The table below compares Q3 statistics across 5 years. Since the dynamics of the SF house and condo markets have significantly diverged since the pandemic struck – the condo market has been weaker – we broke some of the 2020 stats out separately in the table, and then in some of the charts following.
The inventory of condo listings on the market has been soaring, and price reductions are heavily concentrated in the condo market. Hundreds are still selling each month and that number has been rebounding in the last couple months – but increases in supply continue to outpace demand. Within the condo market, the high-rise segment appears to be the weakest, almost certainly due to pandemic-related reasons.
Median sales prices can rise because of increases in fair market value – i.e. buyers are paying more money for the same home (supply and demand) – and/or because buyers are purchasing larger or more expensive houses. Affluent and very affluent buyers are an increasing percentage of the total market throughout the Bay Area. In San Francisco, the average size of houses sold in Q3 jumped almost 6% year over year.
Long-Term Trends in Median Sales Prices
through YTD 2020
Annual Percentage Changes in Median Sales Prices through YTD 2020
We have been getting many questions on annual percentages up and down in median sales prices, so we updated the following 2 charts. The 2020 YTD percentage will almost certainly change, one way or another, by the time full-year sales data is in.
Luxury Home Sales by Quarter
Q2 is typically the strongest selling season for luxury homes, but the pandemic changed that dynamic in 2020. Though the SF luxury segment recovered in Q3, in many other counties around the Bay, luxury home sales have soared to all-time highs.
Active inventory has been surging in recent months (first chart below), as has the months supply of inventory (second chart). As mentioned before, the supply of condos for sale is currently dominating SF inventory.
Even if supply is outpacing demand, more listings went into contract in September than in any month in the last 2 years.
But the number of price reductions – again heavily concentrated in the condo market – has jumped to its highest point in many years. In certain segments, sellers are now competing for buyers, instead of buyers competing for listings.
Median House & Condo Sales Price Trends by District
The 3 charts below are focused on the districts in which the greatest number of house or condo sales occur. The first 2 refer to house sales and the third to condo sales.
The post San Francisco: 7 Months After the Pandemic Hit | October 2020 Report first appeared on Paragon Specific.
Despite the terrible fires, SF had a very active month in listings going into contract in August, hitting a high point for the year and matching the high points of recent years. Surprisingly, the fires did not significantly impact the number of deals being made in most Bay Area counties during the last 2 weeks of the month – the exceptions being Santa Cruz, Sonoma, Monterey and Napa Counties, which saw declines of 13% to 33%.
The number of active listings on the SF market has risen dramatically over the last few months, outpacing the increase in listings going into contract. However, there are significant differences between the house and condo markets, which are discussed later in the report.
With the increase in inventory has come a big jump in the number of listings reducing asking price. In some market segments, sellers are now competing for buyers, instead of buyers competing for listings.
The next two charts illustrate how the house and condo markets have diverged since the pandemic hit. The condo market is much weaker, comparing demand to supply. However, within the condo market, different neighborhoods are seeing varying dynamics, and hundreds of condos are still selling each month. More detail follows later in the report.
Regarding the next chart, the lower the Months Supply of Inventory (MSI), the stronger the demand as compared to the supply of listings for sale. Much of the SF house market (blue columns) remains firmly in “seller’s market” territory, but the condo market’s supply (red columns) is outpacing buyer demand, especially in the higher price segments.
Below is a comparison of median house sales prices, sizes and dollar per square foot values around the Bay Area this past summer.
A review of year-over-year changes in the number of luxury home sales around the Bay Area this past summer. Some other counties have seen astounding increases. SF luxury house sales increased by a more modest percentage; SF luxury condo sales declined year over year.
The following 3 charts illustrate aspects of the SF HOUSE market: Median house sales price trends by bedroom count; sales volumes and median sales prices by Realtor district; and the number of active house listings by Realtor district with an analysis of months supply of inventory.
The following 3 charts illustrate aspects of the SF CONDO & CO-OP market: Median sales price trends by bedroom count; sales volumes and median sales prices by Realtor district; and the number of active listings by Realtor district with an analysis of months supply of inventory.
