The San Francisco Home Market
August 2010 Update
Despite the constant news of dramatic changes in the real estate market - Values soar! Values crashing! Market up or down ___% from last month! Double dip recession! - the home market in San Francisco has exhibited a remarkable stability over the past year. As shown in the charts below, median prices for both houses and condos are virtually unchanged from one year ago; buyer demand remains steady; months' supply of inventory remains steady; foreclosure sales are stable; low interest rates continue. Statistics jump around within a relatively narrow percentage band: there has certainly been no definitive trend up or down. It is neither a crazy buyers' market nor a crazy sellers' market: it's a relatively healthy, balanced market, where the basic rules of realestate generally apply: well-priced, well-prepared, well-marketed homes typically sell quickly and homes without those characteristics don't.
Statistics are broad-brush generalities subject to fluctuations due to a variety of reasons. Median prices in particular may be affected by other market factors besides changes in value. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted. Sales not reported to MLS are not included in these analyses.
Homes Accepting Offers
The number of SF homes - houses, condos and TICs - accepting offers is remaining stable, though running a little higher than this time last year. (April was an abnormally busy month due to the expiring Federal tax credit.)
SF House Median Sales Price
The Median Sales Price is that price at which half the properties sold for more and half for less. Though it has gone up and down a bit over the past year, the median sales price for SF houses in July 2010 was virtually unchanged from that in July 2009: no definite trend up or down has manifested itself. The average median for the past 13 months is $756,000.
SF Condo Median Sales Price
The median sales price for SF condos has remained remarkably stable for the past 12 months, with the average median sales price for the past 13 months being $675,000. Certainly no definitive trend in value up or down is apparent from the median price.
Distressed Home Median Sales Price
Distressed properties are those that are being sold by banks pursuant to foreclosure, and short sales, which require banks to reduce the outstanding loan amount for the transaction to close. The median price for such sales has generally fluctuated between $450,000 and $525,000, which, looking at the earlier charts, one can see is a substantial discount from overall median house and condo prices in San Francisco. However, the majority of such sales are located in the less affluent neighborhoods of the city.
The red bars show the number of active luxury home listings in any given month (in this case, defined as houses and condos with list prices of $1,500,000 and above), and the blue line shows the number of listings which accepted offers. In July, the percentage of higher-end listings which accepted offers was about 15%.
Inventory of Homes for Sale
The dark red bars show the total number of homes that were for sale during the given month, with the lighter bars showing how many were actively for sale on the last day of the month - the difference being those listings that accepted offers, expired or were withdrawn. As we get deeper into summer, both numbers have declined slightly.
Average Days on Market (DOM)
This chart measures the average number of days between going on market and accepting an offer. The average in July was 55 days, the lowest in 13 months but basically unchanged since March. In July, houses had the lowest average DOM with 48 days; condos were at 59 days; and TICs were at 75 days: this reflects the respective heat of each market segment. The average days-on-market for "For Sale" homes is 79 days, since it tracks those listings that have not received an acceptable offer.
Months' Supply of Inventory (MSI)
MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: the lower the MSI, the greater the demand. MSI for all SF homes has stayed generally stable at 3-4 months, which is considered moderately low. However MSI varies widely by property type: for houses, the MSI is a low 2.9 months; for condos, 4.4 months; for TICs, 5.4 months; and for 2-4 unit buildings, a relatively high 7.4 months of inventory.
Distressed Homes as % of Sales
The hash-marked sections delineate the number of distressed property sales (bank-owned and known short sales) against total home sales. The percentage of such sales is noted at the top of each bar: generally jogging up and down between 14% and 17%. Since 2010 began, within any given month, there are usually 400 - 450 distressed properties for sale; 110 - 130 distressed-home new listings; 80 - 100 accept offers; 55 – 75 close escrow; and 30 - 40 expire without selling.
Percentage of Listings Under Contract
This chart shows the percentage of home listings which accepted offers within the given month. Except for the surge in April and the doldrums of the holidays, that percentage has typically remained between 16% and 20%. In July, houses had the highest percentage under contract (22.5%), followed by condos (15.4%), TICs (13.5%), and 2-4 unit buildings (10.7%): the higher the percentage under contract, the hotter the market segment.
Sales Price to Original List Price
The darker blue bars show the percentage of original list price, typically about 100%, achieved by SF home sales that occurred without a price reduction, i.e. they sold quickly. The lighter bars show the percentage of original list price achieved by those listings that went through one or more price reductions before selling. The difference is typically 10 - 13% of the original list price amount. (January's numbers are almost certainly caused by faulty reporting.) A well-priced, well-prepared and comprehensively marketed home (of general appeal) will usually sell quickly for the highest price.
The number of new listings in the city are up a little over July of last year, but down from the peaks of the spring selling season. Usually, the market will see a surge of new listings after Labor Day.
Homes Sold vs. Listings Expired & Withdrawn
The green bars denote sold homes and the purple bars denote expired and withdrawn listings. In July, when many of the spring listings that did not sell expired, the number of expired/ withdrawn listings was almost equal to the number that sold. Listings expire or are withdrawn typically due to being perceived as overpriced.