The first quarter of 2019 was interesting to say the least! Interest rates lowered sharply, the stock market
surged, and a rush of IPO money is predicted throughout the year. See below for the figures and details on how all these elements shaped Q1.
As always, If you have questions about a specific neighborhood, property or anything real estate, let me know!
-Sue
San Francisco Real Estate
Home Prices, Sales & Statistics; Stock Markets; Interest Rates and Unicorns in Spring
April 2019, Q1 Report
A substantial portion of Q1 statistics reflect new listings and accepted offers occurring during the mid-winter market doldrums (Thanksgiving to mid-January). In November and December 2018, the stock market plunged drastically from its all-time high in September, and interest rates hit their highest point in years: these factors negatively affected buyer demand. Then both turned in dramatically positive directions in early 2019. So, Q1 statistics reflect economic conditions in both Q4 2018 (very negative) and Q1 2019 (very positive). It is also the quarter with the lowest sales volume.
The spring selling season – whose data starts to show up in March, but is mostly reflected in Q2 – is the most active of the year, and also typically sees the highest rates of appreciation. As always, there are many economic factors at play impacting Bay Area markets, some of which are discussed below.
Year-over-Year & Longer-Term Trends
Median Sales Prices
Median house sales prices dropped dramatically from last spring, but then spiked up again in March 2019. Spring is typically the season when median prices increase most.
The biggest change since last spring as been a switch from high year-over-year quarterly appreciation rates to zero appreciation and a slight decline in the last 2 quarters. What occurs this spring will be critical to understanding market trends.
New Listings Coming on Market
Year-over-year, there was a plunge in the number of new listings coming on market in Q1 – new listings almost always climb from January through March, but not this year. Were sellers waiting for a hoped-for rush of new IPO millionaires to appear? Will new listing inventory jump now that the IPOs have begun to occur? Q2 will provide much more data regarding the media-frenzy “IPO effect.”
Luxury Home Sales
There has been a significant drop in MLS sales of luxury condos. The jump in the number of new, luxury (and ultra-luxury) condos being built is creating a surge of supply that has increased the competition between sellers for buyers’ attention. (Many new-project luxury condos are neither listed nor their sales reported to MLS, and so are not reflected in this chart.)
Selected Economic Factors
Stock Markets & Unicorn IPOs
A wild ride in stock prices, particularly in high-tech: Prices soared to new peaks in summer-early autumn 2018, plunged drastically in Q4 2018, and then saw the biggest Q1 jump in 20 years. Huge amounts of wealth appearing, disappearing and reappearing – a major influence on consumer confidence and home-buyer demand.
A new surge of large, high-tech unicorn IPOs – mostly of firms headquartered in SF – has just started to roll out. IPOs have historically created vast quantities of new wealth in the Bay Area, though the magnitude of the effect of this new wave on the SF housing market is yet unknown – but currently fiercely disputed. Anecdotally, there have certainly been reports of buyers moving more quickly to beat the “rush of new millionaires” and of sellers waiting to list in order to catch the rush (see New Listing chart above).
Employment
A gigantic factor underlying Bay Area housing markets has been the staggering increase in employed residents since 2010. Outward-bound migration trends of residents and businesses – often citing housing costs as one major motivator – have been an increasing concern in recent years, but for the time being, employment numbers have continued to grow.
New Home Construction
Due to a number of factors, including a rapid increase in land and construction costs, new housing construction in SF dropped dramatically in 2018. The quantity of new homes being built plays a significant role in the supply and demand equation, and thus home prices.
Interest Rates
There has been a stunning decline in mortgage interest rates from mid-November 2018 through the end of March, from 4.94% to 4.06% – to the enormous advantage to buyers. Big drops such as this have helped to recharge buyer demand in the past.
Housing Affordability & Household Incomes
This chart calculates the income required to buy a median-price house in Q4 2018. Median condo prices are substantially less in every county and would require lower incomes.
