2018 Annual Real Estate Market Trends Report

Home Prices Up, Sales Down in 2018  

Sales prices for single-family, re-sale homes condos/townhomes in San Francisco were up last year compared to 2017.

The median sales price for homes gained 16% and the average sales price rose 16.6%.

Home sales, on the other hand, were down 15.5%. There were 3,140 homes sold. The average since 2006 is 2,562.

The sales price to list price ratio, or what buyers paid divided by what sellers were asking, rose from 109.3% in 2017 to 110.1% last year.

Condo statistics show similar trends.

The sales price to list price ratio was up 1.4 points from 2017 to 105.4%.

The median sales price for re-sale condominiums was up 11.3% while the average price gained 6%.

Condo sales were down 3.8% from 2017. There were 3,215 sales in 2018. The average since 2006 is 2,813.

Although prices were up year-over-year, we started to see some softening towards the end of the year.

The sales price to list price ratio for homes ended the year at 106.5%. That is the lowest it has been since January 2017.

We expect the market to start transitioning from sellers to buyers in 2019.

For assistance in this market, do not hesitate to contact me. If you are thinking of selling, I can provide a free comparative market analysis.

P.S. To see the annual trend charts and tables for the individual districts in San Francisco, click on the desired district in the menu to the left.

How Will the Tax Cut Affect Real Estate?

 The real estate market will be among the sectors most impacted by the tax bill.

The legislation calls for reduced tax rates for individuals with higher standard deductions but institutes caps on mortgage interest deductions and the deduction of state and local taxes. The individual cuts expire in 2025.

How it will shake out is still unknown, but many real estate experts have been up in arms about the changes, with the National Association of Realtors (NAR) initially warning that it could lower home prices by up to 10% in every state.

Tax Deductions

The new $10,000 cap on how much local and state tax can be deducted from federal income taxes will have an outsized impact on the Bay Area.

Take couples with enough adjusted gross income to put them in the state’s 9.3% category, that’s income between $105,258 and $537,499, the state income tax ranges from $9,786 to $49,987.

Now, let’s get to property taxes. In San Francisco, the effective tax rate is about 1.2%. Let’s apply that to the median price of homes sold in 2017, which was about $1,700,000. Property taxes on homes that were sold for that amount, or assessed for that amount, equals $20,400.

Yeah, the new tax bill will not be friendly to homeowners in the Bay Area, and we haven’t even added in sales tax paid.

Mortgage Deductions

In another blow to future homeowners, the deduction for mortgage interest has been lowered from $1,000,000 to $750,000. Existing mortgages will be grandfathered in. That might give people less incentive to move.

Interest on home equity debt is no longer deductible, unless the proceeds are used in a trade or business acquisition or to improve rentals. Home equity debt includes refinances on your primary or secondary residences as well as HELOCs.

If the tax bill does result in fewer people moving, inventory will continue to by abysmal. On the other hand, the loss of the tax deduction and the lowering of the mortgage interest deduction will probably curtail demand.

At this point, all we can do is keep a watch on the market to see how this all plays out.

Although we have cleaned this information from reliable sources, the IRS and CPAs have only had a few weeks to go through the tax bill. They’re still trying to figure out all the nuances.

Please discuss the new rules with your tax adviser to determine how the changes will impact your personal circumstances. This article may not be relied upon as tax or legal advice.

