January 2017 – High-Speed Rail

It’s Coming

Here’s the deal. Competition for condominiums is not only from City residents (some 850,000), but from 7 million+ folks who live in the nine counties surrounding the City. Now, think about adding to this housing competition some 18 million who live in the Los Angeles Metro area and will be able to get here in less than three hours!

And they don’t have to fly into SFO or Oakland, but can arrive at the Transbay Terminal downtown, and then walk to a hotel or condominium.

It’s Already Underway

 There’s a 119-mile stretch (part of the 500-mile distance from LA’s Union Station to Transbay) in the Central Valley that is now under construction. Why start there? Two primary reasons: developing rail infrastructure in relatively flat, rural areas allows for lower construction costs and more opportunity for necessary testing, and by law, certain funds needed to be expended by 2017 – a deadline that could not be met if construction were to start in densely-populated urban areas.

BTW, over the past 10 years, the Central Valley has been the fastest growing region in the state, with its population increasing by 17 percent compared to 10 percent statewide. Moody’s Analytics predicts that by 2040, there will be close to 10 million people living in the Valley.  The cities of Fresno and Bakersfield today have populations of 500,000 and 350,000 respectively.

The connection between LA and San Francisco is now estimated to be completed in 2029.

Not Until 2029?

 If we’re talking real estate, we need to think long term, right? For those of us older than the Millennials, we know that 10 years goes by in a flash. Investing in San Francisco residential real estate makes sense only if one plans to remain here for five or more years. Anything less is a crap shoot because the market is cyclical, and it may be difficult to get out with a “whole skin” if one wants to sell sooner.

We have just come off four years (2012-2015) of 10%+ price appreciation. The market had to take a breather, and it did so in 2016 (off 0.5% for condominiums). For the last 23 years, since 1994, with two recessions thrown in, the average annual price appreciation was 7.0% for condominiums and 7.9% for single-family homes, city-wide.

 Condo Prices and Hi-Speed Trains

 Most of the post-2005 condominium construction has taken place downtown in South Beach, Yerba Buena, etc. For several years now, their re-sale prices have been on a par or higher than the traditional high-end neighborhoods – Nob Hill, Russian Hill, Pacific & Presidio Heights, Cow Hollow and the Marina.

In 2016, re-sales were around $1,215/sq. ft. in South Beach/Yerba Buena and $1,250 to $1,330 in the traditional neighborhoods.

However, newly constructed units downtown have fetched more than $1,400/sq. ft. in 2016, and I’ll bet that they continue to exceed prices of the traditional neighborhoods in the future because of their high amenity levels as well as convenience to jobs and, guess what, the coming of high-speed trains.


 The state of California is growing quickly, and its aging infrastructure can’t accommodate the population increases. It’ not feasible to add more freeways or more airport runways at SFO, OAK, SJC, LAX, or SAN. High-speed rail is a major alternative to terminal gridlock.

One of its biggest advantages is that it offers passengers “one-seat” all the way from downtown Los Angeles to downtown San Francisco. It’s also electric so it will improve air quality.

See you in the club car in 2029!

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

December 2016 – Year-end Wrap

 Market Update


 For the 11 months through November, the average price of single-family homes was up 4.7%, and condominiums were off 0.9%, year-over-year: no surprise. After four years of average price appreciation of better than 10%/year, the market needs a rest.

Much Happened


For starters, 2016 witnessed the Salesforce Tower rise, the Millennium Tower lean, the Transbay Terminal move forward, Central SOMA plan take shape, CPMC Hospital top out, Treasure Island infrastructure work begin, the Rockwell welcome its first occupants, Dogpatch come of age, Candlestick Point get a green light, the Warriors Stadium win a judgement…………… and the San Francisco beat goes on.

There are no Experts!


