Looking back at an overview of the 2019 Bay Area market, after years of high appreciation rates, median home prices went down a bit, went up a little bit or remained unchanged as compared to 2018; depending on where you lived. San Francisco hit new quarterly price highs in spring of 2019 (amid all the IPO excitement), but ended up the year flat for houses and a little up for condos. Since there has been so much new luxury condo construction in recent years, year-over-year median price comparisons from 2016 to 2019 may not be exactly apples to apples.
Where were the luxury sales happening in 2019? The chart below breaks out the price-point and neigborhood.
What was the top single family sale in San Francisco? 2900 Vallejo Street sold at $27,000,000. For reference, the top Sea Cliff sale was 140 Sea Cliff. The home sold for $18,000,000.
Looking ahead; for 2020, economist Ken Rosen at UC Berkeley said he expects the Bay Area median price to remain basically flat, within a general range of +/- 2%. Again, this is Bay Area (not Sea Cliff, Pacific Heights, Noe Valley, etc.). I can’t predict the future, but that certainly doesn’t sound unreasonable and happily avoids the sensationalism of many other media-grabbing forecasts.
Within our neighborhood, transactions were down about 50% from Q4 2018. Although ideal selling conditions were present (demand, limited supply and its inexpensive to borrow money), several of you decided not to sell. Some common themes I was given were taxes (i.e. SALT & mortgage interest deductions (up to $750k only)) and limited buying options.
What is a medium value of a four-bedroom home in the area? In the Lake Street Corridor its $3,800,000; in Sea Cliff it is $4,357,000 (compared to $5,500,000 in Pacific Heights and $7,925,000 in Presidio Heights).
Here are the sales numbers for the quarter:
If you recall, the 3rd quarter numbers of 2019 were slightly inflated by two large transactions ($16M & $18M).
The top sales of the quarter:
In other neighborhood news, the end of a long saga nears for 224 Sea Cliff. This home has a colored history over the past 13 years. Teetering on the edge of foreclosure since 2007 (no less than 20 filings; seriously) and offered for sale at $19,675,000 in summer ’17 with no takers. Finally, offered at $15,000,000 in the fall via court appointed trustee (with any sale subject to bankruptcy court approval). The property was ratified at $13,700,000; which is the minimum overbid amount. A new owner should take possession shortly. I toured the home and it’s a disaster. The new owner will likely put at least $5,000,000 into the re-build; probably more. The lot is truly A++ and it has private access to a secluded beach.
What is in store for 2020 as it relates to San Francisco and the market? Some of the positive factors I see for a strong market are:
-Jobs: core Bay Area companies cannot hire enough highly skilled/highly educated workers to fill current openings. The demand for talent will not likely slow in the next six to nine months.
-The stock market continues to perform, creating more wealth (and confidence).
-Interest rates are close to historic lows.
-San Francisco is one of the most dynamic, innovative & technologically advanced cities in the world. We will continue draw the best and brightest and they will need a home.
Some of the concerns:
-Taxes; we have the highest taxes in the nation and neighboring / regional no-state income tax states are calling. Everyone has their own breaking point.
-Out migration of both businesses and residents.
-The cost of entry to San Francisco housing. ~$1.6m for your first house?
-Quality of life issues in San Francisco. Although this is a regional issue, San Francisco continues to struggle with quality of life crimes (i.e. car break in’s, smash & grab theft, etc.) along with mental health and addiction issues on our streets. Hopefully, Gavin can get something done for us.