Inside San Francisco Real Estate

As you know, the pace of change occurring in our country’s economic/financial system has been monumental during the past 6 months.  In analyzing real estate trends, it’s nice to be able to look at the most recent data to gain insight on how these huge forces impact values locally.  The challenge is having enough data to see a trend and allowing enough time for the forces at play to affect prices (there is undoubtedly a lag).

We looked at median values for Condos/Co-ops/TICs/Lofts in the Inner Mission.  In order to incorporate recent economic forces, we compared the past six months performance to that of years past.  Beginning on September 21, 2008 and running through March 20, 2009, we calculated the median value for the neighborhood and then compared the results to the same time period going back 11 years.

It's time to "analyze this"...

Could we have limited our results to less than 6 months?  Actually yes, we wanted to.  Three months history would be more reliable.  However the challenge was that there were not enough sales (data points) to create a reliable trend.  We see the magic number of sales to create a reliable median value trend to be somewhere around 25.

Could we have gone back more than 11 years?  We did, but we found that the early years had very little data (less than 20 sales during this time frame per year) and thus they were left out.  And of course pre-1995, MLS has no recorded sales as it was not the glorious database it is today… it was a huge periodical publication.

What we’re left with in this particular study is a 6-month analysis going back 11 years.  Here are the results for the Inner Mission:

Inner Mission Analysis (click to enlarge)

• Median sales prices for years past were adjusted for the changing value of the dollar using an inflation calculator.
• The years from 1999 to 2001 show the most impressive run-up in this data set.
• The market appeared to correct very quickly, as things were back to “normal” by 2002.
• As of late, the median has held up remarkably well.  There has been a fall of just 4.72% since peak.

Here are the numbers of sales (data points) we are dealing with in this analysis:

Number of Sales Over this Time Period (click to enlarge)

• You can see that years ’95 through ’98 were omitted from the first chart due to low numbers of sales recorded in the MLS.
• The number of sales occurring in the past 6 months is almost half what it was the year before over the same period.

Final Thoughts:

Overall, I am a bit surprised to see that values have held up fairly well in the Inner Mission over the past 6 months.  With the volume of sales decreasing by nearly half, one would expect more than a 4.27% decrease in values year over year.  I am curious to see how this chart takes shape in the future months.  We have a spring and summer surge coming, which will give us more data points in a shorter period of time.  This will give us more insight into this market’s behavior and we’ll be here to keep you posted all along the way.  Thanks for checking in and we would love to hear your impressions of the market.  It’s as easy as leaving a comment below!

For more neighborhood analysis, click HERE.