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For the First Time, San Francisco Is a Million Dollar City
Scott Lucas | Photo: Courtesy Wikimedia Commons | July 17, 2014
Median home prices in SF hit record high.
Median home prices in San Francisco broke a new record, for the first time ever topping $1 million. That's the first time that the nominal median—the figure at which half of all sales are above and half below—broke the seven figure barrier in the Bay Area. The year-over-year change in nominal median sales prices for the city was 13.3%.
The increase in real estate prices has affected the whole Bay Area, although unevenly. The yearly nominal median changes in Napa and Marin counties were relatively low—at around 5%—whereas the increases in San Mateo and Solano Counties were around 15%.
(Side note: Since these are long-term trends, it's important to pay attention to inflation, which generally means that previous median prices expressed in today's dollars don't appear as low. For example, San Francisco's median home sales price in 2005 was about $800,000. Adjusted to 2014 dollars, that price would be $974,500. So even though the nominal numbers are surging, the inflation-adjusted ones tell a slightly different story: These prices are high, but only slightly more than equivalent to the height of our last real estate peak. But all of this makes us look like that killjoy who insisted that the new millennium didn't start until 2001—completely correct, but totally a buzzkill.)
Part of the jump comes from an influx of cash buyers, including what real estate agents are calling "Google kids," or folks with hefty stock compensation looking to get into real estate. There's also an influx of investors from outside the United States, particularly China and the rest of Asian, who see San Francisco as a strong investment. The flip side—limited supply. The Chron quotes one real estate expert as saying, "The number of new units pales in comparison to the number of new jobs in San Francisco."
The cost of renting an apartment continued to increase, with a jump of 5.6% in the first quarter of the year to an average of $2,158. Without the addition of 2,171 units of housing in San Francisco, and many more in the region as a whole, over the last year, that increase would have been even higher. Just look at Oakland, which added no new apartment buildings at all in the last year, and saw its average rents jump 10.6% in the first quarter of 2014.
The good news for buyers and renters, such as it is, was that the rate of increase seems to be slowing as more units enter the market. Does that means our housing could move from torrid to merely unaffordable? Here's hoping.