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House of Pain: San Francisco's Real ­Estate Patterns Are Both Familiar and Crazy 

Wednesday, Jan 14 2015

Just as you're wallowing in disbelief and despair over this city's increasingly surreal real-estate market, along come the good folks at Paragon Real Estate to say, "You don't know the half of it; we've got charts!"

They also have institutional memory, which, like the local housing stock, is in increasingly short supply. Real-estate booms (such as the one we're in) and relative busts (such as the one we exploded out of four years ago) are cyclical. Houses doubled in value between 1984 and 1990, before declining 11 percent from 1991 to 1994. Houses doubled in value again between 1995 and 2001 before sliding 10 percent during the dotcom pop in '01. Values then skyrocketed by 59 percent between 2002 and 2007 before dropping by a quarter between 2008 and 2011. And, since then, values have risen by 45 percent — and counting.

Well, that's a lot of numbers. But what you'll notice is that the good times have seen more good than the bad times have bad. So, while San Francisco is engaged in a familiar pattern, the dollar figures have been steadily climbing — and have never been higher.

As such, the median home sales price in the fourth quarter of 2014 topped $1.13 million. That number is nearly double the median price from the beginning of 2012, $665,000. In 2011, 184 homes were sold for $2 million or more; last year 409 were bought for that price. In that same time period, the number of condos that were sold for upwards of $1.5 million leaped from 132 to 518.

Patrick Carlisle, Paragon's chief market analyst, puts it succinctly. It's a great time to be rich, and if you're rich and own property, you figure to soon be richer. A lot richer. "Affluence," he says, "certainly plays a big role in our real-estate market."

Mark Zuckerberg has established a foothold in Dolores Heights; those hoping to land homes are competing against a well-heeled field. The new condos coming onto the market are almost exclusively aimed at the luxury market — and, adds, Carlisle, 30 to 50 percent of these condo buyers "are not even using it as their primary residence. You have inventory coming on the market, but it's not even going to residents."

High-end housing that doesn't even serve as housing doesn't help the housing crunch. It exacerbates it.

Those with the means to play this pricey game, however, are encouraged by historically minuscule interest rates. "These low interest rates are subsidizing the cost of housing," Carlisle says. "The prices are higher but the payments are lower."

Well, that's nice. But, for ever so many San Franciscans, the only way into the market would be via a time machine.

About The Author

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.


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