Having ticked up another 8 percent over the past week, the number of homes on the market in San Francisco, net of new sales and contract activity, has jumped over 15 percent since the end of August and crossed over the 1,800 mark for the first time in a decade, a jump which shouldn’t have caught any plugged-in readers by surprise.
As such, inventory levels are now running 90 percent higher on a year-over-year basis, 200 percent higher than in September of 2015, and roughly 20 percent higher than during the Great Recession, with the number of condos listed for sale (1,370) now up 108 percent on a year-over-year basis and single-family home inventory (450) up 42 percent (and climbing).
At the same time, with 30 percent of the homes on the market in San Francisco having been reduced at least once, which is 17 percentage points, or 130 percent, higher than at the same time last year, the number of reduced listings has increased 19 percent over the past month in the absolute to a new 9-year high, as we noted yesterday.
And with the pace of sales having slowed over the past week, while the pace of listings has increased, inventory levels should continue to tick up over the next few weeks, as would be typical for this time of the year.
SAN FRANCISCO (KGO) — A new report on housing prices in the Bay Area released Tuesday reveals an obvious trend: people are fleeing high-priced San Francisco for less expensive locations.
According to Realtor.com, the average price for a studio apartment in San Francisco has gone down 31% compared to last September.
That number represents the largest rent price drop for any county in the country, according to Realtor.com.
The monthly price for a one-bedroom in San Francisco has also gone down.
David Stark with the Bay East Association of Realtors explains the contrasting trends are a result of differing lifestyle preferences.
“While pressure for rental units in San Francisco may be down in some sectors, pressure for home ownership has increased,” Starks says, “especially in suburbs in the East Bay.”
“We may not see the big drops in the outlying suburbs,” he explains, “because the demand in these areas is still high.”
Some of that may be due to the people leaving San Francisco and Silicon Valley, but Stark says the housing market in California is still suffering from a longstanding lack of housing.
“We have decades of job growth in the SF Bay Area, but we don’t have decades of new housing opportunity creation,” Stark explains, “and we are still dealing with that during COVID-19.”
Rental prices in some areas have been increasing, including Sacramento, which has been featured Realtor.com’s top 10 list for biggest rent hikes.
Compared to September last year, the average monthly rent for a studio in Sacramento has gone up 16.2% to $1,400. And a one-bedroom is up 10.1% to $1,415 per month.
Former San Francisco resident Hayes Hyde moved out of her apartment in May to a Sacramento home she bought in Sacramento in 2016 as an investment property.
“Everyone is coming here,” Hyde laughed.
Now that Hyde’s job is entirely remote, the Sacramento home is now her primary residence.
“There’s a lot more space to move around, you’re not stuck in traffic, people bike everywhere,” Hyde says. “So I’m not surprised at all.”
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The Bay Area real estate market continued its roaring recovery in September, as buyers took advantage of ultra-low mortgage rates to scoop up a shrinking number of homes for sale at an astonishing pace.
The median price for an existing, single-family home in the Bay Area was $1,060,000 in September, which was down 0.7% from August’s all-time high but up 20.5% from September of last year, according to a California Association of Realtors report issued Monday.
Statewide, the median price set a fourth consecutive monthly record, rising to $605,680, up 0.8% from August and 17.6% year over year.
More alarming for prospective home buyers: The median number of days it took to sell a California single-family home fell to 11 in September, the lowest number recorded since the association started keeping track in 1982 and down sharply from 24 in September 2019. In the Bay Area, the median time on market narrowed to 13 days in September from 15 in August and 23 in September 2019.
“Buyer demand remains robust. We see that in the mortgage applications, we see that in the price numbers for the Bay Area, in the unsold inventory numbers which declined. That is driving this rebound in sales, but it is also making the market more competitive. Homes are selling quicker and for buyers, there’s not a lot of inventory to choose from,” said Jordan Levine, the association’s deputy chief economist.
