Monday, July 17, 2017

New Listing Report - Summer Doldrums

New listings for the past two weeks jumped back up to more normal levels. There were 243 new listings (91 single family homes and 152 condos) compared to 158 (62 single family homes and 96 condos) during the previous two weeks and compared to 313 (136 single family homes and 177 condos) a year ago.

However, new listings are still running well below levels in 2016 and 2015.

The number of price reductions increased somewhat compared to the previous period (16 single family homes vs 14 and 41 condos vs 31).  Compared to a year ago price reductions are stable (57 vs 59 a year ago).

San Francisco 6 month review

Is the San Francisco real estate market one of the most expensive places to buy property?  After a review and analysis of the first six months of 2017 activity you can decide for yourself. 
First a few general data points.  42% of closed residential transactions were single family homes; 58% were condominiums/TICs/co-ops. 
Over 67% of residential sales have a sales price over $1million.  Available inventory is at a seven year low.  In 2010 at the beginning of July there were about 1,106 residential properties (single family homes and condos/TICs/co-ops) on the market.  At the beginning of July 2017 there were only 330.   When compared against typical monthly sales volume, this represents about three weeks of inventory for single family homes and four to seven weeks for condos.
When broken down into price ranges the single largest category of sales is the $1million to $1.5million range at 33%. Then comes the $800k to $999k range at 17.4% followed by $1.5million to $2million at 16.4%.  At the extremes of our market the $0 to $500k range accounts for only 2.2%.  The $2million to $2.5million range has 6.6% and the over $2.5million range accounts for 10.6%.
Looking at the five most popular residential configurations for more clarity, we track 3/2 and 2/1 (bedrooms/baths) single family homes, and in the condo category 1/1, 2/1 and 2/2 (bedrooms/baths). 
Property type**
# of sales
Average sale price (000s)
Low sale price (000s) ***
High sale price (000s)
Average days on market
Sale price premium*
Available inventory
2/1 single family
3 weeks
3/2 single family
3 weeks
1/1 condo
6 weeks
2/1 condo
4 weeks
2/2 condo
7  weeks

*Sale price divided by listing price.
** These five categories represent about 51% of the total residential sales as reported in the San Francisco Association of Realtors MLS.  Most new construction condo units being sold by the developer do not appear in the MLS. 
*** Most of the low sale prices were properties that have their original and resale prices restricted through various government programs designed to preserve affordable housing.
Current detailed reports can be found at
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Wednesday, July 12, 2017

Overall Trends Affecting the San Francisco Housing Market

Interesting analysis that appeared recently in the Business Insider: "San Francisco Housing Market May Have Peaked".

While I disagree with the headline and the metric the author uses to arrive at his conclusion, some of the underlying employment and job growth numbers bear watching.

My biggest disagreement with his "housing market may have peaked" statement is the use of "Federal Housing Finance Agency House Price Index" which is based on mortgages that lenders sell to Fannie Mae and Freddie Mac.  Those mortgages are capped at $636,000.  Assuming 20% down, that mortgage would support a sale of $795,000.

We know that average home prices in San Francisco are well above that figure.  Only 15% of sales this year have been under $799,000 (see our Sales by Price Range report).   So his conclusion is based on data that ignores 85% of the market.

Nevertheless, the slow down in job growth and labor force are worth keeping in mind.

Sales Are Up but Inventory is Down -- what's going on?

For the first half of 2017 the number of residential sales recorded by the San Francisco MLS is up almost 9% compared to the first half of last year -- 2,533 vs 2,332. 

That's the busiest first half since 2014.

But looking at active listings during the first week of each month it is clear that listings are not keeping pace with sales.

This graph shows active listings at the beginning of each month for years 2010 through2019.  Each year follows roughly the same month-to-month pattern -- low numbers in January building to a peak in May/June followed by a lull in July/August followed by another peak in October and then falling off through the end of the year.  The last three or four years active listings have been very low compared to the four previous years.

This trend can be seen on a monthly basis.  Here we show the number of active listings by the five categories of single family homes and condos we track.

Single family homes (both 3/2 and 2/1)and 2/1 condos show the fewest listings while 1/1 and 2/2 condos have significantly more.