Prices Down in Uncertain Times
San Francisco's residential real estate market is returning to a somewhat normal pace. Prices were down in May as compared to last year but this unusual time makes it difficult to compare directly. And we are certainly not in "buyer's market" territory. May's numbers:
Single family median price was down 3.3% to $1,630,000
Condos/TICs/Coops were down much more, 10.8%, to $1,100,000
2-4 unit buildings were down 1.5% but price per square foot was up $150
Active listings returned and were up 13.1% over May 2019
Number of closed sales was still very far from normal, 36.5% of last May
These statistics must be considered carefully in these times. Prices are reports of closed sales, which mostly reflect contracts entered into in April long before the Bay Area's loosening of pandemic restrictions. And those restrictions have skewed the timing of sales activity - listings that would have come on the market in March or April were delayed this year, and that may be particularly true for higher-end properties where timing is closely watched. The same is true for sales; May is normally a heavy month but this year the total number of sales was way down from "normal." For all these reasons, the Summer months will be substituting in for the "Spring" market and will give us a much better understanding of the direction of the market.
What is the market doing right now in June? I see robust activity at every level. Buyers are intent on making a purchase quickly and can expect a bit more bargaining power as Sellers have been carrying their properties during the lockdown and may be anxious to sell. Nicely positioned single family homes are selling quickly and for essentially the same prices as last Fall, sometimes more. The condominium market's dip may reflect buyer reluctance toward communal living or that lower-end buyers are more likely to suffer economically from the recession - some may be forced to sell quickly in these times and those who had been looking may re-evaluate or pause their search. But I would not pronounce that we are in for a sustained downturn in prices for condos or any other kind of property - yet. Much will depend on the direction of the economy, medical advances to control the pandemic and public mood generally. I am cautiously optimistic that San Francisco will weather this storm well, as it has before, but I am keeping close tabs on the market as it evolves.
Neighborhood Statistics
As usual, the different parts of San Francisco are behaving, well, differently. And I honestly cannot offer a cohesive explanation for the wildly varying results. Let's look at the different areas through several lenses.
Given the downturn in the condo market, one would think that districts with more houses would fair better. Not so. Although single-family home heavy District 4 (West of Twin Peaks) was up 9.4% in May year over year, District 6 with mostly apartments was up even more - 17.4% and District 8 with condos sprinkled over the hills and into downtown and the north waterfront was up 14%.
Maybe more expensive areas faired worse? That may be. District 7, always the most expensive area of the city (Pac Hts, Marina) was down 18.5%. District 5 (Castro, Noe, Haight), usually the runner-up, was also down, but a more reasonable 1.4%. But District 1 (Richmond, Sea Cliff) was only down a bit (1%) while generally cheaper District 2 (Sunset) fell 9.3%. So there was no flight to cheaper housing (or "safer" more expensive areas).
One effect of the pandemic and economic downturn was to see properties pulled off the market, or delayed in coming out. There is a feeling that more expensive properties are particularly influenced by this trend as their owners are usually more capable of waiting several months for better timing. That would explain the downturn in District 7 - perhaps the mix of sales was skewed toward the lower end condos in the Marina and Cow Hollow, rather than the mansions of Pac Hts that normally sell at top price in May.
Finally, was there a rush out of congested areas? It does not appear so. District 8 (SOMA, Mission) was essentially flat even though it is one of the densest parts of the city with many very large towers. And District 10, nearly all homes, was also flat.
The bottom line is that May's neighborhood statistics, so far, do not tell us anything about where we are headed. Keep in mind that there were many fewer sales last month also, making it even more difficult to draw conclusions. My advice is to consider the house you have to sell or the one you want to buy, and then have an experienced agent (like me!) analyze the pricing in real time. More than ever in this changing market, that is the experience you want to access. More statistics on my website: www.danslaughtersf.com.
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