Bay Area Real Estate Markets Survey




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San Francisco Bay Area
Real Estate Markets

Covering San Francisco, Marin, Alameda, Contra Costa,
San Mateo, Santa Clara, Sonoma, Napa & Solano Counties

Median home prices, appreciation rates, luxury home markets,
demographics and other market factors, conditions & trends

Updated February 2018

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Bay Area Home Price Maps

Our newly updated median home price maps for the entire Bay Area by city, for San Francisco by neighborhood, and then specifically for the Marin, Diablo Valley & Lamorinda, and Wine Country markets. To access them, click on the map image below and then roll your cursor over the maps on the webpage.




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Bay Area Q4 2017 Median House Sales Prices

San Francisco Bay Area Median Home Sales Prices


Bay Area 2017 Median Condo Sales Prices

San Francisco Bay Area Condo Median Prices


One cannot draw many conclusions regarding the new year market by looking at January data, whose low volume of sales mostly reflects offers accepted in December, however so far, it appears that the low-inventory/ strong-buyer-demand dynamic is continuing in 2018. One recurring situation in recent years is that buyers jump back into the market in January in larger numbers than sellers getting their homes listed to sell - setting up a mismatch between supply and demand. Typically, many more listings will start pouring onto the market in February and March, and a much better idea regarding where the market is heading in 2018 will be possible once spring selling season data starts coming in.

Since questions constantly arise as to how one development or another is affecting or may affect Bay Area real estate markets - new tax laws, the high-tech boom, interest rates, financial markets, new home construction, climate change, and so on - our chief market analyst has made an attempt to identify and quantify the factors currently at play: Positive & Negative Factors in Bay Area Real Estate Markets

This report will focus on Bay Area trends by county, but many other specific-market reports - San Francisco, Marin, Diablo Valley, Sonoma, etc. - can be found here: Paragon Market Reports - Main Page


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Year-over-Year Home Price Appreciation Rates
Comparing 2017 Median Sales Prices to 2016 Prices

San Francisco Bay Area Home Price Appreciation


Additional chart: Bay Area Median Home Price Appreciation since 1990


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Average Dollar per Square Foot Values
& What You Get for $1 Million in the Bay Area


San Francisco Bay Area Dollar per square foot values


Your great aunt gives you a check for a million dollars to buy a home, so you go down to the real estate store to fill your cart. Below are some examples of how much home you would get for your money at 2017 average dollar per square foot rates: In Palo Alto, you could buy 626 square feet of home, and in Vallejo, 3817 square feet, with many other options in between.




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Bay Area Luxury Home Markets

Though San Francisco is a major player in luxury home sales, Silicon Valley - Santa Clara & San Mateo Counties together - has over 3.5 times as many homes selling for $2m and above. All 3 counties have similar average dollar per square foot house values in this high-price category. SF dominates the luxury condo market, and these condos, on average, sell at the highest per square foot values. Marin, Alameda and central Contra Costa Counties have smaller luxury home segments, but you start to get more for your money.

Calculating luxury markets by the top 10% of sales, the thresholds for the luxury designation vary widely: For example, in Sonoma, the threshold is about $1,125,000 for houses, while in San Francisco, it is about $3 million.




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Market Dynamics Overviews




The decline in active listings available to purchase has played a significant role in pressurizing the market in recent years, especially as buyer demand has increased over the same period during which supply has dropped.





Since median sales prices are so often quoted and compared, it adds context to look at the average size of houses in the different markets. (Comparing median prices to average sizes is not ideal, but you get the idea.)





New Housing Construction

This chart below from the November 2017 Housing Inventory Report issued by the SF Planning Department is for 2016, but illustrates how new housing construction in Alameda County has recently accelerated ahead of San Francisco and Santa Clara. Our larger analysis of this report, which focuses mostly on San Francisco, can be found here: SF New Home Construction Report





Days on Market, Overbidding Asking Prices
& Months Supply of Inventory








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Interest Rate Trends

Interest rate changes will certainly be one of the main factors to keep an eye on in 2018, as they play a huge role in housing affordability.






Bay Area Unemployment Rate Trends



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Bay Area Housing Affordability Trends

The CAR Housing Affordability Index, of which the trend lines since 1991 are charted below, estimates the percentage of households who can afford to purchase a median priced house in their county, based on a 20% downpayment. The big factors in this analysis are prevailing household incomes, interest rates, and, of course, quarterly median house sales prices. It should be noted that half of home sales are, by definition, below the median sales price, and that if one included condos (typically much cheaper than houses) in the equation, that would add substantially to affordability percentages.

For Q1 2018, the Index will attempt to factor in the effects of the new federal income tax law limiting mortgage interest, property tax and state income tax deductions, which will presumably reduce affordability percentages further. As seen below, many Bay Area counties are already getting close to historic lows, clearly one of our biggest social and economic challenges.





