Fall Wrap Up - Market Is Up, Down & Sideways
The Fall San Francisco real estate market - like the rest of 2020 - was not normal. After record prices in the Summer, the usual autumn uptick did not occur. Inventory remains very high, especially in the condominium market, but single family home prices were still up a bit and even with that inventory condominiums recovered slightly but certainly should still be considered down overall.
For all residential properties, the median sale price was $1,400,000 in November (3% higher than last year), but more than $50,000 down in October, and for both months well below June's peak of $1,505,000.
Single family homes were up 5.7% in November to $1,695,000, but that number is well below the $1.8m peak earlier this year, or even the peaks of 2019 or 2018. In October the median single family price was up 9.5% but the actual median price was lower than peak prices in 2019 and 2018.
Condo median prices gained on last year's November prices (+1.2% to $1,200,000), but that is below the peaks in 2017, 2018 and 2019. October was almost $200,000 less than October last year.
It is fair to say that prices have moderated but that there is no "crash" or serious downturn. In our city, we are used to ever-rising prices so when that does not happen it feels like a tremendous slow down. But the general pattern for many years in the city has been increasing prices followed by a "plateau" when prices do not rise significantly and even fall a little. Given the dramatic events of this year, these relatively small price decreases are not particularly alarming.
The other important indicators are inventory, the number of sales and overbid prevalence.
The number of active listings on the market (inventory) remained extraordinarily high. Although October and November saw some absorption, 2463 properties were available in October which is more (by about 500 properties) than during the 2008 financial crisis or any time since (when, generally only about 1000 to 1500 properties were available at any one time). November saw a steep drop to just below 2008 levels.
The number of sales continued to tick up as they have since May, but only in November did sales exceed new listings, so we are well off from an equilibrium in the market that could again constrain the supply side.
The percentage of properties selling over list price was 55.8% in October, a big improvement from the Summer (although still below the levels seen in recent years which were generally in the 70% range) but it fell again in November. This number can be deceiving because it reflects both buyer interest (which, if high, results in bidding wars and overbids) but also pricing strategies. The prior practice of intentionally pricing low may have fallen out of favor with the inventory glut so that listing and sales prices converged more often. Nevertheless, fewer overbids generally is a sign of prices heading lower.
What is the market doing now, in December? Normally at this time of year business slows considerably due to holiday parties and travel but that may not be as true this year because of the stay-in-place order and pandemic fears. The process of selling is generally not hampered by those issues and, with more time, at least some people are continuing to shop. It is fair to say that some bargains are available especially for condos/TICs/coops and especially in certain parts of the city. Nevertheless, sellers can rightly point to likely improved conditions next year with the approved vaccines and perhaps another stimulus package. No one knows for sure, but San Francisco and it's dominant tech employers do seem poised to take advantage of the coming psychological (and, hopefully, economic) upturn once our year of upheaval is finished in the Spring and Summer 2021. Tech IPOs in the fourth quarter have been wildly successful and should bring more money into the market next year.
As always, you have to look at your particular situation (both financial and personal) and seek the advice of an experienced agent who remains in the market full-time. These general statistics are not applicable to your property or the one you want. You need a tailored analysis to make the right move. I'm always free to talk - call me!
Neighborhood Statistics
Neighborhood statistics are particularly revealing this Fall. The key indicators appear to be density and type of housing (single family v. condos, but also old stock with space and yards v. newer builds with less of both).
In general, denser areas with more condos saw much more dramatic inventory increases. District 6 (Lower PacHts, NOPA, Hayes Valley) continued to lead, up over 100%, with District 9 (SOMA, Mission, Bernal) almost the same (90%). But the northside also saw a dramatic increase in active listings with District 7 (PacHts, Marina) and 8 (Russian/Nob HIll, Civic Center, North Beach) also up in the 70s.
With only one exception all these areas were well down in price, nearly 10%. The exception is District 6 with prices up 2%. Perhaps the leafy neighborhoods and more house-like flats with yards of District 6 attracted more buyers. But not so for similar District 5 (Haight, Castro, Noe) where prices were down 8.5% with an inventory increase of 53%. District 5 now is cheaper (overall) than either District 1 or 4, when it regularly beat them out from 2010 forward. So is District 5 overpriced and this is a correction? Possibly - similarly expensive District 7 is now below Districts 1 and 4 also, although that trend is more short-lived.
Single-family neighborhoods are generally doing better on price and with lower inventory, again with one exception. District 1 (Richmond) and 2 (Sunset) and 4 (West of Twin Peaks) are up 7.5 and 6.2% and 6.1 respectively. And, in a turnaround from a downturn earlier this year, District 3 (Stonestown) was up 8.5%, These classic family neighborhoods also have the lowest inventory, generally up only in the 20% range. That, and the desire for yards and extra room probably is driving these statistics.
The exception to the single family rule? District 10, where inventory was up more than twice the other similar neighborhoods (+53%) and prices down over 8%. Is this a turnaround of this cheapest of city area's long run up? Or is it because the houses are smaller generally in this area? We will need several more months to tell.
Will this trend toward the more "suburban" areas of the city continue? Will condo prices come roaring back once people return to the downtown core to work and play? No one knows for sure, but it seems foolish to make strong predictions based on the unique circumstance we find ourselves in. The larger forces that drove prices in the core up in the first place are likely not completely gone. But they may have been mitigated by this experience, and perhaps by changes in our society that we are only now beginning to feel. We will keep our eyes on it.
More statistics on my website: www.danslaughtersf.com. (Note that the statistics cited above are rolling 3-month averages to account for the relatively small number of sales in a particular district per month.)
MIDWINTER STAND STILL
December 21 is the winter solstice, the shortest day and longest night of the year in the Northern Hemisphere. Somehow the darkness of winter feels like a good time to reflect and look inward. Solstice means "stand still" so maybe a good way to mark the occasion (especially this year) is to take a moment and stop. Center yourself and do nothing. Focus on the losses we have suffered this year, but also the good things we still have and can look forward to next year. Celebrate San Francisco's relatively light pandemic death toll, while mourning those who fell to the virus. Be happy for friends and family still with us and look forward to gatherings next year that cannot occur this year. I am grateful to all my colleagues, clients, friends and family that have supported me and each other through this trying year. Let's enjoy Yule, Dongzhi, Yalda, Maghi, Korochun or Shalako (all midwinter holidays in various cultures). Enjoy life and the return of longer days.