Only time will tell. But if there is a recession how will it affect the San Francisco Real Estate market? Well since I can't find my crystal ball (kids must have taken it) I decided to pull statistics from the San Francisco MLS. According to yesterday's San Francisco Chronicle our last recession was in 2001. So I decided to go back and pull the median prices from the year prior to the recession through the end of last year. While this is not foolproof, because we have so many micro-markets in this city and the fact that the median price is manipulated by the composition of what is being sold during that time, it is one of the tools often used to determine the relative health of the real estate market.
So with that said, here is the eight year trend of median sold prices and number of sold units for Single Family Homes and Condos/Lofts, all bedrooms.
2000 - SFH $526,000/3,104 units sold - Condos/Lofts $541,000/1782 units.
2001 - SFH $555,500/2,694 - Condos/Lofts $501,000/1,596
2002 - SFH $590,000/3,100 - Condos/Lofts $525,000/2,399
2003 - SFH $640,000/3,392 - Condos/Lofts $535,000/2,818
2004 - SFH $750,000/3,321 - Condos/Lofts $625,000/3,135
2005 - SFH $840,000/3,093 - Condos/Lofts $726,000/2,837
2006 - SFH $840,000/2,718 - Condos/Lofts $730,250/2,470
2007 - SFH $895,000/2,310 - Condos/Lofts $770,000/2,273
What I found interesting is that during this time period Single Family Homes did not see a decline in the median price. They actually experienced a relatively healthy growth rate every year except 2005 to 2006 where the median was flat. Condos/Lofts fell by about 7.4% during 2001 as compared to 2000. They experienced a little over 4% growth the year following the recesssion and by 2004 surpassed the 2000 median price by approximately 16%. So by the end of the third year after the recession Condos/Lofts had fully regained their 2000 value plus a considerable amount.
In addition those people who bought during the recession experienced the greatest amount of appreciation as compared to buying the year prior and year after. So while the housing slump, slowdown etc. continues so does the buyers market.
If there is a recession in 2008 will the real estate market react exactly the same way it did to the recession in 2001? Most likely not. The circumstances are much different now with the subprime debacle. But one fact does remain that we can all agree on, in the long run San Francisco Real Estate will prove to be a wise investment.
Michael Novia
South Beach Real Estate
415-637-2409 (24 hours)
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