San Francisco
(Single Family Homes)
  Prices Other   Percent Change
Year Average Median Sold DOM SP/LP SP/OLP Average2 Median3 Sold4
2000 $729,636 $529,000 3,071 27 110.9% 111.1%      
2001 $752,586 $555,000 2,673 33 101.7% 101.7% 3.1% 4.9% -13.0%
2002 $751,173 $590,000 3,100 33 102.9% 102.2% -0.2% 6.3% 16.0%
2003 $809,711 $640,000 3,392 39 101.9% 100.1% 7.8% 8.5% 9.4%
2004 $948,050 $750,000 3,308 32 107.1% 106.2% 17.1% 17.2% -2.5%
2005 $1,094,695 $850,000 2,984 32 108.1% 107.5% 15.5% 13.3% -9.8%
2006 $1,117,974 $850,000 2,522 39 102.6% 101.2% 2.1% 0.0% -15.5%
2007 $1,205,997 $900,000 2,215 41 103.3% 101.7% 7.9% 5.9% -12.2%
2008 $1,129,265 $830,000 2,049 49 100.8% 98.4% -6.4% -7.8% -7.5%
2009 $973,978 $750,000 2,059 61 99.1% 95.5% -13.8% -9.6% 0.5%
2010 $986,336 $745,000 2,355 59 99.4% 96.8% 1.3% -0.7% 14.4%
2011 $948,797 $690,000 2,473 63 99.1% 90.4% -3.8% -7.4% 5.0%
2012 $1,107,685 $762,000 2,613 53 102.3% 92.4% 16.7% 10.4% 5.7%
2013 $1,295,089 $915,000 2,632 35 106.9% 105.2% 16.9% 20.1% 0.7%
2014 $1,444,800 $1,071,000 2,405 31 109.9% 109.0% 11.6% 17.0% -8.6%
2015 $1,637,196 $1,250,000 2,286 27 111.6% 110.7% 13.3% 16.7% -4.9%
2016 $1,592,398 $1,250,000 2,634 34 107.6% 106.1% 0.5% 4.2% 5.5%
2017 $1,493,229 $1,210,000 3,716 30 109.3% 108.0% -6.2% -3.2% 41.1%
2018 $1,741,294 $1,403,000 3,140 25 110.1% 108.4% 16.6% 16.0% -15.5%

San Francisco
(Condos/Town Homes/Flats)
  Prices Other   Percent Change
Year Average Median Sold DOM SP/LP SP/OLP Average Median Sold
2000 $638,901 $530,000 2,008 23 110.2% 110.3%      
2001 $610,376 $535,000 1,743 40 99.9% 100.0% -4.5% 0.9% -13.2%
2002 $605,351 $560,000 2,653 41 100.5% 99.6% -0.8% 4.7% 52.2%
2003 $605,354 $591,105 3,155 50 100.4% 99.3% 0.0% 5.6% 18.9%
2004 $701,777 $685,000 3,613 37 104.5% 103.5% 15.9% 15.9% 14.5%
2005 $806,583 $775,000 3,455 35 106.4% 105.9% 14.9% 13.1% -4.4%
2006 $793,945 $778,000 2,983 51 101.3% 99.7% -1.6% 0.4% -13.7%
2007 $838,490 $804,500 2,880 49 101.6% 100.6% 5.6% 3.4% -3.5%
2008 $857,146 $785,000 2,152 61 99.8% 98.4% 2.2% -2.4% -25.3%
2009 $752,605 $700,000 1,996 80 97.4% 95.5% -12.2% -10.8% -7.2%
2010 $734,422 $690,000 2,364 79 97.8% 96.8% -2.4% -1.4% 18.4%
2011 $742,401 $655,000 2,566 80 97.6% 92.2% 1.1% -5.1% 8.5%
2012 $820,267 $735,000 3,142 62 101.0% 96.1% 10.5% 12.2% 22.4%
2013 $960,805 $850,000 2,999 41 104.5% 103.9% 17.1% 15.6% -4.6%
2014 $1,096,056 $941,750 3,149 36 105.9% 104.7% 14.1% 10.8% 5.0%
2015 $1,242,862 $1,150,000 2,866 32 107.3% 106.7% 13.4% 22.1% -9.0%
2016 $1,209,090 $1,149,500 2,898 38 103.7% 102.5% -2.7% 0.8% 0.6%
2017 $1,210,212 $1,150,000 3,341 36 104.0% 102.4% 0.1% 0.0% 15.3%
2018 $1,282,649 $1,280,000 3,215 31 105.4% 104.4% 6.0% 11.3% -3.8%