You can say that again. The political experts were dead wrong about the presidential election, right? Forget about panels of experts who want to tell you what will happen in 2017. No one can time the market; certainly not so-called experts. Clients should ask why they are thinking about buying or selling. If they are going to stay in San Francisco for at least five years, then it is a good time to buy. If they have a life-changing reason to sell, then it is the good/right time to sell.

Looking to 2017


Given that there are are no experts, and my non-expert opinion is worth at most two cents, here goes. Single-family home appreciation in 2017 will exceed that of condominiums. No stretch here since this has been so for the last 20+ years. Price appreciation for both categories will continue to slip while condominium prices will continue to be supported by empty-nesters and pied a terre buyers who will continue to compete with people who work and live in the City. The Millennium Tower will continue to be a media darling.

The Book


 Pulse Book Image

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

November 2016 – The Millennium Affect


OK, it’s sinking and leaning a bit . We all know that. It seems the whole world knows it. The story is a darling of national/international media, and it promises to have legs, as they say.

Questions How does it affect other existing buildings and future developments here in San Francisco. I made a few calls. ……there were initial concerns when the news first broke and everyone was asking about structural systems, but there hasn’t been any real impact on sales at other properties: just the need to talk during sales presentations about each building and how it was designed to be safe………………

On the Development Side As developers seek capital for future developments, (more) questions will arise about structural issues and how the developer plans to avoid a Millennium Tower (MT) issue. Capital may insist on added construction insurance (read more cost).

Beneficiaries Downtown San Francisco will continue to attract buyers (even more so when the Transbay Terminal is completed) who want to be in center-city, and though they may avoid MT (at least for a while) their appetite can be sated by other high-end developments.

This particular building’s woes will likely benefit the Four Seasons, St. Regis, Infinity/Lumina, One Rincon/The Harrison, and the soon to be completed 181 Fremont, plus others on the planning boards.

The situation has helped educate buyers and encouraged them to ask about structural systems, caisson depth, bedrock, etc. This is good. The more educated and informed they are, the more likely they will act to make a purchase.

Memories are short. Look at the 1989 earthquake and the damage to the Marina. Marina prices were in the tank for a while, and have since appreciated along with the overall San Francisco market. And yes there are questions about liquefaction and seismic upgrades. Once discussed and explained, it’s full steam ahead.

Market Update For the ten months through October, the average price of single-family homes is up 4.4%, and condominiums are off 0.1%, year-over-year.

Pulse Book Image

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

October 2016 – Long-term Thinking

A Few Data Points

Just for kicks, let’s look at average prices for the last 25 years:

Year                 Condos                    Single-family                  Homes v. Condos

1990                  $318,000                $362,000                                14%

1995                  $314,000                $342,000                                  9%

2000                  $656,000                $729,000                                11%

2005                  $834,000             $1,079,000                               29%

2010                  $758,000                $996,000                                31%

2015                $1,253,000            $1,637,000                              31%

As you can see, prices were relatively stable for 10 years from 1990 to 2000, although they did more than double during that period, and there were ups and downs. Over the 25 years, average prices have appreciated an average of about 6.5% annually; single-family homes a bit more than condominiums.

The premium of single-family homes over condominiums is interesting, although I have no solid evidence as to why there is a premium, nor why it has grown to double digits in the last 10+ years (31% thru September 2016). However, of note, there is no land to build single-family homes, while condominium construction has boomed. Also, the typical owner stays in his/her single family home some 40+ years, while the typical condominium owner stays less than 20 years.

Good/Bad News

 The good news for buyers is that the rate of price growth (10%+/year appreciation in each of the last four years) has leveled off, and it does not seem that we will have another four years of robust price appreciation in the near term.

The bad news is that prices are not likely to soften very much (I hate going out on a crystal ball limb) because 1.  while most young, primary (first time) home buyers may not be able to afford San Francisco prices, there are many recently minted millionaires, well-heeled empty nesters, and pied a terre buyers who can afford our heady prices, and 2. many single-family home owners would likely be “stuck” with a large capital gains tax were they to sell (forget about the issue of where they would move to), thus limiting the supply of additional homes for sale.


