Purchased a year ago for $700,000, the 1300 sf house has grown to 4BR, 3 BA and 2462 square feet.  Voila, the new 587 Jersey, just listed at a slender $1,749,000.  That’s $710 a foot.

I toured the property last Tuesday and to be honest I was underwhelmed.    The developers squeezed the extra square footage into the original building envelope by building out the attic and the basement.  Certainly a good way to avoid all the hassle of neighborhood 311 hearings, notifications, and controversy.  But at the end of the day, you’re still buying a built out basement and a built out attic.  And it shows.

Author: Jack French -- Used under Creative Commons Permission 2.0

Back in May 2009, I showed that Noe Valley was not immune from the slump in prices affecting the rest of the city, despite suggestions to the contrary from real estate agents, mavens and media.

Have things gotten any better?  Well, no.  And maybe.

Here’s a chart showing percentage change in single family home prices for the last 14 months, relative to their all-time highs  (click to enlarge).  (All figures are 3 month moving averages.)

After reaching an all time high in March 2008, prices plummeted.  Just a year later, in the midst of fears of a global Depression, home prices were down 30%.  Did things get better?  No, they got substantially worse.  Despite an impressive  city-wide recovery in 2009, with prices going from 30% down to around 18% down for single family homes at  year’s end (see more detail here) , Noe Valley home prices continued to retreat.  In October and November 2009, prices were down 35%.  At year’s end, they’d barely clawed back two percentage points. Not surprisingly, days on market (DOM) remained stubbornly high for all of 2009.

Still, with cherry blossoms busting loose all over Noe Valley’s quiet streets, there certainly seems to be a change in the air.  There are many more listings coming onto the market and there’s even the occasional feeding frenzy over a clean, well-priced home.  These go in a matter of days, not weeks. Maybe that upturn in prices for January and February suggests a continued warming trend.

In the next few posts, I’ll look at Noe Valley in more detail, including how condos have fared.

Catching up on the endless paper-work the other night, I came across that rare thing:  a property that sells twice in a relatively short time with no major renovations performed in the interim.

This “sales matching” technique is what the folks at Case-Shiller use to create their Indexes of property values across the country.  Part of the reason they can is that their indexes are generated for large Metropolitan Statistical Areas with lots of house sales.  And even so, they use a lot of fancy foot-work to “match up” properties.

So now comes 714 Duncan Street, a beautiful 2,000 sf view home on a steep hill with fantastic city views.  Listed at a disarming $1,195,000, it sold for $1,415,000 in January 2008.  That was pretty much the top of the market for Noe Valley.  (You can see the chart here.)

Fast-forward 18 months.  The same house sells for $1,095,000 in June 2009.   That’s a drop of  22.6%.  My analysis of all Noe Valley sales for the same period shows a drop of just under 25% for the same period.

There’s something of a “duh, so what” to this story.   But I’ve seen enough nay-sayers  (on other blogs, of course!) who argue that tracking statistical medians are meaningless that I thought it was worth posting this as a powerful—and sobering —  case to the contrary.

Author: Jack French -- Used under Creative Commons Permission 2.0

As I mentioned in my previous post, I’ve had several questions about per square foot prices recently.  There’s no doubt that it’s a very useful metric, for the obvious reason that it allows you to get closer to an “apples to apples” comparison of the value of two different properties that are different in size.  Of course, that leaves all sorts of other variables — location, amenities, etc.  But if, say, you’re looking to make an offer on a property, certainly you’d want to start by looking at what other properties in the same area have been selling for on a per square foot basis, and then use that to see if the property you’re interested in is in the ballpark.

Since I live in Noe Valley, I’ll readily admit that I tend to follow my neighborhood more closely than other areas.   No great surprise there.  So here, without further ado, is a chart showing the price per square foot for single family homes in “core” Noe Valley (click to enlarge).

Rather than run the chart as Percentage Change From All-Time High, as I usually do, this simply shows price per square foot as a 3 month moving average.  I’ve added the  “number of sales” per month, plotted on the right-hand axis as well.   Note that low monthly sales volumes ( no surprise, given the small geographic area) will make the data less statistically reliable.  In most months, there are less than 15 sales.

While we’re on the subject of sales volume, I recently read an advertisement in the local rag, The Noe Valley Voice, from a local real estate company touting how sales volume in Noe Valley is up, compared to San Francisco as a whole.  So what?  As I’ve stated before in the context of the luxury home market, I really haven’t found any correlation between volume and price.  Though it may be a little difficult to tell from this chart, I don’t see it here either.  For example, sales volumes were down and falling during the autumn months of 2007, but that’s when prices started climbing towards their all-time high in early 2008.  Likewise, sales volumes were increasing through the first 6 months of 2008, even as prices were sliding.

