San Francisco median home hits $1 million

http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/05/median-home-price-hits-1-million-in.html

by prostoalex • 13 years ago

36 84 13 years ago

hkmurakami2• 13 years ago

Since I don't really have a sense for the size of the houses in SF, I'd be interested to know how SF's numbers for "$/sq.foot of floor space" and "$/acreage" compare with places like Palo Alto.

papa• 13 years ago

This site provides some good neighborhood-specific price/square foot info.

http://pricesquares.com/#/county/1/san-francisco/

You can see that the north and northeast portions of the city carry the highest rates (close to $1k/sq foot in Pac Heights and the Marina).

Zoom in to drill down to smaller neighborhoods/sub-districts.

For comps between SF and Palo Alto, I'd recommend Redfin. Last I checked, the Palo Alto prices were above SF prices (on a square foot basis).

Edit: I'll just add some more detail!

Here's the Redfin report for Palo Alto ($1,168/sq ft): http://www.redfin.com/city/14325/CA/Palo-Alto

Here's the Redfin report for SF ($660/sq ft) http://www.redfin.com/city/17151/CA/San-Francisco

jld• 13 years ago

Here's a link of a graph to compare $/sqft for San Fran vs San Jose area.

http://www.zillow.com/local-info/CA-home-value/r_9/#metric=m...

quanticle• 13 years ago

This, more than anything else, is going to be what kills Silicon Valley. All those twenty-something hackers today are going to look up one day and realize that they can't have a family in the Bay Area, and leave.

w1ntermute2• 13 years ago

Austin is calling: https://news.ycombinator.com/item?id=5794372

Lower cost of living, less restrictive zoning laws, and a more business friendly legal system.

jbooth3• 13 years ago

I think the points related to better transit expanding the amount of available housing stock in other commuter markets have more to do with it than a 'business friendly' legal system or even zoning laws.

We're developers. We know shit-all about common vic licenses or actual brick and mortar business, those of us who own businesses incorporate in delaware anyways. Supply and demand of housing stock is much more important than 10% marginal friction in dealing with regulators (who we don't deal with anyways).

Austin will succeed or fail at continuing to grow based on how much they can grow their housing stock without turning into a gridlocked nightmare.

muzz7• 13 years ago

This has been the case for a long time.

Rather than wonder why reality isn't as one would predict, it would be better to understand why it is the way it is.

tomkarlo11• 13 years ago

SF is only a tiny (49 sq mile) part of the Bay Area. It's like saying nobody can live in the New York City MSA because the price of a 2-bedroom apartment in Manhattan is over $1M, despite the fact that most New Yorkers live in Queens or Brooklyn.

rayiner• 13 years ago

SF is the urban core of the Bay Area, but poorly linked with the rest of the MSA. Manhattan is very closely linked with the rest of the MSA thanks to an extensive transit network ranging out to Connecticut, New Jersey, and the New York State suburbs.

In most cities with poor transit, living out in the suburbs is totally different from living in the city. You might only ever go into city on rare occasions. In New York, you can get much more affordable housing in say Westchester or New Jersey, and still work in Manhattan, with access to all the jobs Manhattan has, with a very reasonable commute.

timcederman9• 13 years ago

Have you seen prices outside of San Francisco? It's "okay" in the East Bay, but elsewhere on the peninsula it's just as bad or worse (Burlingame, San Carlos, Menlo Park, Palo Alto, Mountain View).

zobzu• 13 years ago

TFA actually list an Oakland location. To be honest its +- like SF all around the bay area for a decent place. There are crappy ones which are cheaper tho.

bithive123• 13 years ago

Not to mention the people who never went there in the first place because they have fewer romantic notions about what it means to be a tech startup and never saw the appeal in being paid barely enough to live in an expensive, crowded area.

encoderer2• 13 years ago

I moved here 2 years ago from Sarasota, FL.

My rent did nearly triple AND i went a little down-market from the high-end condo I had in FL.

But my other expenses didn't increase more than 50%.

At the same time, my salary without including options is 85% higher. Including options (I work at a somewhat recently IPOd company) is 122% higher.

My wifes salary -- she's not really in tech -- also increased 25%.

In total, we are far better off financially now than in Florida. And to be clear: In florida my income was a multiple of the median HHI. I was not underpaid there.

Most importantly, though: I can't swing my vintage IBM XT without hitting a half dozen job offers. Seriously every experienced engineer here gets pitched via LinkedIn on the regular.

I'm not trying to sell you on it. But the way you wrote your comment, "romantic notions" and all, was a little condescending. As if it's some foolish thing. Like you have all these analytically minded engineering types going like lemmings.

