The 2020 San Francisco Apartment Building Market January 2021 Market Report for Residential 5+ Unit Buildings Pandemic, shelter in place, unemployment soars, terrible financial hardships for many residents and small businesses, new ways of working, office buildings empty, people move, vacancy rates climb, rents plunge, sales drop, rigorous limits on evictions, new landlord-tenant laws, dreadful fires, an anxious presidential election, interest rates to historic lows, stock markets to new highs, and IPO mania breaks out again. A year of extremes and a challenging year for the residential income market. 5+ unit residential income buildings. Sales reported to MLS. This market consists of a relatively small number of sales, of buildings of widely varying sizes, qualities and financial characteristics, across a broad range of locations: This makes meaningful statistical analysis more difficult. Data from sources deemed reliable, but may contain errors and subject to revision. 2020 numbers are estimates using data available in early 2021: Late reported sales may alter these numbers. All numbers are approximate.
Median Sales Price Trends since 2011 San Francisco 5-15 Unit Residential Apartment Buildings 2011
2012
2013
2014
2015
2016
2017
Sales reported to MLS
2018
2019
2020 $6.0 $6.1 $6.0
Median Sales Prices in MILLIONS of Dollars $6
$4
$3
$2
Millions of Dollars
$5
These prices are gross generalities reflecting sales of a wide variety of buildings of differing sizes and qualities, in locations of differing values. For 10-15 unit buildings in particular, the relatively low number of sales is also an issue. (There were only a handful of sales of buildings of 16+ units in 2020.)
$4.6
$4.8 $4.8
$4.4
$3.6
$2.8 $2.4
$2.6
$2.9 $2.8 $2.7
$2.6 $2.8
$2.0 $2.1 $1.5 $1.6
$1
$-
San Francisco 5-9 Unit Buildings Data from sources deemed reliable, but may contain errors and subject to revision. All numbers should be considered approximations.
San Francisco 10-15 Unit Buildings
Annual Sales Volume San Francisco 5+ Unit Residential Building Sales 187 180
146
151
146
152
157
160
143
137
140 120
110
| Bottom of market | 94
100
86 75
80 60 40 20 0
2009
2010
2011
2012
2013
2014
2015
2016
These analyses were performed in good faith with data derived from sources deemed reliable, but may contain errors and are subject to revision. All numbers are approximate.
2017
2018
2019
2020
Multi-Unit Residential Property Sales, 5+ Units Sales reported to MLS
2020 Sales by San Francisco District 5-8 Units
9-15 Units
Noe, Eureka & Cole Valleys (D5)
20
Russian, Nob & Tel Hills; Financial Dist. (D8 N.)
3
9
2
5
Richmond/ Lake Street/ Jordan Park (D1)
7
Inner Mission Downtown, Tenderloin, Civic Center (D8, S.)
4
7
Sunset/ Parkside (D2) Hayes Valley/ NoPa/ Alamo Square (D6)
6
10
Pacific Heights/ Marina/ Cow Hollow (D7)
3
2
2
1
1
1
16 + Units
The city’s 5+ unit apartment market is dominated by buildings of 5-8 units. The great majority of SF apartment buildings were constructed prior to 1940: Victorian, Edwardian, Spanish Mediterranean & Marina-Style architecture. Almost all buildings sold in 2020 were of wood-frame construction.
2
Data from sources deemed reliable, but may contain errors and subject to revision. All numbers are approximate. May not include all mixed-use building sales.
San Francisco Residential Rents – Estimated & Approximate Weighted Average Asking Rent, Q1 Data Points, 1994 - Present - 20% to 25%
- 8%
Average Residential Asking Rent Q1 Data Points Except Last Reading as Noted
$3,500 $3,250
Even with the 2020 drop in rent rates, San Francisco is still the most expensive rental market in the country.
$3,000 $2,750
Last reading estimated for end of Q4 2020
- 5%
- 25%
$2,500
Dotcom peak →
$2,250
↑ 2012 recovery $2,000
↑ 2008 financial markets crash
$1,750 $1,500
Due to the different ways these numbers are calculated, plus free-rent and other incentives now common in the market, these are very general estimates of the overall trend in rent rates.
↑ Dotcom bubble pops $1,250
1st quarter data points except, as noted for last reading - per RealFacts LLC, for larger buildings. 2017-onward estimated using data from a number of rental data websites. Does not include rentals of single family dwellings, condos or units in smaller apartment buildings (which are often larger & more expensive). Data from sources deemed reliable but may contain errors and subject to revision. All numbers are approximate.
Q4 2020
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
$1,000
San Francisco 5+ Unit Apartment Building Sales
$557
$561
2019
2020
$542
$550
$560
2018
Average Dollar per Square Foot Values
$533
$501 $500
$450
$435 $396
$400 $348
$350
$250
$268
$284
$285
2012
$257
$266
2010
$296
2009
$297
$300
2011
$330
$232
$200
Because of the relatively small number of sales and the huge variety in buildings sold, average dollar per square foot is a very general statistic when applied to investment property sales. Data is from sources deemed reliable, but may contain errors and subject to revision. All numbers are approximate. Outliers deleted when identified.
2017
2016
2015
2014
2013
2008 to 9/15/08
2007
2006
2005
2004
2003
$150
Average Gross Rent Multiples San Francisco 5+ Unit Apartment Building Sales 18
17.6
17
17.8 17.3
17.3
16.5 16.0
16
15.9 15.3
15.6
15 14.3
14 13.2 13
12.5 12.1
12 11
10 9 8 2007
2008 to 8/31/08
2009 2010
2011
2012
2013
2014
2015
2016
2017
GRM is calculated by dividing the sales price by the annual gross rents. It is a very general statistic and all numbers should be considered approximate. This data is from sources deemed reliable, but may contain errors and subject to revision. Outlier sales that would distort the statistic were deleted from the analysis when identified. Based on data provided by listing agents.