The bottom line is that Noe Valley homes are still fetching north of $700 a square foot, and that’s after a protracted slide.  Sure, the price per square foot is  down substantially from the near- $900 a foot that they hit back in January 2008, but it’s a pretty well-heeled foot nonetheless.

Bear in mind that “Noe Valley” means a very small area.  What’s more, there were only 7 sales in August, down from 14 in May and June, and 22 in July.   Sure, there’s been a bit of an improvement over the previous month, but there’s still an 11% difference between how far prices have fallen for the city as a whole (19%) versus Noe Valley (30%).

Arrian Binnings over at Inside SF Real Estate also did a recent update on Noe Valley, looking at median prices in a different way.  (I’ve forgiven him for appropriating my term, “getting granular” to discuss what I now have to refer to as “focusing” on a particular area. Sniff.)  Here’s one of his charts.

Not much comfort there either.

People will continue to point out that this doesn’t mean that your beloved home has fallen in value as far as the data suggests  — and that’s probably true, unless you bought a median-priced home at the top of the market.  Still, Noe Valley seems unseasonably cold right now, and it’s not just the fog whipping down off Diamond Heights.

Light and shadow from the rafters seemed to make the windows glow like cardboard cut-outs.

Here’s the scoop:  Listed in mid-May for $799,000, sold on June 25 for $700,000.  1360 square feet of original detail.  $515 bucks a foot.

I quote from the listing:  “All inside doors, most hardware, some light fixtures appear original and possibly pre-1900.”

Not any more, it seems….

731 Douglass

Meanwhile 110 Hoffman, offered at just $2,000 less than Douglass, had a little less space and a vertical, less user-friendly lay-out.  But, location it had in spades, on one of Noe’s best and quietest streets.  Plus it had a spacious back yard with a lovely mature tree.

110 Hoffman

My good friend and blogging critic, Mike Dashe  — the American part of the Franco-American wine-making duo who own Dashe Cellars — recently took me to task for not doing what any good story-teller does: tell ‘em how it ends.  So here’s the final chapter folks.

731 Douglass came in first, selling for a respectable $1.85 million, or 85% of the listing price after just 48 days.  Good show!  Though it’s worth noting that this was a cool $100,000 LESS than it sold for back in March 2005, when it was on the market for just 18 days.  (There’s more proof of the correlation between price and DOM — days on market — see my previous post.)

110 Hoffman had a more torturous ride to the finish-line.  Originally listed at $2.395 million, it suffered two price drops and was ultimately withdrawn from the market 102 days later when it failed to sell at $2.148. Fast-forward five months to July and it’s back on the market at $1.995.  And, after falling in and out of contract, and back in –  it sells for….

$1,995,000.  Full list price and all within 10 days if the MLS Database can be believed.

That’s a cool $100k more than 731 Douglass.

What went on here?  I honestly don’t think this was a case of location trumping space.  Instead, it’s about timing.  731 Douglass went on the market in January and sold in March.  Prices generally fall somewhat during winter months.  But much more importantly, does anyone remember how the financial world was coming to an end right at that time? The stock market was dropping like a stone and no one knew where it would end.  (In fact, the S&P 500 hit bottom on March 9.)

I remember when I had the misfortune of putting the first property I ever owned on the market not long after 9/11/01.  I’m convinced that it sold for around $300k less than it would have at any other time.

Seen in this light, it sure seems like the owners (and the agent) of 110 Hoffman made the right decision to bide their time.  A few months later, the sun breaks out literally and metaphorically and things are moving again. Here’s a case where the tortoise beat the hare.

And speaking of odd-looking creatures, let’s get back to Dashe Cellars and their beautiful wines (you gotta try their single vineyard Zins.)  Mike, would you care to explain what’s with the monkey and the, ahem, “whale?”

Ken Rosen, Chair of the Fisher School For Urban Economics over at UC Berkeley, has good news for San Francisco home owners.  “The recent rise in home prices and sales activity lead us to believe that the worst part of the correction in home prices is behind us and that housing market conditions are showing signs of improvement.”

This report, based on June results, is the first of what will be a monthly analysis of the San Francisco real estate market undertaken by The  Rosen Consulting Group on behalf of The San Francisco Association of Realtors.  You can download it here.

