17 Jan 2018

San Francisco’s Real Estate in San Francisco, by the Numbers

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In 2017, real estate markets surged and financial markets soared. Here’s a snapshot of how the market fared, and what factors influenced that.

Home and Condo Sales Rose

Whereas we saw some cooling in 2016, with home sales rising 6% and condos not at all, 2017 saw strong growth in median sales price across the board. Single-family homes gained by 7%, with condos close on their tail at 6%, demonstrating the hunger for homes in this very tight market.

Record-Low Unemployment

The Bay Area high-tech economy continues to grow in full force, with companies leasing enormous spaces in newly built office buildings, presumably to be filled with new hires. Consequently, unemployment in San Francisco County hit a historic low in November 2017, at 2.3%. The previous low, 2.4% was in December 1999. We’ve seen some notable IPOs, with others anticipated, generating a significant flow of wealth into the city.

Continued Low Interest Rates

The average rate for a 30-year fixed mortgage for 2017 was 3.99%, with the rates coming down about 0.2% from the beginning of the year. This stays on trend with the long streak of historic low interest rates, which have been hovering around the 4% mark for several years. To put that in perspective, as recently as 2008, rates were around 6%, and going back to 1981, rates hit an astonishing 18.45%. Our current low rates continue to make real estate a desirable investment.

Potential Future Influences

The Bay Area still has probably the most dynamic, innovation-fueled economy in the world and indisputably remains among the great metro areas on the planet, but there are external social, economic, political and environmental factors that may influence our market in the future.

Congress delivered an unpleasant holiday present to many Bay Area residents in the form of federal tax law changes, limiting the deductibility of mortgage interest and state and local taxes (SALT). The effect of these changes make living in an already high cost-of-living area more costly for many residents, and also reduce some of the financial incentives of home ownership, especially for more expensive homes. Predictions on the effect of these tax changes on local housing markets and the business environment range from one extreme (economic devastation) to the other ( ¯\_(ツ)_/¯ ). On a positive note, the state legislature is currently working on bills that might blunt the negative financial impacts, but it is too early to guess how it will all play out. We live in interesting times.

A Cause for Celebration

If you will forgive a little celebration on our part: In 2017, Paragon became the largest brokerage in San Francisco by dollar volume sales of residential and multi-unit residential real estate (as reported to MLS, per Broker Metrics). We opened our doors in 2004.

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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group

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