Monday, July 20, 2015

New Listing Report -- Some Good News for Buyers?

We've just updated our report of new listings which we do every two weeks.  It shows the market's usual seasonal variations are consistent this year vs. a year ago but the total number of new listings is down compared to the same two week period last year.

In the two week period ending 7/20/15 there were 150 single family homes newly listed for sale compared with 137 last year.  However, there were only 179 condos listed compared to 246 last year -- so, 28% fewer condos but almost 10% more single family homes.

The report also shows that 11% of those new single family homes listing went into contract -- well below the typical percent during the last few months which has hovered in the high teens and low twenties percent.  For condos, the percentage of new listings that went into contract within two weeks was 9.5%, the lowest since October of last year.  Typically, this percentage has been in the low to mid twenties.

Overall, this may be good news for buyers -- although overall inventory continues to trend downward, competition may be easing just a bit.

Wednesday, July 15, 2015

2nd Quarter Results

The performance of the San Francisco real estate market in the first six months of 2015 has been just breathtaking, even for those of us who have been through many market adjustments/cycles.  Over 60% of sales was for over $1,000,000 with 20-25% of them being all cash.  Typical days-on-market for this group varied between 20 to 28 days.  And the average selling price for single family homes were about 20% over list price.  For condominiums the average selling price has been about 10% over asking.

Our condo market has been the prime source providing new housing, albeit well short of what would be required to meet today's demand.  In 2005, considered to be the height of the market prior to the recent recession, condos were 58% of the residential market with single family homes making up the remaining 42%.  In the first half of this year condos have risen to 67% of residential sales and single family homes have fallen to 33%.  With only 49 square miles of land, and land-locked on three sides, the only place to grow in San Francisco is up.  The city anticipates that 10,000 to 20,000 units are currently in the concept, planning or construction stages for the next 10 years.

We've been surveying the San Francisco and Marin real estate markets for 16+ years at our web site BOLDSF.COM because our clients wanted more than just one number to help them analyze their planned sale or purchase.  We survey specific configurations of single family homes (2bd/1ba, and 3bd/2ba) and condominiums (1bd/1ba, 2bd/1ba and 2bd/2ba) in San Francisco and similar configurations in Marin.  These configurations in our surveys comprise approximately 62% of total sales as reported in the San Francisco MLS.

From our data it's easy to compare year-over-year growth and the pre-recession highs for each category.


2014
2015
2015 vs 2014
$ Change
2015 vs 2014
% Change
Pre-Recession
High
2015 vs Pre-Recession
$ Change
2015 vs Pre-Recession
% Change
Single Family 2bd/1ba
$838,000
$947,000
$109,000
13%
$755,000
$192,000
25%
Single Family
3bd/2ba
$1,192,000
$1,347,000
$205,000
21%
$987,000
$350,000
37%
Condo
1bd/1ba
$702,000
$776,000
$74,000
10%
$560,000
$236,000
42%
Condo
2bd/1ba
$895,000
$1,016,000
$121,000
14%
$697,000
$319,000
46%
Condo
2bd/2ba
$1,206,000
$1,352,000
$146,000
12%
$950,000
$402,000
42%

It's really getting tough to find any property priced below $500,000 in San Francisco.  They were only 60 total sales under that price point in the first six months of the year.  Of those, 20% were controlled by a city-mandated program which severely restricts the amount of increase allowed each time the property sold.  The program also places income restrictions on buyers.  By year's end, a $500,000 listing will mean it's almost certainly a "below-market-rate" unit.

We are asked all the time "are we beginning to see another real estate bubble" and "are we due for another "downturn".  We currently see no major changes in available inventory (low) and no increase in demand (high) which might normally indicate a shift.  Even when interest rates inevitably rise, it will probably not affect 20-25% of residential sales.  Instead of 10-20 offers, a seller might get 1-5 offers.  Hopefully, pricing will moderate although there will remain "pockets of popularity" where things won't change much.

For a comprehensive look at our statistical reports at our web site BOLDSF.COM.  You will find our various reports for San Francisco and Marin counties.  We always appreciate referrals if you have someone who might be entertaining a move to the San Francisco bay area.

