Spring Market Springs Up
Remember last year and all those articles about massive outflow of population from San Francisco to the suburbs, people seeking more space and fleeing the ghost-town streets, the coming housing market correction? Now the prevailing narrative is all about escalating prices, bidding wars and a crazy market. Of course, neither story is true - and many of the articles about it, last year and this, are about the national market, or the Bay Area market with varying definitions to make the statistics fit the story's point. Our market and the statistical record are much more complicated than that and tell a different story. Let's take a look, keeping in mind that last March's sales mostly occurred in February before the pandemic settled over us.
First, there is no denying that the Spring market is more optimistic than last year, with inventory way down from last Fall and prices for desirable houses at all price levels up. But condo/TIC inventory remains higher than usual and prices there, although higher, are not fully recovered. The overall statistics for March sales:
For all residential properties, the median sale price was $1,380,000 in March, slightly lower than in March 2018, 2019 or 2020 - so evidencing neither a downward "correction" or a true boom.
Single family home prices were up 6.5% from last March and the same as the peak last year in June. 2018 and 2019 saw higher peaks, but April may bring further gains (see below).
Condo/TIC/coop median prices were down 3.4% as compared to last March to $1,178,750. That's almost the same as March 2019 so, again, not really a significant downward trend.
Inventory is still much higher than "normal" but more than 1200 properties less than the peak last October. And single family inventory is just a little bit higher than the norm over the last 10 years - almost all the excess is in condos/TICs.
Predictions of another surge in supply this Spring have not come true - so far - which is putting upward pressure on prices. But so far condos, in particular, remain relative bargains. Houses are not. What do other statistics tell us about what April and beyond might look like?
New Listings: New listings in March were more or less normal for the past 5 year period. So, again, there is no flood of new properties to drive prices down.
Pending Sales: What about demand? Sales in March hit a new record - hundreds more properties sold than in any March ever. So the additional inventory is being soaked up, and not replaced
Overbids: Interestingly, properties are not generally selling for over the list price. Nor are properties being discounted - the median sale price is 100% of list price. It is hard to tell what this means because of the wild ups and downs of the last year, leaving agents without a stable set of comparable sales to set prices. It is clear that sales last Fall when inventory was sky high were not in the same environment we have now, but using only the last 3 months means very few sales to consider.
What is going on right now in April? There are lots of amazing sales - $6 million properties selling within days with multiple bids way over asking, loft condos selling in 5 days for high prices. There is certainly a psychology among buyers that they have an opportunity to get something now that may disappear later this year when things return to "normal" and (possibly) interest rates (and/or prices) rise. This is driving prices upward on some properties. But many others, particularly those that are not perfectly "clean" or have some undesirable aspect are not selling quickly and having to wait for the right buyer, sometimes with discounting. So the market is really fragmented.
As a general rule, houses in nice neighborhoods that "check all the boxes" are selling quickly and for record prices. This is particularly true in the suburbs from the Peninsula to Marin to the East Bay, as well as the residential neighborhoods of San Francisco. That is less true of condos/TICs but it really depends on the location and type of property. For example, there are still a lot of high-rise condos downtown that did not sell last year (although that market does seem to have recovered somewhat), but nicely renovated full-floor flats in leafy areas are highly desirable and drawing lots of attention. If you are a seller, it is more important than ever that the property be prepared and positioned properly to make sure you capture the frenzy if at all possible. If you are a buyer, it is just as important that you understand every nuance of each micro-market - with your experienced, professional agent's help.
So, my message for now is the same as it always is, heightened by the unusual situation we are in - at the tale end (hopefully) of an historic pandemic. You need a full-time agent to advise you on the current value of your property or the one you want. I'm always free to talk - call me!
Neighborhood Statistics
Neighborhood statistics so far this Spring really support the movement toward houses and away from condos/TICs. Nearly all the appreciation in the city took place in house-heavy areas, and all of these are in the foggiest part of the city - space beating out weather.
