LUXURY CONDOS IN DISTRICT 9

LUXURY CONDOS IN DISTRICT 9 M I S S I O N B AY, S O U T H B E AC H , Y E R B A B U E N A , S O U T H O F M A R K E T

The 5 year seller’s market continues with condos leading the way.

2.

LUXURY CONDOS IN DISTRICT 9

T

he 5 year seller’s market continues with condos leading the way. Condo appreciation in San Francisco has outpaced Single Family Homes since

the real estate market began to recover at the beginning of 2012. Since January 2012, the index level for condos has more than doubled while SF single family homes are close to that with a 94% increase. During this same time period, the Case-Shiller 20-City composite, used as a representative sample of urban areas throughout the US, has increased by 50%.

SF HOUSING VS USA HOUSING CASE-SHILLER FIGURE 1

SF Housing vs USA Housing

300

250

200

150

SF Housing

3.

SF Condos

USA Housing

Jul-17

Jul-16

Jan-17

Jul-15

Jan-16

Jul-14

Jan-15

Jan-14

Jul-13

Jul-12

Jan-13

Jul-11

Jan-12

Jul-10

Jan-11

Jan-10

Jul-09

Jul-08

Jan-09

Jul-07

Jan-08

Jul-06

Jan-07

Jan-06

Jul-05

Jan-05

Jul-04

Jul-03

Jan-04

Jul-02

Jan-03

Jan-02

Jul-01

Jan-01

Jul-00

50

Jan-00

100

In general, sales during the holiday season tend to favor buyers...

4.


R

olling 3 and 12 month median sales prices for condos in Mission Bay, South Beach, Yerba Buena, and South of Market show the seasonality of the real estate market

and the longer term trend in median sales prices. In general, sales during the holiday season (November-January) tend to favor buyers as many potential buyers check out during these months. The decrease in competitive bidders cause a drop in sales prices. But a potential seller may want to use this time to prepare their listing for the seasonal demand shifts in the coming year. Longer-term trends in these neighborhoods show a deceleration in the rapid appreciation experienced from 2012 to 2015.

FIGURE 2

5.

MISSION BAY

SOUTH BEACH

YERBA BUENA

SOUTH OF MARKET

Looking at the year-overyear median sales price, the upward trend in sales price is continuing albeit flattening.

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L

ooking at the year-over-year median sales price, the upward trend in sales price is continuing albeit flattening. The price per square

foot emphasizes the progression to a sideways movement; however, the 5 year monthly variance in the mean is around $110 per square foot which is considerable in absolute dollar terms.

MEDIAN SALE PRICE AND PRICE PER SQUARE FOOT PAST 3 YEARS FIGURE 3

7.

Condos across SF County are seeing similar trends but with smoother curves due to sample size.

8.


