San Francisco Homes Hit Million-Dollar Median Milestone

August 1, 2014

For the first time in the city’s history, the median selling price for houses and condos in San Francisco reached seven figures.

“It certainly is a milestone. It’s like ‘wow!’” Betty Taisch, San Francisco Association of REALTORS® president, told the Associated Press about San Francisco hitting the million-dollar median mark.

But a $1 million home in San Francisco also won’t fetch buyers the fancy mansion on a lavish estate it would elsewhere. Instead, home buyers in the Bay Area are finding they’re having to pay $1 million for an 800-square-foot starter home that may need work and may not even come with private parking, the Associated Press reports.

Behind the city’s bustling real estate activity is the rapid growth in its technology industry as well as its 49-square-mile constrained supply of housing.

The San Francisco Bay Area had a record number of homes and condos listed for $1 million and above between April and June, accounting for one-quarter of all sales in the region, according to CoreLogic DataQuick, a housing data provider. In fact, six of the Bay Area’s nine counties set records for the number of homes and condos that sold for more than $2 million (California as a whole also did), according to the report.

"The robust tech economy and the overall economy mean the Bay Area has been doing better than most for years now," says Andrew LePage, an analyst with CoreLogic DataQuick. "It already was expensive, and a lot of these high-end markets weren't hammered as hard during the downturn because they weren't exposed to subprime mortgages, so they had less ground to recover in the first place."

George Limperis, an agent with Paragon Real Estate Group in San Francisco, told the Associated Press that technology millionaires are helping to bid up properties and are making all-cash offers, which is driving up demand. But unlike the city’s tech boom in the late 1990s, buyers are more prepared to pay more than $1 million for a fixer-upper, he says. Also, international interest in the city has flooded into the housing market, also lifting home prices and competition.

"Everyone is aghast at what these things sell for, but as long as the economy keeps going it like it does, these numbers do make sense," Limperis says.

Source: “San Francisco Median Home Price Hits $1M, Won’t Buy Much,” The Associated Press (July 31, 2014)