Agent Justin Palmer of Avenue 8 represented a family that is closing this week on a home in the Oakmore section of Oakland. It was listed at $1.2 million, attracted multiple offers and sold in less than two weeks for $1.45 million. It has almost 3,200 square feet so on a price-per-square-foot basis, “it was really good and it appraised for a higher number than they bought it for,” Palmer said.
The buyers had been renting in San Francisco. “Like most people, this year made them reevaluate their lives and preferences. They were seeking a little more space so they could both work from home and wanted more space for their young child,” Palmer said. The seller was a widow ready to downsize.
The sale epitomized what has been going on in the Bay Area. “Oakland in general this year has been on fire,” although condos are cooler than single-family homes. “We’ve seen such a large migration from San Francisco, people needing more space, whether that’s outdoor space or room for a second office,” Palmer said. The pandemic has absolutely pulled sales forward. “I think a lot of people’s five-year plans were condensed into 2020.”
On a month-to-month basis, the median price paid for a home in September fell in Solano, Contra Costa and San Mateo counties, (down 2.9%, 2.7% and 2.2%, respectively), and rose in all other Bay Area counties, led by Napa and Marin (up 3.8 and 2.5%, respectively).
More Information
$1.06 million
September’s median price, existing, single-family Bay Area home
11 days
Average time to sell a California single-family home in September
90.2%
Increase in the number of sales, year over year, in San Francisco
Year over year, prices rose in all Bay Area counties, ranging from 8.1% in San Francisco to 20.6% in San Mateo.
Sales remained brisk, up 2.6% month-to-month and 34.2% year over year. They were especially strong in San Francisco and Marin counties, up 90.2% and 53.4% respectively, year over year. The report includes sales of existing, single-family detached homes advertised on a Multiple Listing Service. It excludes new construction and condominiums, which make up a larger percentage of sales in San Francisco than in other counties.
Condos, especially in the city’s downtown and South of Market areas, have been arguably the weakest spot in the Bay Area as buyers have cooled on communal, high-rise living during a pandemic. However, separate data from the Realtors association shows that San Francisco condo sales in September were up about 30% from August and 63% from last September, not as robust as single-family home sales but hardly a slowdown. The median price paid for a San Francisco condo in September was about $1.2 million, down 4.2% from August and down 7.8% year over year.
Condos were “more of a mixed bag,” with a “big increase in sales even as the price has softened,” Levine said.
For the Bay Area as a whole, condo sales last month were up 11% from August and 36% from last September while prices rose 2.5% and 6.4%, respectively.
“We do see more weakness on the rental side of the market due to the nature of the downturn we are in, where the effects of this pandemic-related shutdown have been borne by folks at the lower end of the income spectrum,” who tend to be renters, Levine said.
That could deter some investors from buying lower-end properties to rent out, which could explain some of the relative weakness in condo pricing.
Sales in resort communities remained especially brisk in September as buyers unable to travel clamored for vacation homes, often where they could work remotely. South Lake Tahoe home sales increased 105.4% year over year.
Ultra-low mortgage rates and constrained supply, especially for lower-priced homes, have fueled price increases. The number of active listings statewide fell 56% year over year for homes priced at less than $1 million, compared to a 30.4% drop for those listed between $1 million and $3 million and a 19.4% decrease for homes over $3 million.
Mary Edwards, a Coldwell Banker agent in San Anselmo, said the market is still “going pretty crazy,” partly because “we didn’t have a true springtime like we usually have in February, March and April” because of shelter-in-place restrictions.
She and her business partner, Linda Gridley, listed a home on Paradise Drive in Tiburon in late September for $2.8 million. “We were marketing it as, ‘Have a resort in your own backyard staycation.’ It had a boat dock and a private beach,” Edwards said. More than 60 people, most from San Francisco, came to see it. “We took offers a week later and it closed in seven days, all cash, no contingencies” to a San Francisco couple for $3,088,888. “I know several clients who were going to buy a second home in Tahoe but decided to stick around and get a bigger place” in Marin.
