2nd Quarter Results

The performance of the San Francisco real estate market in the first six months of 2015 has been just breathtaking, even for those of us who have been through many market adjustments/cycles.  Over 60% of sales was for over $1,000,000 with 20-25% of them being all cash.  Typical days-on-market for this group varied between 20 to 28 days.  And the average selling price for single family homes were about 20% over list price.  For condominiums the average selling price has been about 10% over asking.

Our condo market has been the prime source providing new housing, albeit well short of what would be required to meet today's demand.  In 2005, considered to be the height of the market prior to the recent recession, condos were 58% of the residential market with single family homes making up the remaining 42%.  In the first half of this year condos have risen to 67% of residential sales and single family homes have fallen to 33%.  With only 49 square miles of land, and land-locked on three sides, the only place to grow in San Francisco is up.  The city anticipates that 10,000 to 20,000 units are currently in the concept, planning or construction stages for the next 10 years.

We've been surveying the San Francisco and Marin real estate markets for 16+ years at our web site BOLDSF.COM because our clients wanted more than just one number to help them analyze their planned sale or purchase.  We survey specific configurations of single family homes (2bd/1ba, and 3bd/2ba) and condominiums (1bd/1ba, 2bd/1ba and 2bd/2ba) in San Francisco and similar configurations in Marin.  These configurations in our surveys comprise approximately 62% of total sales as reported in the San Francisco MLS.

From our data it's easy to compare year-over-year growth and the pre-recession highs for each category.

	2014	2015	2015 vs 2014 $ Change	2015 vs 2014 % Change	Pre-Recession High	2015 vs Pre-Recession $ Change	2015 vs Pre-Recession % Change
Single Family 2bd/1ba	$838,000	$947,000	$109,000	13%	$755,000	$192,000	25%
Single Family 3bd/2ba	$1,192,000	$1,347,000	$205,000	21%	$987,000	$350,000	37%
Condo 1bd/1ba	$702,000	$776,000	$74,000	10%	$560,000	$236,000	42%
Condo 2bd/1ba	$895,000	$1,016,000	$121,000	14%	$697,000	$319,000	46%
Condo 2bd/2ba	$1,206,000	$1,352,000	$146,000	12%	$950,000	$402,000	42%

It's really getting tough to find any property priced below $500,000 in San Francisco.  They were only 60 total sales under that price point in the first six months of the year.  Of those, 20% were controlled by a city-mandated program which severely restricts the amount of increase allowed each time the property sold.  The program also places income restrictions on buyers.  By year's end, a $500,000 listing will mean it's almost certainly a "below-market-rate" unit.

We are asked all the time "are we beginning to see another real estate bubble" and "are we due for another "downturn".  We currently see no major changes in available inventory (low) and no increase in demand (high) which might normally indicate a shift.  Even when interest rates inevitably rise, it will probably not affect 20-25% of residential sales.  Instead of 10-20 offers, a seller might get 1-5 offers.  Hopefully, pricing will moderate although there will remain "pockets of popularity" where things won't change much.

For a comprehensive look at our statistical reports at our web site BOLDSF.COM.  You will find our various reports for San Francisco and Marin counties.  We always appreciate referrals if you have someone who might be entertaining a move to the San Francisco bay area.