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
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.
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.
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.