The current trends in San Francisco real estate market show that it is the fastest moving real estate market in the country. Besides that, the market shows continuous, steady, stable growth, and has done for the past four or five decades, and shows no signs of slowing down. It isn’t a bubble, it’s just a booming housing market. With the increased value from Silicon Valley, the prime location, and the beautiful oceanside climate, there are plenty of reasons why the San Francisco real estate market may never slow down.
So what does this mean for the homeowner, or prospective homebuyer? Since it moves so fast, the market can certainly be tricky to get a clear picture of. To that end, we’ve compiled some trends and data to help you get a firmer grip on the current and projected state of the San Francisco real estate market, to help you make a sound financial investment or to find your dream home.
#1. Home Values Continue to Climb
The median house sale price continues to climb, with the highest specific growth in 3-bedroom houses. As of April 2018, that median sale price (for San Francisco real estate in general, not just for 3-bedrooms) is up to $1,665,000 (some estimates place it closer to $1,340,000 depending on the neighborhoods included in the survey). That’s a year-over-year increase of about 20% from the April 2017 figures. Or, put another way, if you’d bought a new San Francisco home this time last year, your investment might already have grown by several hundred thousand dollars.
#2. These Neighborhoods Are in Highest Demand
While the San Francisco real estate market is growing across the board, certain parts of the city are in particularly high demand, showing the greatest market increase year over year. Over the past decade (roughly), these neighborhoods have shown the most concentrated increases in sales, relative to the rest of the San Francisco real estate market:
The distribution of these neighborhoods is compelling. While Bernal Heights and the Mission are in close proximity to downtown, the other neighborhoods are further from the city’s core. The clear trend shows that, while the downtown has always led the charge for housing, the rest of the city is catching up. It’s a great time to buy, and, while it’s not exactly getting in on the ground floor, it’s definitely still relatively early as far as lifetime investment growth is concerned.
#3. House Flipping Isn’t Spurring the Market
In other fast-growing real estate markets, house flipping is a major driving force for growth. That does make a fair bit of sense. It’s basic economics, really. Most nascent or growing markets would be prime candidates for the house flipping community, since they would stand to increase their overall profit margin. That’s not the case in San Francisco’s real estate market.
With so many heritage homes, it’s precisely their traditional value that makes them desirable. Besides that, the market is growing so quickly, it’s a better investment of time and money to hold onto a piece of property and put it to use as a rental, rather than letting it stay vacant during house-flipping renovations. Indeed, in most cases, house-flipping in San Francisco would actually hinder the overall profitability of the investment. There are certainly outlier cases (and an experienced San Francisco Realtor would be able to find them, if those are what you’re after), but the overall trend shows that the market growth is itself sufficient to sustain a strong investment without the extra leg-work.
#4. The Greatest Growth Is in Higher-Value Homes
These market increases are measured as percentages. If the market average is, say, 10% year over year across the board, then higher value homes will show the greatest investment potential. Let’s just crunch some very, very quick numbers.
Imagine two homes, both bought on January 1st, 2017. The first was bought for $1 000 000 and the second was bought for $4 000 000. At that 10% increase, as of January 1, 2018, after just one year, the first home will have increased in value by $100 000, while the second will have increased by $400 000. So, oranges to oranges, the higher-value home, just by virtue of the market growth, will have increased in value by a full three hundred thousand dollars more than its counterpart.
The Bottom Line on Trends in San Francisco Real Estate
All these trends in San Francisco real estate come together to highlight a reliable bit of market wisdom: the very best financial decision you can make is to invest in the highest-value home you can possibly afford, as soon as possible. That’s the best way to maximise your investment growth over the long-term (or the shorter-term).
In some cases, depending on your neighborhood, you stand to make a greater long-term profit by selling even a fairly recently bought property, as soon as it’s plausible for you to upgrade to a higher-value home. The specific projections will depend on your neighborhood and the scale of increase for your upgrade, so there’s no one-size-fits-all approach. It’s always a good idea to contact a San Francisco realtor to discuss your particular situation to discover whether a move is worth the investment potential.
Investing in San Francisco real estate is a forward thinking way to plan for your financial future. Snatching up the perfect high-value property is the prudent move, and an experienced Realtor can make all the difference. If you’re ready to take the next step, go ahead and give Danielle Lazier + Associates a call. We are ready to make your real estate dreams a reality.
