If you want to buy a home or condo in San Francisco, you’re going to need about a million dollars – literally. For the first time in history, the median selling price in San Francisco has exceeded $1 million, and all that cash won’t get you a fancy mansion or a beautiful beach view, either. In fact, these days, $1 million will get you exactly what median price usually gets you in any housing market: a median home in San Francisco. In this market, that means “an 800-square-foot starter home that may need work and may not come with private parking,” reported the National Association of Realtors (NAR).
CoreLogic analyst Andrew LePage credits the meteoric housing prices to a “robust tech economy” and the fact that “a lot of these high-end markets [like San Francisco] weren’t hammered as hard during the downturn because they weren’t exposed to subprime mortgages.” International investors are also boosting home prices by making astronomical all-cash offers and bidding up properties. “Everyone is aghast at what these things sell for, but as long as the economy keeps going like it does, these numbers do make sense,” said another real estate agent. He added, “There is money coming in from so many places now,” explaining that to buyers who already own property in Hong Kong, London, or New York, a million-dollar-median is “parallel” with what they have come to expect. He cited an example in which he helped sell a “modest Victorian home” listed at just under $1.2 million for $1.8 million to a developer planning to turn the entire thing into condos. That entire process happened in just about a week and 10 people submitted all-cash offers on the property.
WHAT WE THINK: It’s pretty clear that San Francisco is hot right now, and as long as those offers are coming in as cash offers instead of mortgage loans, you could probably make some pretty good money in that part of the country if you can afford the entry price.
Do you invest in San Francisco real estate? Are you buying in California? Do you think this is a bubble or the “new normal” for the west coast?
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