San Francisco Residential Market Trends in Realtor District 5: Noe/ Castro/ Haight

The Epicenter of the High-Tech-Buyer
Market Surge in San Francisco

A statistical market overview by the Paragon Real Estate Group for Noe Valley, Eureka Valley & the Castro, Cole Valley, Mission Dolores, Haight Ashbury, Ashbury Heights, Clarendon Heights, Parnassus Heights, Corona Heights, Glen Park, Twin Peaks & the Duboce Triangle

Below are a variety of charts detailing market conditions and trends in the neighborhoods of San Francisco’s central Realtor District 5. District 5 is one of the more homogeneous districts in San Francisco in terms of property values, but still any analysis of an area with so many properties of different type, location, condition and quality can only be a very general overview.

District 5 soared in value between 1996 and 2008 and was one of the last districts to peak in value before the financial markets meltdown in September 2008. Values then fell 15% to 20% very quickly and then stabilized in 2009 and 2010. With the surge in high-tech buyers in 2011, many of whom wish to be close to highways to the peninsula — and love the lifestyle and ambiance of District 5 neighborhoods and its commercial districts — activity in this district picked up dramatically.

Now in 2012, the competition between qualified, motivated buyers here has become ferocious: inventory is very low, certainly not enough to satisfy buyer demand, and many of the listings are selling very quickly in multiple-offer, competitive-bidding situations. This is exerting considerable upward pressure on prices.

Median House & Condo Sales Prices in District 5

Median home prices have been climbing in recent quarters and have now hit their highest points since 2008.

Percentage of Listings Accepting Offers

An excellent statistical snapshot of supply and demand. As the market heated up, the percentage started climbing higher in 2011 and is now at its highest level in memory.

Sales Prices to List Prices, Days on Market, Price Reductions & Expired Listings

Right now, most of the homes that sell in District 5 sell quickly for at or over asking price. Those listings that go through one or more price reductions take much longer to sell and sell at a large discount to original list price. The percentage of those listings that expire or are withdrawn without selling (typically due to being perceived as overpriced) is at a historic low.

Homes for Sale on the Last Day of the Month

The incredibly low inventory of homes available to purchase in District 5 through MLS is clearly illustrated in this chart.

Months Supply of Inventory (MSI)

MSI is at an extremely low level of inventory for houses and condos, a reading that would be considered indicative of a strong “Seller’s Market.” Indeed anything under 3-4 months is usually considered a Seller’s Market.

Luxury Home Sales

This chart tracks the number of homes accepting offers with a list price of $1,500,000 and above. With the influx of newly affluent high-tech buyers, this market segment is increasing.

Expired & Withdrawn Listings

As the market has accelerated, the number of listings not selling has gone down dramatically.

Average Dollar per Square Foot for Houses & Condos

Both houses and condos in District 5 have generally been oscillating up and down within a a relatively narrow $50 band of average dollar per square foot value since the beginning of 2009. The last quarter or two have seen increases and, considering the current market conditions, we suspect this will continue.

District 5 Distress Home Sales

The cross-hatched portion and the percentage at the top of each column shows the quantity of distress home sales (bank-owned and short sales) within total unit sales. In District 5, distress home sales make up a very small percentage of sales and have had very little impact on values. For the entire city, the percentage of distress sales is 16% – 20%, but most are clustered in specific neighborhoods in the lower price segments.

District 5 Home Sales by Price Range

This is a snapshot of sales by price segment in the 12 months through the 1st quarter of 2012. During this period, the overall median sales price in District 5 for houses, condos and TICs was something over $900,000. In the chart below, each column constitutes a price-range segment of $250,000.

Average Days on Market (DOM) Before Acceptance of Offer

These figures can fluctuate without great meaningfulness — a few listings that sell after being on the market for a long time can have a large impact on the average, even when new listings are selling very quickly — but the trend can be interesting. Right now, many listings are accepting offers within 7-10 days of going on market.

Longer-Term Trends

The following charts delineate average sales price (which is different from median sales price) and average dollar per square foot by year since 1995. When neighborhoods are grouped together below, it is because they generally share similar market values in particular property types. Sometimes it’s valuable to step back for a longer term view of market trends. Annual statistics, because of the much greater amount of data, are typically much more reliable than (fluctuating) quarterly or monthly stats.

Noe & Eureka Valleys: Higher-End House Sales, Values over Time

This is just a snapshot of a particular segment of the market in two of the biggest neighborhoods of District 5: Noe Valley and Eureka Valley. It should be noted that many houses do also sell for higher prices here than in price parameters set in the chart below.

MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.

AVERAGE SALES PRICE is calculated by adding up all the sales prices and dividing by the number of sales. It is different from median sales price, but like medians, averages can be affected by other factors besides changes in value. For example, averages may be distorted by a few sales that are abnormally high or low, especially when the number of sales is low.

DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market.

MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a “Seller’s market”, 4-6 months a relatively balanced market, and 7 months and above, a “Buyer’s market.”

DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.

SAN FRANCISCO REALTOR DISTRICTS

District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain

District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights

District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview

District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands

District 5: Noe Valley, Eureka Valley (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights

District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights

District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina

District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin

District 9: SOMA, South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena

District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission

Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.

Median and average statistics are generalities subject to fluctuation due to a variety of reasons (besides changes in value): how they apply to any specific property is unknown. Averages may be distorted by one or two sales substantially higher or lower than the norm, especially when sample size is small. Sales not reported to MLS – such as many new-development condo sales — are not included in this analysis. All figures should be considered approximate and are derived from sources deemed reliable, but may contain errors and omissions, and not warranted.

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