Link to our full report on Bay Area housing affordability

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County to County, Metro Area to Metro Area
& State to State Migration Trends


Bay Area County-to-County Migration

Though people from all over the country and world migrate to and from the Bay Area, the greatest flow is actually between the local counties themselves. In net migration numbers, amid all the back and forth, people are, generally speaking, flowing from the core, most expensive counties to adjacent, somewhat less expensive counties, and then to even more affordable counties outside the inner Bay Area. However, the inner core counties, where the high-tech boom has been most concentrated, attract significant immigration from outside the Bay Area, state and U.S., which is why their population numbers have continued to grow. Note: This chart does not include Santa Clara County, though much of its migration patterns can be seen in the data of the other counties.





U.S. Metro Area to Metro Area Migration

This chart pertains to immigration in and out of the 5-county San Francisco metro area, which does not include Santa Clara to its south. Between U.S. metro areas, more people are leaving the SF metro than arriving, but that deficit has been more than made up for by substantial numbers of foreign immigrants. These numbers, however, pre-date the much more hostile view of immigration by the current administration, so we will have to wait and see what effects derive from that change. Looking at net metro-area migration, more people come to the SF metro area from Santa Clara County, Southern California, New York, Chicago and Boston. And more people leave the SF metro area to go to other (less expensive) CA counties east and north of the Bay Area, and to metro areas in Texas, Nevada, Oregon and Washington State. The exodus is made up of both people changing jobs, and retirees, though they tend to go to different places.





If you want to read about state to state migration patterns, our recent article is here: California Migration Trends


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All our Bay Area reports and articles can be found here: Market Trends & Analysis

One of our recent and popular reports: San Francisco & Bay Area Demographics

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Median House Price Appreciation since 1990




Appreciation trend lines are largely similar across the Bay Area, but some counties have outperformed others. Solano is still well below its previous peak price ten years ago, and Sonoma and Napa are just now coming back up to their previous highs. Most of the other counties have exceeded their 2006-2007 peaks, sometimes by very wide margins. As will be explored further below, proximity to the heart of the high-tech boom has been one of the major factors in recent appreciation rates. Still, it is worth noting that in the past year and a half, appreciation rates in less expensive towns and neighborhoods have typically been higher than in more expensive areas, an indication of the sometimes desperate search for affordable housing - however that might be defined within the context of any given market.



The Most Expensive Places in the Bay Area
August 2017 Update

By clicking on map, you can also access our full collection of home price
maps delineating current city home prices throughout the Bay Area.



Note: Diablo in Contra Costa with 6 sales at a median price of $2,731,000, and Penngrove in Sonoma with 13 sales at a median price of $919,500, had higher prices than Alamo and Healdsburg in the period measured, but because of their very low number of sales, we highlighted the larger markets on the map above.

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Annual Home Price Appreciation Rates since 1996 and 2011

This table below illustrates annual compound appreciation trends going back to the post-recession recovery that began around 1995, and also from the current post-2008-crash recovery which started in 2012. This is based upon someone purchasing their home all cash: If one had purchased with a 20% downpayment, then the annual compound rate of appreciation of that cash investment would be much, much higher.





There are 3 big factors behind local appreciation rates: 1) the emergence of the Bay Area in the past 20 years as an international, economic powerhouse, which generally lifted all markets, 2) how close the specific market is to the white-hot centers of the high-tech boom (SF and Silicon Valley), and, 3) how badly the county was hammered by the foreclosure crisis, since those markets whose prices fell 50% or more to unnatural lows bounced back more on a percentage basis than those counties less affected by the subprime catastrophe.

SF has had the highest compound annual rate since 1996: It is the epicenter of the Bay Area high-tech, bio-tech and fin-tech economic miracle. But Oakland soars above all other markets in appreciation since 2011, because of a combination of factors: It is the closest affordable alternative to much higher SF prices; it is a lively, multi-cultural urban area appealing to high-tech workers; and its housing prices dropped an astounding 60% after the 2008 crash, which set them up to fly upward once the heavy anchor of distressed property sales was removed.

Having complete confidence in our ability to predict what will happen in the past, we now recommend that all our clients go back in time to 1995 or 2011 and buy as many homes as possible.


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Economic & Demographic Factors

Underpinning the Bay Area real estate market and general economy are often amazing, but sometimes worrisome statistics. Below are tables and charts ranking counties, zip codes and cities by a variety of parameters. The Bay Area ranks extremely high in income, education, employment rates and general health factors, often grabbing almost all the top rankings, but it is also unhappily high in income inequality, housing unaffordability and poverty.





Bay Area City & Zip Code Income Rankings

Atherton has the highest median household income and the highest median income per worker in the state, followed by a handful of other nearby, highly affluent, Silicon Valley communities. In San Francisco, South Beach and the Presidio zip codes make the top rankings, but note that several of the most expensive neighborhoods in SF are in zip codes that mix highly affluent with less affluent areas (such as Pacific Heights and Western Addition, or Russian Hill and the Tenderloin). SF neighborhoods also have much higher percentages of residents who are tenants, and generally speaking, renters have lower incomes than homeowners.