“With the statewide home price hitting new highs for the past four months, it’s sounding like a broken record as California home sales and prices continue to outperform expectations,” the association’s chief economist, Leslie Appleton-Young, said in a press release. “However, with the shortest time on market in recent memory, an alarmingly low supply of homes for sale, and the fastest price growth in six and a half years, the market’s short-term gain can also be its weakness in the longer term as the imbalance of supply and demand could lead to more housing shortages and deeper affordability issues.”
Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender
Massive losses in revenue have bludgeoned the reeling hotel industry in the Bay Area and California, fresh evidence of the brutal effects of the coronavirus, according to figures released Monday by a top lodging analyst.
The hotel markets in the San Jose-Santa Cruz and the San Francisco-San Mateo regions have been hammered during the months of coronavirus-linked business shutdowns, and the downturns in these Bay Area markets have turned out to be far worse than what’s going on in the rest of California, Atlas Hospitality reported Monday.
“This is as bad as we have ever seen it for the hotel industry,” said Alan Reay, president of Irvine-based Atlas Hospitality. “After 9/11, or even compared with 2009, we have never, ever seen it this bad.”
During the five most recent months — coinciding with extensive business shutdowns ordered by state and local government agencies to combat the coronavirus — revenue per available room, the most widely tracked barometer of the health of a hotel market, plummeted, Atlas Hospitality reported.
“When you look at the decline in revenue, it basically wipes out the finances of almost every hotel property,” Reay said.
In January 2020 compared to January 2019, hotel revenue per available room slipped 1 percent in California, 5.4 percent in San Francisco-San Mateo, and 6 percent in Santa Clara County-San Cruz County, according to Atlas Hospitality.
However, from April through August and compared with the same five months in 2019, hotel revenue per available room fell by 65.5 percent in California, 82.6 percent in San Francisco-San Mateo, and 76.9 percent in San Jose-Santa Cruz, Atlas Hospitality reported. The five months in 2020 were all periods of business shutdowns and massive travel restrictions.
The hotel woes are also costing a growing number of workers in the sector their jobs.
Among the notable cutbacks recently affecting hotel and resort operations: Pebble Beach Co., which operates world-famous resort, lodging, restaurant, and golf facilities in Monterey County, recently revealed plans to lay off 500 workers, and warned of more job cuts to come if business conditions don’t improve.
Three operations were particularly hard hit in the Pebble Beach Co. layoffs: Inn at Spanish Bay is cutting 170 positions, Lodge at Pebble Beach is chopping 119 jobs, and Spa at Pebble Beach is reducing staffing by 77, according to an official filing with the state’s labor agency.
“We are concerned that the COVID-19 pandemic and the related economic downturn will continue to have a significant impact on our business for months to come,” David Heuck, Pebble Beach Co. chief administrative officer, wrote in a notice to the state government.
During the 12 months that ended in August, the Bay Area lost 135,500 jobs in the hotel and restaurant sector, a Beacon Economics analysis shows, representing a 35% nose-dive in the number of jobs in that sector. California suffered a 28% plunge in its hotel and restaurant jobs over the one-year period that ended in August.
The biggest hotel and restaurant losses in the Bay Area came in the San Francisco-San Mateo area, with a loss of 47,700 jobs. Hotel and restaurant job losses totaled 36,300 in Santa Clara County and 31,900 in the East Bay.
The sharp revenue declines could force a growing number of hotels to fail or simply decide not to open their doors again as hotels, even after government officials lift coronavirus restrictions.
Pebblebrook Hotels and its 12 lodgings in San Francisco are a case in point. In a July 31 conference call with analysts to discuss recent financial results, Jon Bortz, chief executive officer with Pebblebrook Hotel Trust, sketched out the company’s approach to its operations in San Francisco.
“We don’t have any plans to reopen any hotels in San Francisco,” Bortz said. “We don’t see right now a recovery in the cards in that city, based upon their approach to reopening.”
