1997 - Sold for $1,825,000
2003 - Sold for $2,750,000
2014 - Sold for $6,995,000
2016 - Sold for $7,450,000
"These numbers show one thing for certain. Time is your friend when owning a home in San Francisco and blue chip property protects value in a downturn and takes the most advantage of a market cycle taking off again."
1998 - Sold for $1,000,000
2009 - Sold for $2,400,000
2011 - Sold for $2,720,000
2014 - Sold for $3,900,000
2016 - Sold for $4,200,000
Pacific Heights known the world over as San Francisco’s premier neighborhood is home to hundreds of architecturally significant residences, quaint shopping districts, and iconic views of the Golden Gate Bridge and the San Francisco bay. Since 1996, the median price of a Pacific Heights single family home has increased 367% from $1,200,000 to $5,600,000 with the condominium market showing a 286% gain from $375,000 to $1,450,000 in 2015. There have been downturns during this time, most notably the precipitous value drop in 2009-2011; but a long term real estate hold in this blue chip neighborhood has always been a wise investment. Even so, buyers often hedge and play the market timing game.
“In 30 years in this business, I do not know anybody who has done it (market timing) successfully and consistently, nor anybody who knows anybody who has done it successfully and consistently.” So were the words of John Bogle, founder of the Vanguard Group of Investment Companies. Over the past twenty years, we have noticed a strange phenomenon with intelligent and successful individuals in the San Francisco’s high end real estate market. For an inexplicable reason, very few tend to buy real estate when it is on sale. This is when the truly savvy take advantage of the window to buy at a discount and ride the market when it turns. Time after time in a hot market we hear, “I am going to wait until the market cools off to buy a home.” And yes they do wait…and wait…and wait! Most would agree that timing the bottom is luck. Which is why we see most of these “smart” buyers wait until the market turns and fervently chase each other back to the multiple offer market place. Makes sense right? Uh?
The reality of purchasing a home often relies on factors outside of market economics. A job transfer, an equity event, a marriage, more kids on the way, divorce, downsizing are some of the life events that call for a new home. Our advice to our San Francisco clients today who are looking at a mature market cycle is to protect themselves by specifically buying blue chip real estate. Buy in Pacific Heights! Practice time honored fundamentals. Location, location, location. Buy the least expensive house on the best block. Get into the 2000+ sqft condominium market. Of the 2,694 condominiums in Pacific Heights only 427 are 2000 sqft or more. This is a relatively safe sector since buyers are increasingly getting priced out of this neighborhood's single family home market and alternatively choosing to stay by purchasing a large condo. Playing defense in a hot market is an astute way to build confidence and be prepared to strike when the right property comes to market. In the last twenty years the Pacific Heights market has topped twice. First in 2001 concurrent with the dot-com bust with a median price of $3,684,000 then in 2007 at a median price of $4,037,000. The market did take approximately five years each time to climb back to these peak prices. The current market the Pacific Heights median price is 38% above the 2007 top at $5,600,000. How about that!
What to make of these market cycles when coupled with the lives we lead from our homes? These numbers show one thing for certain. Time is your friend when owning a home in San Francisco and blue chip property protects value in a downturn and takes the most advantage of a market cycle taking off again.
CaenLucier Tip: We encourage you to take our thoughts into consideration and listen to our seasoned professional advice when purchasing in any part of the market cycle. A bet on Pacific Heights real estate is one that we will continue to encourage for a solid part of your financial portfolio and a place to enjoy your life!