What’s a Better Investment, Facebook or Real Estate?
If a San Francisco median house purchase was made with a 20% down payment rather than all cash, and adjusted for closing costs, total cash return translates to 339% over the period from 2011 to 2016. Paragon Real Estate Group’s latest market report for the City reveals that a down payment of $152,000 in 2011 would have turned into roughly $667,000 in 2016 net sale proceeds.
By comparison, an investment in Facebook would have returned 174%, and Apple 163%. An investment in soybeans would have lost 23% and gold would have lost 18%.
A few other key findings from Paragon include:
- An all cash, 2011 purchase would have generated large, additional financial returns in the form of extremely low monthly housing costs.
- San Francisco median house prices continued to appreciate in 2016 at 6%, a considerably slower rate than the previous four years.
- Condo prices basically plateaued, and dipped in some neighborhoods.
- Condo sales accounted for 53% of San Francisco homes sold in 2016.
- Supply, and sales, of house listings continued to dwindle, while a surge of new-construction condo projects hitting the market appreciably increased the inventory of condos available to purchase.
- 2016 saw a reasonable adjustment to a desperately overheated market, but nothing that suggests, so far, an imminent, dramatic downturn.
For comments, questions or concerns, please contact Dennis Kaiser