We may move at some point to another tech-heavy city like Austin or Boulder or, ya know, whatever. But as techy as those places are, truly NO other place can compare to the density of startups and tech companies here.

davidw• 13 years ago

I think 20-somethings have been rotating in and out of that area for decades. I did my time in SF in the late 90ies.

beeffective• 13 years ago

Like me, I already left. I lived in Hayward and commuted to the south bay while my wife commuted north a little bit. It was rotten and awful. I hate everything about living in the Bay Area and I love it here in Sacramento. I also lived on the peninsula. It was nicer but twice the cost per sq foot to rent and a lot more traffic to deal with during regular hours.

prostoalex2• 13 years ago

I dunno, a quick browse through Craigslist reveals many early-twenty-somethings seeking roommates who are okay with sharing bathrooms for <$2k budgets, and dangle your own private bathrooms if your budget exceeds that.

With salary boom, for many foreigners the disposable income after paying rent still exceeds disposable income in their home country, so until salaries are where they are, for a bunch of people the current price levels are still a sustainable and highly desirable proposition.

tomkarlo11• 13 years ago

The title here is a little deceptive; it's the median price for a "single family home". A lot of the inventory in SF is either apartments in small buildings or duplex / multi-residence structures, which are generally less expensive (and it would be better to have more of those and fewer single family dwellings, since they use space more efficiently.)

api• 13 years ago

Sell. Seriously. If you own one of these, sell. Then laugh.

This real estate hyperinflation is going to destroy the very engine of class mobility and youthful enthusiasm for a better life that powers the Valley. When that's gone, the Valley will decline. When the Valley declines, the local real estate bubble will pop.

Want a historical example? Detroit. It once had the highest average income in the U.S., and now look at the property values there. The reasons for its collapse are different and it's unlikely that SF (which is desirable for other reasons like climate and landscape) would ever fall as far or as fast as Detroit, but it's illustrative nonetheless. It shows that one should be cautious about long-term value in overinflated one-horse-town economies.

And if SF is not a one-horse-town, it soon will be. Industries other than tech will succumb to the lure of lower costs of doing business and leave.

cpursley• 13 years ago

As an appraiser, I agree. SELL SELL SELL. Rent in the meantime if you'd like to stay put. The economics make more sense.

toomuchtodo• 13 years ago

I wish I could short real estate.

jzawodn• 13 years ago

Totally.

We had a townhouse in the South Bay (which has been going up very quickly too) that we sold a few month ago. We got $100k more than we would have about 9 months earlier.

It's madness.

(We moved a few hours away a couple years ago and had been renting it...)

timcederman9• 13 years ago

You could sell and laugh, but then where would you live? You either get a ridiculous commute, or you have to pay exorbitant rent. Something decent runs for over $4k/month everywhere in the valley these days. Everyone said the same thing about the Valley during the last 2 bubbles, but it keeps going up. People need somewhere to live - selling now on some hypothetical crash makes living your life very difficult.

Domenic_S6• 13 years ago

I sold my place in the east bay and now rent in Morgan Hill. $2900/month gets me a 4 bedroom place in a 10 year old neighborhood. My commute to SJ is 30 mins up 101.

nawitus• 13 years ago

I guess the idea is to sell, live on rent for a while, and then buy a new home after the crash. Easy to make a decent profit if house prices crash by 30%.

encoderer2• 13 years ago

Things are expensive but there's no reason to round-up or inflate numbers. Maybe if you must rent a large single family home. Then sure, $4k would be the minimum.

But I live in a 2/2 duplex in a desirable SF neighborhood and pay $3100.

jlarocco• 13 years ago

Anywhere else in the US? San Franscisco and "the Valley" are hugely over rated.

There's no shortage of jobs here in Denver, and that kind of money can last a long time here, even without working and living modestly.

lotharbot4• 13 years ago

> "where would you live?"

Do you absolutely need to be in the [EDIT] Bay Area?

If the answer is no, then there are a lot of other cities with reasonable tech scenes and much cheaper housing. Boston and Seattle are around $350k median home value. Denver, Atlanta, and Minneapolis-St. Paul are around $200k. Those places all count as "somewhere to live", and don't make life particularly difficult (unless your life revolves around something specific to SF/SV.)

UVB-76• 13 years ago

> When that's gone, the Valley will decline. When the Valley declines, the local real estate bubble will pop.

I wouldn't be so sure of that. The appeal of a particular location as a place to live will usually long outlast the activities or culture that put that location on the map in the first instance.

San Francisco is a strong brand, and demand for housing in the city is going to remain strong for a long time to come.

afterburner• 13 years ago

Yes; San Francisco was probably an interesting and desireable place to live even before anything tech related happened there.

tomkarlo11• 13 years ago

It's worth noting that SF is already on it's 3rd or 4th major evolution; between the Gold Rush, the big shipbuilding days, the 1906 earthquake, the WWII period and 90's tech bubble, it's survived a series of major changes and collapses and rebuilt successfully. I don't know Detroit's history that well, but it seems like it's basically had one major act (the auto industry) and that's still playing out.

Androsynth• 13 years ago

SF is only like 10% of the population of the SF/Oak/SJ bay area triangle. It may have the best brand in the area, but what happens when the housing prices drop in fremont/milpitas and then in santa clara/san jose and then starts working its way up the peninsula?

