Happy 4th of July!
In between putting on another fleece, BBQs or just enjoying this long weekend, catch up on the latest from Kevin+Jonathan and San Francisco’s housing market. It’s been a helluva journey this year.
Where We’ve Been
- May cause dizziness or nausea.
- Other side effects may include insomnia, irritability, or euphoria.
These side effects aren’t just for the latest prescription drug being hawked on tv, but could easily describe what the Bay Area’s housing market has been like for the first half of 2021. As our Mid-Year Survey will show, a lot has been going on with a lot of sales activity that reflect lives being uprooted, shaken around and set back down again given the Pandemic, its aftermath and the recovery we’re now entering.
More and more evidence of life entering a new normal can be seen by going outside. Last weekend was the first where we noticed marked increases in foot traffic along the neighborhood drags that are at the heart of our various neighborhoods like the Castro, Cole Valley, Noe Valley and the Inner Sunset for example. And instead of being infectious with something no one wants, there seems to be an infectious energy out there instead. The future is on its way for sure. Given that it’s the midway point of 2021, we wanted to look back with an eye towards the future and what it means for real estate.
What follows below is our mid-year survey chronicling what buyers have been liquidating their portfolios for, along with a bevy of recent Tall Tales of Sales, recent Client Wins, and our prognostication as to what buyers will gravitate towards if they haven’t already bought or if they wanted to buy something else.
As always, thank you for reading In the Know. We have more than 700 subscribers and our readership keeps expanding. But we can’t do it without you, your referrals and your loyalty. Thank you. So be sure to think of us anytime real estate comes to mind as we’ll be here to help you and yours out.
Very Truly Yours and Best,
Kevin K. Ho, Esq.
Vanguard Properties
Broker Associate | Attorney | Top Producer | REALTOR
DRE 01875957 | SBN 233408
(415) 297.7462 | kevin@kevinandjonathan.com
Jonathan B. McNarry
Vanguard Properties
Broker Associate | Top Producer | REALTOR
DRE 01747295
(415) 215.4393 | jonathan@kevinandjonathan.com
Raffi McNarry-Ho
Real estate super dog and Black Labrador Retriever extraordinaire. See his listing resume here.
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As you may know, we have made hundreds and hundreds of YouTube property walk-throughs of the things we see in San Francisco. Shall we walk and talk?
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Check out our client Phil's latest win over on Pond Street.
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Check out the detached condo our clients Miles and Daryl won over on 23rd Street.
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The Market Survey Intro: Kevin was correct, but Jonathan was even more correct — prices have gone up but not as much as major stock indexes.
When we thought the City’s housing market would come back this spring and summer, we thought it’d be a modest affair — okay, I thought it’d be more modest as it’s proven to be whereas Jonathan thought that the early spring was just the beginning of a longer term and more sustained increase in prices that are still underperforming when compared with major blue chip indexes, which means there’s still more room to go. (Raffi was indifferent and more focused on ensuring the treat supply chain went interrupted).
Our 2019 Prediction: We surmised that getting a new Administration who would be more effective at ending the Pandemic would kickstart the economy which would lead to more homes being bought and sold with an emphasis on single-family homes everywhere meaning there would be some softness in high-rise/stacked living in areas like SoMa, South Beach and Mission Bay.
What Happened: Correct and then some. To say that home prices have risen since last year — let alone since January 2021 — would be an understatement. What’s been impressive is that the surge in home prices isn’t just confined to the Bay Area but has also been taking place nationally. People saved more money during the Pandemic, people stayed put in their current homes and construction activity ground to a halt. This means there’s more cash in the system that has less inventory being traded and less inventory being created. Throw in society-wide, work-from-home arrangements, low mortgages rates and an overall reprioritization that emphasized staying close to home, then you can see why us realtors are so busy these days.
The Data says: It looks like we’ve seen people have really gravitated towards single-family houses with the median — the median — house price in San Francisco pushed past $1.98 million in June 2021. Condo prices, meanwhile, have been more erratic for 2- and 3-bedrooms especially with prices only just now recovering to somewhere near their 2019 highs.
