The San Francisco Home Market: Bounce Back or Double Dip?

Posted by Leslie Bauer on Wednesday, March 10th, 2010 at 9:40am.

We live in a constant storm of analysis and opinion as to what is happening and will happen in real estate. Due to national statistics in December (and other economic indicators), some have predicted a nasty "double dip" in the home market subsequent to the recovery which began last spring. But the market goes into hibernation in December: there are far fewer transactions, mostly by first-time buyers purchasing at lower price points, while families and upper-end buyers generally withdraw for the holidays. When the data is reduced and skewed, it's less reliable. January isn't much better because it takes a while for the market to wake up.

Therefore, the market data for February, as seen in the charts below, is of particular interest. While it's unwise to make too much of one month's data (a failing of many pundits), it is surprising how sharply February's statistics indicate a strengthening market. That is not to say a double-dip isn't possible -- the state, national and world economies are still fragile -- just that we are not yet seeing indications of one here in San Francisco. Those who have spent the last year waiting eagerly for further price declines have so far waited in vain. (For the record: according to the Case-Shiller index, home values in the 5-county SF Metro Area have increased 4 - 5% in 2009, but the city accounts for only a small percentage of those sales.) It will be interesting to see if the trends seen below continue, as spring gets under way -- and what implications that might hold regarding price movements.

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