District 4 (St Francis Woods, Westwood Park, Miraloma Park) shot up 5.5% from last March to a median price of $1,740,000. Amazingly, this is just $10,000 less than the median price in District 7 (PacHts, Sea Cliff) and higher than sunny District 5 on the other side of Twin Peaks.
District 3 (Stonestown, Ingleside, Lakeshore) was up to $1,226,000 median, an increase of 6.6% from last year. This is higher than District 8 and 9 on the eastern side of town.
District 2 (Sunset, Parkside) was up 2.7% to $1,500,000. Again, this is certainly driven by a desire for single family houses with yards - essentially the entire district.
But that trend is not all-encompassing. Certainly, apartment-heavy areas have taken a hit, but some single family neighborhoods have also suffered.
District 6 (NOPA, Hayes Valley, Lower Pac Hts) was down 12% to a median of $1,250,000. Densely packed with apartments, that follows the narrative.
District 9 (SOMA, Mission, Bernal, Potrero) also suffered with its large numbers of high-rise properties. But it was down only 6% to $1,175,000, bolstered by interest in Bernal land Potrero and, perhaps, a return to downtown in anticipation of the coming normality.
District 10 (Bayview, Excelsior) showed a rare decrease of 7.8% to $1,000,000 median price. This is surprising because the area is mostly houses with yards and has show steady appreciation for years as people retreat to the most affordable area of the city. Perhaps this shows the limits of that trend, or perhaps it reflects the loss of freeway access as a selling point.
The other noticeable trend is a move away from the most established "old San Francisco" neighborhoods on the northside. This may be related to the surge of interest in southern Marin and the general desire to move out of dense areas and those close to the Financial District, due to work-from-home trends.
District 7 (PacHts) was the biggest loser of the month, down 22% to $1,755,000. Note that this may reflect the very expensive properties in that area that tend to wait for the "prime" marketing months of April and May. So we may see a quick reversal.
District 8 (Civic Center, Russian Hill, Financial District) saw a very small increase (0.3%) to $1,200,000. This is a bit surprising because the area is so condo-heavy, but it may also reflect a resurgence in interest now that prices are down - buyers looking to move into these very desirable areas in a "once-in-a-lifetime" opportunity window.
District 1 (Richmond) sank almost 10% to $1,600,000. Is this a city-changing trend emptying out the establishment neighborhoods and completing the decades-long movement toward the center of the city? Time will tell.
I certainly believe that none of these trends are written in stone. We have been through an amazing economic and psychological shock. I don't think anyone knows how the market will react, or what neighborhood characteristics will be desirable a year from now when we will either be in our "old" normal or some new situation. Close attention to the trends happening now is required and perhaps a longer lens than one month's statistics.
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.)
May Day
May Day is a traditional holiday celebrating Spring, especially in Europe. Traditionally the first day of May, the tradition began in Roman times as a flower festival called Maiouma but it became known for elaborate banquets and was suppressed by the early Church for "licentiousness." The holiday also has roots in Germanic and Gaelic culture. The latter, known as Beltane and held the night of April 30, involved having cows jump over fires to protect their milk from the faeries.
In 1889, May 1 was chosen for International Worker's day by the socialist and communist movements. In 1955, a competing Catholic holiday for St Joseph, Jesus' surrogate father, was instituted to compete with the communist holiday. Many European countries still have May Day holidays vaguely associated with the labor movement. The idea of an early May holiday was transferred to North America also, in particular the use of Maypoles, dancing and outdoor events. It even made it all the way to Hawaii where it is known as Lei Day - hearkening back to the original flower origin.
This year we could all use some extra cheer around this time. Why not take a walk on May Day? Go to the Botanical Garden in Golden Gate Park, or make a flower basket, wreath or heart to share with loved ones. May can be our month of coming out from the pandemic, at least partially, for a sign of new hope!