At best, the Pebblebrook hotels in San Francisco might reopen in 2021, Bortz told the analysts.
“Some of these hotels will never reopen as hotels again,” Reay said. “They might become multi-family apartment properties.”
A disappearance of hotels could hobble the financial conditions of cities that depend on revenue from lodging taxes because the conversion of hotels to residential properties could erase scarce revenues amid an economic slowdown.
The reliance of hotels in the San Francisco, San Mateo County, and Santa Clara County regions on business travelers is one reason the performance of the Bay Area hotels is so much weaker than is the case in California overall.
“Business travel is pretty much non-existent,” said Dharmesh Patel, executive managing director, Hotels USA, with Colliers International, a commercial real estate firm.
Even amid the massive uncertainties that face the lodging sector, one thing appears certain: The current level of revenue implosion for hotels is unsustainable, in Reay’s view.
“No hotel can withstand this sort of revenue decline,” Reay said.
While the real estate market in Tahoe skyrockets, long-term rentals are scarce. In Tahoe City, where Hanichen lives, home prices have increased more than 30% compared with last year, according to Redfin. (Nationwide, home prices are up 11%.) In Truckee, almost twice as many homes have sold year over year.
Meanwhile, the inventory for vacant long-term rentals in Tahoe is 0-2%, says Heidi Hill Drum, CEO of the Tahoe Prosperity Center.
“So when you have a vacancy rate of zero percent, it means there’s no rentals available,” Hill Drum says. “Two percent means there’s very little on the market and you can pretty much charge whatever you want.”
On Craigslist, there seem to be more posts advertising renters searching for a place to live than there are rentals. With so few places available, rates are predictably going up. Landing Locals, a service that aims to place Tahoe Truckee renters in vacant second homes, said the average rent for a house in North Tahoe and Truckee, as of July, was $3,500 a month.
That kind of scarcity and pressure is squeezing a lot of locals — from seasonal tourism employees and service industry workers to nurses, teachers and government employees — who also have to compete with people from the Bay Area on the few rentals available. One post on Craigslist said they were a “Bay Area professional looking for a winter escape” and would pay six months’ worth of rent, up front.
With real estate on the rise, long-term rentals are scarce in Tahoe.
Julie Brown / SFGATE
This issue has gotten so pronounced that the town of Truckee is literally offering to pay second homeowners a $3,000 grant if they rent their house to locals for 12 months. The grant program is a partnership between Truckee and Landing Locals, which will coordinate the rental. Seana Doherty, Truckee’s housing manager, says she hopes this investment will catalyze second homes that are currently sitting vacant.
“There are just not many homes that are empty for 12 months of the year,” Doherty says. “It makes it really desperate for people because their landlord told them they have to go and there’s just not that much out there.”
Looking for a house to rent in Tahoe for three, six or 12 months is a search that requires a lot of effort and patience. Hanichen started by posting a query on Facebook: “Here’s a golden opportunity for you to be my landlord,” he wrote. He’s optimistic he’ll find something, but he says it probably won’t be as good of a deal as the place he lives in now. He says the going rate to rent a one-bedroom in Tahoe City is about $1,200 right now — a $500 hike from what he currently pays — and even those are hard to find.
Colin Frolich, co-founder of Landing Locals, used to work for Airbnb. But when he moved to Tahoe with his wife in 2018, he says he “defected” to start this new company with his wife. Now he helps Tahoe locals find places to live in a region saturated by vacation rentals. Landing Locals doesn’t just help renters. They’re also trying to make it easy for second homeowners to fill their homes. Frolich describes his job as “matchmaking.”
“We are really trying to understand what it’s going to take to convince homeowners to open up their homes and rent them out seasonally or long term,” Frolich says.
Landing Locals fields a lot of queries from Bay Area residents wanting to move to Tahoe. One person wrote on their rental application that she worked at Uber, her spouse worked at Google, they had a combined income of $550,000 and they owned an award-winning poodle, Frolich told me. They said they would pay a year’s worth of rent up front — plus $1,000 more than the asking price.
