Archive for the ‘Market News’ Category
The pundits are making dramatic, even doom-laden pronouncements about what is going to happen with interest rates (and the housing market), though they’ve been wrong so many times over the past few years, these “expert” predictions might be taken with salt-shaker’s worth of salt, perhaps with lemon and a nice shot of tequila.
Obviously, interest rates are an important component of the real estate market. But this chart gives a little context to what has occurred recently: the blue column is the average 30-year interest rate for the first 5 months of 2013, when everyone was dancing with glee at how low the rates were; the black line at the end represents the interest rate on Friday, June 6th, though it is true that it briefly hit 2 tenths of a percentage point higher earlier in the week (so if you like, add the tiniest smidgeon more to the black line).
I don’t know where interest rates will go, though they will probably rise over time—and perhaps there will be an upcoming interest-rate shock. But terror seems a bit premature.
The Economist has a good article (about the US real estate market not being in a bubble) and created a terrific interactive graph that allows you, by metro area (you have to click on San Francisco to add it to the graph), to compare home price changes in real terms over time, versus average incomes, and versus rents, from 1987 to 2013. San Francisco is at the top of the chart in percentage increase and increases in prices in real terms, but still rates right at the long-term average in home prices versus income and versus rents. The Economist was one of the very first to identify the housing bubble inflating – running strongly against the then current opinion of other pundits – so I think their opinion on whether another bubble is about to burst in the U.S. is worth hearing. (FYI: The do believe there are serious housing bubbles in certain other countries.)
”The verdict: in most markets houses are near or above their long-run values, but none looks bubbly. Price rises in Phoenix, Tampa and Miami have restored values only to their long-run averages. In Las Vegas they are still below that long-run average. Many things could trip up the housing recovery, from stalling job growth to higher mortgage rates; at the moment, a bursting bubble is not one of them.”
You can play around with the interactive chart, and you should read the article below the chart widget:
Here are 3 of their charts with San Francisco added:
Home Price Appreciation in Real Terms (Adjusting for Inflation):
Home Prices Against Average Income:
Home Prices versus Rents:
The Case-Shiller Index for the 5-County SF Metro Area is beginning to show the spike in values that we have been seeing in the city itself. Remember that the Index reflects the market heat 3-5 months ago. I would expect we will see significant further increases in coming months. The online chart is here: http://my.paragon-re.com/Docs/General/SixtyFortyImages/Case-Shiller_High-Tier_2011.jpg
And here is a longer term view of the Case-Shiller Index for the SF 5-County Metro Area. Note that the period from 1988 to 2000 is not proportional to the graph, as it has been compressed. The online chart is here: http://my.paragon-re.com/Docs/General/SixtyFortyImages/Case-Shiller_from_1990.jpg
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This is a look at what’s going on in the housing market from a different angle – lender mortgage applications — than our usual market statistics:
AP Article: “Reports point to recovering housing market”
“Earnings reports from two major banks Friday painted a picture of a healing housing market, with more Americans taking out mortgages, paying them on time and taking advantage of low interest rates to refinance.
At JPMorgan Chase, the biggest bank in the United States, income from new home loans set a record from January through March. The bank issued 6 percent more mortgages than a year ago and got 33 percent more applications.
Wells Fargo, which issues the most home loans, booked the most mortgage fees since 2009. It issued 54 percent more mortgages than a year ago and took 84 percent more applications.”
2012 RealTrends 500 Report: Of Top 500 Residential Brokerages in U.S.
Paragon Ranks #3 for Highest Sales per Agent & #4 for Highest Average Sales Price
Top Firms Nationally: Ranked by 2011 Closed Sales Volume Per Agent
Top Firms Nationally: Ranked by 2011 Average Sales Price
Founded in 2004 by five of the most experienced and successful real estate managers in San Francisco, Paragon is already one of the top three residential brokerages in the city by sales volume. According to the just-released 2012 RealTrends 500 report, of the 500 largest residential brokerages in the United States, Paragon ranks #3 in sales per agent and #4 in average sales price . Per the SF Business Times, we are #1 in sales per agent of the top 10 brokerages in the Bay Area (for the 4th year running), and according to Broker Metrics, we also have the largest number of agents in the top 10% of all SF agents by dollar volume sales.
Paragon is a member of the world’s largest luxury home network, Luxury Portfolio, and in San Francisco, we have the highest number of agents closing transactions with sales prices of $2,000,000 and above. In 2011, we also led the city in the sale of residential investment properties.
Paragon is the only locally-owned and managed brokerage in San Francisco that conducts business across the entire city in all market segments – residential and luxury homes, investment and commercial property, leasing and new home development. With approximately 135 agents and licensed assistants, and a management, marketing and support staff of over 20, Paragon brokered almost a billion dollars in real estate in 2011. We pride ourselves on having the energy, ambition and team spirit of a start-up, and the experience, savvy and resources of a big, long-established firm.
Our philosophy is simple: hire the best agents and then provide them with the highest quality training, marketing and transactional resources, technology, market analytics and management support to do the best possible job for our clients.
Highest Sales per Agent of the 10 Largest Brokerages in the Bay Area
Highest Unit Sales per Agent of the Largest Firms in San Francisco
Most Agents in the Top 10% by Dollar Volume Sales
Most Agents Closing High-End Residential Property Sales
Top Ranking in Average Sales Price to Original List Price Percentage
for Houses, Condos and Luxury Homes
Top Ranking in Average Days-on-Market Figures
Characteristics of a Really Good Real Estate Agent
In one of the largest, most complicated financial transactions of your life,
what exactly does a really good real estate agent do?
He or she:
- Cares more about your priorities and goals than their commission. (The smartest agents know that if you take care of the client, the commission takes care of itself.)
- Negotiates effectively and, at your instruction, aggressively to achieve the best possible price and terms (which can easily make a 3% to 5% difference in sales price, and sometimes signifcantly more).
- Never makes decisions for you nor pushes you to make decisions a certain way, but lays out all the information, options and strategies for your consideration.
- Ensures you understand what’s happening, what’s necessary and what’s at stake at every step.
- Tells you the truth as best as can be discerned: positives, negatives, upsides, downsides, changes in the situation, even what you might not want to hear, what might change your mind about proceeding with a transaction.
- Offers an array of qualified professional resources — stagers, inspectors, contractors, lawyers, escrow and loan agents — and advises you when their counsel is required.
- Coordinates, manages and controls — based upon your decisions — every aspect of the process. Always with an eye to protecting your interests.
- Knows the market in your geographic area and property type inside out: its values, market trends, neighborhoods, pros and cons, legal issues, its agents.
- Keeps his or her promises.
- Works hard; works on your timeline; works to minimize your effort and stress; works to make or save you more money than they cost in commissions.
The quality of the agent working on your behalf — his or her competence, integrity, work ethic and commitment to your interests — can make an enormous difference in the outcome of your home purchase or sale: in money, in stress, in future happiness.
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.
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.