Seasonality & the San Francisco Real Estate Market

Seasonality typically affects inventory levels, buyer demand and median home prices, often in very significant ways – as is illustrated in the following charts. However, it is not the only factor affecting market conditions and trends – general economic conditions and financial market movements, new construction projects coming on market, significant changes in interest rates, local stock market IPOs, natural and political events, and other factors can and do impact the market as well, sometimes quite suddenly.

It is also worth noting that new listings and new sales occur every month of the year – and sometimes, depending on prevailing market conditions and the specific property, buying or selling during the slower periods of the year can be the smart strategy. For buyers in particular, though the supply of active listings is somewhat lower during mid-late summer and mid-winter market slowdowns, and the number of new listings dwindles, the competition for homes is much lower as well. There are many more price reductions and increased seller willingness to negotiate list prices. The result is that buyers can sometimes make the best deals during these periods: Many of the charts below illustrate this opportunity.

Because of the significant summer and winter slowdowns, it is difficult to come to definitive conclusions about the condition and direction of the market during July/August, and December/January. One really has to wait for the autumn market to begin in mid-September with the typical surge of new listings, or the spring market to begin in late February/ early March to get a sense of where the market may be heading next.

The devil’s always in the details, and the details of the market change constantly. Still, there is a typical and dramatic ebb and flow to the level of activity in the market that correlate with seasonality, and that is what this report explores from a variety of angles.

Without inventory and buyers wanting to purchase, there is no market. These first charts show the classic effects of seasonality on supply and demand.


Buyer Demand, Price Reductions & Overbidding

For the last few years, spring has been the season of the greatest market frenzy, which shows up in Sales Price to Original List Price ratio (a good measurement of the competitiveness of the market), and the percentage of listings selling for over final list price..

As seen in these next charts, the higher-price end of the market is usually much more affected by seasonality that the general market. Among other effects, this will usually raise the median sales price during the peak spring and autumn selling periods, and lower them in the slower periods of summer and mid-winter.

These final 2 charts illustrate both the rapidly appreciating real estate market since 2012 and the shorter term ups and downs that seasonality can play in median home prices – which sometimes have little to do with changes in fair market value. The Case-Shiller Index chart attempts to track changes in fair market value, and the effect of seasonality is dramatically illustrated. Of course, in an appreciating or depreciating market, there are usually other factors impacting median sales prices beside seasonality – as always, what is most meaningful is the longer term trend in home prices, not short-term fluctuations.

Fluctuations in median sales prices are not unusual and these fluctuations can occur for other reasons besides changes in value, such as seasonality; inventory available to purchase; availability of financing; changes in buyer profile; and changes in the distressed and luxury segments. How these statistics apply to any particular property is unknown without a specific comparative market analysis. All data from sources deemed reliable, but may contain errors and is subject to revision.

© 2017 Paragon Real Estate Group

What Dog Owners Should Know About Home Buying and Selling Etiquette

We often think about the concept of dog etiquette in relation to our interactions with friends, family, strangers at the park, and other dogs we encounter on our daily walks. But one realm where people may not think about the importance of proper dog etiquette is real estate. Many of us buy and sell homes and many of us own one or multiple dogs. Here’s what you need to know about canine interactions during the home buying and selling process.

Dogs don’t belong at open houses

An “open house” showing means that anyone can come by and look at the home in question. Some people take that “anyone” to mean their canine companions. From both the buyer and seller’s side, having dogs at an open house is a big dog etiquette faux pas.

If you’re attending an open house for a home you’re interested in buying, leave your dog at home. If you feel it’s important to bring your dog along, get the ok from the homeowner and realtor before doing so. If you spot an open house your want to check it out while out walking the dog, take your dog home first and go back. People have allergies and to put a finer point on it – not everyone likes your dog.