“I was like, god damn it,” Frolich said. He wrote the woman back and said their company prioritizes finding rentals for Truckee and Tahoe residents.
Frolich saw the pandemic’s impact on the rental inventory in Tahoe firsthand. When short-term rentals were banned last spring, he says he got a bunch of inquiries from second homeowners and matched 20 places to live with renters. Then summer started, and a lot of people from the Bay Area came to Tahoe to stay for a lot longer than usual. Vacation rentals were booking up fast. The real estate market picked up the pace. Long-term rentals dried up. Then, Twitter announced they would let their employees work remotely, and, Frolich says, the “dominoes just fell.”
“Everyone just either occupied their existing second home or started bidding and buying all the houses in Tahoe and constricted supply, raised prices,” he says.
In September, when some of the summer visitors headed home, another wave of houses in Tahoe and Truckee went up for rent on Landing Locals. But those were filled fast, and now there are only a few houses available.
Emily Vitas, executive director of the Truckee Tahoe Workforce Housing Agency, says she hears from people at least once a week who are looking for a new place to rent because their landlord just sold their home.
The Tahoe Truckee Workforce Housing Agency represents some of the biggest employers in North Tahoe and Truckee — the Truckee Tahoe Airport, Tahoe Truckee Unified School District, Tahoe Forest Health System and Truckee Donner Public Utility District — who are desperate to find more housing, both rentals and homes to own, for their employees.
Almost 40% of their employees rent, Vitas says, and 16% say they’re seriously considering a move out of the area because housing has gotten so expensive. In the past 10 years, Tahoe Forest Hospital has seen 13% of its 1,100 employees move from Truckee to Reno, a half-hour commute away.
“The urgency on our end has escalated greatly,” Vitas said. The workforce housing agency was created last March. Just six months in and Vitas said the group is starting to talk about the need to build their own employee housing if they want to keep people in Truckee.
Long-term rentals in Lake Tahoe are difficult to come by.
Julie Brown / SFGATE
Several affordable housing projects are being built in Truckee right now that will open up 200 units to low-income families as soon as this spring, Doherty says. Not only will those projects help alleviate a financial hardship for families who have been overpaying on rent, but when those families move, Doherty hopes it will also open up more places to live and rent throughout the region.
Hanichen’s shack is still on the market, though he heard an offer may have recently been accepted.
“The thing that gives me the most comfort: Who the f— is going to pay a half million dollars and live in this little shack?” Hanichen says. “For me it’s been perfect. I love this little place.”
Hanichen’s landlords bought it sight unseen. (He pays rent to a property management company.) They’ve never raised the rent in the three years he’s lived here, and he says they’ve treated him well. He assumes the property owners just want to make good on their investment.
“There are zero things I can do about this. Absolutely zero,” Hanichen says. “It’s the way of the world. It’s the way it is up here. It’s nothing to be angry about. It’s just the way it is.”
Perhaps Hanichen’s new landlords will let him stay — though he’s well aware that real estate trends indicate people aren’t buying properties in Tahoe right now just for the investment. Instead, they want to move and actually live in Tahoe. That’s not necessarily a bad thing. Places like Tahoe City and neighborhoods throughout the region could use a dose of new residents to support a year-long economy.
Hanichen’s lease expired on Oct. 1, at which point he went to a month-to-month agreement. If it sells and the new landlords want to move in, they’ll have to give him 60 days’ notice. He’s not too stressed — a couple friends have already reached out with leads. He says he’ll probably find a place to live through word of mouth, not on Craigslist.
“I’m not worried about being tossed in the cold,” Hanichen says. “But it’s like, to live in my own one-bedroom in downtown Tahoe City for 700 bucks, that is going to be tough to beat. A godsend has to come down and give me a better deal than what I have. I’ll stay positive on that.”
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