$1 million city: S.F. median home price hits 7 figures for 1st time
The median price paid in June for a new or existing single-family home or condo in San Francisco hit $1 million for the first time, according to a report released Wednesday by DataQuick. It was the first time any Bay Area county hit a seven-figure median, DataQuick spokesman Andrew LePage said. The median is the price at which half of homes sold for more and half for less. The nosebleed price is a result of limited inventory and an influx of cash buyers willing to pay whatever it takes, says Cece Doricko, a Realtor with TRI Coldwell Banker. Many are tech workers with stock compensation from an initial public offering or takeover. Realtors call them “Google kids,” even if they are 40 years old and work in biotech. A secondary group of cash buyers are investors from outside the country, mostly Asia, who see San Francisco as a relative bargain. “It’s really hard to buy if you don’t have cash or 50 percent down and make an offer that is non-contingent,” says Doricko. She’s had buyers who made the highest offer lose out because the seller asked cash buyers to come up to that price. “And they do,” she says.
There’s a glimmer of hope for buyers in the DataQuick report, which shows the rate of home-price appreciation continues to slow. For the nine-county Bay Area, the median price for homes closing in June was $618,000. That was up a scant 0.2 percent from $617,000 in May and 11.4 percent from June of last year. In June 2013, the median price rose 33.1 percent from a year earlier. Even in stratospheric San Francisco, home prices are rising at a slower rate. “Year over year, you are up 13.3 percent,” LePage said. “A year ago, you were up 23.8 percent.” Limited inventory has contributed to both soaring prices and a sales slowdown. Sales picked up a bit in June, but not much. A total of 7,915 new and resale houses and condos sold in the nine-county Bay Area last month. That was up 0.2 percent from 7,898 in May and also up 0.2 percent from 7,897 in June last year.
Renting no easier
The cost of renting an apartment in the Bay Area, meanwhile, shows few signs of decreasing, despite a boost in supply. The average asking rent in the nine-county Bay Area hit $2,158 per month in the second quarter – an increase of 5.6 percent from the first quarter and 10.3 percent from the second quarter of last year, according to a survey by RealFacts. The average rent is for market-rate apartments and townhomes ranging from studios to three-bedrooms in complexes with 50 or more units. San Francisco had the highest rents – $3,229 on average, up 5.6 percent for the quarter and 9.4 percent year over year.
Oakland up 19%
But Oakland had the biggest percentage gain. The average asking rent there jumped to $2,421 in the second quarter, up 10.6 percent from the first quarter and a whopping 19.1 percent year over year. “Out of the 15 properties we were tracking in Oakland, only three held rents steady. Twelve showed significant increases,” said Nick Grotjahn, a spokesman for RealFacts. Oakland had no new apartment buildings open during the past year, although two that are finishing up should hit the RealFacts survey next quarter. But other cities have had significant increases in supply. “People thought there was going to be a breather, especially with a lot of inventory coming online,” says Grotjahn. But the new apartments haven’t put much of a dent in rents.
In Santa Clara County, 12 large rental properties – with about 4,000 units combined – have come on the market over the past year. That’s more new inventory than in the previous four years combined, when only seven buildings with a total of 3,100 units debuted. Yet asking rents in San Jose – home to seven new buildings over the past year – hit $2,169 in the second quarter, up 9 percent year over year. That was only slightly lower than the previous year, when rents rose 9.8 percent.
Construction can’t keep up
In San Francisco, nine new buildings – with a total of 2,171 units – entered the RealFacts survey over the past year. From 2009 through 2012, only seven large properties with a total of about 1,600 units came on the market in San Francisco. Yet rents in San Francisco rose 9.4 percent over the past year, compared with 7.4 percent the previous year. “The number of new units pales in comparison to the number of new jobs in San Francisco,” says Samantha Chandler Duvall, director of acquisitions and business development with Chandler Properties. Her firm manages about 4,500 units throughout San Francisco, and most new tenants are coming from outside the area, especially New York and Chicago. In San Francisco, rents in the second quarter averaged $2,583 for a studio, $3,042 for a one bedroom/one bath unit and $4,248 for a two bed/two bath unit. Grotjahn said property managers have told him that demand has diminished somewhat over the past six months. Instead of getting 30 applicants for a unit, they might get only 20. Bill Meyer, president of WM Properties in San Francisco, said the slowdown has been steeper than that. His firm manages apartments mainly in Pacific Heights and Nob Hill and has had five to rent in the past month. “Not only is the number of applications down to one or two, traffic is also down. A year and a half ago, we had 15 people show up the first night (of an open house). Now it’s down to two or three,” he says.
Vacancy rate still zero
But, he adds, “We are still getting them leased (before the previous tenant moves out). Our vacancy rate is still essentially zero.” Although he has been able to increase rents by 9 or 10 percent a year, “We think the number of visitors to the open houses and time it takes to sign a lease is a leading indicator of rent softening.” Rafael Davis, Chandler’s director of leasing, said he has seen no slowdown in applications. “You list one property, there are maybe 20 to 30 qualified tenants wanting to look at it right away.” He added that the lower the rent, “the more candidates for that space. If you list a studio for $1,850 in the Mission, you get 30 to 40 responses.”
Other Bay Area cities with big rent increases over the past year include Petaluma (18.7 percent), Belmont (16.6 percent), Milpitas (15.7 percent), and Hayward (14.9 percent.)
June home sales
Sales and median prices of new and resale single-family homes and condominiums that closed in June.
Source : San Francisco Chronicle