 So if you own and are here, that’s good, and if not, that’s not so good. Lots of people want to be here, but it’s an expensive place to be. If you want lots of space at a low cost, I understand that Iowa has much to offer (don’t ask me exactly what).

New Specialty

I have decided to help first time buyers break into the market using some creative thinking. Call me.

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

Pulse Book Image

September 2016 – Unaffordable

It’s Getting Personal

I may have told you that my Orange County-based son was planning to move to the city. We looked at several condominiums and even made an offer on one in Dogpatch. He called me last week to let me know that he was in contract in OC on a 3 BR/2.5 BA condominium, about 1,500 sq. ft. with parking at a price of……… wait for it………… $445,000. Needless to say, we in San Francisco can’t compete.

In the News

news image

 For the last several months, I have been reading stories about tech employees decamping for other cities. Last week there was a story in the NY Times about Bay Area companies starting outposts in Arizona.S

The article mentioned that according to Zillow the median home price in metro Phoenix was $221,000 and $822,000 in San Francisco. I checked the MLS for San Francisco, and the median price in August was $1.2 million, not $822,000. (Note: $1.34 million for single-family homes and $1.1 Million for condominiums). The combined median value in San Francisco was a mere $265,000 in 1994 – 22 years ago.

Then there was the story about the Palo Alto Planning Commissioner who resigned because of the cost of housing in Palo Alto. From the former Palo Alto Commissioner’s resignation letter, “If we wanted to buy the same home (note – they were renting with another family) and share it with children and not roommates, it would cost $2.7M and our payment would be $12,177 a month in mortgage, taxes, and insurance. That’s $146,127 per year — an entire professional’s income before taxes. This is unaffordable even for an attorney and a software engineer.”  (I encourage you to read the whole article).

The New York Times business section had an article on August 24, entitled The Housing Market is Finally Starting to Look Healthy. That would be for the rest of the country, not the Bay Area, since we have been on a tear beginning in 2012.


Yes prices have moderated in 2016 (stalled is a better description), and I am willing to bet that we will have a few years of a flat if not a down market.

The “unique” nexus of San Francisco/Silicon Valley is not about to go away, but it is going to be tougher to attract young talent to the area mainly because of the affordability issue.

Our Market

In my opinion, the market started softening in June 2015. It continues to soften. For those who NEED a home, they should not wait for prices to go down, and for those who NEED to sell, they should not wait for prices to go up. As I discovered in assembling my Pulses into a book, one better not try to time the market. Do what you need to do when you need to do it.

Pulse Book Image

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

August 2016 – Summertime in San Francisco


As I listen to the weather news, I hear that it is 105 degrees in Sacramento, and then look at my car’s temp gauge to see it’s 65 degrees in San Francisco. My superior mathematical skills allow me to quickly compute a 40-degree difference. Good Grief, Charlie Brown!

The dollar may be up versus most other currencies, but that doesn’t stop the hordes of tourists dressed in shorts and T-shirts from visiting our shores. They come not only to see the beautiful Bay and Bridge views but to also see the turn-of-the-century architecture (the last century thank you) and to see the birthplace of brands they know well like Facebook, Google, Twitter, Tesla, Yelp, et al. This is ground zero!

And then – the Cost of Housing

“Gee honey, let’s think about living here. But it’s so expensive.” Indeed, it is. I spoke to a woman this past week who now lives in St. Louis. Why? She said she lived in San Francisco for 10 years and left to buy a house with a backyard, etc. (Sounded like my daughter who absconded with my granddaughter and moved to Seattle 10 years ago).

Recently, each year some 70,000 folks move into the city while some 60,000 move away. So there is a net influx of some 10,000 who are part of the reason for increased prices. Jobs are plentiful, and pied-a-terre and empty-nester buyers push prices up as well.

