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Quarterly Real Estate Report Q1 2015
Steven M. Gothelf
Broker Associate
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San Francisco: Q1 Results
Inventory shortages continued to bedevil San Francisco's real estate market during the first quarter of 2015. Homes were in short supply at all price points, particularly condominiums, and it wasn't uncommon to see attractive, fairly priced properties go under contract barely a week after arriving on the market. Sales prices climbed steadily throughout the quarter, and most homes received multiple offers from what seemed to be an inexhaustible supply of would-be buyers.

Sellers, meanwhile, faced a dilemma: Putting their homes on the market, even with the promise of a high sales price, instantly placed them in the same position as other buyers — scrambling to find their next home. The solution for many sellers in San Francisco was to negotiate a rent-back agreement with the buyer, giving them some extra time to search for a new property.

Looking Forward: The second quarter typically sees strong activity, but there are additional factors that should help supercharge real estate sales this year: a booming local economy and interest rates still hovering near record lows. All signs point to a busy spring and summer for the San Francisco real estate market.
Median Sales Price
The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price.
Single-Family Homes — Median Sales Price
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Condominiums — Median Sales Price
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Months’ Supply of Inventory
The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market.
Single-Family Homes — Months’ Supply of Inventory
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Condominiums — Months’ Supply of Inventory
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Average Days on the Market
Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close.
Single-Family Homes — Average Days on the Market
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Condominiums — Average Days on the Market
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Percentage of Properties Under Contract
Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.
Single-Family Homes — Percentage of Properties Under Contract
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Condominiums — Percentage of Properties Under Contract
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Sales Price as a Percentage of Original Price
Measuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region.
Single-Family Homes — Sales Price as a Percentage of Original Price
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Condominiums — Sales Price as a Percentage of Original Price
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Delving into San Francisco’s Districts
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Pacific Union Offers Bay Area Buyers and Sellers an Enhanced Mobile Experience
The mobile world is not coming — it's already here. Nearly 40 percent of Pacific Union's overall website traffic originates from a phone or a tablet device. On the weekends, this metric increases to over 60 percent.

In response to this shift, Pacific Union recently launched a completely revamped and greatly improved website. Our development strategy was “mobile first,” and the new site offers local home buyers and sellers access to listings; expert, hyperlocal neighborhood information; and up-to-the-minute market conditions on the go.

With a location-based search function, the mobile website displays active inventory in a pictorial carousel. The website also delivers the most current market conditions data — average sales price, average sales-to-asking-price ratio, and number of days on the market — for over 140 San Francisco Bay Area communities to the palm of your hand.

We have built this new site to give your Pacific Union real estate professional his or her own personal mobile site. By clicking Create Account at (as seen in the image to the left), you may select your personal real estate professional. After you save your property search parameters, you can elect to receive automatic email updates regarding new homes for sale or the latest market conditions.

Pacific Union's new website is “adaptive” in that it recognizes your device type and optimizes functionality to suit it, whether you are exploring with your smart phone, tablet, or computer. I encourage you to tour your favorite neighborhoods, research the latest market trends, and of course review specific listings at

Mark A. McLaughlin, CEO, Pacific Union
Wages and Jobs to Grow in 2015, IPO Activity Starts Slow
The Bay Area's high-flying economy showed little sign of cooling as the first quarter of 2015 wound down, with both jobs and wages projected to grow across the region. Local initial public offering (IPO) activity, on the other hand, has gotten off to a relatively slow start after a busy 2014.

According to data from John Burns Real Estate Consulting (JBREC), there were 35 Bay Area-based IPOs in 2014, which generated about $5 billion in raised proceeds. Last year's notable offerings included San Francisco-based Lending Club, which as of February had raised $870 million since its December debut on the New York Stock Exchange. San Mateo's GoPro, makers of the mountable video camera, also had a healthy IPO: $427 million in proceeds.

In the first quarter of 2015, there were five Bay Area-based IPOs, with Los Altos-based file-sharing service provider Box, the tech sector's sole representative, raising $175 million. The other companies that went public last quarter are biotech or medical firms: San Francisco's INVITAE ($102 million raised), Redwood City's Avinger ($65 million raised), Fremont's Zosana Pharma Corporation ($50 million raised), and San Ramon's SteadyMed Therapeutics ($40 million raised).

Brenon Daly, 451 Research's research director based in San Francisco, finds the somewhat sluggish pace — at least in the tech sector — a bit of a surprise given last year's activity. “I would characterize it as unexpectedly and disappointingly slow,” he says.

Funding Availability Increases Incentive to Stay Private

So what's behind the drop-off in activity at a time when many well-known local tech companies – including Uber Technologies, Airbnb, Dropbox, and Pinterest — appear to be likely IPO candidates? Daly cites two likely culprits.

As in real estate, IPO activity follows seasonal patterns, with the early months of the year typically a quiet period. A business not only wants a solid year of earnings behind it before going public but also an exceptional first quarter.

More importantly, perhaps, is the large amounts of money venture capital firms are currently willing to funnel into local companies. According to JBREC, Bay Area-based companies took in a total of $23.4 billion in funding last year — the most since 2000. Investor interest in tech darlings does not appear to be waning; in February, San Francisco-based Uber raised an addition $1 billion in funding, bringing the company’s total to about $5 billion since its foundation in 2009, according to The New York Times.

Given that an IPO can be a long, complicated affair due to laws such as the Sarbanes-Oxley Act, Daly thinks that many companies are staying private for as long as possible since late-stage, private capital is readily available.

“There's no real reason to go through the hassles of an IPO when there is someone ready and willing to cut you a huge check that day,” he says.

Bay Area Jobs, Incomes Poised for Growth in 2015

Even if 2015 doesn’t turn out to be a banner year for Bay Area IPOs, steady wage and job growth should keep demand for real estate running strong. According to JBREC, about two-thirds of the 127 public companies based in the Bay Area were up on a year-over-year basis in March, a sign that local companies should continue to hire.

“Job growth is the No. 1 driver of home demand,” says Pete Reeb, one of JBREC’s principals.

JBREC projects that the Wine Country will lead local job growth in 2015, with employment growing by 4.4 percent in Napa County and 3.2 percent in Sonoma County. Employment is projected to rise by 2.5 percent in Santa Clara County; 2.4 percent in Alameda and Contra Costa counties combined; and 2.3 percent in Marin, San Francisco, and San Mateo counties combined.

Employment is either at or above peak levels across most of the Bay Area, JBREC says, most notably in Napa County, where both payroll and labor force totals were 104 percent of their 2008 highs. Bucking this trend was Santa Clara County, where the employment rate was 96 to 97 percent of its dot-com era peak.

Bay Area wages should see even bigger spikes in 2015, which will help local homebuyers unlock more purchasing power. JBREC projects that median incomes will grow from 3.8 to 4.5 percent across the region in 2015 — compared with 0.3 to 1.9 percent last year.
Review the Latest Bay Area Data & Stats
Bay Area 10-Year Overview
Here’s a look at home sales in the Bay Area’s real estate markets in the first quarter of 2015, with a glance back at the 10 preceding first quarters.
10 Year Chart
Click here to see specific 10-year data on key cities in the Bay Area.
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Steven M. Gothelf
Broker Associate
1699 Van Ness Avenue
San Francisco, CA 94109
Pacific Union