AgentIndustry News

Even with home appreciation rates dropping, San Francisco remains a bright spot

Home value appreciation has slowed going into the fall, a welcome sight for some
  • The decline in appreciating homes is occurring just about everywhere, and more than one in every four homes depreciated in August.
  • Appreciating homes were far more prevalent than those losing value, with 59.2 percent of domiciles gaining ground.
  • San Francisco has highest price per square foot and slimmest inventory in California

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Recent numbers on home appreciation released by Weiss Residential Research show that the number of homes in the U.S. that are losing value snuck upward in September. Still, and by a wide margin, most homes in the U.S. are appreciating. And, in some places, like San Francisco, the pace at which values are ratcheting up has only cooled, and not stopped.

More than one in every four homes depreciated in August as the national percentage of depreciating homes rose from 23.4 percent in July to 27 percent in August. On the flip side, appreciating homes were far more prevalent than those losing value, with 59.2 percent of domiciles gaining ground. That’s a slight change from July’s 56.8 percent.

In both cases, year-over year numbers are going in the wrong direction, as the national depreciation rate was 13.6 percent in August 2014. In that same month, 66.9 percent of homes were appreciating.

The decline in appreciating homes is occurring just about everywhere. To do the best in homes gaining value, consider purchasing in Flint, Mich., or Fayetteville, Ark., which came out on top in the recent study. They are the only two markets in the top 10 that grew their appreciation rates year-over-year.

Those two top cities stand in stark contrast to the bottom markets in the report, especially Fayetteville. All of the top 10 appreciating markets are located in the West or Midwest, but the bottom 10 markets by appreciation rates are entirely in the Northeast, Mid Atlantic and South.

3 essential tools that will 10X your real estate marketing
Smart landing pages, a synchronized database and automation generate results READ MORE

San Francisco remains a good bet, yet still a tight market. Although not appreciating as quickly as it was last year at this time, it still remains a hot real estate market. 

But the California Association of Realtors (CAR) report singles out the San Francisco Bay Area, underscoring a tight supply and highest price per-square-foot in the state. The Bay Area is the only region in California where homes are selling above original list prices due to constrained supply with a ratio of 102.4 percent in September, up from 101.2 percent a year ago. Price-per-square foot in the market is a staggering $770.

Weiss Residential Research observes home value trends on hyper-local levels, and cautions potential investors to do their homework down to a granular level to get a good buy that will hold its value.

“National median reports are showing that year-over-year prices moderating in August, a sign that the depreciation trends we have monitored at the hyper-local level since May are intensifying. Year over year appreciation rates are falling virtually everywhere, even in eight of the nation’s hottest markets,” said Allan Weiss, CEO of Weiss Residential Research.

Top 10 markets by August appreciation percentage, largest 150 markets

Metro Aug-14 Aug-15 Change
Flint, MI 52% 100% 48%
Fayetteville-Springdale-Rogers, AR-MO 48% 94% 45%
Reno, NV 100% 92% -8%
Denver-Aurora-Lakewood, CO 97% 90% -6%
Fort Collins, CO 90% 88% -2%
Portland-Vancouver-Hillsboro, OR-WA 94% 87% -7%
Madison, WI 72% 82% 10%
San Jose-Sunnyvale-Santa Clara, CA 96% 82% -15%
San Francisco-Oakland-Hayward, CA 96% 79% -17%
Seattle-Tacoma-Bellevue, WA 88% 79% -10%

Weiss Residential Research uses a Big Data approach to creating accessible data and tools that track nearly 50 million repeat sales indexes, one for each house in the US. 

Email Kimberley Sirk