A Second Wind for San Francisco Real Estate?

The Market Shifts Again after Cooling in 2016

Since the year began, preliminary data has been trickling in regarding the commercial and residential real estate markets. Indications are that things may be heating up again after a slightly slow start to the year. My take on what is happening in the market is that the November election results were not anticipated by many in the Bay Area. The subsequent months of daily unpredictable news about the new administration caused a lack of confidence in the market, so people held back. Now it seems that many have decided it's time to move forward with their lives, and people are back to buying and selling in San Francisco and the area. What does this mean for the rest of the year? Well, my trusty Magic 8 Ball would say, "Ask again later."

Percentage of Home Listings Accepting Offers by Property Type & Price Segment

A way to judge the health (or craziness of a market) is to look at the percentage of listings accepting offers: The higher the percentage, the hotter the market. In the chart below, we assessed San Francisco by property type and price segment, comparing this past April to the same months of 2015 and 2016. Note that spring 2015 was considered a particularly feverish market characterized by very high demand and very low inventory. Most of the segments saw a considerable cooling from April 2015 to April 2016. However, almost all the segments bounced back in April 2017, and, indeed, the lower price segments performed significantly better than 2 years ago. It will be interesting to see if these dynamics continue through Q2 and beyond. As seen in the chart below, there has been an appreciable drop in the number of homes for sale. Keep in mind the basics of supply and demand. When demand is high and supply is low prices tend to escalate.

Various Economic Indicators

S&P 500 Stock Index

San Francisco, Alameda & Marin Rents

Mortgage Interest Rates

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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.

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.

© 2017 Paragon Real Estate Group