After writing the below posts about an area of town, and a couple of buildings in particular, that I think will be far more susceptible to foreclosures, short sales and continuing price declines, it got me to wondering how San Francisco compares to other heavy condo cities. So I turned to Trulia's "market trend" pages and compared San Francisco to New York City and Miami. Unfortunately Trulia's numbers are for all residential properties, so this is not a condo comparison, but rather a very general market comparison, but it will suffice.
My suspicion is that both New York and Miami had run ups in real estate prices that far outstripped San Francisco. I moved to San Francisco in 1997 from New York City, and the year before moving here I had found a $120,000 1BR condo in NOHO (north of Houston rather that South of Houston SOHO in New York, but not quite the Village). As a brain washed New Yorker, I just assumed I was living in the most expensive City in the country. So when I arrived in San Francisco and ran into prices that were DOUBLE what I had seen in New York, I was utterly shocked.
Today, New York seems like it is twice as expensive as San Francisco, and if perception were right it would mean we doubled in price since 1997 while they quadrupled. Meanwhile, the stories I hear about Miami were all about fraud, massive speculation and general bubble hysteria driving prices straight up. New York is getting hit by the financial crisis more than any other city and is of course home to Bernie Madoff.
San Francisco has seemed tame in comparison. So I turned to Trulia to confirm my suspicions and discovered the following:
Since 2000 to today Miami's median price increased 108% from $113,000 to $235,000. New York skyrocketed an astounding 328% from $213,000 to $912,500. Meanwhile, San Francisco started out being almost twice as expensive as New York at $430,000 for a home in 2000, but is now about 30% cheaper at $630,000 which is a 47% run up in prices. Again, in sum, SF up 47%, Miami up 108%, NYC up 328%.
As the saying goes, the taller you are the harder you fall, and what goes up must come down, and in that regard New York and Miami are in far bigger trouble than San Francisco.
It occurred to me that San Francisco may have had a larger earlier run up given the dot com bubble that began collapsing in 2000. So I looked at 5 year ago numbers. Unfortunately Trulia didn't have New York numbers, but anecdotaly I know they were seeing massive runs up in the last couple of years. Meanwhile, Miami is still up 27% over 5 years ago, and San Francisco is up only 5%.
So how much further will San Francisco drop? Well I refer you to the below posts where I believe there are significant price drops still to be seen IN CERTAIN AREAS. But overall, since we did not rise nearly as far as other cities, don't expect us to fall as far. New York has only recently begun dropping, and they could be in for a long and painful fall, and no one is doubting that Miami is in a free fall with no end in sight.
In the better parts of town... expect San Francisco to remain resilient. San Francisco went from being twice as expensive as New York to 30% cheaper. What's more, HOA dues in San Francisco are often 1/2 to 1/4 the amount in New York, so your dollar goes a lot further here in SF. Finally, New York has the SOMA/South Beach/Mission Bay problem... there seems to be never ending sites for building straight up. But if you want to live in Noe Valley or Russian Hill, they won't let you build up, so for the most part the inventory will always remain the same, and well to do buyers will compete with each other for the best homes for an eternity. It's supply and demand supplemented with equally well off Sellers who refuse to sell low and can afford to be stubborn. So this "sorta" Buyer's market now isn't going to last forever, and San Francisco prices will not drop any where near the levels of New York, Miami or the rest of the Bay Area. And once the economy straightens out, and Buyers here still have jobs, and realize that Sellers aren't "blinking", prices will once again begin to climb... albeit slowly and steadily, not crazily.