Tuesday, May 23, 2017

New Listing Watch - more new listings, more in contract, and fewer price reductions

Overall, the number of new listings in the previous two weeks is down slightly from the same period a year ago (347 vs 366) but up 16% compared to the previous two week period (347 vs 299).

The number of new listings of single family homes was down compared to last year (144 vs 164).  New listings of condos was virtually identical:  203 vs 202.  Compared to the previous two week period new listings of both single family homes and condos were up as you would expect this time of year.

The percentage of new listings that went into contract increased sharply compared to the previous two week period (single family homes:  12% vs 3%; condos: 15% vs 3%).  Compared to the same period a year ago they were up modestly (single family homes:  12% vs 10%; condos: 15% vs 13%).

The number of price reductions is down significantly compared to the same period a year ago (single family homes: 16 vs 32; condos: 39 vs 45).  Compared to the previous two week period price reductions are down for single family homes (16 vs 21) but up slightly for condos (39 vs 36).

Thursday, May 18, 2017

HOA fees

I was checking out a new listing today at Opera Plaza and the monthly HOA fee of $950 caught my eye.  Seems like only only yesterday (but in reality it's been ten years) HOA fees in that building were in the $500-$600/mo range for similar sized units.  And, of course, those fees do not include parking and they aren't deductible in the same way that mortgage interest is.

It turns out that there are 68 currently available units listed in the MLS that carry HOA fees of over $1,000/mo.  Of those, all but two have an asking price of over $1,000,000.  21 do not include parking.

Another 71 listings have HOA fees ranging from $800-$999/mo.  112 listings have HOA fees between $500-$799 and 170 listings have HOA fees under $500/mo.

High HOA fees aren't entirely a bad thing.  In some ways they may indicate a very well run homeowners association keeping up with repairs, maintaining healthy reserves, avoiding costly special assessments and, possibly, providing a lot of services such as a staffed lobby, concierge, swimming pool and elevators -- all of which contribute to HOA costs.  Very low HOA fees can indicate an association without adequate reserves, very few services and possibly deferred maintenance and minimal reserves.

As HOA fees increase as a percent of your overall monthly housing costs it's all the more important to review the HOA disclosure documents to make sure you understand why the monthly fees are what they are and to get insights into likely changes in the future.

Inventory -- still down

We've been bemoaning low inventory in the residential real estate market for what seems like years now.  And just when you think things (inventory) may be looking up we take another dip:

Each month we take a snapshot of the number of active listings in San Francisco from the MLS in five different configurations of single family homes and condos/TICs.  The snapshot is taken usually on the 8th day of the month.

Last May inventory showed a very positive bounce off the lows in 2015 which capped five years of steady decline.  Many of us thought this might be the beginning of a steady increase.  However, this  year we see a decline in inventory across all five of the categories we survey*.

The New York times recently published an article that may partially explain continued low inventory, "Real Estate’s New Normal: Homeowners Staying Put" that shows home ownership tenure has been climbing for the last 15 years starting roughly at the beginning of the last recession.

Although their data represents a national survey and we know from experience the San Francisco doesn't always follow national trends, in this case they've identified at least one contributing factor that seems to apply here which is also supported by local anecdotal experience.  We hear from potential home sellers all the time "if I sell where do I go?"  For most people the only answer to that question is "away from the Bay area.

*The five categories of single family homes (2 bed/1 bath; 3 bed/2 bath) and condos/TICs (1 bed/1bath; 2 bed, 1 bath; and 2 bed/2 bath) represent approximately 60% of listings in the San Francisco MLS.

Monday, May 8, 2017

New Listing Watch - less inventory and fewer price reductions

At a time when inventory should be increasing, the number of new listings of single family homes has dropped compared to the previous two week period (118 vs 131) and compared to the same period one year ago (118 vs 147).  The number of new condo listings rose compared to the previous period (181 vs 142) but has not reached the level of a year ago (181 vs 202).

The percentage of new going into contract has also dropped compared to the previous period (single family homes: 3.4% vs 5.3%; condos: 3.3% vs 14.8%) and compared to a year ago (single family homes: 3.4% vs 8.2%; condos: 3.3% vs 7.4%).

The number of price reductions is up compared to the previous two week period (57 vs 44) but still way down compared to the same period a year ago (57 vs 95) which is mostly based on fewer condo price reductions (36 vs 66).   Condo sellers seem to have gotten the message that aggressive over pricing is a formula for their properties to sit on the market longer and ultimately achieve lower selling prices.

The entire report can be found at our web site.