New Listing Watch - Fewer Properties in Contract; More Price Reductions

Today's latest "hot sheet" activity for the previous two weeks appears to be almost exactly what it was last year at this time.  Inventory begins to rise after the Labor Day holiday and for the next ten weeks inventory grows by about 400 homes each month.

For 2015 during the past eight weeks as measured in our survey the number of new listings (single family homes and condos/TICs) is 1493.  For the same period in 2014 there were 1486 new listings.  In 2015 the number of price reductions were 98 single family homes and 129 condos for a total of 227.  For the same period in 2014 there were 118 price reductions for single family homes and 112 reductions for condos for a total of 230.

It's interesting to note that the number of properties going into contract for the last two weeks were 130 compared to 181 last year, a reduction of almost 30%.

Where are all the cash buyers?

With all the talk about how cash buyers are king/queen in the San Francisco real estate market and how ordinary buyers who need a mortgage are being beat out at every turn it's a little surprising to see this report from Zillow that shows San Francisco is one of the lowest markets in terms of percentage of cash buyers.

Of the 47 metropolitan areas listed, San Francisco is 39th (and San Jose is 42nd).  The highest percentage of cash buyers appears concentrated in Florida.  The top four area are Miami-Ft. Lauderdale, Sarasota, Ft. Myers and Tampa -- all with more than 50% cash buyers.

The explanation may be as simple as homes in the Bay area are generally more expensive than in many eastern cities.  According to Zillow's numbers, the "median home value in Miami is $289,200" compared to San Francisco's median home value of $1,094,500.

New Listing Watch - Two Weeks Ending 10/12/2015

The total number of new listings continues to keep pace with a year ago but the split between single family homes and condos has changed.  This year there are more condos (213) than single family homes (152) that came on the market in the last two weeks.  Last year the numbers were reversed with more single family homes than condos.

New listings going into contract is up for both single family homes (8.6%) and condos (15.0%) after being in single digit percentages for the previous two reports.

Another change from the previous two reporting periods to note is the uptick in price reductions.  The number of condo price reductions was 41 -- the highest we've seen in a long time.  There are obviously some motivated sellers out there who, apparently want to sell before the end of year holiday doldrums kick in.

New Listing Watch - Two Weeks Ending 9/28/2015

The number of new listings of single family homes and condos coming on-line in the last 14 days is consistent with a year ago.

However, our report shows that the number of listings that have gone into contract  is remarkably low this year versus last year. 

Now, this could signify that buyers have decided that these offer dates  which drive the over bidding is something they want to avoid. 

We also note that the number of price reductions continues to increase for both single family homes and condos. 

We continue to believe that  this Hot Sheet Report is the closest to a leading indicator of market activity than anything else we have been watching.  As we continue to survey our market, we advise sellers to price properties consistent with current neighborhood selling prices, but depending on location, offer dates should be used with caution.  Buyers should become VERY active with their searches and keep a sharp eye out for price reductions!

Do Photos Sell Real Estate?

I ran across an interesting article today that claims "the number of photos included in the listing has an influence on how fast the home sells."  They quickly qualify this claim by saying that in the Bay Area there is little correlation between number of photos and speed of sales unless the listing is on the market for more than 20 days.

The article is based on a study done by the on-line real estate brokerage famous for their notorious "Zestimate" which purports to estimate (get it?) the market value of residential properties whether on the market or not.

This article originally caught my eye because I spend a lot of time taking quality photographs of listings for myself and other agents and I've always believed that quality photos have become an increasingly important marketing tool ever since listing information became widely available on the internet.  But this article goes too far when it says that a property listing with more photos will sell a faster than a listing with fewer photos.  And if you look at Zillow's actual study you'll see they make no such claim.

There are far more significant factors that affect the speed of a sale -- the most important are:

• demand vs. supply
• asking price compared to perceived value

The market in San Francisco is a great example of the first point -- there is great demand resulting in many listings receiving multiple offers well over asking price, often within two weeks of the initial listing.  The second is just common sense -- if buyers perceive the asking price to be greater than actual value they do one of two things.  Either they simply look elsewhere or they may make an offer under asking price and closer to what they believe is the market value of the property.  In a market like our current market in San Francisco, buyers won't bother to make an under asking price.

This is not to say that listing photos aren't important but the effect of listing photos is more subtle and nuanced and probably not subject to easy quantification.  Our experience (and that of our colleagues) tells us:

• It's extremely important that photos accompany a new listing when it is first published.  Especially in a competitive market, agents and their clients are watching for new listings very closely.  If a new listing surface with few or no photos, the reaction is generally to skip by that listing (and not come back for a second look) and a suspicion that there is something wrong with the property "so they're not showing us what it actually looks like".
• Quality photos create the impression of a quality property for both buyers and agents -- and the opposite is true as well, with poor quality photos suggesting the property is in poor condition and in need of repairs.
• "Missing" photos also lead to suspicion that there is something wrong.  If there are no photos of key rooms such as kitchens and bathrooms buyers and agents are likely to think the worst.  Same thing if there are no photos of a feature mentioned in the description. 
• The photos must reflect the reality of the property.  If there a utility poles and wire in front,