2018
2019
2020
Average Cap Rates San Francisco 5+ Unit Apartment Building Sales 6.0
6
5.8 5.4
5 4.6
4.8
4.7
4.0
4
3.8
3.9
4.0
4.3
4.3
2019
2020
3.9
3
2 2007
2008 to 8/31/08
2009 2010
2011
2012
2013
2014
2015
2016
2017
Capitalization rate calculations – sales price divided by net income (excluding mortgage costs), or return on investment as if the property had been purchased all cash – are only as good as the income and expense data provided by listing agents, and should be considered general approximations. Data from sources deemed reliable, but may contain errors and is subject to revision. Outlier sales that would distort the statistic were deleted from analysis when identified.
2018
Average Price per Unit San Francisco 5+ Unit Apartment Building Sales
$450,000
$400,000
$350,000
$300,000
$250,000
$291,000
$223,000
$236,000
$265,000
$328,000
$352,000
$404,000
$453,000
$431,000
$476,000
$485,000
$472,000
$150,000
$288,000
$200,000
2007
2008 to 8/31/08
2009 2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$100,000
Because of the huge variety in buildings sold, this is a very general statistic when applied to SF investment property sales. This data is from sources deemed reliable, but may contain errors and subject to revision. Outlier sales deleted when identified. All numbers should be considered approximate.
Average Price per Unit – Selected Submarkets 5+ Unit Apartment Building Sales in 2020 $673,000
Size of the building, size of the units, specific location, condition, architectural style, tenant profile, and current and potential rent-generation of the units - all these factors will affect this very general metric very significantly.
$472,000 $419,000
$429,000
Hayes Vly NoPa - Alamo
Sunset - Parkside
$491,000
$383,000 $317,000
Inner Mission
Richmond, Lake St, Jordan Park
Russian, Nob, Tel Noe, Eureka, Cole Hills; N. Beach Valleys
Neighborhood titles often stand for larger districts. Data from sources deemed reliable but may contain errors and subject to revision. Adjusted for outlier sales that significantly affected average. Numbers should be considered very approximate since a very wide variety of buildings are in this mix.
Pacific Heights Marina
San Francisco 5+ Unit Apartment Building Sales 2020 Sales by Price Segment
Sales reported to MLS
5-8 Unit Buildings
9-15 Unit Buildings
16+ Unit Buildings
17 16
Median Sales Price, Median Size, Avg. $/Sq.Ft. Value 13
• 5-8 Unit Bldgs • 9-15 Unit Bldgs
$2,640,000 $4,690,000
4,700 sq.ft. 10,600 sq.ft.
$577/sq.ft. $505/sq.ft.
There were too few 16+ unit sales to calculate meaningful statistics.
5
5
2
$1.5m $1.99m
$2m $2.49m
$2.5m $2.99m
$3m $3.99m
$4m $4.99m
Sales reported to MLS. Data from sources deemed reliable, but subject to error and revision. All numbers to be considered approximate.
$5m $6.99m
$7m $9.99m
$10m+
San Francisco Apartment Building Market – 5+ Units New Listings Coming on Market in Quarter 80
5+ unit buildings, MLS listing activity, per Broker Metrics
The number of new listings in Q4 2019 was unusually low – perhaps due to the new COPA legislation that went into effect in September.
70
60
50
40
30
20
10
Data from sources deemed reliable, but may contain errors and subject to revision. Based upon MLS activity: Not all for-sale properties are posted to MLS. All numbers approximate and subject to revision.
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Q1 2019
Q4 2018
Q3 2018
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
Q1 2017
Q4 2016
0
San Francisco Apartment Building Market – 5+ Units Active Listings Listed for Sale at End of Month
5+ unit buildings, MLS listing activity, per Broker Metrics
90 80 70 Pandemic hits
60 50 40 30 20
This does not include the large portfolio of Veritas owned apartment buildings.
10 0
Data from sources deemed reliable, but may contain errors and subject to revision. Based upon MLS activity: Not all for-sale properties are posted to MLS. All numbers approximate and subject to revision.
Percentage of Listings Accepting Offers in Quarter San Francisco 5+ Unit Building Market Dynamics
Per MLS sales data
60%
50%
40%
30%
After pandemic hits 20%
30%
57%
35%
38%
18%
32%
29%
32%
33%
34%
29%
13%
18%
19%
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q2 2017
58%
Q3 2017
10%
These analyses were performed in good faith with data derived from sources deemed reliable, but may contain errors and are subject to revision. All numbers to be considered approximate.
0%
San Francisco Apartment Building Market – 5+ Units Listings Closing Sale in Quarter since 2017 Q2 2017
Q3 2019
Q2 2018
45 40 35 30
After pandemic hits
25 20 15 10
46
35
35
38
44
33
39
21
44
47
35
29
17
18
22
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2017
35
Q2 2017
5
Data from sources deemed reliable, but may contain errors and subject to revision. All numbers approximate.
0
Average Days on Market until Acceptance of Offer San Francisco Multi-Unit Residential Sales since 2010 | Bottom of market | 99
100 90
5-8 Units
9-15 Units
97
86
83 77
80
74 68
70
69
67 57
60
60 56
56
66 67
67
2019
2020
59
58 52
48
50
48
47
40 30 20
10 0 2010
2011
2012
2013
2014
2015
2016
2017
These analyses were performed in good faith with data derived from sources deemed reliable, but may contain errors and are subject to revision. All numbers to be considered approximate.
2018
Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.