Inside San Francisco Real Estate

In case you’ve been living under a rock, our country’s financial system has undergone radical change during the past five months.  The pace at which change is occurring is akin to a forest fire.  We’re hoping for a fast burn that clears the way for new growth.  At this time, however, the fire’s still going.  Maybe not quite as strong as it was at climax, but definitely still going.

What's going on in the economy isn't exactly a "controlled burn"...

Because of the rapid changes going on, we crave the freshest information.  In the interest of seeing what’s going on right now, we created an analysis that you may find veeerrrry interesting.  Here’s what we did:

1. List out all the sales that have occurred in San Francisco’s 10 MLS districts from October 1, 2008 to March 1, 2009 (that’s five months worth of sales).
2. Find the median sales price in each district over this period.  Record it.
3. Follow steps 1 & 2 for each district over the same time period going back to the year 2003.
4. Find when prices peaked for each district.
5. Calculate how far prices have fallen from peak.
6. Rank the 10 districts based on performance over this period.

*Please note:  You’ll need to familiarize yourself with THIS map in order to understand the MLS districts.  All sales come from the MLS.  These do not include private transactions or sales taking place at new developments.  All numbers were adjusted for inflation to control for the changing value of the dollar.  This helps us gain better insight into true market behavior.  Property types included in the analysis include single family homes, condos, TIC’s, lofts, and stock cooperatives.

Now that you know the method, how about those results?

Districts are ranked from worst performance to best:

1. District 3 – Medians peaked in 2005 – Current median is down 31.65% from peak.
2. District 10 – Medians peaked in 2005 – Current median is down 29.32% from peak.
3. District 9 – Medians peaked in 2004 – Current median is down 17.96% from peak.
4. District 2 – Medians peaked in 2005 – Current median is down 14.98% from peak.
5. District 5 – Medians peaked in 2007 – Current median is down 14.01% from peak.
6. District 8 – Medians peaked in 2006 – Current median is down 13.64% from peak.
7. District 1 – Medians peaked in 2007 – Current median is down 12.74% from peak.
8. District 6 – Medians peaked in 2005 – Current median is down 8.39% from peak.
9. District 4 – Medians peaked in 2007 – Current median is down 5.98% from peak.
10. District 7 – No decrease in median during this time period.

As you can see, it’s all about location.  Different pockets around the City behave in different ways.  We’re surprised by the relatively strong performance of district 6, and were floored to see that district 7 has not posted a median price decline over this time period.  District 8 is arguably the most diverse district, with neighborhoods such as the Tenderloin and Russian Hill lumped together in the same boat.  Out of all the district analysis, we think district 8 is probably the least telling.  District 9 is also pretty diverse in types of neighborhoods, so just take note.

Otherwise, the picture is pretty revealing.  The lower end of the market has taken more of a beating since prices peaked.  The higher end has held up better (so far) and has peaks that occurred later.

For more articles looking at the San Francisco market as a whole, click HERE.