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 (, 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.

Thursday, May 21, 2015

Rent vs Buy?

Trulia recently published an updated report comparing costs to rent vs. buy in a number of real estate markets.
(Click on the map to embiggen).

I've highlighted the San Francisco market.  Click here to see the full Trulia article where you can play with some of the assumptions included in their calculations.  They also offer a full calculator where you can plug in numbers specific to your situation.
One of the main points of their article is to be sure to include the cost of monthly home owners association (HOA) dues.  We've noticed a significant increase in dues over the past few years and they can make a significant impact on your rent vs. buy situation.

Wednesday, April 22, 2015

Price differential between condos and TICs - update

We recently updated our quarterly report that looks at the differential between condos and TIC pricing.  TICs continue to have lower selling prices than comparably categorized condos.

The differential in sales prices is higher this year than the same period two years ago for two of the three categories (1br/1ba and 2br/1ba).  In the third category (2br/2ba), there were only two units sold in the first quarter of 2013 averaging more than $1.1million so the differential between 2br/2ba condos is distorted.

In a difficult and competitive market, TICs remain an attractively priced alternative.

The full report can be found on our website.

Monday, April 13, 2015

Little change -- low inventory

I've been away from the blog for a while but, as far as inventory is concerned, you haven't missed much.  We continue to have lower than normal inventory and lots of demand.  And even in San Francisco that's a formula for lots of competition and, ultimately, sales prices exceeding asking prices by an average 7-20%.

From our latest report here's a graph showing new listings (single family homes and condos) during each two week period.

We've been doing this report for almost two years so you can see that compared to last year inventory has followed the same cycle (as it does most years) with the lowest inventory between Thanksgiving and Christmas and then a steady climb into the spring market.  The difference is the number of new listings during each two week period this year is noticeably lower than it was last year.

The full report can be found at this link.