SF home prices surge again, show no signs of slowing 

click to enlarge San Francisco reported a 3 percent home price increase, the greatest out of the S&P/Case-Schiller Index released Tuesday. - JEFF CHIU/AP PHOTO
  • Jeff Chiu/AP Photo
  • San Francisco reported a 3 percent home price increase, the greatest out of the S&P/Case-Schiller Index released Tuesday.

Home values in San Francisco have swelled again, signaling yet another "overheated" spring market in the Bay Area.

San Francisco's 10.3 percent annual gain in March — the highest year-over-year increase of the 20 major U.S. metropolitan areas surveyed — is The City's first double-digit monthly increase since July 2014, according to the S&P/Case-Shiller Index released Tuesday. The report is published the last Tuesday of each month and tracks the price path of typical single-family homes in metropolitan areas. It is released two months after the featured month.

In addition to The City, the Case-Shiller San Francisco metro area includes San Mateo, Marin, Alameda and Contra Costa counties.

At 3 percent, San Francisco also reported the greatest month-over-month home price increase out of the cities included in the index. Other cities with significant gains from February to March include Seattle, Dallas, Denver and Tampa. The national index increased 0.8 percent from February to March.

This year also marks the fourth spring in a row that San Francisco's home prices have dramatically surged, reaching 110 percent greater than the home price in January 2000, the designated basis for the Case-Shiller Index to compare home prices.

"The frenzy in the market this spring has been every bit as overheated as last year and the year before that, which was somewhat unexpected, since everybody is wondering how long this can continue," said Patrick Carlisle, chief market analyst for San Francisco-based Paragon Real Estate Group.

Carlisle primarily attributed the continued climb to the region's technology boom that has triggered an influx of residents looking for housing faster than demand can meet.

Ted Egan, The City's chief economist, said San Francisco added 105,000 jobs between September 2009 and September 2014.

"There's been a huge burst in new wealth creation in Silicon Valley," Carlisle said. "Thousands of new millionaires have been minted, dozens of billionaires, and literally hundreds of thousands of people whose net worth has jumped dramatically."

The current tech surge is also likely to produce less of a bubble than the dot-com era of the late 1990s because, unlike that bubble, many of today's companies driving the wealth are profitable, Carlisle noted.

"We're certainly overheated, but often things keep rolling on for longer than people assume they will," he said. "I don't see a bubble popping in the next year or two."

For the past three decades, the up cycles in San Francisco real estate have lasted in the five- to seven-year range, Carlisle said. The City is just 3½ years into its current economic recovery. Still, the surge appears to be unprecedented.

"Certainly I've never seen in my 26 years in real estate a higher demand market than what we're currently in," said Patrick Barber, president of the San Francisco Association of Realtors. "There's so much demand and so little inventory."

However, Carlisle anticipated that the housing market will flatten out or decline in the summer, autumn and winter months, a trend experienced last year.

"For the last four years, the surge in home price appreciation has mostly occurred in spring frenzies," he said.

About The Author

Laura Dudnick

Laura Dudnick, a Bay Area native, covers education and planning for The San Francisco Examiner. She previously worked as a senior local editor for Patch.com, and as the San Mateo County bureau reporter and weekend editor for Bay City News Service.
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