Did you read about the robot-powered burger joint that creates and serves hamburgers with all the trimmings and replaces two or three full time line cooks in the process? If Tesla or Google can create driver-less cars, then……………..

The Housing Crisis

There is indeed a housing crisis for people who work in restaurants, the first responders, nurses, school teachers, and younger tech employees who have not, and maybe never, cash out at the thousands of start-ups that will never make it. Yes, they can rent, but rents are exceedingly expensive as well.

Though my crystal ball tells me that housing (and rent) prices have moderated, in the long-run, San Francisco will continue to remain one of the most expensive cities in the U.S.

The following table speaks volumes. Real annualized house appreciation, 1950 – 2000

Top and bottom 10 metro areas with 1950 population > 500,000

Annualized growth rate, 1950-2000

Top 10 MSAs by Price Growth         Bottom 10 MSAs by Price Growth

San Francisco*              3.53                                San Antonio                  1.13

Oakland                            2.82                                Milwaukee                     1.06

Seattle                                2.74                                Pittsburgh                     1.02

San Diego                          2.61                                Dayton                            0.99

Los Angeles                      2.46                                 Albany, NY                      0.97

Portland                              2.36                                 Cleveland                       0.91                                                                                              Rochester, NY              0.89

Bergen-Passaic, NJ       2.19                              Youngstown-Warren  0.81

Charlotte                            2.18                                 Syracuse                            0.67

New Haven                        2.12                                  Buffalo                              0.54

Note: Average = 1.70

Source: Joseph Gyourko, Christopher Mayer, Todd Sinai

*The rates above are for the San Francisco metro area, which comprises nine Bay Area counties and not for the city of San Francisco itself.

The six cities with the highest appreciation are all on the west coast. With the exception of San Antonio, all of the lowest growth cities are former centers of the industrial age.

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

Pulse Book Image

July 2016 – The Market: What is Going On?


My December, 2015 Pulse was entitled Are We Getting Tired? The title referred to a sense that the market was getting a bit long in the tooth after four straight years of 10+% price appreciation.

Fast-forward six months to present day. Compared to the first six months of 2015, average prices for single-family homes are up just 0.5% and condominium prices are down 1.4%. Yes, the market appears to have lost some steam – average price-wise.

When I look at my 2015 numbers today, I now think that the market started losing steam in June 2015, not in December 2015.

Many agents will tell you that the market has “softened” and price reductions are no longer an infrequent occurrence. How does this square with so many properties going way over list price?

Transactions – the Other Number

 It is worth looking at the number of transactions. To keep things simple, I will discuss only single-family homes and forget about condominiums. In 2008, as the recession was gathering steam, 2,161 single-family homes sold in the city. This compares to an average of 2,967 for the previous five years (2003 – 2007) and average annual sales of 2,457 in the five years after 2008 (2009 – 2013).

For 2016, I estimate that there will be a total of 2,125 sales, 7.0% fewer single-family transactions than in 2015, and a whopping 28% fewer than the average number of sales for the period 2003 – 2007.

Some Theories

July 2016 Pulse - Theories

For the 19 years between 1987 and 2005,  transactions averaged 3,084. Now we are running closer to 2,100. Why such a drop? I can only speculate. Maybe it is because single-family owners are living longer, or maybe they are able to make their homes more senior-compatible so they can stay longer, or maybe their homes have appreciated so much that they don’t want to sell and take a substantial capital gains hit. In any event, though the market maybe cooling, enough buyers are willing to compete and spend what it takes to buy the home that they want. Averages can mask all sorts of anomalies.

A Contradiction of Sorts?

Is there really a softening in the market? While average year-to-year price comparisons may show minimal or no percentage growth for the city, the numbers are only averages, and buried in the averages are an awful lot of properties whose final sale price exceeded list price; often by 20% to 40%!

