Posts about the Sunset District don’t make it to the blogosphere very often – so when I found this one a few days ago, I knew I had to share it with you folks here.
Submedian is a blog written by a real life San Francisco home buyer. From Submedian’s blog:
I’m a potential buyer with a family in tow. I’m currently preapproved for a loan that would allow me to purchase a median priced home in San Francisco (~$800k), which I guess puts me in the top 12% of income for the city. The problem for me is I can’t really afford either the downpayment (I’m aiming for 10%) or the monthly nut on a median priced home, so I’m focused on homes that are priced less then the median price, hence the name of the blog: submedian.
Now, Submedian’s post on the Sunset homes showed that home prices in the Sunset ain’t doin’ so hot. A few things to point out before the discussion really takes off is that only 29 single family homes were found in the Sunset – so I’m not sure if the search only took into account Sunset proper, or if it included Parkside, Inner Sunset, Inner Parkside, etc. In contrast, all of District 2 has 81 single family homes on the market right now. Inner Sunset, Central Sunset and Outer Sunset combined have 33 single family homes on the market right now, so I’m going to assume it really is JUST the Sunset district proper and run some numbers to see if Submedian’s research rings true.
According to Submedian’s research, “anybody selling a Sunset home purchased within the past five years is showing negative appreciation” and “if you want to sell your house for more then you paid for it, you better have bought your home a decade ago.”
So – I thought I’d run some numbers and see if his statements are true. The following are median prices for the last 10 years for the Sunset District. The number for 2008 is for all closed sales from January 1st of this year through today.
2008 – $835,000 ( 1% ↓)
2007 – $845,500 ( 3% ↑)
2006 – $815,000 ( 2% ↓)
2005 – $830,000 (11% ↑)
2004 – $745,000 (18% ↑)
2003 – $628,000 ( 9% ↑)
2002 – $575,000 ( 6% ↑)
2001 – $538,000 ( 5% ↑)
2000 – $510,000 (27% ↑)
1999 – $400,000 (13% ↑)
1998 – $354,000
Let’s look at some of the highlights of this list.
- If you bought your home 10 years ago, your home has appreciated 235%!
- If you bought your home 5 years ago, your home has appreciated 32%!
- Prices over the last 3 years have remained flat!
When I work with clients, I insist that they find a home that they can live in for at least 5 years. Real estate, save for a few crazy years, has never been a “get rich quick” investment. I urge people to look at their purchase as a home first and foremost, and then, as an investment that will eventually earn them a nice return.
If you are looking for a short term investment with guaranteed return, real estate has really never presented that.
If your objective is long term there is very little support for a theory that you will lose in real estate, especially in the San Francisco real estate market.
What about Submedian’s analysis?
Well – while the premise that “anybody selling a Sunset home purchased within the past five years is showing negative appreciation” is definitely incorrect – because as the real data shows, prices have appreciated 32% over the last five years. And the slight up/down change in median prices over the last 3 years isn’t really indicative of negative appreciation. (Of course, if you take into account transfer taxes and all of the other selling costs, you WILL lose money on a home if you bought within the last 3 years and are selling today. However, you probably saved a hefty amount in taxes, AND you enjoyed the home you lived in without throwing your dough away on rent – and taking those two factors into account, even someone who bought in the last 3 years would likely break even on their investment.)
In a nutshell – the numbers show that while no one in the Sunset has gotten rich in the last few years, they haven’t exactly experienced negative appreciation either. They have, however, had the opportunity to live in their very own home in one of the City’s best kept secrets (for those that aren’t too wimpy to handle a little fog here and there, that is! ) So if you’re thinking of buying or selling in the Sunset, don’t be afraid to take the next step and talk to a REALTOR. We can give you an accurate idea of whether your goals are realistic. And if you don’t already have a REALTOR, give me a holler – I’m happy to talk real estate!
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