They say the US real estate market sucks. They say housing is in for more pain. Not everyone is listening.

Here are the top 5 highest priced San Francisco condo sales thus far in 2011, as measured by price per square foot.

765 Market St., #27A
Sold for $7,200,000 or $2,170/sqft on May 10, 2011.
3 beds, 4.5 baths, 3,318sqft
You may have heard of a little hotel chain called the “Four Seasons.” With expansive views and high-end finishes, this 3,000+sqft condo includes custom furniture and the pampered lifestyle one can only find at the Four Seasons. Oh, and the buyer paid cash. No big deal.

765 Market St., #32F
Sold for $4,350,000 or $1,689/sqft on February 16, 2011
2 beds, 2.5baths, 2,576sqft
Another Four Seasons property, this corner unit is smaller than its big brother listed above, but no less spectacular. A “steal” at just under $1,700/sqft

1045 Vallejo St
Sold for $4,100,000 or $1,715/sqft on May 12, 2011
3 beds, 2.5 baths, 2,391sqft
Away from the steep streets and cable car lines, this urban sanctuary is truly unique. Sold for $150,000 above list, this 2-level luxury condo has spectacular city views, an elevator and two fireplaces. Monthly HOA fees are a mere $2,560. Oh, another all-cash transaction.

425 1st St., unit 6004
Sold for $2,427,308 or $1,548/sqft on March 31, 2011
2 beds, 2 baths, 1,568 sqft
You may know it as that eyesore you almost run into coming off the Bay Bridge. Others call it home. One Rincon Hill is a condo before its time, finished at the height of the housing boom in 2008. This top floor, penthouse unit is a mere 1,568sqft but boats truly breathtaking views. But for $1,548 per sqft?

765 Market St., #22D
Sold for $3,700,000 or $1,441/sqft on March 15, 2011
3 beds, 3.5 baths, 2,567sqft
The agent for this property (who represented both buyer and seller for a cool $185,000 commission) must have quite a sense of humor. She noted on the listing: “Price Reduced! Now at affordable $1,539/sqft.) San Francisco: You just can’t make this stuff up.

This post first appeared in: Cirios Trends – March 2011

Redwood City’s official slogan, “Climate Best by Government Test,” is no joke: At the turn of the 20th century, the US Government found Redwood City to be at the center of one of the world’s three best climates (the others being the Canary Islands and the Mediterranean Coast of North Africa). Situated nearly equidistant from San Francisco and San Jose, it offers a suburban setting with a strong sense of community and rich history. Redwood City was the first incorporated city in San Mateo County and has drawn in commuters for more than 100 years. Population skyrocketed in the late 1990’s as the tech boom brought the masses to Silicon Valley. Today, Redwood City has a population hovering around 80,000 residents.

We chose Redwood City to profile for a host of reasons, but primarily because it is one of the most socio-economically diverse cities in the entire Bay Area. Unsurprisingly, the real estate market is equally varied, with hilltop estates and barred up shacks alike.

The City
Redwood City encompasses over 25 square miles, extending from the wetlands on the edge of San Francisco Bay to the hills adjacent to the Pacific Ocean. For comparison, Daly City, a town in northern San Mateo County with a similar population, has a total area less than one third the size.

In general, neighborhoods improve (and home prices increase) as one moves east to west. As seen on the map above, the city can generally be broken into about a dozen distinct neighborhoods, each of which with its own unique character.

Downtown has recently undergone a major redevelopment, which is ongoing, and businesses, housing and prosperity are taking root. Eastern Redwood City has a strong Latino population, and many Bay Area locals argue Redwood City is home to the best Mexican food outside San Francisco’s Mission District.

The Schools
No home search would be complete without a deep understanding of local schools. And understanding the landscape of public schools in Redwood City is as important as any city in the Bay Area. As seen below, API scores (see previous article on San Francisco schools for more on API scores) in Redwood City are all over the map. Roy Cloud Elementary and North Star Academy have some of the highest scores in the country. Meanwhile, despite vast improvements over the past decade, Garfield, Hoover and Taft still lag higher quality schools in the district.

Home prices, as one would imagine, vary widely by neighborhood and specifically by school district boundary. Cross a boundary and home prices can change by as much as 10%.

Home Prices
In February 2011, the median home sale price in Redwood City was $752,000. In January, it was $704,975. The average sale price in February was $812,485 compared to $741,077 in January. So does that mean home prices are skyrocketing? Far from it.