My Conclusion

 While we are not likely to see year-over-year price growth of 10+% in 2016, there are fewer single-family home properties coming to market and competition remains intense. My crystal ball predicts a 4.6% average price increase over 2015 versus the 13.3% appreciation in 2015 over 2014. A cool down in year-over-year price growth is also the story with condominiums (estimate – 2.8% price growth), though new construction adds to supply. Then there is Brexit, which is likely to have an impact on both buyer and seller psychology. Hmmmmm.

Pulse Book Image

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

Please feel free to email or ring me at 415-730-7772 when you need real estate expertise.

June 2016 – 181 Fremont Residences

What’s different?

This is a relatively small residential development on top of a big commercial office building. I am sure there are other large commercial buildings with residences in the city, but they do not readily come to mind.

181 #1

On top of 50+ floors of commercial space, there are 55 condominiums and 12 “accessory suites” on the 54th floor (think nanny or guest quarters). Owner units start on the 55th floor and go up to the 70th floor penthouse: only 2 to 4 units per floor from 55 to 69, and a full-floor unit on 70.

The 52nd floor has a fitness center, owners’ lounge, catering kitchen, conference room, etc.: no swimming pool or media room. (Mechanical on 53). Unlike other high-end developments, my sense is that potential buyers are likely transient and will not be using the property as a primary residence. Of course, I could be wrong.

The developer, Jay Paul, hired top interior designer, Orlando Diaz-Azcuy, to design unit interiors and the residential lobby. His recommended finishes and wall/floor/window coverings/recessed lighting will be installed by the developer, which is one of the reasons for lofty prices, not to mention views, location, and a limited offering.  Kudos to Heller Manus Architects for contributing a beautiful building to the skyline. BTW, the current sales center is at 101 California, 42nd floor, rather than at or near the property.



For quite some time, I have been pontificating the benefits of the Transbay Terminal (scheduled to open late 2017). The 181 Fremont development adjoins Transbay and has direct access on its 7th floor to the 5.4-acre park atop the Terminal. It’s a great location; walking distance to Moscone Center, SFMOMA, the Embarcadero and Ferry Terminal, etc.  The Terminal will include 100,000+ sq. ft. of retail space, a benefit to the neighborhood.


 HOA dues, which include earthquake insurance like the St. Regis and Four Seasons, will be a rich $2.00+/square foot/month, similar to the hotel units. Purchase contracts are available now and occupancy is scheduled for Q 3 2017. Accessory units can be purchased only by original owners but can then be resold to anyone.

My sense is that the target market for these units is the wealthy home collector who would like a special San Francisco home when he/she is in town. The location, views and finishes are quite special, and although overall market appreciation has slowed, the developer has only 55 units to sell.

Pulse of the Market – The Book

Pulse Book Image

The Pulse of the Market book (edited Pulses from 2005 to 2015) is available in paperback and Kindle at Amazon.com. It offers insights and perspectives on what has made San Francisco residential real estate tick in the past 10 years. Let me know if you would like a personal autograph.

 Please feel free to email or ring me at 415-730-7772 when you need real estate expertise.

May 2016 – If President Trump – Expected SF Changes

The Story Behind the Story

With the political season in over drive, I started thinking about possible changes that we might see were Donald J. Trump to become president.

This was going to be the April Pulse, but my daughter told me that I might insult some people. Then my good buddy and lifetime CPA called me a wuss for not publishing it (that hurt). So here we are.

Bike Lanes Re-imagined

Move over, bikers, limos only. Yes, we are due a respite from the ever-increasing number of green bike lanes throughout the city.  The green lanes will remain green. However, they will be for limousines only. Bikers will receive a $200.00 ticket if they use them.  There will be no cost to repaint lanes, and the $200.00 per ticket revenue will generate ample funds for street maintenance. Expect limo sales to soar generating even more tax revenue for city coffers. This is a win, win, win!

