Ask most anyone familiar with Bay Area real estate which city has more expensive homes, South San Francisco or Millbrae, and the response is likely to be unanimous. South City doesn’t exacly have the reputation for high-end real estate.

But taking a look at the graph below, during the boom, South City tracked Millbrae pretty closely, as measured by price per square foot. In fact, in 2004 then again in 2005, South City even hit the same level as its neighbor to the south.

Since the market started tumbling in 2007, the gap between the two has widened. This partly reflects the fact that South San Francisco has had a higher foreclosure rate than Millbrae, so homes in poor condition are selling at a higher clip, dragging down price per square foot. In South City we’re now back to levels not seen since 2002, but in Millbrae we’ve only reached 2004 prices.

With the new appraisal guidelines restricting buyers ability to get loans, the next few months should be very telling with respect to how the already battered housing market can continue the healing process.

One of themes we harp on here at Cirios is how home price trends are becoming increasingly localized as individual real estate markets grope for a bottom.

Some areas, particularly the hardest hit by foreclosures, have seen fantastic price declines. Others, mainly the high end, are only recently feeling the ill-effects of job losses and our slumping economy. And while this dynamic makes for a tricky housing market, it also breeds opportunity for those savvy enough to identify which markets will be the first to stabilize and eventually rebound.

Take a look at the 2 graphs below showing price per square foot in Redwood City, CA.

The first shows all residential sales in Redwood City. The steep declines in 94601 and 94602 not only show price declines, but help illustrate how areas with high foreclosure rates — like these 2 zip codes — are seeing steeper price declines than areas that are holding up better. (For more on this subject, read about foreclosure sales effect price data.)

The second graph shows 1 segment of the market,
homes with living areas of 1,200 – 2,500 square feet.
While a somewhat arbitrary cutoff, the idea is to pick
like homes within each area to try and compare apples
to apples.

What we see is that in the second graph, is that the “spread” between each zip code, that is, the premium you pay to live in 94063 vs. 94601 or 94602 remained essentially the same throughout the boom and into the bust. Meanwhile, the first graph shows that price per square foot in 94063 (the least desirable part of town) almost touched 94061 (the most desirable part) right around the peak of the bubble.

So what does all this mean? 2 takeaways: First, be skeptical when you look at housing market data, since very small changes in data collection can lead to quite different results. Second, real estate always has been, is, and always will be local. No national, statewide or even citywide trends can capture what’s going on at the street level.

Want to see this analysis for your town? Contact Cirios Real Estate today!

Looking for great schools, rolling hills, big lots and a quick BART ride to the city?

Orinda and Lafayette, two of the most desirable towns in the East Bay, have all this and much more. Home prices remain in a downward trend, to be sure, but inherent desirability and established neighborhoods should keep these two from falling off a cliff, even as their high-end brethren around the Bay Area feel the pain of an tight jumbo loan market.

The graph below shows price per square foot for homes with 1200-2500 square feet, pretty middle of the road for these areas. Once you get above 2500 sqft, you start losing your marginal price per square foot and comparisons with smaller homes start to lose meaning.

What did that mean? Read more about Price per Square foot here.

Want to find out more about these two towns? Contact Cirios Real Estate today!

(click to enlarge image)