaires would return to the ranks of the paperless. That’s just in SF, SV would also lose tens of thousands of jobs. Wouldn’t be as dramatic as the dotcom bust because current funding levels are lower and cash positions stronger, but it would be enough to “affect” SF RE prices and the commute congestion by a whole lot more than Caltrain modernization.

            Of course Caltrain modernization is “supported” by the usual political suspects. They have been “supporting” it without funding it to completion for how many decades now? And of course all of them would disagree with your belief that “of all the ways to spend our money, this is one that makes the most sense.” I’m sure they would also all disagree with your claim that “the alternative is to do nothing.” There are plenty of more worthy and effective transportation alternatives for spending billions than Caldrain. Perhaps we can explore them next time SS runs a relevant story.

            The restriction on ios are not “bad” from Apple’s point-of-view. They are in place (in part) to protect Apple’s franchise from value raiders that would breach their precious walled garden. Only one wolf is allowed in Apple’s little piggies pen. Maximizes margin over market share. Very profitable until too many piggies escape to a cheaper knockoff, as they did with windows, or to innovation, as they did with www.

          • Posted by Sabbie

            That the local real estate market relies on FB, Apple, and Google keeps being repeated but with no evidence. They are not the largest employers around by a long shot, and Apple/Google have been around long before the market started going crazy in 2012, so where’s the correlation?

          • Posted by SFRealist

            I’m sorry to be the one to break this to you, Jake, but basically all small tech companies lose money. The successful ones then grow to make money later. That’s how it works.

            Now if you took away the funding, then yes they would go out of business. You would also miss out on the chance that one of them would grow to a larger more profitable company. Maybe you’re right, and that ecosystem will decide to stop funding startups. If that were to happen, SF and SV would indeed suffer greatly. But that’s not really a strategy for dealing with our real estate costs, because that’s not going to happen.

          • Posted by SFRealist

            Sabbie, I didn’t say that market relies on those three companies exclusively. (Though if you are into correlations, Apply’s market cap has doubled since 2012, Google’s has tripled, FB’s has quintupled.) They are only the largest of the large tech companies (Oracle, Salesforce, Netflix, etc.) which pay their employees very well, which allows their employees to pay high prices for real estate. They also keep fleets of lawyers, accountants, bankers, consultants well paid.

          • Posted by anon2

            “Jake, but basically all small tech companies lose money.”

            Partly true, but still doesn’t change the fact that tech and the valley has gone through many boom-bust cycles. It’s one thing to claim, without any evidence, that Apple & Google have just now hit some critical size to end boom-bust cycles, it’s quite another to deny they ever happened at all.

            And there are good reasons to believe that the boom-bust cycle of startups has gotten more pronounced.This isn’t just a few guys in a garage blowing through a few hundred $k of seed money. Companies now are blowing thorough tens, hundreds of millions (or in the case of Uber, Billions!) and going on for longer in a money losing state.

            Also, more if not most of these companies are not losing money because they are actually investing in technology. They’re losing money because they’re providing products or services at a loss. Look at the company, Bepi, in the lede of the WSJ article I posted above. $120M burned through, 270 employees on the street, burning money to gain market share, then poof gone!

            If companies are trying to develop some actual technology, a computer chip or drug, whose success or failure rests on some factors of science or nature, then the success or failures of these companies will tend to be more random and uncorrelated with each other. But when startups are merely selling products at a loss to gain market share for an eventual cash out to a set of greater fools, their successes or failures are all highly correlated to the financial environment. Why do you think so many companies failed one after another in the first dot com bust?

          • Posted by SFRealist

            Many companies failed in the Dot Com bust because it was too early. Many early car companies also failed between 1895-1915. Did that mean that the car industry was dead? Or did it mean that it would take some time and experimentation to figure out what worked in this new industry and once people did that, they would build successful companies?

            Beepi failed. The real tragedy is that its employees are now doomed to never work again. What will happen to them? Oh that’s right, they’ll move on to something else, continue to earn salaries, buy homes, etc. Maybe their next companies will succeed.

          • Posted by anon2

            ” I didn’t say that market relies on those three companies exclusively.”

            But by what even semi-plausible mechanism would the small number of employees of these companies make up for slackening demand in a region of millions? And if these companies are south bay based and there aren’t that many SF to SV work commuters, why SF?

            And isn’t part of the reason that profitable companies stay that way, that they watch expenses? Won’t they trim the fat during a downturn?

          • Posted by SFRealist

            If there was a downturn, it would be a problem, though less for the Bay Area than for other regions (midwest, Vegas). But there isn’t a downturn now. Or not a downtown by any recognizable definition of the word. Yes, some smaller companies are failing. The big companies have record high stock prices. That’s not a downtown.

          • Posted by SFRealist

            For what it’s worth, this article says there were about 8500 SF residents commuting south daily by shuttle bus alone in 2016. That doesn’t include drivers or Caltrain.

