Ruth Krishnan, the real estate agent handling the listing, said she expects the house to sell for far above the asking price of $550,000.
Why? Because potential homeowners in San Francisco are not waiting around.
This current mentality in the housing market also characterized much of 2013: “If I don’t buy this house now, then next month it’s going to be more expensive,” according to Krishnan. Thanks to a healthy local economy, there is the money to do that — and folks in the real estate industry see the trend maintaining through the rest of the year.
Asking prices for homes were up 15 percent in San Francisco year over year, according to the real estate website Trulia’s year-end look at the nation’s top 25 metro areas.
In nearby Oakland, asking prices from 2012 to 2013 jumped 25 percent.
Prices did calm down in the second half of the year, but Krishnan said that at one point in the spring, she had to look at properties daily because their prices would change so quickly (in one instance, she said, a home shot up 20 percent).
High demand, low supply, lots of cash and cheap credit all contributed to San Francisco’s housing price spike last year, according to a market report by Paragon Real Estate.
In 2013, The City not only recovered from the Great Recession’s trouncing of housing prices, it exceeded them, noted Paragon. Last year’s median home sale price of $915,000 passed the previous peak of $895,000 set just before the housing bust in 2007. The median marks the midpoint in the range of home prices.
A large component of 2013’s real estate market was driven by luxury home sales.
“The affluent have benefited from the surge in financial markets, which makes them feel more affluent,” the Paragon report said. “… Our local high-tech boom has minted a large number of newly wealthy homebuyers.”
In many cases, such buyers were driving the increased prices, Krishnan said.
“A lot of my clients are tech clients and a lot of my clients have cash,” she said. “Because of how they came by it, they — I don’t want to say they didn’t work for it, but all of a sudden they had a lot of cash. They say, ‘What do I need to spend?’ They say that all the time.
“They want what they want and they have the cash to buy it, so they do.”
While San Francisco has seen prices climb overall — the median figure last year, $915,000, was more than double the state median, according to Paragon — the kind of homes sold, how many and at what price differed throughout The City.
Condo and tenancy-in-common, or TIC, sales were concentrated in the northeastern section of The City, with more than 1,000 units sold there.
By contrast, the most houses were sold in the southeastern part of The City. In the Bayview-Hunters Point and Excelsior area, about 500 homes were sold, which is higher than any other single area of San Francisco. The majority of all sales citywide were condos, accounting for more than three-fifths of the total.
Looking to 2014, both Trulia and Paragon seem optimistic about seeing more of the same, but they both expect prices to rise by about half the rate they did in 2013.
And while the San Francisco Association of Realtors is not expecting the market to be as frenetic as in 2013, it is expecting prices to increase at least 10 percent to 12 percent, said organization President Betty Taisch.
The same forces that shaped 2013 will be driving San Francisco home prices this year, she said. Those forces include the continued growth of the local economy thanks in part to the booming tech sector and a limited housing supply.
The limited inventory is the result of low construction rates, geographic constraints and a reluctance to sell no matter the price increases.
Many homeowners whose houses lost value after the recession are just now regaining that lost equity. Taisch said she expects those sellers to wait till their homes are even more valuable before selling. With few nearby options for inexpensive relocation, sellers are reluctant to leave their homes.
Buying property in S.F.
More than 6,500 homes were sold in 2013 (compared to 6,255 in 2012)
More than 3,000 of the homes sold were condos or tenancy-in-common units
Roughly 124,000 homes are occupied by owners
About 222,000 are rentals
About 25,000 are vacant at any given time
NOTE: While sale prices were higher than in years past, the total was not. In 2004, 7,887 homes were sold in The City.
Source: Paragon Real Estate
Rental rates also soar
San Francisco rents climbed by 10.6 percent in December compared to the same month in 2012. In fact, they rose at a rate faster than in any other metro area in the country. Only Portland, Ore., comes close, with about a 10 percent rise from December 2012 to December 2013. Nearby Oakland’s rents only rose by 2.2 percent. And nationally, rents rose 3 percent.