Autumn in San Francisco

Posted by Leslie Bauer on Tuesday, October 19th, 2010 at 11:13am.

October 2010 Market Update

After a relatively slow summer, the number of new listings and accepted offers in San Francisco soared after Labor Day. Median prices remain stable; mortgage rates hit yet another low; and the Blue Angels returned. As usual, pundits are divided between this being the best time to buy a home in decades (a growing number) and this being a lull before the economy falls off a new cliff. Below are charts that attempt to give snapshots of both current market conditions and historical context.

Statistics are generalities subject to fluctuation due to a variety of reasons. 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 — such as many new-development condo sales — are not included in these analyses.

SF Median Price since 1993
Though median prices peaked in 2007 for the city as a whole, some neighborhoods (such as Bayview and Excelsior) peaked in 2006, while others (such as Noe Valley and Pacific Heights) peaked in 2008. SF is a city of financial micro-climates. After the big drop in late 2008/ early 2009, SF median prices have been quite stable for the past 5-6 quarters. Median price is that price at which half the sales occurred for more and half for less; it may be affected by other factors besides changes in value. SF Median Prices by Neighborhood

U.S. Median Price Since 1968
The increase in national median price was quite steady until the craziness of the bubble and the resultant drop. And if you draw a straight line from 1968 through 2000, extending the line will cut off the bubble and end up pretty close to where we are right now.

SF, CA & US Median Price Comparison
California as a state had one of the most dramatic drops in median price due to the huge number of foreclosure sales in many of its counties. (SF has been much less affected by “distress” sales.) As of August 2010, there has been some improvement, from the recent low point, in median prices on both a state and national level.

SF Homes Accepting Offers
By week through October 3: sales activity bounced back strongly from a very slow start to September (a late Labor Day). More listings accepted offers in the past 3 weeks than in any comparable period since the April federal tax credit crush.

Sales by Price Range (1 year)
Lower priced home sales continue to increase as a percentage of all SF home sales. This is due to an increase in distress sales (see chart further below), changes in financing conditions, the recently expired tax credits, and general price declines.

Sales and Price Reductions
3rd Quarter: of the listings that do sell, most sell relatively quickly without price reductions — at an average days on market of 47 days and an average sales price to original price (SP/OP) percentage of 99.6% (virtually at asking price). And the average SP/OP % for HOUSES without price reductions (the hottest market segment) was 101% ( i.e. over asking price). Those listings that sell after one or more price reductions average 113 days on market with SP/OP percentages typically in the 84% – 90% range. Regardless of price reductions, listings on average sell within 3-4% of their FINAL list price — that is, buyers typically won’t even make offers on homes they consider overpriced by more than about 5-7%. And then there is the huge number of listings that don’t sell at all — expired and withdrawn — usually due to being perceived as overpriced. (Some of these are then re-listed and sold at lower prices.)

New Listings Coming on Market
By week through October 3: Mid-September saw a huge spike in new homes coming on the market, which fed the resulting spike in accepted offer activity. In the 2 most recent weeks, the number of new listings has tailed off to more normal levels.

Inventory of Homes for Sale
As of September 30th, the number of homes actively for sale in San Francisco is at its highest level since October 2008, and almost 14% above the number 1 year previously.

Sales by Property Type
3rd Quarter: houses and condos dominate SF MLS home sales. The number of house and condo sales declined approximately 5 – 10% over the past 3 years. However, due to changes in financing conditions, and condo conversion and eviction laws, sales of TICs have plunged 71% and sales of 2-4 unit buildings have declined by 33% as compared to the third quarter of 2007. New-development condo sales unreported to MLS are not included in this chart.

2-4 Unit Buildings: Avg Dollar per SqFt
By quarter: due to the reasons already discussed, multi-unit buildings have been hit by larger declines in value than houses and condos. Since the peak in late 2007/ early 2008, the average dollar per square foot for such properties has declined by 30%. This compares to drops in average dollar per square foot of about 21% for houses and 20% for condos over the same time period.

Sold Listings vs. Expired & Withdrawn
By month: the last 3 months have seen a decline in the number of closed sales (green bars) and an increase in the number of listings that expired or were withdrawn from the market (purple bars). Remember that closed sales activity is typically 30 – 60 days behind the current market activity as defined by offers being accepted, so September’s surge is not reflected in this chart.

Distress Homes Listings Accepting Offers
By quarter: the number of bank-owned property listings and short sale listings accepting offers has been increasing. However, distress property transactions have the highest fall-out rate – a fair number of accepted offers do NOT proceed to close of escrow due to the complications inherent in such deals (especially in short sales). In the quarter just ended, distress properties made up 15.4% of active listings in SF, 21.6% of accepted offers, and 16.2% of completed sales. As a point of comparison, in the second quarter of 2010 (the most recent data available), the sales of bank-owned properties alone (NOT including short sales), made up 24% of US residential sales and 43% of California sales.

Luxury Homes Accepting Offers
By week: defined here as houses and condos with a list price of $1,500,000 and above, the number of luxury home listings accepting offers surged in late September after a very slow July, August and early September.

Months’ Supply of Inventory (MSI)
By month: for SF houses and condos, MSI has remained steady at a moderate level below 4.2 months since April 2009. Reflecting the heat of their respective market segments, in September, the MSI for houses was lower (at about 3.4 months) than the MSI for condos (about 5 months) and for TICs and 2-4 unit buildings (between 6 and 7 months of inventory). MSI is defined as the number of months it would take to sell the existing inventory of homes for sale at current rates of listings selling and expiring.

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