Home sales data, like all data, are easy to manipulate. In fact, in recent weeks, housing data providers are calling into question the validity of data put forth by the National Association of Realtors.

And in places like Redwood City, where neighborhoods vary greatly, broad measures of home prices can be even more misleading. To cut through the noise, Cirios Real Estate’s tireless data gnomes spliced Redwood City home price data by neighborhood, according to the groups listed here.

As can be seen by the first graph, sale prices vary widely in Redwood City. In Farm Hill, the posh area in the hills, million dollar homes are the norm, and prices have only slipped back to where they were in 2005.

Meanwhile, in Friendly Acres, a working class neighborhood between Bay Road and Highway 101, prices have fallen more than 30%. In nearby Redwood Village (not shown), prices are off more than 50%.

But simply looking at sale prices doesn’t tell the entire story. One interesting way to examine price trends is by looking at price per square foot and normalizing data to a common point. In other words, let’s assume all areas start at a base level (in this case, 100) and see how they fared over time.

In the second chart, we see that despite the great strides many of the working class parts of Redwood City have made, more desirable areas have actually fared better in terms of home prices.

Since the beginning of this year, we are starting to see noticeable differentiation between neighborhoods, something which was absent through much of the housing boom, when pretty much all prices went up, albeit in varying degrees.

But starting about a year ago, prices in different areas have started to move more independently. This is a trend we have harped on over the past year, that in more healthy real estate markets, prices move based on local fundamentals. We may not be back to what most would consider “healthy,” but we certainly are closer than we were a couple years ago.

This post first appeared in: Cirios Trends – Special Edition: The Year Ahead

What could be the oldest adage in all of real estate has never been more true: Location, location, location. According to the Case-Shiller Home Price Index, a widely watched gauge of home prices in major metropolitan areas around the country, only four cities experienced net gains in home prices in 2010: San Francisco, Los Angeles, San Diego and Washington DC. Yet, it was widely reported throughout the year that the housing market was on the mend.

And now with nationwide home prices back down to where they were in 2003, many are wondering if now is the time to jump back into the market. The answer is, of course, complicated.

A great way to begin your assessment of how risky buying a home may be is digging into the data. But what data? Average sale price, Median sale price, price per square foot?

Using the Oakland neighborhood of Rockridge, one of the most popular places in the East Bay for young families to live, as a proxy, we drilled down into localized data to show how simple data analysis can help identify market trends on a truly street-level. Rockridge’s main drag, College Avenue, is packed with bars and restaurants just a few short blocks from BART. Its logical that living close to
College carries a premium, but let’s examine whether there is a difference on the east of west side of the street.

As our readers know, we often use price per square foot to examine value trends over time, so let’s look at Rockridge.

While values on each side of College have fluctuated a bit, by and large the value trends have tracked closely without much spread between the two areas. If the ended the analysis here, one might determine that it didn’t really matter on which side of College you bought. But we know better, that price per square foot only tells part of the story. So we looked at a rolling average sale price for the previous 60 transactions to see if the two sides of College Avenue really were that similar. Looking at the graph below, its clear to see they are not.

Its pretty clear then that there is a marked difference between the east and west sides of the street. Armed with this knowledge, we can set to figuring out why. It turns out that College Avenue, in addition to being the main drag, is also a school district boundary. Elementary schools on the east side are some of the highest quality in the state, while those in the west are mediocre at best.

Why then did the price per square foot graph tell such a different story? The answer lies in home size. On the east side of College, where home prices are far higher, the average home size in this data set is around 2,400 square feet. Over in the west, its just under 1,500 square feet. All things being equal, smaller homes will command a higher price per square foot, since as you add more house, the value of that incremental living area diminishes. It makes sense, adding 1,000 square feet to a 1,500 square foot home almost doubles the size, while tacking the same addition onto a 2,500 square foot home doesn’t make nearly as big a difference.

This dynamic can be clearly seen on the previous graph, where the superior neighborhood (the red line), actually has a lower price per square foot than the one with the inferior schools. If we had stopped at price per square foot, we might have wrongly determined that there realty wasn’t much of a difference between the two sides of College Ave.