Get your dog out of the house for showings

Whether it’s an open house or your realtor is showing your home to a prospective buyer, it’s your job as a seller to make the home as attractive as possible. Sure, any buyer will know (thanks to disclosures) that your home has been inhabited by a dog. But that doesn’t mean you need to shove that fact in their face. If you know someone is coming to look at your home, take your dog out of the house for a bit. Take a walk. Take them to a dog-friendly (and fun!) location like one of the many fenced-in dog parks in the area, a bar like The Homestead or Holy Water, or a restaurant like Park Chow or MoMo’s patio.

And before you leave, don’t forget to remove as much evidence of dogs as you can. Deodorize your carpets, rugs, and furniture. Vacuum up hairs. Use candles or plug-in air fresheners to get rid of some of that dog smell. You may have become accustomed to it, but a potential buyer may be turned off by a heavy dog odor.

Moving day is not very dog-friendly

Moving day is no fun for humans – and it’s even less fun for dogs. Imagine someone raiding your home and taking everything and you have no idea why they’re doing it. How stressful! It can be even worse if you hire movers, as strangers inside the home can upset many dogs. You should plan to remove your dog from the chaos of the move if you can. Technology is making it easier for you to do this, as apps like Rover connect you with local dog lovers willing to take care of your companion for either the duration of a walk, for a day, or even overnight if need be.

Many of us are attached to our dogs and there’s nothing wrong with that. They are a huge part of our lives. But there are certain times when it’s bad manners (and even detrimental to your dog itself) to involve them. Buying and selling a home is one of those times. Do what you can to keep your dog as far away from the fray as possible – whether it be a showing, an open house, or moving day.

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Q3 SF Real Estate Market Review

Year-over-year, a low inventory homes market dropped even lower, while buyer demand increased to keep the pot boiling in San Francisco through the third quarter, when activity typically cools down between the spring and autumn selling seasons. Since closed sales in each month mostly reflect the market heat in the previous month, when the offers are actually negotiated, we will not have hard data on September until October sales data becomes available in November. One thing we do know is that the number of new listings coming on market in September, which is usually the month of the year with the highest number of new listings, is down considerably from last year – but the number of listings accepting offers increased: Less inventory, but more demand.

Q3 SF Median Home Sales Price Changes since 2005

San Francisco Q3 Median Home Price Trends

The Q3 SF median house sales price was $1,365,000 and the median SF condo sales price was $1,175,000, considerable year-over-year increases over Q3 2016 prices: 7% and 11% respectively. It is not unusual for median prices to drop from Q2 to Q3, to a large degree due to the seasonal decline in luxury home sales, as well as the typical overall market cooling during the summer, and this occurred for houses, which dropped $75,000 from Q2, similar to drops in previous years. But condos bucked this trend and increased $40,000 quarter to quarter. (Q2 to Q3 change is not illustrated on this chart.) However, while the house inventory in the city has been relatively unchanged for 60+ years, tens of thousands of new condos have come into the market over recent decades, which means that comparing the basket of sales in different periods is not always apples to apples.

Q3 San Francisco Market Trends since 2005
Comparing Q3 statistics for the past 12 years

Q3 New Listings Coming on Market since 2005

New listings hitting the market dropped appreciably year-over-year, doing no favors for buyers competing for homes in Q3 overall, and in September specifically.

San Francisco Q3 New Home Listings on Market

Months Supply of Inventory (MSI), Q3 since 2005

MSI compares demand to supply in one statistic: The lower the MSI, the higher the demand vs. the number of listings available to purchase. The MSI for the SF house market in Q3 2017 was as low as in any Q3 during the past 12 years. For San Francisco condos, the MSI was somewhat higher, but still historically low (but does not include the substantial inventory of new-project condo listings, not listed in MLS). Both are down significantly from Q3 of 2016: 2016 was a cooler market between two very hot markets in 2015 and 2017.

San Francisco Q3 Months Supply of Inventory

Average Days on Market, Q3 since 2005

San Francisco Q3 Days on Market

Overbidding List Prices
by Month since December 2015

In the last 6 years, overbidding percentages have usually declined from the Q2 spring selling season to the quieter Q3 summer market. But not this year: This year overbidding increased in July and September to their highest points since mid-2015.

