Inside San Francisco Real Estate

Welcome to our first installment of “In Search of Truth”.  If you are unfamiliar with how we arrive at the numbers we’re about to talk about, be sure to read about our methodology here.

Russian Hill Condos

In this edition, we set out on a mission to find out if condos in Russian Hill have been appreciating or depreciating.  We went through all sales of Russian Hill condos over the past 6 months with a fine-toothed comb and here’s what we found:

• There were a total of 23 condo sales in Russian Hill in the past 6 months (6/1/08 to 12/1/08).
• Only 4 of the sales appeared to be in the exact same condition when they sold in 2008 versus when they were last sold (according to the MLS photos).  We’ll call these “perfect pairs”.
• All other sales were left out of the analysis because they lacked photos, did not have a past sale to compare to, or had been completely remodeled between sales.

Based on these four perfect matches, did Russian Hill condos appreciate or depreciate?  Here’s what we learned:

• The average annual appreciation for a “perfect pair” Russian Hill condo in the analysis was $22,918.  The median annual appreciation was a little lower, at $21,017.  If it’s a positive number in this environment, we’d say that’s pretty good.
• The average years of ownership for a “perfect pair” condo was 2.78 years.  This is definitely on the short side.  Most people we do business with own for at least 4-7 years.
• If you multiply the $22,918 average annual appreciation by the 2.78 years of ownership, it could be deduced that a perfect pair condo appreciated $63,712 in the last 2.78 years.
• Three of the sales appreciated, one depreciated.  The condo that depreciated lost $17,500 in value during it’s duration of ownership (which was 3.09 years).  Even with this depreciator dragging the numbers downward, the overall trend was up.

We know that the sample size is small, and in the future we’ll expand our search criteria, perhaps to 12 months worth of sales.  We did not anticipate that it would be so difficult to find perfectly matched sales.  Admittedly, we are erring on the side of being very picky about which properties qualify for the analysis.  The photos have to be there for both sales in question and the property has to look the same.  This is something Case-Shiller is unable to do, as they automate their data gathering using an algorithm.

However small the sample, the story is telling and we believe the numbers to be well within reason.  If you have MLS access, you can see the perfect matched sales for yourself.  Look at the most recent sale, read the descriptions, and look at all the photos.  Then look at the last sale under property history, read the description, and look at all the photos.

1. 1326 Greenwich
2. 1135 Francisco #5
3. 1438 Green #5B
4. 54 Bret Harte Terrace #1

Any requests on what neighborhood we should analyze next?