In last month’s report, we looked at era of construction for the city’s houses. The chart below does the same for the SF condo, co-op and TIC market.
The post San Francisco Real Estate – A Complex Market September 2020 first appeared on Paragon Specific.
As illustrated below, the San Francisco market currently reflects a variety of both positive and negative indicators. Among Bay Area markets, the city is seeing the softest recovery from the initial shelter-in-place plunge in activity in early spring, while some other counties – less expensive, more suburban or rural – are experiencing extremely high demand. (See table near the end of this report.)
Within San Francisco itself, supply and demand conditions have diverged dramatically between house and condo markets, with the latter being far weaker and rapidly climbing into “buyer’s market” territory.
Median Home Sales Prices
On a 3-month rolling basis, SF median house sales prices are as high as they’ve ever been. The median condo sales price, while not particularly low, has been running lower than the highs of last year.
Supply & Demand Indicators
The number of listings going into contract has been increasing, but at a much lower rate than inventory is growing (chart 1). Sales volume is climbing, but is still far below the high points of recent years (chart 2). Price reductions have been soaring in recent months (chart 3).
Diverging House and Condo Market Conditions
The next 5 charts illustrate the increasingly stark divide in the levels of inventory and buyer demand between these 2 major market segments. However, it should be noted that within the condo market, certain segments and locations are performing better than others. The largest condo market in San Francisco – the greater South Beach, SoMa, Mission Bay, Civic Center area, dominated by large complexes and high-rise buildings, including continuing new construction projects – is seeing the weakest conditions.
As illustrated in the following 2 graphs, the supply of listings on the market is at its highest point in 8 years, with the inventory of condos spiking way, way up. As a market softens, correct pricing becomes increasingly critical for sellers. In a hot market, buyers compete for listings; in a cooler market, sellers compete for buyers.
Though climbing in recent months, the days-on-market figures are not high. It appears those listings selling are going into contract relatively quickly.
The amount and magnitude of buyers overbidding asking prices is considerably diminished from levels seen in the past 6 years. Part of this is due to the change in showing conditions brought about by strict shelter-in-place rules. But in an environment of increased inventory, buyers see a reduced necessity to compete with each other.
Luxury Homes Going into Contract
Comparative Conditions around the Bay Area
This table ranks each county by the percentage of active listings going into contract in June/July 2020 – a standard statistic of market heat – compares it to the same period of last year, and then rates the year-over-year change. Many counties are seeing hugely increased demand over last year. The SF house market is about the same as last year, and the SF condo market is substantially cooler.
San Francisco Era of Construction
This chart looks at the number of house sales over 2 years in different periods of construction. SF is a city of older houses with relatively little new house construction in the past 30 -40 years.
The condo market had similar divisions up until about 1980, when new condo construction blasted off to add tens of thousands of new units to the market, sometimes creating huge new residential neighborhoods.
Despite the ongoing health and economic crisis precipitated by COVID-19, the SF real estate market made a large recovery from the steep declines in March and April. The SF median house price hit a new monthly high in June ($1,800,000), and high-end houses, in particular, have seen very strong demand – this applies to virtually every market in the Bay Area. More affluent buyers – the demographic least affected by COVID-19, unemployment, and also having the greatest financial resources – have been jumping back into the market to a greater degree than other segments.
The condo market has been weaker than the house market, as measured by both supply and demand metrics and median sales price. It may be that prospective condo buyers – often younger and less affluent than house owners – have been more affected by the huge jump in unemployment.
The first chart below illustrates the big rebound in buyer demand, as the number of listings accepting offers in June 2020 rose slightly higher on a year-over-year basis. Of course, closed-sales volume – a lagging indicator – was hammered in Q2 by shelter in place.
High-end sales staged a particularly strong recovery, reaching a new high as a percentage of total sales. This is one of the factors behind median house sales prices hitting a new peak in June.
As illustrated below, the house market (blue line) has performed much better than the condo market (purple line).
Three angles on median home sales price movements – annual, monthly and quarterly. While the median house price has hit a new peak, the median condo price has declined from its 2019 high.
Average days on market remained relatively low in Q2, though higher than Q2 in 2018 and 2019.