          • Posted by anon2

            “Many companies failed in the Dot Com bust because it was too early. Many early car companies also failed between 1895-1915. Did that mean that the car industry was dead?”

            It’s 2017, cars have transformed the planet and Detroit is Detroit. Is it still to early for the car industry?

            Companies failed during the first dot com because they were playing the greater fool game and all of a sudden they ran out of fools. Lots of companies are trying the very same thing right now.

          • Posted by Sabbie

            Stock prices are a function of liquidity as much as anything else, idle money must have yield as we saw during the sub prime MBS bubble, and tech stocks are today’s darling.

            As for the lesser companies don’t count on getting much warning sign of a “slowdown” before the crash. New Century Financial didn’t report a single negative quarter before their stock dropped about 90% in less a month in early 2007 and then got de-listed. Furthermore people barely even took notice, it took another five months before Bear Stearns tanked, and then the broad market kept going up for another 2-3 months after that. Only in hindsight do most people acknowledge these as warning signs.

          • Posted by Dave

            @Sabbie I think a general correlation exists between the success of the FB’s and Google’s and SF real estate. Certainly that of SV real estate. At a more general level, much of SF’s tech success is because of SV and, even at that, tech is a small portion of SF jobs. Still, SF tech jobs have a disproportionate influence on everything from rents to housing prices to the quality of life.

            The problem occurs when there is a slowing of tech or of VC funding – it is felt more in SF than in the Valley. The trend in office rents and vacancies in SF tells a tale of late and should be interesting to follow this year. The correlation in housing prices exists also with office rents. The increase in space available for sublease is, to a large degree, coming from tech companies freeing up SF space. Twitter most famously did this last year. That is compounded by non-tech firms like Blue Shield moving several thousand workers to Oakland, Schwab leaving SF altogether for Texas last year and one of the bigger banks (IIRC it’s Union Bank) now moving a chunk of their workforce away from SF.

            It’s a double edged sword where tech firms could and did overpay for (and over lease) SF office space and are now subleasing it, but large employee firms, such as Schwab, who might be in the market for space are not going to pay the uber lease rates tech companies do. Plus, large non-tech employers are not lining up to move workers to SF. A crunch in the office market could be coming with millions of square feet of approved prop. M space coming online in the next 3, 4, 5 years.

            So all of this – flat housing prices, increasing office vacancy rates, the beginnings of a fall-off in SF employment – while not 1:1 correlated to FB, Google and, more generally, tech is occurring in part due to a softening of tech/drop in VC funding.

          • Posted by SFRealist

            Detroit was a rich city from around 1935-1970. Then Japanese and European companies started building much better cars and Detroit crumbled. The car industry remains.

          • Posted by Jake

            SFR, most “small tech companies” can’t afford to lose money because they are not VC funded or subsidized by investment banksters. They are among the “fleets” of “well paid” “consultants” and others that provide tech services, mostly to larger also not VC-funded companies. I’m sorry to be the one to break this to you, but basically many of your fact statements are demonstrably false, which is ironic for someone that repeatedly and erroneously claims that others have written things that are “not true.”

            I have not claimed that an “ecosystem will decide to stop funding startups.” There was a “downturn” in VC funding that predates and contributed to the slowdown of the SF RE market. There was also a “downturn” in IPOs.

            Cloudera is a “small tech company” with some excellent tech and some excellent technologists, yet they are losing money and they went public at half their previous funded value. If the public was not willing to buy IPOs from money losing companies, which was the norm until the dotcom era, then Cloudera would either have less money available now or worse terms from private investors.

            Going forward, the bigger risk in SF is the lack of profitability of the large privately-held tech companies. Uber lost ~$1 Billion Q4 of 2016. 40 unicorns occupy ~5% of SF office space. Investor sentiments on funding these not-small mostly not-profitable companies could sink or float the top of the SF RE market.

          • Posted by SFRealist

            I’d appreciate it if you would please list all of the factual statements I have made here that are demonstrably false. Thanks!

          • Posted by Jake

            Thanks for the generous invite. Though it may have to wait for my retirement, when I hope to reread all the surrealists.

  6. Posted by Dave

    SF has gotten too pricey compared not to just other regions, but to many other parts of the Bay Area. At the same time the quality of life is declining here due to all the infrastructure issues which are not being addressed. I’d rather spend a million on a home in Millbrae near El Camino (west of) than be “trapped” in a million dollar Sunset special despite a slightly longer commute. One gets so little in SF – even in the new condo towers which are generally not luxury by any stretch despite what the developers choose to call them.

    All the while large office projects which will create thousands of new jobs with no commensurate housing increase or infrastructure improvements are going forward. Ironically, this new wave of office construction could end up killing the goose so to speak. Right now it’s just residents who are choosing to leave SF for other Bay Area locations or for places like Seattle and Portland. At some point, as gridlock becomes permanent throughout much of downtown and SOMA, more and more employers will start to pull up stakes. It does not take a crystal ball to see where all this is heading.