In Marin County, Belvedere, Tiburon, Kentfield and Mill Valley make the lists; in Contra Costa, the Diablo Valley & Lamorinda communities of Blackhawk, Alamo, Lafayette, Orinda and Moraga rank highest; in Alameda, Piedmont is in the top 10 cities for median worker earnings.





Bay Area zip codes utterly dominate the CA rankings for higher education, taking 14 of the top 15 spots out of about 2600 zip codes. Unsurprisingly, high positions in income usually correlate with the same in education (and having UC Berkeley and Stanford in our midst was a help): Top Bay Area Zip Codes for Higher Education

If you wish to explore Bay Area rankings by other criteria: Top 25 Rankings in California



Employment & Unemployment

High-tech employment in SF & San Mateo Counties illustrates
broader trends in hiring: massive growth and some recent cooling.




Unemployment rates are bumping against historic lows.




Bay Area Poverty Rates & Housing Affordability

Beneath surging affluence, significant percentages of county populations
are living in poverty. High housing costs are a big factor.




Percentage of Homes Owner-Occupied



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Era of Home Construction




Bay Area Rents

Rents are even more sensitive to hiring trends than home prices.



Link to our apartment building market report

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All Bay Area counties have been rapidly growing in population. San Francisco
in particular is very densely populated and getting more so.







Overview Demographics: SF Metro Area
December 2017 Update


Ethnicity, Race, Ancestry & Language








Religious and Spiritual Practices & Beliefs






Education, and Income by Education & Sex






Employment, Wages & Commuting




The Bureau of Labor statistics analyzes average annual wages for over 700 local
occupations in the SF metro area. Below is a sampling of approximately 50 of them.








Spending Money






Voting




How Americans Spend the Hours of Their Days




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S&P Case-Shiller Home Price Index
for the San Francisco Bay Area

Case-Shiller charts are complicated, which is why we have put them at the end of the report, but they do give perspectives on home price appreciation by price segment. The different price tiers had bubbles, crashes and recoveries of very different magnitudes, with the low-price tier having an extravagantly enormous subprime bubble and a disastrous crash, while more costly home tiers having lesser bubbles and crashes. The end result now is that all three tiers are relatively close in their current prices as compared to 2000 values, but are in very different circumstances when compared to their 2006-2007 bubble peaks. Around the Bay Area, generally speaking, San Francisco, San Mateo, Marin, Santa Clara and Diablo Valley-Lamorinda have high-price tier markets with smaller mid-price segments; Alameda, Sonoma, Napa, Solano and non-central Contra Costa have mixes of low-price and mid-price markets (though there are, of course, pockets of high-price homes as well).

All C-S data points refer to a January 2000 home price of 100. Thus a reading of 250 signifies a price 150% higher than in January 2000.






More affordable homes have been appreciating much more quickly
in the past 15 months than more expensive price segments.



Link to our full Case-Shiller Index report

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These 2 charts below are specific to the San Francisco house and condo market, illustrating median price movements since the early 1990's through 2016.





A few interesting points regarding the above graphs: The year of highest percentage appreciation in the past 25 years was 2000, the height of the dotcom bubble. (However, by dollar appreciation, as opposed to percentage change, recent years have seen by far the greatest increase in prices.) When the dotcom bubble popped, SF condo prices were much more negatively affected than house prices: Young, high-tech workers play a bigger role in the condo market. And in 2016, the condo median sales price plateaued (and declined a little in some neighborhoods) while houses continued to appreciate, albeit at a much slower rate than the previous 4 years. We ascribe this plateauing in condo appreciation to, firstly, a big increase in new condo construction (more supply) and, secondly, to some cooling of the high-tech hiring boom (somewhat less demand).

Chart: Marin County annual market changes

Chart: Lamorinda & Diablo Valley annual market changes

Chart: Sonoma County annual market changes


Other recent or recently updated reports:

2017 SF Controller's Office Benchmark Report, Comparing SF to 16 Comparable Cities, 6MB PDF

San Francisco Luxury Home Market

San Francisco Bay Area Real Estate Cycles

Diablo Valley & Lamorinda Market Report

Marin County Market Report

San Francisco Home Prices & Trends

Sonoma County Real Estate Market Report

All our reports and articles can be found here: Market Trends & Analysis

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California and U.S. median prices used in the compound annual appreciation analysis come from the CA and National Associations of Realtors and pertain to what they designate as the "existing single family home." First half median prices are estimates based on their monthly data. Bay Area median prices are from sales reported to the appropriate county MLS system.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices can be and often are affected by other factors besides changes in fair market value, and longer term trends are much more meaningful than short-term. It is impossible to know how median prices apply to any particular home without a specific comparative market analysis. All numbers in this report are to be considered approximate.

© 2017-2018 Paragon Real Estate Group