This analysis then begs the question, what is the point of looking at data to figure out where school and other value boundaries, when local real estate experts should have the same information? A fair argument, and one we often hear when we venture outside our back yard and try to tell real estate agents what (they think) they already know. But what if a buyer wants to live within a 30-minute commute of San Francisco, send their kids to a public elementary school with an API score above 800 and be within walking distance to a downtown with shops and restaurants?

Rather than calling a dozen real estate agents and getting their biased view on why their local area is better than the rest, smart data analysis can help narrow down a search by using consistent metrics to get an untainted view of markets on a localized level. Only by combining data analysis, local market expertise and an understanding of macro trends affecting a region can one get a complete view of home price trends down to a street level. Armed with that knowledge buyers can set out to make smart buying decisions — even if that decision is to keep renting.

This post first appeared in: Cirios Trends – Special Edition: 2010 Real Estate Roundup

This month, rather than looking at an individual zip code to spotlight a particular aspect of Bay Area real estate trends, we looked at the Bay Area as a whole (well, 5 counties worth: Santa Clara, San Mateo, San Francisco, Alameda and Contra Costa). We examined more than 45,000 residential real estate sales (condos and single family homes) and looked at median and average sale prices by month. As you can see, the path of Bay Area real estate prices has traced a nearly smooth parabolic arc over the last year. After coming off the lows of 2009, prices steadily rose through August of this year but have been falling ever since. At their peak, prices had come up a full 20% off their lows and have fallen 6% since then.

Two huge caveats should come along with such a broad analysis of price trends. The first is that these data have not been seasonally corrected. Much of the parabolic trend in prices can be attributed to the normal yearly cycle in real estate markets. Every year, prices come up in the summer and slip again in the winter months, as we see here. However, this yearly cycle is not likely to account for the entirety of the 20% price increase and a large portion of this should be seen as actual value increases in Bay Area Real Estate.

The second caveat — one that we continually try to hammer home at Cirios, is that by accumulating data over such a wide geographic range (5 counties) many more local trends can be masked. Indeed, to an extent, averaging data over such a large area makes this analysis more suited to evaluating economic trends rather than looking at actual real estate markets.

To drill a bit deeper, we sliced and diced the Bay Area into county specific data for each of the five counties. For all, the data graphed here represent moving averages of home sales over the past year.

The first thing you might notice is how different each of the graphs look. While each county can be seen to follow the rough trajectory of our Bay Area wide parabola, individual counties vary widely in the exact parameters of their trends. San Mateo County, for instance, has experienced a few large dips over the past year, both in January and September.

San Francisco has shown a lot of volatility in the past year. While some of the apparent volatility in the SF price trend graph can be attributed to the effects of a smaller sample size (San Francisco is by far the smallest county of the 5) and a wide range of local price ranges, a good portion is real market volatility.

Contra Costa County, on the other hand, actually followed a fairly smooth arc and followed pretty closely the Bay Area trend as whole.

Alameda County bounced along nearly flat for the year, but still ended the year up significantly from where it started in January.

Last but not least, after a rough start to the year, Santa Clara County rebounded in the spring and held steady through the summer and into the fall. Recent months have seen weakening, however, so we could have another rough start in 2011.

Of course, looking at county wide trends is also not the best way to evaluate the value of an individual home. At best, it can only give a rough idea of regional activity. As we have pointed out often in the past, even looking at zip code level price trends can be confusing or even counterproductive when trying to make individual real estate decisions. This being said, however, comparing neighborhood trends to larger geographic areas can be very informative, allowing one to identify neighborhoods that are going against a downtrend in prices or outpacing value increases. These differences can be immensely important in choosing one city over another or one neighborhood or another and can allow considerable narrowing of available real estate choices.

At Cirios, we are always working to improve our data analytic capabilities, with particular care paid to metrics and visualizations that allow our clients to make the best real estate decisions for themselves. Over the next year, we will be unveiling a variety of astoundingly useful tools to help all real estate market participants, from first time home buyers to the savviest of long term real estate investors, make the best possible real estate choices. And as always, we have the expertise, integrity and passion to make sure those choices become reality.

This post first appeared in: Cirios Trends – Special Edition: 2010 Real Estate Roundup

For those of you fortunate enough to have attended the Cirios Holiday Party this year, you may have noticed a host of charts and graphs posted around the room. Those graphs, representing real estate markets from around the Bay Area, have been reproduced in their entirety here. For commentary or more information about anything you see here, please feel free to contact Cirios Real Estate at 415.217.0012 or info@ciriosre.com.

