January 2019 Market Report

Looking Back on 2018

What a year. Rarely have we seen so many local, national and international political, economic, social and ecological factors impacting the 2018 market. In the first half of the year, market conditions were about as hot as they've ever been, and there were staggering year-over-year appreciation rates. While real estate and financial markets began to cool off in summer and early autumn, in the end we still saw a banner year for property value appreciation (see below). Entering 2019, we continue to see many of the factors that influenced last year, including extremely volatile financial markets, fluctuating interest rates, contentious national politics, international trade issues, and spiraling debt levels. These threaten to soften the market, yet employment growth remains strong in the Bay Area, and a dramatic surge of local high-tech unicorns that plan to go public could create a tsunami of new wealth and, consequently, buyers.

What will 2019 be like? If only I had a crystal ball. Barring any further unforeseen changes that we can not control in the national and global arena, we should see a slightly less intense market this spring. But anecdotally, judging from the number of open houses and the amount of client activity that I have seen so far this year, there are definitely plenty of interested buyers out there. Prospective sellers would be wise to consider their options now.

Year-over-Year Annual Appreciation

Comparing 2018 to 2017, the median single family house sales price in San Francisco jumped 13% or $185,000 to $1,600,000—the largest annual dollar increase ever (not adjusted for inflation)—and the median condo price increased by $60,000 to $1,210,000. The delta in appreciation between SFR and condos is likely to continue and expand, considering the vast majority of new construction in the city is condos.

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Year-over-Year Appreciation by Quarter

Broken out by quarter, it is clear that the big increases in price occurred in the first half of 2018, after which the median house sales price declined. By the 4th quarter of 2018, the quarterly, year-over-year median house appreciation rate had basically dropped to zero. Condo prices were basically flat Q2 to Q4. This trend of high appreciation rates in the first half plunging during the second half was relatively common around the Bay Area. In theory we will see similar patterns in the first half of 2019.

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Do you have questions about these reports, or about the market in general? I have more data, such as appreciation rates by neighborhood, but I don’t want to make this post overwhelming. I’m always available to answer your questions. Just contact me.

dpaul brown