San Francisco: The Golden Gate City
Putting off buying a house for even just a few months could cost you big-time in San Francisco.
The median price for a single-family home rose a jaw-dropping $100,000 in the City by the Bay—reaching an all-time high of $1.6 million—from the last quarter of 2017 to the first quarter of 2018, according to a recent analysis from the San Francisco–based Paragon Real Estate Group. That's six figures in only three months!
House prices in the Bay Area city, a favorite of extremely well-paid techies, shot up nearly 24% in the first quarter of this year, compared with the first quarter of last year. And they're likely to rise even further, as prices usually surge in spring and summer, says Patrick Carlisle, Paragon's chief marketing analyst.
"We didn’t see this coming,” he says. “I don’t think I’ve ever seen this kind of jump.”
In most parts of the country, $100,000 can fetch buyers a move-in ready, multiple-bedroom house in a nice neighborhood. The median home price nationally was just $279,900 as of March 1, according to realtor.com® data.
The nearly incomprehensible rise in San Francisco is due to the dearth of houses on the market, a problem that shows no signs of abating. Since the city occupies a peninsula, there isn't much room to expand. Builders have been putting up condos, but not nearly as many single-family abodes—there simply isn't the land available to do so. And sellers are often reluctant to part with their homes as they fear they won't find anything better that they can afford.
Those who transfer for work or move out of the city for a stretch of time often rent out their homes instead of selling them in order to avoid having to buy another home in the city in the future. That leaves buyers with few options, and lots of competition from deep-pocketed tech executives and venture capitalists.
"There’s just a trickle of new listings coming on the market, and they’re snapped up almost immediately," Carlisle says. "We’ve had situations where there are 10 to 20 offers on a new listing, sometimes even more. Multiple offers are the norm, and sometimes there are frenzied bidding wars."
And those $1.6 million, median-priced homes aren't anything exceptional. They're usually moderately sized with a few bedrooms and two bathrooms—and they aren't even in the most prestigious neighborhoods.
“We’re not talking about a house that would be featured in Architectural Digest," Carlisle says. "That would probably be at least $2.5 million."
For those with a more modest buying budget, say in the $400,000 range, housing is still available, but not in San Francisco proper. Areas of Solano County, such as the once gritty and bankrupt Vallejo, 30 miles or so from downtown San Francisco, are among the lower-priced markets in the Bay Area. They've been attracting buyers who have been priced out of San Francisco.
However, San Francisco isn’t completely off-limits to home buyers. Condominiums are an option for those with a budget of at least $600,000—one-bedroom condos, that is. The median condo price was $1,176,500 in the first quarter of this year, according to Paragon.
“I just sold a condo yesterday listed for $699,000 in [the San Francisco neighborhood of] Pacific Heights, and got 10 offers,” says Eddie O'Sullivan, an associate broker with the Eddie O’Sullivan Group at Keller Williams Realty. "It sold for above listing price."