San Francisco house price declines year over year again

The California Association of Realtors tabulated house sales across the Bay Area last week and found that, once again, prices overall dropped in July compared to last year in almost every Bay Area county.

The overall drop came in at 3.1 percent from July of 2018, to a Bay Area median sales price of $950,000 year over year.

By and large, this is pretty much what house prices in the nine counties have done all year. The interesting thing is that this time San Francisco saw a dip too, bucking its usual trend of, well, bucking the trend.

The median price for SF was down three percent year over year, dropping to $1.6 million. San Mateo County also slipped three points, down to $1.56 million.

Alameda County declined 2.1 percent to $950,000, while Contra Costa County slipped 5.4 percent to $660,000.

Santa Clara County saw the biggest year-over-year drop outside the North Bay, down 3.9 percent and landing at a median of just less than $1.3 million.

Napa County saw the worst treatment (or best, depending on one’s point of view) in July with a 5.8 percent decline from last year, the new county average coming out to $685,000. Marin County was close at 5.1 percent down and more than $1.25 million for a median.

The only counties that appreciated year over year last month were Sonoma and— surprisingly—Solano.

But Sonoma County’s fractional 0.8 percent increase to $655,000 doesn’t make much of an impression. Solano was up 2.4 percent but remains, as always, the least unaffordable region in the Bay Area, with an average home price of $465,000 for the month.

Prices go up and down all the time, and it’s usually not a good idea to make a big deal over one month’s data.

But whereas prices have generally slipped year over year across most of the Bay Area, it is unusual to see San Francisco join in. Although SF prices have sometimes declined from 2018 peaks in previous months, the city typically resists the sinking trend stubbornly.

This was also significantly larger than the previous drop of just 1.1 percent in April.

Writing for SF-based real estate group Compass’ monthly market report, economist Patrick Carlisle notes that “markets in late 2017 through spring 2018 were very hot virtually throughout the Bay Area—perhaps the hottest they’ve been since 2000, the height of the dotcom boom.”

Since then, he goes on to say, “most markets saw either no significant year-over-year appreciation or year-over-year declines in median house sales prices” across the region.

Most months only “those markets most affected by the slew of local high-tech IPOs” saw housing price appreciation—that is to say, San Francisco and sometimes “the greater Oakland market.”

Carlisle also points out that SF is an odd example, because whereas the city is building significant numbers of condos, townhomes, and other multi-family developments, new single-family home stock is basically at a standstill, meaning that demand still goes up even as new supply becomes available.

In San Francisco, the average sales price for a single-family house rose from approximately $1.3 million in 2015 to around $1.6 million for the whole of the second quarter of 2019.

On the other hand, the median price for a condo during roughly that same period increased from around $1.1 million to about $1.2 million.

But even that number is potentially deceptive; Compass also warns that “SF has a large luxury condo market, which affects median values.” Which is to say, the high end tends to drag the average disproportionately upwards, disguising the realities of cheaper multi-family homes further down the chain.

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