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Has the San Francisco Condominium Market Finally Turned a Corner?

Maze of highway signs turning corners

 

In my last newsletter, we did a deep dive into where San Francisco’s condominium market stands now in relation to where it was right before COVID took the wind out of its sails.  The three key takeaways were:

  1. The oft-quoted “median sales price” can distort what’s going on in the condominium market because it hides changes in product size and type, especially when sales are thin. Median Price Per Square Foot is the better measure of the market.
  2. Condos in the downtown/SOMA area have not returned to their previous highs in the roughly seven years since the COVID pandemic. Meanwhile, condos in residential neighborhoods outside Downtown/SOMA (“Residential Neighborhoods”) topped their previous all-time highs this spring and remain close to them.
  3. What defines “luxury” in the condo market is price rather than geography. Looked at this way, luxury condominiums have outperformed the rest of the condo market.  As with single family homes, it’s the “K-shaped economy” in action.

The Short-Term Picture

What the long-term analysis didn’t reveal was how recent and rapid the condominium market’s recovery has been – and that it’s now occurring in Downtown/SOMA, not just in Residential Neighborhoods. Continue reading “Has the San Francisco Condominium Market Finally Turned a Corner?”

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SF’s Condo Market since COVID: Location Matters – Except When it Doesn’t

 

San Francisco Houses with different price signs
Original Photo taken and edited by Misha Weidman. For Sale signs added with ai.

Your correspondent has been hard at work wrestling with a database with nearly 40,000 sales going back to pre-pandemic January 2019. Full disclosure:  Claude has been my constant side-kick to analyze and deep-dive the data in ways I would never have been able to do before.  Conclusions and writing remain my own.

As promised in my last newsletter,  here’s a heatmap — actually two — comparing price changes in the condo market between the 6-month period right before the COVID pandemic lockdown in March 2020, and the 6-month period ending in mid-July 2026.  (Note these are best viewed on your computer screen, not a mobile device; click on the “full screen button” for the best experience.)

Why these two periods?  Because I wanted to see to what extent the city’s condo market has recovered from the  exodus that followed the COVID pandemic.  It’s well documented that the exodus hit the condominium market hard and the Downtown/SoMa area particularly hard. And there’s been lots of talk of “recovery.”  I’ll get to more recent trends in my next post but I wanted to start with a longer-term, city-wide view.  And for that, I thought a heatmap might provide a good visual guide to where we are in relation to where we were pre-COVID.

The first chart above compares median sales price for the two periods; the second compares median sales price per square foot.  At a glance, the Sales Price Heatmap simply reveals much more color variation, with a mix of up (red) and down (blue) subdistricts.  This is especially so in the Downtown/SoMa area that’s outlined in navy blue. Continue reading “SF’s Condo Market since COVID: Location Matters – Except When it Doesn’t”

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Winners and Losers: A Heat Map of San Francisco’s Neighborhoods

I’m back!  (More on this later….)

I’m so excited to present this heat map of San Francisco neighborhoods, which I believe may be the first of its kind.  I’ve been thinking about this idea for a while:  thank you Claude, and a shout-out to my son, too, who helped me bring the coding part of this project to fruition.

Be sure to click on the “fullscreen” button on the map below to expand it. We will get into the qualifications shortly, Continue reading “Winners and Losers: A Heat Map of San Francisco’s Neighborhoods”

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SF Real Estate Heats Up as the Weather Cools Down

Generated with Claude.ai using a photo taken by Misha Weidman
Image Generated with Claude.ai

In my last post, I wrote that San Francisco’s residential market, fueled by the booming economics of local AI companies, was bucking the trend of most Bay Area counties by showing clear signs of strength while other counties stayed flat or faltered.  Recent data suggests that this trend could be accelerating.

In Contract, Pendings, Sales Volume All Up

First, let’s recall that the music stopped in Spring, 2022, when the Fed started aggressively raising the Fed funds rate to cool economic activity and accelerating inflation after having kept interest rates near zero during the Covid Pandemic.

Fed funds rate since 1981
Fed Funds Rate

The resulting rise in mortgage rates correlates precisely with a massive slowdown in the Bay Area residential market  as we entered 2022 (chart below).