I think housing in SF is very dependent on 1) the tech boom and 2) the baby boomers who own property in the south/east bay (but wont sell because they missed out on the 2008 sales price). Both of which are temporal in nature.

SF may always be a enclave of the wealthy, but if the rest of the bay area goes to shit, prices will drop. It may not get massacred like SJ eventually will (after the baby boomers houses start hitting the market en masse), but even those wealthy enough to live there will feel it.

muzz7• 13 years ago

Comparisons to Detroit have been the case for longer than I can remember. The formula appears to be:

Recession -> Area is becoming Detroit Boom -> Area will be Detroit

There are newspaper articles comparing Silicon Valley to Detroit going back to at least 1985...

aresant• 13 years ago

"Today's low mortgage interest rates and tight supply of homes for sale are "creating a kind of witch's brew of extreme price spikes," says Stan Humphries, Zillow chief economist. (1)

Logic tells me that when the all-important "monthly payment" rises, as a result of higher mortgages rates, that is going to be instantly detrimental to the housing market to a nearly equal degree.

But when I've asked this question of people I know in real estate (from realtors to investors) the answer is "yah but there are a lot more factors at work"

What are those factors? The FED is going to raise rates and when they do is this going to leave a lot of recent homebuyers holding the bag, again, on an inflated asset?

(1) http://www.usatoday.com/story/money/business/2013/05/28/home...

muzz7• 13 years ago

Mortgage rates do not affect cash buyers. Despite low interest rates-- and high dollar amounts-- there are surprisingly many cash buyers in the Bay Area.

http://sanfrancisco.cbslocal.com/2013/04/03/rise-in-all-cash...

Domenic_S6• 13 years ago

This is secondhand so take it for what it's worth, but I've heard that a lot of these all-cash offers are folks who tap their extended family for spare cash, buy the house, then "re"-finance into a normal mortgage and pay the family back. Rates do affect cash buyers who use this strategy.

Also, many cash buyers are flippers, but the flippers need to sell to normals who take mortgages. So impact there, too.

tomkarlo11• 13 years ago

Buyers don't buy in a vacuum. When mortgage rates rise, it reduces the buying power of a large portion of the market, and the value of the homes themselves decline as a result. Yes, a cash buyer could still pay the same amount, but why would they?

dragonwriter3• 13 years ago

> Logic tells me that when the all-important "monthly payment" rises, as a result of higher mortgages rates, that is going to be instantly detrimental to the housing market to a nearly equal degree.

The big thing right now isn't interest rates/monthly payment (though that's a factor that reinforces the high prices). Its who is buying and selling and which homes (and how few) are on the market.

> What are those factors?

The big one is the broader economy and credit markets.

> The FED is going to raise rates and when they do is this going to leave a lot of recent homebuyers holding the bag, again, on an inflated asset?

Not really, because the big price spikes recently are because there are a very small number of homes selling and they tend (disproportionately as compared to other times) to be higher end homes and higher-end buyers and being paid for with cash or at least very large % down. So the median prices look high, but there's not a lot of people involved, and even for the number of buyers not a lot of exposure to interest rate hikes.

dreadsword2• 13 years ago

The examples at 322/280/etc. per square foot seem cheap. I live in WINNIPEG and houses on my street go for $450+ per square foot, and that's in Canada where mortgages aren't tax deductible, and Winnipeg in particular where the climate is... challenging. The one's that are $500+ per sft --- well, that's the cost of location. Deal with it.

Zimahl2• 13 years ago

As an American, I don't seem to understand Canadian currency at all. I've watched 'Love It or List It' on HGTV knowing that it's a Canadian show but the prices of the houses are all typically anywhere from $700k-$900k for 1600 to 1800 square feet. Trying to convert it back to a price in US dollars I guess isn't quite right. What's the median income in Canadian dollars that makes home prices so high?

Side nitpick: do Canadians primarily use square feet as a measurement? Is that a real estate standard even though Canada is mostly metric?

dreadsword2• 13 years ago

Real estate and houses are just cheaper in the US -- like cars. That's just the way it is. In real estate, square feet rule in Canada - just one of those holdover things.

Mankhool• 13 years ago

Here's what $1 Million will buy you in Vancouver, Canada. http://realestateresults.ca/officelistings.html/details-2956... I rent a 2BR apartment in a 1950s building for $1615/month. Would love to see/hear comparisons.

lotharbot4• 13 years ago

Half a mile away from me, on the west edge of Denver, Colorado:

http://www.redfin.com/CO/Lakewood/1826-S-Manor-Ln-80232/home...

For comparison, here's a $1 mil home in SF:

http://www.redfin.com/CA/San-Francisco/96-Broad-St-94112/hom...

andyl• 13 years ago

Median housing prices in my area (palo alto) have already been well above $1M for a long, long time. Doomsday prophets: nothing new here, really - just continuation of a well established trend.

San Francisco median home hits $1 million

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