Many times, it’s hard to see where you are in history when you’re in the middle of it, but it now looks like January 2021 was the last ‘best’ time to buy a house.
Houses in San Francisco took twice as long to sell on average back then and sold anywhere from $200,000 to $300,000 less than they did in May 2021. But does this mean you’ve missed out? Not really because there wasn’t nearly as much choice as just 160 houses sold in January while 260 sold in May 2021.
As with most years, list price meant nothing. Nearly 80 percent of single-family houses in San Francisco sold over list price in May 2021 (56% of condos sold over list price during the same time period. Houses sold at an average of 15% over list price while condos, if they sold over, sold an average (if a condo sold over list, it sold an average of just under 6% over list price.
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Our Prediction: The more suburban parts of the Bay Area — the East Bay, Peninsula and points north of Marin — would be popular.
What We’ve Seen: Yes, the normal school-related relocation that take 30 and 40-somethings to the East Bay, Marin or the Peninsula has accelerated thanks to the Pandemic’s impact on priorities and work patterns. But the shift has been more fever-pitched than anticipated with East Bay where houses regularly see 20-25 offers for homes priced in the $700,000-$1.5M range. This competition is leading to homes selling for far more now than what they would have just a year ago. The median $/sqft price for a house in Alameda Country went from $575/sqft in May 2020 to $744/sqft in May 2021 at a median price of $1.3 million countywide with prices surging to near-San Francisco prices in Piedmont, Montclair and Berkeley most recently with single-family houses closing at a median price of $1.9 million at $998/sqft for these three most popular destinations.
Meanwhile, Alameda County condo prices have held steady at $604/sqft in 2020 and $614/sqft in 2021.
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And here's what we see coming down the line...
General Predictions Now
The Baby Boom Push Out. A little bit of inventory relief may be in the offing however as Baby Boomers who couldn’t fathom selling are, well, now starting to think about selling their homes to either downsize or upsize to a family compound in a two- or three-unit building for example. The pandemic’s end is partially why this is happening but changes to California’s property tax system, which locks in a home’s purchase price as its property tax basis is now allowing owners to bring a relatively low assessed value to a replacement home anywhere in the state.
Single-Family Homes with yards (or any outdoor space really) are selling like sought-after hot cakes/PS5s; but unlike those consumer goods/commodities, replenishing now inventory or supply of houses – especially in San Francisco — already time-consuming and expensive — has become even more so recently with lumber prices and supply chain disruptions for such things like appliances and paints for example, but the hope that points one and two above will lead to more inventory along with improving supply chains for building goods and appliances. But for the time being, be prepared to compete and to pay for a single-family house or, even, a two-unit building that people end up using as a single-family or as a family compound for a multigeneration family.
And, of course, the post-pandemic pent-up demand push has added price premiums for homes with outdoor space, proximity to dog parks (something Raffi knew about years agop) and, proximity to slow-street streets like Sanchez Street in Noe Valley, Page Street in the Haight and Kirkham in the Sunset among many, many more. How long these streets stay slow remains to be seen.
A changed work-life balance and being spared a year of commuting has altered buyer preferences or, perhaps, distilled them back to more traditional layouts and locations. This has the impact of putting more emphasis on being more flexible on neighborhoods (the commute is out, walkability is in), better finishes and appliances and wanting extra room for at-home offices, in-laws or just because.
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Instead of just seeing the outcomes of properties you may have following on the MLS without context, here’s what we know/have been told or have heard. Remember, this is all hearsay, maybe even double or triple hearsay — in other words, the information here may not be fully accurate but should be close to what really happened. We highlight these properties to give you a general sense of how the market is behaving, ask us for more information and how it may be useful to you.
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We’re proud to be a part of the largest locally owned real estate brokerage for San Francisco and the greater Bay Area. Founded, owned and operated with close ties to the LGBT community, development community and a civic minded spirit that has remained a compelling force in San Francisco’s housing market.
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