By Eric Castongia, Zephyr Real Estate
In the last year, we have seen values appreciate, level, drop and appreciate. The market’s inconsistency has been difficult to nail down since the sale price of a property depends heavily on what the competition is at the time. I have also seen on more than one occasion, properties that I thought would sell for much more than they did, and others that I was shocked to hear sold for as high as they did. Both these factors make it quite difficult to compare apples and apples.
The one consistent thing in the market place now is listing a home closer to its realistic selling price, rather than under pricing and counting on an overbid and multiple offers. This change in list price strategy has created a perception for some buyers that because a property might at one time have gotten an overbid of 20% over asking, it has lost value because in the current market, it will fetch asking price-this is not an accurate perception, since list prices have actually gone up to reflect the newer strategy and some of these homes are still getting multiple offers and overbids, but not as aggressively as we have seen in the past.
The following analysis combines data from the San Francisco Multiple Listing Service and what I’m seeing in the market. This is my best attempt at making sense of where real estate values are in the West Portal area.
- The number of sales are up from 7 properties in the first quarter of 2005 to 16 properties in the first quarter of 2006. The market in West Portal is quite stable year over year, so this seems to indicate property owners wanting to cash in on the ‘bubble’. Although there was a ‘flood’ in inventory, sales prices generally went up between the fourth quarter of 2005 and the first quarter of 2006.
- For the first and second quarters of 2005, I reported an average increase in property values between 10-12 percent for the most typical two bedroom, one bath West Portal homes; other compared homes stayed even in this period.
- Property values went down in the third and forth quarters of 2005, but values were still up from the previous year end.
- At the end of 2005, I reported an average increase for the year of 12-15 percent for the year. I’m going to challenge my own previous number here and change it to 5-12% over the year. This wider gap takes into account a bigger cross section of West Portal homes.
- I think the market has gotten off to a slow start this year with the persistent rain, sensational news stories with predictions of collapse and interest rate adjustments. I do think the market will continue up this year, although perhaps not at the early levels of 2005,
- Taking the above data into account, it seems reasonable to expect an average annual appreciation rate of three to five percent.
- By taking a longer term approach, I anticipate that we can continue to expect a healthy and reasonable rate of appreciation. The desirability of San Francisco, the bustling West Portal commercial strip and improvements in the economy all contribute to our expectation of steady growth in value.
Eric Castongia, Residential Sales Specialist at Zephyr Real Estate provided the information in this article. Eric can be reached by e-mail at Eric@EricSellSF.com, or via mobile phone at (415)307-1700.