Summer Market - Record Prices and Inventory
June and July were certainly not the same this year for anyone, and that holds true for the real estate market too. The prevailing wisdom is that the Spring market that did not occur during the initial COVID-19 lockdown spilled over into the Summer. We hit record prices, but also saw a flood of new listings that have still not been worked through. The numbers:
Overall, the residential market hit a new high in June (median price of $1,520,000) and although July was down a bit from that it was still higher than last year by 4.5%
Single family median price also hit a record in June ($1,805,000), and declined in July to below $1.7m, still up 5.6% from last July
After plunging in May, condos/TICs/coop prices recovered in June to 2017 levels, and in July were up 3.7% from last July. Still, condo prices are lower than last Fall and the inventory numbers (see below) are daunting, if not evenly spread over the city
2-4 unit buildings held steady on price, up just slightly from last year on a price per square foot basis, and selling just as fast (33 days, median). But transaction plunged from 64 last year to only 25 this year
The most important number is active residential listings which have gone way up, higher than at any time since October 2010 and 80% higher than last July. This normally portends price drops, but so far has not had that result across the board
Number of closed sales overall has recovered to normal, and was actually up 5.7% in July v last year
What do the numbers tell us? Prices seem to be holding steady. Normally, increased inventory lessens competition for each property and lowers sale price, but perhaps because San Francisco demand has long outstripped supply, the increased active listings are just soaking up pent up demand. As I often say "it does not matter if there are 10 offers or 5 - you are only going to take one." Why is inventory so high? Maybe because home has become so important in this time that many more people are seeking something closer to what they truly want. This shifting around is actually a good thing, both for the market and for San Francisco. No doubt some of the movement is from owners finding they no longer want or need to be near work, and the neighborhood statistics from downtown and SOMA reflect that. Or maybe now is the time to move up while interest rates are very very low and at least some sellers are motivated to make a deal in the face of increased competition. As always, your personal situation is the most important thing to consider, not the market for all properties.
Another interesting divide is between condos and single family houses. The latter are holding up much better in this time, with record prices and less inventory (although still far more than usual). How much less? Active listings of houses are up 27% from last year, but condos are up 84%! No doubt this reflects the trend toward working from home, creating desire for more space and separation from neighbors. Also, condos generally appeal to younger, less wealthy buyers who perhaps are more likely to be suffering economically and/or more willing to move out of San Francisco. Although there is a lot of talk of San Franciscans abandoning the city it is very important in this time of change to look at your specific property and neighborhood, as the current forces are not the same for a 30th floor luxury condo, garden apartment in Noe Valley and a modest home in Portola.
What is the market doing right now in August? Traditionally, August is a very slow real estate month as people take vacation and ready for the Fall season after Labor Day. This year, I anticipated that there would be less of a slow down because of decreased plane travel and other gatherings. However, it does appear that a substantial subset of buyers are away (in Tahoe, Mendocino, Oregon or on a cross-country road trip) and there are less showings. At the same time, sales are happening and new inventory is coming on at all price levels. Certainly buyers should be wary of over-paying at this time. And sellers need to price right and present their property in its best light for a successful sale. Professional advice with an ear to the ground on what is happening right now is more needed in this volatile time than ever.
Neighborhood Statistics
Although all areas of the city are subject to the general trend of inventory increase, the level of the increase varies substantially and median price changes are not at all uniform.
The westside illustrates this schizophrenic result. District 1 (Richmond) had 75% more active listings than last July and a median price 11% below last July (but still over $2m). But District 2 (Sunset) across the park, had only 1.4% more listings and was flat on price at $1.5m. District 3 (Stonestown) was down 6% on price with inventory up 46%.
The central city was also illustrative. District 4 (west of Twin Peaks) was essentially flat on price despite a 53% increase in inventory. District 5 saw an actual median price increase (by 1.8% to $1,795,000) but a whopping 77% increase in active listings, the highest in the city. Were these price results due to large numbers of houses selling at record levels as people flee from communal living? Perhaps. District 6, with a much higher concentration of condos was down in price 9% to $1,269,000, bolstering this view.
Or are slow sales of expensive houses a contributing factor? District 7, which includes the city's most expensive houses in PacHts and PresidioHts as well as a lot of cheaper condos in Cow Hollow and the Marina, was down in price 12% to $1,887,000, lower than District 1! Apartment-heavy District 8 (Russian, Nob Hill, North Beach, Civic Center) saw the highest price increase in the city, 11.4% to $1,150,000. District 7 also saw inventory climb 60%, perhaps because of the exodus of young people out of those apartments?
Finally, District 9 which includes the condo towers in SOMA and the dense Mission, was essentially flat on price, but with the second highest inventory increase. Perhaps that reflects the large number of condos available which, so far, have not had to drop prices to sell. House-heavy District 10 continued its march upwards in median price, up 5.7% to $1,068,000 (still the cheapest in the city) and with relatively moderate inventory increase of 17%.
What can we make of these neighborhood statistics. Really, they are all over the place and not terribly useful in determining how much a particular property is worth. If there is anything clear, though, it is that general statements - everyone fleeing apartments and the city completely or everyone buying a house - are simply not true. It is always much more nuanced than that and requires a real examination of longer term trends in society, work and culture AND your own situation and desires. I am always interested in discussing and will continue to check the market so I know as much as possible about what is going on and how to consider a move and where it can take you.
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.)
VIRTUAL EVERYTHING!
In this pandemic time, many of us have shifted to a lot of virtual interaction. Zoom work meetings, more FaceTime calls with clients and friends and too much social media. Real estate has shifted too with more attention paid to digital assets so that buyers can sift through properties online first, limiting the number of houses they visit in person. But some things really do have to be seen in person - a house's light and space are hard to capture and most buyers want to really "feel" their new home before buying. In person tours - conducted safely - are allowed under the city's restrictions and crucial to the selling process. So if you are a serious buyer, or a seller wondering how this process works in this time, give me a call and we will do what is needed to secure your home, your life and your future.
And for those of you not currently looking, you can still get your home envy fix this month. The annual San Francisco Decorator Showcase has gone virtual too! Every year, the city's best interior designers take over a prominent home with every room - even the elevator, phone closet and laundry room - getting a dose of creativity. New walls, exciting furniture, floors, fixtures art and objects are carefully chosen, commissioned from expert artisans and placed to evoke a mood or statement. Usually the house opens in May for gala receptions and self-guided tours with everyone dressed up and the designers on hand to answer questions and share their whims. But the COVID pandemic put a stop to the work in March and I was afraid we would miss it this year. But a plan was hatched to do it safely and and now the showcase has been scheduled as a virtual tour, still benefiting San Francisco University High School's financial aid program. Check it out here and get some ideas for your space.