San Francisco Overbidding Home Prices

Context Economic Factors to Bay Area Housing Markets


We recently completed a report placing the Bay Area housing market within the context of a wide variety of other economic and demographic dynamics, such as population growth, employment and hiring, the stock and the IPO markets, consumer confidence, interest rates, commercial lease rates, , aging homeowners (who sell less frequently), housing affordability and new housing construction. Because conditions, trends and cycles seen among them are, more often than not, closely interrelated. The full report is online here: Economic Context Report.

San Francisco Luxury House & Condo Markets

In September, we issued 2 detailed reports on the San Francisco luxury house market, and the SF luxury condo, co-op and TIC market. Above are 2 of many updated analyses. The complete reports can be found here:

Link to our SF luxury house market update
Link to our SF luxury condo and co-op market update

San Francisco Investment Property Market

After dropping in 2016, SF residential rents appear to be making a small recovery, though the data is still very short-term, and there are thousands of new apartments in the new construction pipeline in the city. This chart is from our latest report on the San Francisco, Alameda and Marin multi-unit residential markets:

Link to our apartment building market report

Trends in Selected San Francisco Neighborhoods

We have dozens of analyses of appreciation trends within specific SF neighborhoods and districts, and below is a sampling, some by median sales price and others by average dollar per square foot value. Some city neighborhoods plateaued or saw declines in values in 2016, when segments of the market distinctly cooled: Generally speaking, these were more expensive home segments, and condo markets most impacted by new-project condos coming on market with major new supply. Affordable house markets largely continued to appreciate in 2016. In 2017 to date, most areas of the city have experienced further appreciation.

Changes in these statistics do not necessarily correspond exactly to changes in fair market value, as they can be affected by a variety of factors. Neighborhoods with relatively few sales and broader ranges in individual sales prices are most prone to fluctuations unrelated to changes in fair market value. Longer-term trends are always more meaningful than shorter term. If you are interested in a neighborhood not included below, please let us know.

Please let us know if you have questions or we can be of assistance in any other way. Information on neighborhoods not included in this report is readily available.

SF neighborhood home price tables: Median Sales Prices by Bedroom Count

All our real estate analyses can be found here: Paragon Market Reports

Over the past 12 months, Paragon sold more San Francisco residential and multi-unit residential real estate than any other brokerage. (Dollar volume sales reported to MLS per Broker Metrics.)

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

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 San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group

 No one knows San Francisco real estate better than Paragon.

The Multi-Unit Residential Property Markets of San Francisco, Alameda & Marin Counties

We recently completed a report placing the Bay Area housing market within the context of a wide variety of other economic dynamics, such as population growth, employment and hiring, the stock and the IPO markets, consumer confidence, interest rates, commercial lease rates, housing affordability and new housing construction. Because conditions, trends and cycles seen in housing markets and in these other fundamental economic realities are, more often than not, tied together quite closely. The full report is online here: Economic Context Report.

Context Economic Factors to Bay Area Housing Markets


Our updated analyses specific to the Bay Area apartment building market begin below.

This report generally separates out the 2-4 unit and the 5+ unit apartment building markets in the 3 counties, since they typically have somewhat different dynamics and values. When analyzing statistics by submarket, we are sometimes working with a relatively small number of sales, which can lead to anomalous fluctuations. Sudden outsized jumps or declines in median prices or average dollar per square foot values should be taken with a grain of salt until the trend is substantiated over the longer term. All the statistics below are broad generalities covering a wide variety of buildings of different locations, sizes, qualities, condition, incomes, and expense ratios.


Sales & Values by Submarket





Overview Trends by County

Marin is sometimes excluded from analyses pertaining to larger apartment buildings simply because the number of sales there is often too low for reliable statistics to be generated.





