A Year In The Market
2019 was poised to be the year of the IPO, yet cash never flooded the real estate market as most experts predicted. Lyft, Uber, and Slack all stumbled, and WeWork, well, you know how that turned out. The ripple effects of struggling IPO's were seen in the real estate market in Q3 and Q4, with fewer transactions than initially expected. The psychological effect was also noticed; homeowners waiting to see values rise with the influx of cash were left hanging, and over-priced listings were forced to sit on the market longer than anticipated, with eventual price reductions and properties not selling. Transparent pricing at true market value is recommended in Q1 of 2020.
One trend remained true in 2019; The first wave of re-sales in new condominium buildings sold with significant appreciation. One Mission Bay, The Harrison, Arden and The Rockwell all saw significant price jumps. Expect this trend to continue throughout 2020 and beyond.
Taking a deeper dive into how each individual neighborhood performed, we are seeing some interesting trends emerge.
Mission Bay
The newest neighborhood in San Francisco (exception; ShipyardSF at Hunters Point) is showing continual growth with no sign of slowing down.
Take a look at the data from a PDF I made for my investor’s shopping in Bayview/Hunters Point/Candlestick Point. I liken these 3 neighborhoods in district 10 to a young Mission Bay; terrible publicity around toxicity, poor public perception & relatively no infrastructure built to sustain an enjoyable local lifestyle.
Mission Bay Then vs. Now
In 2011, the original Mission Bay developments Madrone & Radiance were averaging $662 per foot. Fast forward to 2018, Mission Bay as a whole was selling for $1,182 per foot. Prices cracked $1,200 per foot in 2019, all but signaling home values doubling in under a decade.
With condominium development at capacity, it’s hard to see these averages stagnating any time soon. Mission Bay was SF’s first fully master-planned community with 4 condo buildings planned for the south side of the channel. Now that One Mission Bay has fully sold, resales will control the market.
We project home values to continue to climb with Chase Center becoming a new norm in the neighborhood, as well as Mission Rock breaking ground this year.
South Beach
South Beach continues to hold the lead in district 9, with an average sales price above $1,450,000. With no single-family homes in South Beach and a flurry of brand new luxury high rise developments, the neighborhood is showing no signs of stagnating, either.
Don’t let 43 days on market fool you into thinking this is a slowing market compared to the 7-21 days you see in other parts of SF and the Silicon Valley; that statistic is heavily influenced by new construction. $10M to $46M penthouses routinely sitting on the market for 365 days or more. A transparently priced 2 bed | 2 bath will disappear from the market just as quickly as any other neighborhood.
The Avery, 181 Fremont, and MIRA all increased sales volume in 2019, with The Harrison nearing total sell out. New construction not only boosts the neighborhood’s aesthetic value, it increases surrounding building’s values, too. When the neighborhood price per foot as a whole increases, the lower half of the market gets pulled up with it. 201 Harrison and similar properties all saw growth too, likely from increased neighborhood desirability.
A trend I saw in 2019 was the slowing of loft sales. Ironically, the 01.08 Coming Soon List was littered with lofts coming to the market in early 2020. South Beach is home to many historic and architecturally beautiful loft buildings, from 200 Brannan, to the Clocktower Lofts and Oriental Warehouse. We had 2 listings in Oriental Warehouse in the tail-end of 2019 that were priced exceptionally well compared to local inventory and previous sales, yet few buyers nibbled. Days on Market for lofts in 2019 reached 47, with a handful of properties being removed from the MLS or expiring.
We built an exceptionally deep loft buyer list from our efforts in the field and through social media ad spend, looking forward to placing some buyers in beautiful lofts in the neighborhood in 2020.
SOMA
South of Market continues to march along year after year. Before projects like 99 Rausch, you would expect to see the average neighborhood price per foot, well below $1,000, and potentially just below $900. The revamping of property in SOMA is bringing a new era of values, and along with it some headaches.
SOMA will continue to be a challenging neighborhood to truly value, as the variability in individual properties is extreme. From brand new construction on quiet side streets, the worn-down industrial conversion loft’s on the next block with a rampant homeless population sleeping on your doorstep, this district is by definition block by block.
The best deals can still be found in SOMA, particularly smaller streets like Russ, Bluxome, Clara and Shipley, where 1990’s construction or older are seeing beautifully custom interior remodels bringing them to a 2020 palate, while still holding a ~ $900 to $1,000 per foot purchase price.
SOMA Grand continues to remain steady as the neighborhoods staple luxury highrise, offering bi-monthly house cleaning services and a tried and true amenity package.
99 Rausch set a new standard of price per foot in the neighborhood averaging $1,361 per foot over 31 sales in the building in 2019. What 99 Rausch mastered was a combination of sleek, contemporary design with perfectly designed floor plans for smaller condominium living. The developer hit it out of the park with each unique living space, optimizing every inch of the layout for livability.
Looking Forward
With all economists projecting a stable housing market in 2020 and 2021, we anticipate these numbers to remain mostly stable for the remainder of the year. San Francisco has the luxury of being a bubble within a bubble and an extremely strong local economy; median-value condominiums are protected from macro factors that can swing smaller markets in other states. Our recommendation for buyers is to continue to seek buy-below-asking opportunities by shopping in the off-market inventory portals. Homeowners should price their homes transparently at exact market value, or anticipate lengthy days on market to accumulate as buyers aren’t interested in bidding wars.