(CLICK TO ENLARGE IMAGES)

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This post first appeared in: Cirios Trends – Special Edition: East vs. West

Hayward and Daly City can both be considered entry level markets. Raw prices are dramatically different, but then again so are income levels, crime and demographics.

Notably, from 1997-2007, homes in Daly City sold for around $100/sqft more than those in Hayward. For the reasons noted above, this makes sense, and held consistent through the dotcom and housing booms alike. Then, as the market slumped in 2007, that consistent relationship became unhinged.

Prices in Daly City are now almost $200/sqft higher than Hayward, nearly twice the historic average.

There are a couple ways to interpret this. One could argue that growth in Hayward was driven by loose lending, allowing lower income buyers to move up into homes they could not afford. Hayward came crashing back to reality and tight lending standards are now limiting demand.

On the other hand, has something fundamentally changed since 2007 that makes Hayward that much less attractive than Daly City? Looking at the population change in the two cities, we’re not sure that’s the case.

This post first appeared in: Cirios Trends – Special Edition: East vs. West

Despite having a median household income almost 50% higher, San Ramon home prices are 40% below those of San Mateo. Think proximity to jobs doesn’t matter?

San Mateo is located smack in between San Francisco and the northern tip of Silicon Valley. Young professionals and families alike are drawn here for the easy commute to multiple job centers (if you can call CalTrain or 101 easy).

Across the Bay, San Ramon is a posh East Bay community with new developments and larger, spacious lots. But getting to San Francisco or Silicon Valley is a chore.

Home price declines in both cities took about four years to shake out, but San Ramon fared worse than San Mateo. Prices fell almost 30% from their peak in 2005, while San Mateo dipped “just” 22%.

Similar to the previous comparison, the premium for San Mateo homes has now grown to almost $200/sqft from an average of $100-120/sqft over the past decade. This begs the question: Is San Ramon now cheap relative to San Mateo, or is there a new “normal”?

This post first appeared in: Cirios Trends – Special Edition: East vs. West

Topographically, Millbrae and Piedmont could not be more different. Most of Millbrae consists of relatively flat, suburban neighborhoods with a few homes scattered amongst the hills. Piedmont on the other hand is an exclusive suburban enclave nestled in the Oakland hills.

Population growth has been relatively stagnant in the two cities, median incomes are comparable and over the past ten years, home price trends have been nearly identical — as have values themselves.

Of late, Piedmont did not see the rebound that Millbrae and many other areas did, but Millbrae has slipped and is now back at lows seen in the dark days of early 2009. Prices in both cities have fallen in the past 12 months, compared to rises in the four other cities we examined this month.

Prices in Piedmont and Millbrae are back to where they stood in 2004 — the height of the housing boom. So, can Millbrae’s proximity to jobs and Piedmont’s cache support home prices at their current levels, or are these markets poised for another fall?

This post first appeared in: Cirios Trends – Special Edition: East vs. West

So, what to make of all this number crunching? First, let’s point out a few notable pieces of data from the chart below.

1) Hayward is the only city of the six where prices are actually down since 2000. This shows the extent of recent price declines in the area, where prices are down almost 60% from the peak. Notably, however, prices in Hayward have recovered more than 10% since their recent trough. This is consistent with other distressed markets where active investors, stimulus and limited inventory have pushed up prices in the past 18 months.

2) Millbrae and Piedmont have fared the best since 2000, which supports the concept that the job and income growth of the past decade has favored the upper and middle classes, rather than the lower classes.

3) While demographics drive long term home price trends, recent population booms in the East Bay (Hayward and San Ramon) may not have created sustainable demand for expensive homes.

4) Zip codes don’t always tell the whole story. Anyone who knows Hayward and Piedmont will tell you that crime rates noted above do not reflect reality, even in the slightest (note that for the home price analysis, we sliced Piedmont out from other neighborhoods in the same zip)

5) Markets that peak early often bottom early as well. Prices in Daly City hit their trough way back in 2008. And while they climbed steadily for the subsequent 12 months, in the past six they have been dipping again and could revisit recent lows.

The goal of this exercise wasn’t necessarily to say definitively that it’s better to buy in the Peninsula or the East Bay, Hayward or Daly City. Rather, there is a multitude of data points one can look at when evaluating real estate. But its understanding the stories behind the data, what’s driving the numbers that enables smart real estate investors to use data to help them make good decisions.