SFMOMA renamed

Trump Art Collection

Who needs fancy smancy art? The Trump Art Collection will be installed and SFMOMA will be renamed SFTAC. Did you know that a trademark application was filed in 2006 for the Trump Art Collection? The trademark appears to cover a slew of art-related products including, note booklets, check booklets, autograph booklets, and totally-not-out-of-date telephone booklets.

 Coit Tower Renamed

 Henceforth, Coit Tower (also known as the Lillian Coit Memorial Tower) will be renamed Trump Tower. Lillian Hitchcock Coit was a wealthy socialite who loved to chase fires in the early days of the city’s history (think 1860s). Lillian’s fortune funded the monument after her death in 1929, and one apocryphal story claims that the tower was designed to resemble a fire hose nozzle. Another more recent apocryphal story claims that Trump thought the renaming was appropriate because the tower resembled a part of his anatomy.

Palace of Fine Arts Re-imagined

 Welcome to the Mar-a-Lago Club of San Francisco. The Donald plans to buy the Palace from the City for $10 million (same as what he paid for Mar-a-Lago Palm Beach), but this being San Francisco, instead of creating a private club, it will be a public club for everyone (don’t sweat the details as to how exactly that will work). He will lease the club to the City for $1.00 a year. Think of it! Located next door to Crissy Field and the Marina Green, it will become a perfect setting for special events, holiday celebrations, weddings and galas, just like Mar-a-Lago in Palm Beach! Of course, the fees will skyrocket, but since all the public owns and belongs, who cares?

Other Expected Changes

Charlotte Schultz, long time Chief of the Mayor’s Office of Protocol will be fired. Her replacement will be Aaron Peskin. SFO International well be renamed Trump International with a special gate for Air Force One, Dogpatch will become Trump Patch, Pacific Heights will be Trump Heights, ATT Park will become Trump Park, and Twin Peaks will become Trump Peaks. Real estate values will soar!

Pulse of the Market – The Book

Pulse Book Image

The Pulse of the Market book (edited Pulses from 2005 to 2015)

is available in paperback (Kindle version a few days off) at Amazon.com. It offers some perspectives on what has made San Francisco residential real estate tick in the past 10 years. Stay tuned.

April 2016 – Flying O Ranch


 Frank Wylie, founder of Wyle Laboratories, a leading aerospace company based in Los Angeles, created Flying O Ranch in the early 1990s. The Ranch is a gated community and encompasses some 1,400 acres, subdivided into 33 parcels, each about 40 acres.

The Ranch is about six miles from Coarsegold (the closest market and shops),

30 miles north of Fresno (closest airport), 65 miles southeast of UC Merced, 12 miles south of the fairytale Chateau du Sureau Inn, and 30 miles from the southern entrance to Yosemite National Park.

The original buyers were mostly from southern and northern California. They wanted a refuge from the hectic urban experience. In some instances, they were horse people and had a desire to ride throughout the entire 1,400-acre ranch. Some constructed homes; others have kept their land unimproved.

Views of the surrounding mountains and bluffs are spectacular.

Flying O View with Mtns

Special Property Now Available

The property, 30332 Flying O Ranch Road (Parcel #7), is approximately 40 acres of natural land with great vistas and rugged, usable terrain. There are two wells on the property, along with a 600-gallon tank that holds water for the property and home. Our client purchased the land in 1998 and in 2006 built a two-bedroom/three-bath “smart” home (about 1,800+ sq. ft.). There are two attached garages.

Below is the vista from the second level dining area.

Flying O DR with view

 The Flying O Ranch parcels are quite special. When someone buys a property they are really getting use of the entire 1,400 acres of the Flying O Ranch with equestrian facilities, miles of trails, and all while living on a working cattle ranch, not to mention magical vistas and the serenity of open space.

For information on either property, please send Malcolm Kaufman at email or give him a ring (415) 730-7772, or email  Beth Carver, who resides in Bass Lakes (a lot closer than San Francisco). Beth’s phone number is (559) 658-1784.