Inventory -- still low -- still a seller's market

The number of active listings* at the end of the first week in April this year is lower than at the same time in 2017 or 2016. 

(*We track five configurations of single family homes and condos/TICs.)

For the two single family home configurations we track, the available inventory is about equal to the number of properties sold each month which indicates a strong seller's market.  No surprise to anyone who has been trying to buy a house.  A client of ours recently made an offer on a nice, modest home in the Oceanside neighborhood and found himself in competition with twelve other offers.

For the condos we track, inventory isn't quite as constrained.  There were 100 active 1 bedroom condo listings and there are approximately 54 sell each month.  Still a seller's market, just not as strong.  For 2 bedroom, 2 bath condos there were 113 active compared to average monthly sales of approx. 60.  For 2 bedroom, 1 bath condos market is similar to the single family home situation with 24 available which is the same as the average monthly sales.

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.

Inventory - not much sign of improvement

Inventory is down compared to this time last year after a noticeable inventory increase (2016 compared to 2015) in two of the three condo configurations we track

Total active listings in the San Francisco MLS at the beginning of June for the five categories of single family homes and condos we track was lower than it has been since we began tracking this information in 2010 (376 units).

• Survey is usually done within 5-8 business days of the beginning of the month.
• These five configurations represent approximately 60% of residential real estate sales in San Francisco.

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.