The average overbidding percentage declined to zero in Q2 as showing procedures and the offer-making process have been severely affected by shelter in place.
The Bay Area markets with the largest year-over-year increases in the number of listings accepting offers in June 2020 were the 4 outer Bay Area counties of Monterey (up 61%), Santa Cruz (58%), Sonoma (47%) and Napa (37%). They also have among the lowest population densities in the Bay Area. The more urban counties saw more modest y-o-y increases: San Francisco (6%) and Alameda (7%). Other factors may play a role in this: length/strictness of shelter-in-place rules, home price differences, second-home buying patterns, and so on.
Supply & demand statistics, median sales price trends, sales and values by city district, the luxury home market, and the ongoing effects of COVID-19
Generally speaking, market activity – as measured by the number of listings going into contract – continued to pick up rapidly in May, bouncing back from the steep plunge following the first shelter in place orders. However, activity in May, which is typically among the busiest selling months of the year, still remained well below May 2019. Still, with the easing of shelter in place, as well as the market learning to adjust to new circumstances, it is expected the recovery will continue to surge closer to normal.
Interest rates hit yet another historic low at the end of May.
Median sales prices for both houses and condos dropped significantly in San Francisco in May, but those figures are based on a very low volume of closed sales in the month. An even bigger drop in higher-price home sales also put downward pressure on median prices. May sales and sales prices mostly reflect the huge impact of COVID-19 on the SF market in late March and April. Based on the large jump in accepted-offer activity in May (and especially for more expensive homes), coming months will constitute a better indicator of whether changes in fair market value are occurring.
Anecdotally, word on the street is that buyer demand has come surging back and home prices have so far been little affected, though opinions vary regarding different market segments. We’ll know more soon.
The SF market – as also common in other urban centers – was more deeply and more quickly affected by COVID-19 and shelter-in-place than other more suburban county markets, seeing larger initial drops in activity. Even with the remarkable rebound of buyer demand in May, its recovery is, so far, lagging other counties on a year-over-year basis, especially more suburban and rural counties, such as Marin and Sonoma. A variety of factors may be at play, which are discussed on a chart within this report, however definitive pronouncements regarding longer-term market, economic and demographic effects are impossible to make while the crisis is still at hand.
Rent rates appear to be dropping quickly, subsequent to the enormous increase in unemployment – which typically impacts the rental market more rapidly and significantly than the for-sale market.
NOTE: Any statistics derived from closed sales – such as median sales prices, sales volume and days on market – reflect the state of the market 3-6 weeks ago when the offers were negotiated and accepted – and when the market was most terribly impacted by the crisis.
May 2020 Crisis Update. Market activity begins to tick up after severe shelter-in-place plunge. Median home sales prices are up. Interest rates hit new low.
Shelter-in-place caused steep drops in activity across the board in what is typically the busiest selling season of the year. However, though still far below normal levels, activity has been picking up since bottoming out in late March/early April, and will presumably continue to do so with the easing of both shelter-in-place and property-showing rules.
So far, home prices have increased, but a fair proportion of the sales behind April median sales prices still reflects offers accepted prior to shelter in place.
Interest rates hit a new historic low in the last week of April.
Week by Week Supply & Demand Trends
The only way to clearly perceive the recent changes in the market – sudden plunge and the beginning of recovery – is by looking at WEEKLY trends in buyer and seller activity. These are illustrated in this first chart below.
Year-over-Year Changes in Median Home Sales Prices
Generally speaking, the first months of 2020 have been characterized by year-over-year increases – often considerable – in median home sales prices across the Bay Area.
Longer-Term Trends in Median Home Prices
– 12-Month Rolling Illustration
Year-over-Year Monthly Activity Comparisons
The next series of charts reflects the dramatic changes in market dynamics by MONTH as compared to spring 2019. These don’t illustrate the uptick in activity in the most recent weeks.
Year-over-Year Changes in Luxury Home Markets
Mortgage Interest Rates
At the end of April mortgage interest rates hit a new historic low.
We are not going to review the economic news already extensively covered in the media, except for this stark illustration of the unparalleled rise in unemployment. How quickly this horrifying trend can be reversed will probably be the single largest factor behind an economic recovery.