    • Posted by Gorkem

      Honest question Dave, have you ever drove around Seattle during rush hour? At least people can take Bart/Caltrain or bike/walk in SF in Seattle they don’t have any option but to drive. I think this year was especially bad but it did not stop raining since September in Seattle. I don’t know how people talk about high quality of life in Seattle when it rains all the time and you can’t really leave your house. It’s is a real problem..

      • Posted by Panhandle Amigo

        Couldn’t agree more. My process of elimination goes as follows:

        – Seattle and Portland are not diverse at all, a bit too sleepy, and it rains from October to May. No thanks.
        – Midwest and South…no.
        – Northeast: Cold winters, humid summers…plausible but not as good as here.
        – LA and San Diego: lack intellectual horsepower, culturally devoid…plausible if you were doing your own thing or found your group of peers.

        • Posted by Frank C.

          This kind of conversation is somewhat true, but honestly, would NYC have a tech sector at all if weather were that big of a factor? No. So you shouldn’t be distracted by this when forecasting. The main fact is the multiplicity of new tech centers, not the lack of an overwhelmingly awesome single rival.

        • Posted by Brisket

          “Midwest and South…no.” Chicago is a fantastic City, much more of a true city than little town San Francisco.

          “LA and San Diego: lack intellectual horsepower, culturally devoid” Well I’ll agree as to San Diego but Los Angeles blows SF away as far as museums, has a lively arts and music zcene and has an incredible food scene as well, so hardly culturally devoid.

          • Posted by Panhandle Amigo

            I should have mentioned Chicago, I agree it’s a wonderful metropolis. However, winters in Chicago are brutal and summer isn’t that amazing either. Also, there’s *nothing* to do outside of Chicago. Flat farmland for hours. Also, it’s full of Midwesterners. I’d posit that the intellectual horsepower there is at least a step below SF/NYC/Seattle/Boston.

            Agreed about LA, I think LA is plausible for me, I mostly just hate the vapid entertainment industry.

            Finally, Denver…similarly nondiverse, a little faux-constructed, but plausible. Weather is pretty good despite winter.

          • Posted by Dave

            Not to mention the incredible public transportation network in the making in LA.

        • Posted by Dave

          The relocation numbers for March posted at Redfin show SF at the top of the list of US cities in terms of people leaving. LA was number 3 on that list, but the percentage seeking to leave was almost half as small as for SF LA is undergoing a rebirth for anyone who has not been there recently..

          As to weather, Seattle and Boston were the two large cities where residents seemed most content as measured by not wanting to relocate out of the area.

          So weather is a factor but it works both ways. Lots of folks want 4 seasons and though Boston is quite cold it is about to overtaken SSF as the US biotech center. Portland actually has about the same rainfall as Santa Rosa – when California is not experiencing a drought.

          In terms of jobs the big gainers forecast by Forbes were Seattle, Nashville, Orlando, Jacksonville and some of the Texas cities.

          The process of elimination works differently for everyone .

        • Posted by BHG

          Bingo.

      • Posted by Dave

        My comment was not so much about the quality of life in Seattle, but the decreasing quality of life in SF. And that is relative to other Bay Area cities. This explains, IMO, the surge in sales and prices in all Bay Area counties but SF. Bay Area residents are more and more choosing areas other than SF to live in. Lots of things contribute to that but most likely relate to life quality issues in one form or another – as techy couples in my neighborhood have their first child many move to the mid-Peninsula or the Lafayette area for, bingo, quality of life reasons as relates to their child.

        There has been a sharp deterioration in “life” on Mt. Davidson since the boom started. Wall to wall parked curbs, speeding down Teresita as some folks coming from the south take that route to avoid Portola during the rush. Parked cars are sideswiped often now and usually overnight. That was a rare occurrence up here on the suburban slopes of Mt. Davidson even 5 years ago. Many homes are rented out to 3, 4 or 5 unrelated adults with 3, 4 or 5 cars. Flash parties happen here more and more.

        The road around Lake Merced is a mess and has been for a while. Pot holes sit unfixed for weeks – are you listening DPW as there are 3 or 4 large ones in front of the old Boat House. Cross the city line to Westlake and like magic the roads and landscaping suddenly improve.

        It’s there for anyone who has eyes to see – though sadly the SF PTB either don’t see it more likely, IMO, choose to ignore it.

        The MB/Giant’s/Central SOMA build out could be the proverbial straw. We’ll see.

      • Posted by oakland lover

        I agree on the traffic, i was up there in OCT 2014, and it was awful driving around. Im sure its only got worse sense then. If they put in a proper subway system it would be pretty cool. Overall I thought the city was pretty awesome (if you dont mind rain, i personally love rain!). But the Bay area is WAY better!!

      • Posted by SFRealist

        Traffic in Seattle is shockingly awful. Lots of sprawl.

        • Posted by BHG

          Lots of people who looooooooove to drive from the ‘burbs.

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