The average price-per-square-foot gave a mixed performance in 2015, continuing to rise in some communities, like Oakland, but falling off during the second half of the year in most, including San Francisco and Los Angeles. Expect home prices to increase only marginally in most communities throughout 2016, as the housing market adjusts to higher mortgage rates, likely to begin hindering homebuyer purchasing power mid-year.

Check out the price-per-square-foot history of home sales in these eight California communities.

Posted updated February 1, 2016. Original copy posted January, 2012.

San Francisco

San-Francisco-2012-2016

Chart update 02/01/16

San-Francisco-1988-2016

Chart update 02/01/16

Marin County

Marin-County-2012-2016

Chart update 02/01/16

Marin-County-1988-2016

Chart update 02/01/16

Riverside

Riverside-2012-2016

Chart update 02/01/16

Riverside-1988-2016

Chart update 02/01/16

Los Angeles

Los-Angeles-2012-2016

Chart update 02/01/16

Los-Angeles-1988-2016

Chart update 02/01/16

Oakland

Oakland-2012-2016

Chart update 02/01/16

Oakland-1988-2016

Chart update 02/01/16

Santa Ana

Santa-Ana-2012-2016

Chart update 02/01/16

Santa-Ana-1988-2016

Chart update 02/01/16

La Jolla

La-Jolla-2012-2016

Chart update 02/01/16

La-Jolla-1988-2016

Chart update 02/01/16

Corona del Mar

Corona-Del-Mar-2012-2016

Chart update 02/01/16

Corona-del-Mar-1988-2016

Chart update 02/01/16

Data courtesy of Redfin

These charts are updated annually

Local pricing trends: the long and short of it

Two profiles have been charted for each community:

  • a long-term profile from 1988-2016; and
  • a short-term profile from 2012-2016.

Long-term profiles indicate the market hit its bottom in 2012. Consider 1999 and 2000 as years when prices were at historical mean price levels. Adding roughly 2% of consumer price index (CPI) inflation per year, we can see the pricing in the present market was vastly inflated in 2013-2014.

Related article:

The mean price trendline: the home price anchor

Short-term profiles show that home prices are experiencing downward pressure as we start 2016. This is partially due to a depressed home sales volume in California, which, while up slightly over the previous year, lags behind what is needed to sustain the prices increases experienced in the interim. Further, with the coming headwind of rising mortgage rates quickly approaching, expect prices to fall as soon as late-2016, to bounce back late in 2017 once home sales volume picks up with fuel from the recovering jobs market.

Price per square foot analysis

The average price per square foot in each of these areas during 2014 was:

  • $1,060 in Corona del Mar, up 6% from $997 in 2014;
  • $922 in San Francisco, up 19% from $777 in 2014;
  • $771 in Marin County, up 12% from $687 in 2014;
  • $640 in La Jolla, down 3% from $661 in 2014;
  • $575 in Los Angeles, up 4% from $552 in 2014;
  • $314 in Santa Ana, up 8% from $290 in 2014; and
  • $196 in Riverside, up 5% from $186 in 2014.

The bottom price areas largely consist of home sales of low-tier properties (a favorite of speculators). More low-tier property sales have the effect of dragging down the average price per square foot.

Related article:

California tiered home pricing

Of course, using average pricing has its drawbacks. Similar to using the median price, average prices give the appearance of an inaccurate collective increase as prices in a neighborhood become less volatile. In reality, neither the average price nor the median price gives an accurate representation of market direction. In fact, while all of these areas showed an increase in the average price per square foot in 2014, prices in most parts of the state began to decline by the end of the year.

Thus, when analyzing a particular property, these charts offer no advice beyond demonstrating localized trends. When pricing a home’s value, agents and homeowners must consider:

  • the property’s fair market value (FMV) based on nearby comparable property sales; and
  • local end user demand, based on:
    • the local job market; and
    • local demographics.

Related articles:

Jobs move real estate

first tuesday Market Charts: Demographics of Ownership