County median household incomes are broken out below for homeowners and tenants – some Bay Area county incomes are among the highest in the country. However, comparing the chart below to the one above illustrates the disparity between prevailing incomes and the incomes required to purchase in the Bay Area.
Health & Economic Indicators
According to a 2018 ranking of state health conditions by the Commonwealth Fund, California ranks 14th in the nation (1st being best – Hawaii). According to CountyHealthRankings.org, Bay Area counties are at the top of the list within CA for Overall Health Outcomes: Marin, San Mateo and Santa Clara rank 1, 2 & 3, while SF is 8th. On the less positive side, SF has the highest income inequality ratio in the state.
As we move out of these rainy winter months, there are so many amazing events to attend in our city. Listed below are some of the highlights. Chocolate, art, St. Patrick’s Day, multiple garden/floral expos, beer, wine & more! A little something for everyone. Looking forward to so many of these!
March 16, 11:30am, From 2nd St. & Market St to the Civic Center
You don’t need to be Irish to enjoy this vibrant display of history and culture. The parade and festival feature over one hundred colorful floats, live performances, along with delicious Irish food and beverage.
Take a stroll through artfully curated gardens created by world-class floral designers. Learn how to create your own beautiful arrangements with hands-on demonstrations and seminars.
Back for the 8th year, Bay Area Brew Fest showcases hundreds of beers, food trucks, and a dueling piano bar. General admission grants you unlimited samples from over 80 breweries and an excitement-filled day.
It’s almost time for the return of America’s favorite pastime. Whether you’re watching from the stands at AT&T Park or cheering from the comfort of your couch, the 2019 Home Opener game is a cause for celebration.
Starting Line at Pier 39; Finish Line at Maritime Museum
For runners and spectators alike, the 7th annual Half Marathon is a perfect way to give back while enjoying 13.1 miles of the beautiful scenery of the Bay and the Golden Gate Bridge.
As one of the longest running film festivals in the US, SFIFF showcases cinematic expression and culture through film from over 50 countries around the world.
April 13-14, 20-21, Post St. between Laguna and Fillmore
With over 200,000 attendees, the SF festival is said to be the second largest celebration of the arrival of spring and blooming of the cherry blossom. It is also held at one of the last three remaining Japantowns in the United States!
Wine-taste your way down Polk Street and enjoy the local eateries along the way. Participants will receive a wine glass and a map of the merchants between Post and Filbert Streets.
Known as the “Biggest Little Parade in SF,” this annual Spring celebration offers something for everyone—live entertainment, outdoor dining, pony rides, petting zoo, and more!
The fair features 75 modern and contemporary art galleries from across the globe that will showcase painting, ceramics, jewelry, sculptures, photo, mixed media, and more.
The highly-anticipated Decorator Showcase is back again for its 42nd year. The 2019 edition will showcase a completely reimagined 18,000-square-foot mansion modeled after the Petit Trianon in Versailles.
May 19, Time TBD, Starting line Main St. & Howard St.; finish line Ocean Beach
San Francisco’s silliest, most energetic footrace is back for another year. Whether you’re a giving it your all on the 7.46-mile course or just exercising your fashion sense, Bay to Breakers is an event you won’t want to miss!
Experience the week-long “floral takeover” of the de Young galleries. The exhibition features brilliant floral interpretations of the de Young’s collection of paintings, objects, and sculptures.
At the corner of Magellan and Dorantes, we have been watching this gorgeous tree get cut down. Tree remover estimated it to be 120 years old. From the permits on the tree, it sounds like not everyone wanted the homeowner to cut it down. Not sure what the homeowner has planned, but hopefully some other trees will be planted in its place.
Homes in the West Portal area have become very desirable to buyers who want to commute south, take muni downtown, or want a feeling of a “real” neighborhood. Prices continue to rise and supply is limited. Bigger houses, yards, trees, muni, the “village”- what’s not to like?