News & Research Archive

Pulse Of The Market (Pulse 78 - Where Are We In The Cycle?)

Apr 20, 2010


This Pulse is about the San Francisco condominium market.

Where are we in the cycle? Are we at the bottom: will there be a double dip? A typical Realtor will give you an answer based on his/her own anecdotal experience. It reminds me of the story about the blind men and the elephant. The punch line – the old man found that when he was a young man he hastily concluded that he understood the whole of something when he had experienced only a part. We Realtors only see a small part of an unfolding story.

The best the Team can do is shed a little light on this subject. While we are not market experts, we do appreciate the economic forces that influence the market, and we do study the numbers.

A Chart May Help

The chart below depicts price appreciation for San Francisco condominiums from the end of 1999 through Q1 2010. As a data point, the S&P/Case-Schiller Index covers single-family homes, not condominiums, and their data include the nine-county San Francisco Bay Area, not just San Francisco City itself. Our data are for the City of San Francisco and just condominiums. We use a methodology similar to the S&P/Case-Shiller Index.

The bottom appears to have occurred about this time last year – April 2009. The peak occurred in October 2007. The decline in prices was about 17%. Through March 31, 2010 we seemed to have experienced an appreciation of 6.5% from the April 2009 bottom. Will it continue?

At the Bottom or Double Dip?

We don’t know.

But we do know a few things. First, buyers are buying, not to flip, but to fulfill a need. Either they are relocating, tired of renting, ready to start a family, downsizing from the house in the burbs, investing for a family member, or buying a pied-a-terre because they are ready to do that – the usual reasons that typically support the San Francisco condominium market.

We also know that the south of Market Street available new inventory continues to dwindle and no developer has yet put a shovel in the ground for a new high-rise development. Prices need to rise to cover construction costs before developers start over again, and construction lenders need to feel more sanguine that a new development will sell out in a reasonable time. Some developer and some lender will venture into the water before long, but we know not when.

We at are sanguine about San Francisco residential real estate in general and are positive about south of Market Street if it is the right condominium in the right building. So call us and we are glad to share our knowledge and expertise and represent you in a transaction so you don’t make a mistake.

Pre-Summer Reading

Our recommended pre-summer reading includes two recent articles. Don’t Bet the Farm on the Housing Recovery by Robert Shiller, the man behind the S&P/Case-Shiller Index.

The other article is from the Wall Street Journal and discusses the pinpointing of the recession’s end.

Both are interesting and worth your time.

If you are interested in how individual bedroom/bath configurations have performed in the last few years, take a look at the charts at the site.

Written by: Malcolm E.A. Kaufman


Starboard TCN is posting this article on its website and blog with Malcolm E.A. Kaufman's approval.

Malcolm E.A. Kaufman is Founder of PulseFactors™ LLC. He refers you to his website,, where you can see recent issues of Pulse of the Market© and learn more about him. He invites your comments, suggestions, and questions.

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