I’m a big fan of Rosen.   I listen to him speak once or twice a year at a real estate symposium put on by the Fisher School; he and others bring a level of sophistication and breadth of view to the analysis of the real estate market that is hard to find when we are toiling in our own back yards.  I blogged on his predictions about the market  in a couple of posts entitled The View From Space at the end of last year.  Does that mean you won’t be needing me to crunch the numbers any more, gentle reader?  Not necessarily:  I believe the report miscalculated the median year-over-year price change for single family homes from June 08 to 09.  Rosen says it’s 6.8% down.  SFAR’s own numbers put it at 4.9%.  (I have us down 5.7%:  some discrepancies, alas, are inevitable — a result of delays in agents and brokers putting “sold” information into the MLS system from which all this data is derived.)  Anyway, I’ve notified SFAR — we’ll see what happens.  Besides, I’ll continue to try to get as fine-grained as I can in my analyses.  Rosen is a big picture guy.

Quibbles notwithstanding, Rosen makes some interesting points and one of them has caused me to rethink a previous post of mine.

His report points out that nearly a quarter of active and closed sales in June were in District 10, which encompasses “distressed” areas like the Bayview and Hunters Point.  Back in May, I argued against the commonly-heard thesis that District 10, along with District 3, were dragging down values in the city as a whole.  My chart showed that the City taken as a whole was about as far off its all-time high as Districts 3 and 10 were off of theirs.  Well, I was right.  And wrong.

It turns out that both statements are true:  Districts 3 and 10 were doing no worse than the city as a whole in terms of where they were relative to their all-time highs.  But it’s also true that the high volume of low-priced sales in those districts, combined with many fewer sales at the top end of the market, did pull down the median value for the City as a whole.   How did I miss it?  I didn’t look at the distribution of sales across the various districts. Rather, I compared the medians for each data set without looking at relative sales volumes.

Data analysis is tricky stuff.  It’s easy to pick and choose your metrics to match your agenda.  But it’s just as easy to miss a detail that changes the picture considerably.

Here are some more tidbits from the report:

• Despite the concentration of low-price sales in Districts 10, there has been a significant jump in sales volume in high priced Districts 5 and 7, which encompass neighborhoods like Noe Valley and the Marina.
• The large number of condos on the market from new down-town and SOMA high rise projects is continuing to put downward pressure on condo values.
• Rosen expects home prices to be soft but to continue to improve through the remainder of the year.  “With for-sale inventory still at elevated levels and expectations for a continued rise in the unemployment rate through the end of this year, buyers will still have good purchasing opportunities.”

I got that part right.

After doing a guest post on Noe Valley price trends at theFrontSteps a few weeks ago, Alex, tFS’s friendly editor, suggested that I do a side-by-side comparison of sales trends in Cole Valley and Noe Valley.

Great idea, I thought! Trouble is, Cole Valley sits within a tiny subdistrict of the MLS  (see the pink area below?) and as a result, there very few transactions from month to month.

That makes data crunching hard.  Maybe even meaningless. Check out the white bars in this chart (click). They represent the number of single-family home sales per month back to January 2003.  (Number of sales is tracked on the right side of the chart; percentage change from “high” is tracked on the left side.)

You can see that there are many months where only one or two houses sold. There are some months where there were no sales at all. It’s tough to extrapolate monthly sales trends under those circumstances and dangerous to assume that an “all-time high” is meaningful when it’s based on only one or two data points.

So instead of running percentage changes off of median monthly values, as I had done for Noe Valley, I ran the percentage changes off the “95th Percentile” value of all sales occurring between January 2003 and April 2009. The 95th Percentile value represents a “high”, while excluding the potentially aberrational top 5% of sales.  Aren’t you glad you asked? (Special thanks to my wife, Nina, who looks over my shoulder at a lot of my statistical analyses — she’s the one with the one with the PhD in data-crunching.)

After looking at this chart, I sort of threw up my hands.  With only 179 sales in over 6 years, it’s not sensible in my view to draw conclusions about monthly trends in Cole Valley, let alone to compare them to Noe Valley, where the “core” area alone — Subdistrict 5C — had over 900 sales during the same period.

So I re-ran the numbers and calculated medians based on annual sales.  The second chart (click) shows the results.

I think this is much easier to understand.  Again, with so few sales, one should be careful about drawing any conclusions, and with only 5 sales in 2009 so far, I think it’s too early to conclude that the apparent drop in median prices for 2009 will continue to be accurate.  Rather, I’d say that Cole Valley seems to have been holding up pretty well.

Stay tuned.  I can’t help myself.  Coming up, Cole Valley and Noe Valley go head to head.