The San Francisco metro area has seen its home values drop by a quarter, and the city still has some pain to work through. The citys future predictions are still a mixed bag and hard to decipher as market signals tend to move in both directions.
Fiserv predicts a 14.3% gain between June 2010 and June 2011. Averaged out, that means a 4.8% gain over the next two years. One reason for the sharp comeback is that much of the area's excess inventory will have been sold. It's already dropped by nearly in half over the past year.
The recovery will be delayed, though, as the area. particularly Oakland and the East Bay, due to its foreclosure problems. During the first six months of 2009, one of every 52 homes had at least one foreclosure filing.
The good news, according to Mark Fleming, chief economist for First American CoreLogic, is that core city neighborhoods don't have nearly as many foreclosures as those out on the fringe. Popular neighborhoods in San Francisco include Pacific Heights, Noe Valley, Bayview, South Beach, Bernal Heights, and Castro. The steady demand in those communities will serve as a base as other neighborhoods rebuild.
The thing is, demand is accumulating. At some point the market will kick back into gear. It's possible that prices have bottomed out, and it seems likely that today's interest rates won't be around a year from now. There will be catch-up activity, but the big question is timing. We'll have to see what happens with employment, the economy, and with today's tight credit
San Francisco is one of the top ten cities in America to invest in.
Well, the points that resonated the most with me were:
1. 9.7% unemployment, but job growth in the high income/skill sectors required to buy a home there
2. Job growth: High-tech computer jobs in SF have doubled from 8,000 to more than 16,000 (SF Center for Economic Development)
Number of life sciences jobs in SF has grown 5X to 2,750, up from 500 in 2004.
3. Venture capital dollars invested into SF during the recession: over $6.3 B has been invested in software/computer and bio-tech just in 2010
Multi Housing New
Vacancy rates is the broadest indicator of a healthy market. Marcus & Millichap’s third-quarter vacancy rankings identify New York as the leader at 2.9% vacancy rate and San Francisco coming in at 4.7%, compared to a national average of 7.8%.
Median home price: $675,000
Value lost since 2006: 25.7%
Forecast gain by 2011*: 4.8%
From the Trulia web site
Average price per square foot for San Francisco was $556, an increase of 7.5% compared to the same period last year. The median sales price for homes in San Francisco for Sep 10 to Nov 10 was $635,000 based on 1,233 home sales.
Compared to the same period one year ago, the median home sales price decreased 0.8%, or $5,000, and the number of home sales decreased 13.3%. The average listing price for homes for sale in San Francisco CA was $1,073,580 for the week ending Dec 15, which represents a decrease of 0.8%, or $8,237, compared to the prior week.
Since the price of housing ultimately rests on the ability to pay...watch job growth. Preliminary October labor force data counts for San Francisco,county pegs the unemployment rate at 9.3%, down 0.3% in San Francisco.