Mortgage Rates vs Bay Area Home Sales
Bay Area Sales volume vs Mortgage Rates

With that background in mind, many of our statistics are now at or approaching levels they had reached before that 2022 slowdown.  Continue reading “SF Real Estate Heats Up as the Weather Cools Down”

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The San Francisco Residential Real Estate Update: An Ai Generated Glimmer of Hope?

 

AI generated imaged
An AI Generated Glimmer of Hope

Back in May 2018, when pundits everywhere delighted in sounding the death-knell for SF’s residential market due to a host of local challenges including lack of affordability and rampant homelessness, I suggested they might be a bit premature. In the summer of 2020, months into the Covid pandemic, Zillow published data suggesting that SF was again on the skids.  Again, I suggested that “this too shall pass.”  Condo and home prices proceeded to hit record highs until 2022 when higher interest rates brought the real estate party to a stop, leaving a hangover from which much of the Bay Area — indeed the country as a whole — has yet to recover.

Interest rates are still high, albeit with indications that they may be coming down “any day now.”  Add in such challenges as the economic uncertainty engendered by Trump’s tariff wars; an enduring change in the remote/on-site work model; and a persistent narrative of SF’s “doom loop” decline, and it’s fair to ask whether SF can once again pull off a Houdini-like escape. Continue reading “The San Francisco Residential Real Estate Update: An Ai Generated Glimmer of Hope?”

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San Francisco Mid-Year Real Estate Report:
It’s Not Just the Weather That’s Gloomy

(Photo courtesy of Henri Borius @ IG_Henri_Borius_Photos)

Noe Valley, where I live, is supposed to be sunny.  But I can tell you that – until this July 4 week-end’s delightful respite  — I was getting tired of waking every morning to another milky white sky and a temperature reading that seemed stuck on 50º. It’s not just the weather that’s been gloomy. One article after another seems to take delight in enumerating San Francisco’s travails.  The Economist, among other magazines, opines that downtown San Francisco may risk falling into a “doom loop.”  The San Francisco Chronicle followed up with a list of major retail vacancies after Westfield gave up its flagship property on Market Street.  And the Financial Times, in an article titled “Defaults Raise Alarm Over Stability of San Francisco’s Commercial Property,” quoted the chief executive of the company that owned two major hotels given back to their lenders as saying “San Francisco’s path to recovery remains clouded and elongated by major challenges” including “concerns over street conditions”.

Indeed.  Downtown San Francisco resembles what I remember it looking like in 2001 after the dot.com bust.   More broadly throughout the city, you’re lucky if you can find a restaurant whose kitchen stays open after 9:00 pm.  And homelessness continues to plague the city, just as it does the state more generally.  The Benioff Homelessness and Housing Initiative’s recently released report found that over 171,000 people experienced homelessness daily in California.  That’s more than 30% of the nation’s homeless population.

Shall we talk about interest rates (see below)? With 30 year fixed mortgages going for around 6.5%, we are back at rates last seen right before the 2007/2008 Financial Crisis brought the party to a close.  For anyone who’s counting, that was fifteen years ago.  And the speed of the increase has been breathtaking:  rates were at 3.25% just 18 months ago (second chart). Fed policy may not have succeeded in taming inflation yet, but it’s certainly had its effect on the housing market.  No one should be surprised.

Continue reading “San Francisco Mid-Year Real Estate Report:
It’s Not Just the Weather That’s Gloomy”

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The 2022 San Francisco Residential Real Estate Wrap-Up: The Bad, The Worse, and the Ugly

Happy New Year everyone!  It’s been nearly three years since the Covid pandemic hit the world. Back in March 2020, as San Francisco’s streets became eerily quiet, it might not have been wrong to predict an apocalyptic end to the modern world and city life in particular à la Station 11, ( I highly recommend the Amazon Prime series).  As people fled the city and its density, predictions for SF’s real estate collapse propagated faster than new Covid variants.

Fast forward to mid-2022: both house and condo prices hit records of $2 and $1.3 million respectively.  For the full year, the median house price ended down just 1% from the all-time high set in 2021; condos ended down just 2% from the previous year.  Covid, Schmovid, you might say.

Continue reading “The 2022 San Francisco Residential Real Estate Wrap-Up: The Bad, The Worse, and the Ugly”