The headline in the San Francisco Business Times in May 2013 was an eye opener: San Francisco Median Home Hits $1 Million. How much higher could it go? Was this the official announcement of a housing bubble watch?
The great news for homeowners―and the bad news for home buyers―is that both headlines are correct. Home prices calculated by the San Francisco Association of Realtors hit $1 million in 2013, but that excluded condos, which were lolling about somewhere around $850,000.
But the good times kept rolling, and DataQuick reported this week that the median (the midpoint separating the higher half of a data sample from the lower half) for condos and homes combined has breached the magic million-dollar mark and continues headed up.
The continued influx of tech employees rolling in stock option money and Asian investors offering all-cash deals drove prices up 13.3% compared to a year ago. That is actually a slower pace than a year ago, when prices were up 23.8% over 2012.
The California Association of Realtors, in a separate study cited by the Chronicle, showed median resale prices in Marin and San Mateo counties also topped $1 million. But the Realtors exclude new home sales, homes not in the Multiple Listing Service and condos. So it’s a bit like comparing Luxe Gold Cupcakes and White Truffles.
Home prices in the nine counties that make up the Bay Area as a whole have not kept pace with San Francisco, but they’re not too shabby. The median price in June was $618,000, up 11.4% over June 2013. But prices a year ago were 33.1% higher than June 2012.
Not surprisingly, rents in San Francisco are also impressive. While the average rental asking price in the Bay Area for apartments and townhomes is $2,158 a month, San Francisco tops out at $3,229, according to RealFacts. Those prices are for rentals in complexes with 50 or more units.
San Francisco, a wealthy city for a long time, has been undergoing an intensified gentrification of its less desirable areas as well as bidding wars in its nicer neighborhoods. The result is some of the worst income inequality in the world. The San Francisco Human Services Agency crunched data from the U.S. Census Bureau and the World Bank to determine that San Francisco’s income inequality was on a par with Rwanda.
The Brookings Institution used different numbers but came up with strikingly similar results, ranking San Francisco the second-worst city in the nation for income disparity between haves and have-nots.
The bidding wars are forcing many longtime residents out of the city, often through evictions of renters via the 1986 Ellis Act, which lets landlords toss out tenants and sell their apartments as tenant-in-common units, on their way to becoming condos.