Chart: Sales by Price Segment, SF 5+ Units
Chart: Sales by Price Segment, SF 2-4 Units


Rent Rate Statistics

According to Zillow, median list rents ticked back up in the first half of 2017, reversing several previous quarters of decline in 2016, but still well down from peaks in 2015: This trend is relatively consistent across Bay Area counties, as well as within San Francisco when looking at rents by unit size. However, the change is still short-term and too much should not be made of it until substantiated over the longer term. Hiring trends, which often drive rent rates, have been fluctuating up and down over the past 20 months, with a general overall plateauing in employment numbers over the time period (after years of huge increases). At the same time, there are still many thousands of new apartments in the construction pipeline in the city.





Market Metrics by County & San Francisco Submarket
Cap Rates, Price per Unit & Days on Market





San Francisco Trend Overviews

These 3 charts below for the overall SF market, from our mid-year report, give additional context to the submarket metrics illustrated above.





San Francisco Supply & Demand Dynamics
Active Listings, Listings Accepting Offers & Seasonality

As of 10/2/17, there were 107 active 2-4 unit building listings in San Francisco with 43 listings pending sale (offers accepted but not yet closed sale). In the SF 5+ unit building market, there were 29 active listings with 28 pending sale (a relatively high number). These two charts illustrate the size of the SF multi-unit markets in any given month, and how market activity ebbs and flows by season. In mid-November, local real estate markets usually plunge in activity until picking up again in February and March.




Sales Price to List Price Percentages, Days on Market,
Price Reductions & Expired Listings

This chart below illustrates different reactions to properties that the market deems fairly priced or priced too high: Some listings sell quickly for over asking price; some must go through one or more price reductions to sell after a much longer time on market; and some do not sell at all, but are pulled off the market because of buyer indifference. Though this chart is specific to San Francisco multi-unit buildings, the same basic trends are found in every county and every segment of our real estate markets.



Q3 2017 Sales of San Francisco 5+ Unit
Apartment Buildings

San Francisco is a unique residential-investment market: the buildings are smaller and older than in most places, built in a wide range of architectural styles. The great majority of the market is under rent control, which makes upside rental-income potential a big component of valuation, even if it is unknown when that potential might be realized. Furthermore, the units are typically very unlike those in suburban garden-apartment complexes, and within the city the variety in buildings and units is enormous.

Sales reported by 10/2/17. Data from sources deemed reliable but may contain errors
and subject to revision. May not contain every sale occurring in the period.

In real estate, the devil is always in the details: If you are interested in further insight into the details of any of the above sales, or regarding properties currently on the market, please contact me.


Long-Term Appreciation Trends: 3 Major SF Districts

These 3 charts review the 2-4 unit building markets in three broad sections of the city: The very expensive, northern district encompassing the greater Pacific Heights area; the central Noe, Eureka & Cole Valleys district; and the Richmond district in the northwest corner of the city. We use the 2-4 unit building markets because the greater quantity of sales makes the statistics much more meaningful.





Broker Performance in Residential Multi-Unit Property Sales

According to Broker Metrics, which crunches MLS sales data, of the largest brokerages in San Francisco for multi-unit residential property sales, Paragon ranks first for highest sales volume (in both 2+ and 5+ unit building sales). Paragon represents both many more buyers and many more sellers in successfully completed transactions. We also know and do significant amounts of business in surrounding Bay Area counties.



All Paragon market reports can be found here

It is impossible to know how median and average value statistics apply to any particular apartment building without a specific, tailored, comparative market analysis, which can be provided upon request.

Numbers reflect sales reported by 10/2/17. These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities: This is especially true for multi-unit properties, with the enormous range of property types, sizes, conditions, circumstances, qualities, financial data and locations. We are often dependent upon listing agents for income and expense details, which can be of varying accuracy. Many Alameda sales do not report cap rates, so the calculation in this report is based only upon those that did. A percentage of investment property sales are not reported to MLS, which sometimes limits our ability for more comprehensive data analysis. All numbers to be considered approximate.

© 2017 Paragon Commercial Brokerage