SF COUNTY FIGURE 4 SF County

$1,400,000

Median Sale Price

$1,200,000 $1,000,000 $800,000 $600,000 $400,000

Rolling 3 Months

Jul-17

Jan-17

Jul-16

Jan-16

Jul-15

Jan-15

Jul-14

Jan-14

Jul-13

Jan-13

Jul-12

Jan-12

Jul-11

Jan-11

Jul-10

Jan-10

Jul-09

Jan-09

Jul-08

Jan-08

Jul-07

$-

Jan-07

$200,000

Rolling 12 Months

Condos across SF County are seeing similar trends but with smoother curves due to sample size. The slowing should not be cause for alarm as price appreciation was incredibly fast with median sales price nearly doubling in these neighborhoods since 2012. As figure 4 indicates, the majority (~75-80%) of the gains happened from 2012-2015. Although home prices doubling every 4 years appears fantastic at first, that sort of growth is not sustainable and would move from exciting to troubling quickly. A steadier, flatter growth rate is likely going forward. Month-to-month median price variance also supports a flatter growth curve. New and existing developments should put District 9 in a great position for sellers’ asset returns. The Central Subway - connecting South Beach to Chinatown with a Yerba Buena stop in between - will likely open in a year (or two) along with the new Mission Bay Warriors stadium by the end of 2019. As SF has begun building up, the quantity of luxury condos have grown to meet demand. Office spaces, such as the Salesforce Tower, bring added desirability to the neighborhoods for those that want a quick walk to work. The new ultra luxury developments have allowed for a steady stream of comparable listing, which benefit existing condos in the area. A nice externality of luxury areas is the positive feedback loop they tend to experience over time. Amenities in the area reflect the level of affluence that can support them, leading to high-quality businesses, whether that be restaurants, gyms, or other leisure activities, moving in.

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Median days on market is not only another good barometer for how hot a market is but it also tends to be inversely related to the percent of properties that sell above list.

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M

edian days on market is not only another good barometer for how hot a market is but it also tends to be inversely related to the percent of properties that sell above list. Over the past 5 years DOM has had less dispersion

among neighborhoods and at the same time the percentage of condos that sold over list reached 60-80% in 2015. In 2017, the average percentage of condos for these neighborhoods that sold over list is around 50% with the exception of the South Beach neighborhood which averaged 27%. The absorption rates, the rate at which homes sell in an area, paint a favorable picture for sellers in the area. Traditionally, an absorption rate greater than 20% is considered a sellers market, which highlights the constant demand in these neighborhoods. Since January 2012, the absorption rate has dipped below 20% seven months cumulatively between the four neighborhoods. For San Francisco County, a high absorption rate is normal - there are consistently multiple buyers ready to put in offers, only constrained by the inventory available. Tax Considerations - Many sellers’ tax considerations are suppressing an increase in supply. With rapid housing appreciation over the last 5 years and the level of affluence in the area, many sellers must consider the capital gains tax, Medicare surtax, property taxes, and the San Francisco Transfer Tax. However, the returns that sellers are realizing exemplify the pattern of capitalizing on the appreciation of real estate to create wealth. As one of the top producing teams in District 9, Gueco Real Estate Group has extensive experience guiding clients through the complexities of the local market, including the seller considerations listed here. Gueco Real Estate Group understands these market nuances can be overwhelming for anyone considering selling or buying in the Bay area. Our primary goal with this piece is to educate you on some of these market aspects. Of course, a few pages can never replace our direct experience and years of helping buyers and sellers navigate these complexities as successful advocates. If you are considering making a move, give us a call to discuss partnering with an experienced member of the Gueco Real Estate team.

MEDIAN DAYS ON MARKET (ROLLING 3 MONTH) FIGURE 5 200 180 160 140 120 100 80 60 40

Mission Bay

11.

Yerba Buena

South of Market

SF District 9

San Francisco County

Sep-17

May-17

Jan-17

Sep-16

May-16

Jan-16

Sep-15

May-15

Jan-15

Sep-14

May-14

Jan-14

Sep-13

May-13

Jan-13

Sep-12

Jan-12

May-12

Sep-11

Jan-11

May-11

Sep-10

Jan-10

South Beach

May-10

Sep-09

May-09

Jan-09

Sep-08

May-08

Jan-08

Sep-07

May-07

0

Jan-07

20

Nini Gueco

Fatemah Nikchehi

REALTOR®

Broker Associate

415.488.6928

415.756.4418

[email protected]

[email protected]

CalBRE# 01908351

CalBRE# 01703928

Marcell Neri

Hunter Anderson

REALTOR®

REALTOR®

[email protected]

[email protected]

CalBRE# 01933020

CalBRE# 01945468

Jeremy Villacarlos

Kevin Gueco

REALTOR®

Founder

415.933.0303

415.418.8850

[email protected]

[email protected]

CalBRE# 01994495

CalBRE# 01461677

415.529.8958

650.796.8805

G U E C O R E A LE S TAT E .C O M