Tuesday, July 7, 2015

Inventory Continues Downward

If you've been paying any attention to the San Francisco real estate market in the last year or so the constant refrain has been "low inventory" (along with "soaring prices", of course).

As if we had any doubt, our bi-weekly survey of new listings has just been posted and it shows the number of new listings for the two-week period ending 7/6/2015 to be even lower than the comparable period last year.

In 2014 the number of new listings in the two weeks ending July 8 was 229 (107 single family homes and 122 condos).  This year in the two weeks ending July 6 the number of new listings was just 187 (89 single family homes and 98 condos).  That's almost 20% fewer new listings than a year ago.

Sunday, June 7, 2015

Number of Sales Fall in San Francisco

The number of residential sales* so far this year is well below last year and the lowest it's been in five years.




















It's a busy graph -- click on it to see a larger version.

The line in dark red shows sales so far for 2015.  In every month this year except March sales were lower than they were in 2014.

Although historically May sales have always (since at least 2007) been higher than April, that is not the case this year.  Our peak sales months are May or June but this year it looks like April may be the peak sales month.

*Total sales reported in the San Francisco MLS for San Francisco county including single family homes, condos, TICs and co-ops.

Friday, May 22, 2015

Some Perspective on Current Market Conditions

Arithmetically, the performance of the San Francisco real estate market in the first four months of 2015 can be described as nothing short of dazzling.  Professionally, with each passing day as property sales are recorded and the specifics of each sale are revealed on our MLS, the aggressiveness of these buyers it just takes your breath away even for those of us who thought we had seen it all.

Of the 1,490 closed residential sales (both single family and condo/TICs) reported to our MLS, 883 (59.3%) sold for over $1 million.  The remainder (567 homes, 40.7% of the total) sold below that magic number.  By way of comparison in 2013 and the first nine months of 2014 only 38% of homes were selling above $1 million.

The largest single category of home sales have been in the $800-$999k range where 449 sales comprised 30.1% of all sales.  The next largest category is the $500k-$799k range with 261 sales (17.5%).  Of particular note are the top and bottom ranges where there were just 43 sales (2.9% of the market) had selling prices in the $1-$499k category.  The top range (over $2.5 million)  had 138 sales (9.3% of the total).  Of the 43 homes below $500k, seven were “below market rate” units where the city mandates the maximum selling price.

Looking at just condo/TIC listings of 1 bedroom/1bath, 2bedroom/1 bath, and 2 bedroom/2 bath properties most listings generally sell  and close in 23-35 days with an average selling price 6-15% over listing price.  Their respective average selling prices are $747k, $1 million, and $1.4 million.  Talk about “sticker shock”!  In most parts of the country, those results would be considered exception but, alas, in San Francisco they are now considered just typical.

San Francisco new construction will continue to add primarily condominiums in the next ten years.  It is estimated there are 10-20,000 “in the pipeline”.  Given the land-locked nature of San Francisco only a few single family homes will be added and condos will increase their dominance in the residential market.  This should mean that single family homes will become even more valuable as they become a smaller percentage of the market inventory.

After 16 years of keeping statistics for our San Francisco clients (seewww.boldsf.com/Statistics), it appears that for the foreseeable future demand will continue to far outstrip available inventory with cash-laden buyers making all-cash offers with few or no contingencies and two week closes more common.  We see examples of these sales almost daily.  Just one example is a 3 bedroom/1 bath single family home on Potrero Hill (where incidentally the author has owned a home since 1974) that has not been on the market for at least three decades but in good but not updated condition.  This listed for $869k which was appropriate based on recent sales.  The winning buyer closed in 13 days with a selling price of $1.465 million!  An agent in our office has a client who offered $1.1 million, no contingencies and a 12 day close.  His offer ended up in the middle of 16 other offers.  In a normal market his offer would have been considered a slam dunk pre-empt.
Just this morning at our regular office meeting we heard from representatives from Fidelity and Chicago title companies talking about the coming changes effecting real estate transactions beginning Aug 1st and they mentioned that between 20-25% of recently closed transactions in San Francisco were all-cash deals.

So if you or your client are considering moving to San Francisco or the Bay area, we will be happy to assist you and your client in navigating this market.  It appears this is the new normal.