
Market Conditions, Trends and Home Prices in San Francisco - rafaelc
https://www.paragon-re.com/trend/san-francisco-home-prices-market-trends-news
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aphextron
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refurb
A few things to keep in mind when looking at these stats:

\- the turnover in bay area real estate is relatively low, I've seen 0.38% as
the per year turnover rate (not sure how accurate)

\- as such, prices get bid up really high with such low inventory

\- real investment companies are driving a lot of this - it's an anecdote, but
a house down the street in SF has been under construction for over 4 years;
it's a completely redone duplex. You're either a multimillionaire who can
float a 2nd mortgage for 4 years or you're a company with deep pockets who
knows they can flip it for 200% of the purchase price when it's said and done.

\- the same RE company that produced this report, also has a good article on
bubbles - they are realistic about it[1]

It's not a normal market at all.

[1] [https://www.paragon-re.com/trend/3-recessions-2-bubbles-
and-...](https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby)

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nshelly
Keep in mind Paragon Real Estate Group is motivated by turning over inventory
and encouraging people to buy.

> "longer term trends have always been positive"

This suggests that you should always buy if you're planning to stay in the Bay
Area for the long term. The problem is that if you need to move _within_ the
Bay Area, then you could be setting yourself up for a very long commute, when
one could have rented and invested the difference in the bull market over the
past 10 years. And if you do ever leave the region (like many do, despite what
the article suggests that lumps overseas in-migration with domestic out-
migration), then you're looking at a 8-10% in fees to buy and then sell. Many
parts of the region still haven't recovered from the bubble of 2007, and a
more apt study would be to examine historical prices in urban areas like
Boston or New York and the opportunity costs. A study of 100 years of
commercial real estate in NYC show how property values were 30% lower in 1999
than they were in 1899, adjusting for inflation, and within, any decade values
often rise and fall by 20–50% in real terms.
[https://economics.mit.edu/files/5887](https://economics.mit.edu/files/5887)

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jzl
Given how small SF is, and given how many multi-millionaires are minted with
every big and even not-so-big tech company exit -- not to mention a steady
population of bankers, traders, lawyers, doctors, etc. -- it seems like there
is absolutely no end in sight to what is happening in the housing market
there. There are probably more people flush with 7+ figures of cash to buy
there than there will ever be available inventory in the foreseeable future. I
would be extremely curious to see the demographics of all home buyers over the
last few years, and/or what percentage of sales in the city are all-cash
offers or at least could be done as such if the buyers desired.

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yuhao
Recently went to an open house in Hayes Valley. Asking price 2.595 million.
Checked back with a real estate agent later, and got these stats: There were 6
offers, 5 of which were all cash. The winning offer was for 3.3 million.

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jzl
Amazing. Would kill to see the respective employer(s) of each bidder. That
would be fascinating. I still wonder how much developers and/or foreign buyers
are in the mix, but I have a feeling that's not the dominating factor here.

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Reedx
I don't know, I mean, are there really that many employees who have ~$3m in
cash?

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jzl
I'm thinking of all the people who did/will make that much or more with each
large-scale exit. How many 3+ millionaires will the combined exits of Airbnb,
Uber, and Pinterest create? (Any of which could be in the next few years.)
Easily more than a thousand, I would guess.

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bradlys
It's no surprise why so many people are still trying to get in even though the
market is insane. They just look at those graphs, with 5-20% YOY growth almost
every year, see a horrible recession once every few years that has at most a
30% effect on house value (which recovers all "lost" value very quickly)...
makes a lot of financial sense. You buy a $2m home and it'll be $3m in no
time. Plenty of folks said it would stop a long time ago but it clearly isn't
stopping.

I'm genuinely curious as to where the price cap is going to land with the
homes. We're already at prices that almost no one can pay (you have to be a
1%'er) - but at what point is it too much even for most of them?

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seanmcdirmid
It has to stop, obviously. That $2 million house isn’t going to be $20 million
in 10 years without serious inflation.

No one today remembers the early 90s, when plenty of people did or almost lost
their shirts in the Bay Area housing markets.

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paulsutter
A friend bought his house in Sunnyvale at the peak and I think the trough was
about 30% lower. The decline had no effect whatever on his life, before long
it was multiple times his original price.

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thatfrenchguy
Unless you get fired and you can’t afford your mortgage.

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mateo411
If you get fired or laid off, then you get another job.

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nostrademons
This was not always possible in 1991 or 2002 or even 2009.

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mateo411
This is true. The biggest risk with buying is that there could be a recession
in the near future and you will be unemployed.

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dawhizkid
It's just not worth it. I went to an open house this weekend to see a 800 sq
ft 2b/1ba in Castro area for "only" 1 million and the ceilings were (no joke)
~6' high!

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refurb
This is what gets me about housing in SF. OK, it's a hot market and a typical
home is $1.5M. I get that.

But that same $1.5M home is probably a 1920's floor plan (one bathroom, no
storage, tiny bathroom) and hasn't been updated in decades.

If you want what most of the rest of the country deems a middle class house,
you're looking at $2.0M+ unless you're living in a neighborhood with
shootings.

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jimbofisher1
Ah the Silicon Valley Oasis.

"I will say there is more feces on the sidewalks than I’ve ever seen..."

[https://www.nbcbayarea.com/news/local/SF-Mayor-Theres-
more-f...](https://www.nbcbayarea.com/news/local/SF-Mayor-Theres-more-feces-
on-the-sidewalks-than-Ive-ever-seen-488156431.html)

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ucaetano
Silicon Valley is about 40 miles south of San Francisco :)

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fenwick67
It's in the "san francisco bay area".

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ucaetano
Sure, and both Malibu and Skid Row are in the Greater LA Area.

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almost_usual
Like anything in life you either got lucky or didn't with Bay Area housing.
It's a contentious subject and people who are new are paying a premium to "get
in".

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benarent
I would be interested to read more about what'll happen in the case of the
next large quake. Since we're overdue a big one[1]. I recently had a friend
big on a duplex in the Marina. I'm not sure if I would take a 20 - 30 yr real
estate bet in a liquefaction zone.

1\. [http://theconversation.com/californias-other-drought-a-
major...](http://theconversation.com/californias-other-drought-a-major-
earthquake-is-overdue-90517)

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d1zzy
I have Earthquake insurance from the CEA and it was surprisingly cheap, but of
course, one thing is for the insurance to cover your home repairs and quite
another to actually be able to do them because if/when the next big one hits,
if you think contractors/developers are overbooked now it will be 100 times
worse then, basically I suspect we'll live in a tent for a while. But at least
I have my own piece of land where to do that.

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jzl
Slashdotted...

~~~
Reedx
That's still my favorite term for this.

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crsv
This report juxtaposed with some of the descriptions I was reading on a reddit
thread about what it's like to be in SF on a day to day basis just paint such
an insane picture. A place where the median house price is 1.6 million dollars
and it's completely commonplace to see a person defecate on a street in broad
daylight.

For a place that has generated such wonder, it seems like some kind of social
anti-pattern born out of a hyper-capitalist society.

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pwned1
Page down.

