More signs of a trend ...

The San Francisco Real Estate Market exploded two weeks ago and while most thought it would be another solid year of sales, the shear quickness and intensity of Buyer demand was not anticipated. Inventory has been unusually low and it appears it has not been building as fast as most years. Since March 1 there have been 180 new condos and 170 new single family homes appearing in the San Francisco MLS. 88 of the condos (about 49%) are now under contract with an average DOM of 14, and 87 of the single families (about 51%) are now under contract. Shades of '05 and '06!

With two consecutive year-over-year growth years behind us and the first quarter of 2012 about to show very strong numbers, 2012 should be the third year of year-over-year growth. Most analysts and prognosticators usually consider three in a row to be a TREND. As the Bay Area goes so goes California, and as California goes so goes the Nation, let's hope the old saying holds this year!

Sellers are finding that if you generally list your property consistent with the most recent comparable sales, 1 in 3 are finding a willing and eager group of buyers, pre-qualified and able to close in 30-45 days. These buyers are anxious to WIN even if it means offering a little over asking -- in some cases with a 5 to 10% premium.

It is quite confusing to buyers, especially first-time buyers, to understand this hectic market pace since national news outlets are still talking about a sluggish real estate market. Buyers who are new to the area often remain in denial for their first two or three offers. It's gratifying for SF agents when they begin to listen to educated advice.

Seller's had just about been convinced that premium pricing was not working unless the property truly reflected premium quality. This might just make it more difficult to convince them that over pricing can still leave a property languishing on the market.

In taking a closer look at the data, it appears that this phenomenon is showing up in properties ranging from $400K to $1.5M+ and includes most of the 10 MLS districts in San Francisco. Also, Mill Valley in Marin and some South Bay Communities are experiencing similar demand.

Anecdotes do not a trend make, but ....

Several items in the news and my own experience as an agent converged today that says a good deal about the current housing market and, maybe more importantly, the mindset of potential buyers:

1. The National Association of Realtors reported that sales of existing homes rose again in January, the third time in the last four months.  This is entirely consistent with what we've been reporting for a while regarding our local San Francisco market where sales of existing homes in 2011 rose compared to the previous year and was the third year in a row of sales increases.
2. The San Francisco Chronicle reported in it's "On the Block" blog that there has been a recent spate of sales in the peninsula communities of Palo Alto, Menlo Park and others where buyers, often in multiple offer situations, are paying all cash and waiving contingencies!
3. Working with several buyers recently we've experienced first hand several properties we had some interest in go into contract within a few days of hitting the market.  And there we have begun to see the return of offer dates on listings.

Sales Rates

Here's some interesting statistics that give some clues about the state of the San Francisco real estate market.
First, for the full year 2011, the number of residential sales increased again for the third year in a row. 

More properties (single family homes, condos, TICs and co-ops) were sold last year than any year since 2007.

Sales for January, 2012, also showed strength:

Although slightly fewer sold this January than January, 2011, overall the trend is positive since the low of downward trend that started after 2007.

Foreclosure Activity

ForeclosureRadar is one of the most widely quoted companies on real estate foreclosure activity nationally.  They also break down their data by county and zip code.

Here's their most recent graphs summarizing foreclosure activity in San Francisco for he last year.  Notice the significant fall off in Notices of Default and Notices of Sale in December compared to November and also compared to last December.  Maybe it's just a gesture acknowledging the holiday season, or maybe not.

06075 - Foreclosure Filings

There's also a noticeable uptick in Cancellations and a small but steady decline in the number of properties that ended up Back to Bank.

06075 - Foreclosure Outcomes

Consistent with the above, there's a noticeable decline in properties in the Preforeclosure stage as well as those Scheduled for Sale compared to last month and compared to December last year.

06075 - Foreclosure Inventories

These trends are not universal in the surrounding counties where, for example, Notice of Sale seems to be sharply up and Cancellations are mostly down.

San Francisco Year-end Statistics

The number of sales of single family homes and condos/TICs in San Francisco continues an upward trend since hitting a low in 2009.  We're at about 89% of total sales compared to 2007 and 80% compared to 2006.  Selling prices are not showing an increase yet but, even in San Francisco, laws of supply and demand generally work.  (See following post).

As in most years, the number of sales was down slightly compared to November but, generally, monthly sales in 2011 followed the normal seasonal fluctuations.  (Sorry for the "busy" chart).