At the beginning of each new client consultation, I ask the prospective San Francisco home buyer or seller what they believe is going on in the local real estate market, whether they are thinking of a Bernal Heights single family home or a Mission Dolores condominium.
Over the past 6 months, I have noticed a real shift in mentality. This is far from scientific research and more anecdotal, but it does seem like the public mood has improved. More buyers tell me that they feel we have already seen the bottom and that prices in San Francisco are starting to head back up, if only slowly.
Personally, I do believe that we have already seen the bottom but that we are likely to stay in this type of more balanced, complicated, and sensitive market for a while…in other words, I do think the market has improved but I don’t see any rampant price appreciation in the near future. And, in certain neighborhoods & types of property, we could see a further decrease in home values in 2010.
The San Francisco Association of Realtors in connection with the Rosen Consulting Group has prepared a December 2009 year-end analysis of the San Francisco real estate market. Here are some highlights and links to the entire study.
On why San Francisco real estate is more stable, steady and resilient…
“Although it has been a difficult year for residential housing markets nationwide, San Francisco has fared better. The market’s inherent high barriers to entry, combined with the city’s limited exposure to exotic mortgage abuse during the most recent housing cycle have helped protect the market from the initial wave of home price corrections, according to the latest Market Focus report, published jointly by Rosen Consulting Group and the San Francisco Association of REALTORS®.
The report indicates that in recent months, the San Francisco housing market has shown increasing price stability, particularly at the low-end of the market, while for-sale inventory
levels have declined significantly and at a much faster rate in comparison to other parts of the country. Amid the improvements to job growth and economic activity, the Rosen Consulting
Group expects the housing market to improve during the coming twelve-month period. By year end 2010, Rosen Consulting Group (RCG) forecasts the San Francisco median home price to
increase by 2.5 percent with a more substantial jump in the median price the following year.
Ilse Cordoni, president of the San Francisco Association of REALTORS®, attributes the strength of the San Francisco housing market to the premium value everyone places on San Francisco
real property. ‘We have up and down cycles but, fortunately, for property owners here, less price turbulence is experienced here than almost any other location in the country.'”
- SF Median Single Family Home Sales Price increased to $820,000 in November 2009; up 9.8% from November 2008 and up 7.5% from the previous month (October 2009).
- 29% increase in the number of closed single family home sales November 2009 vs November 2008
- Pending home sales activity increased 50% since November 2008
- Month’s supply of inventory back down to 3.0 from 5.8 last year. (Even our high numbers are crazy low compared to most of the country. My Realtor colleague in the Mid-Atlantic told me double-digits for their month’s supply of inventory!) We almost never have a lot of real estate inventory for sale in San Francisco…ergo even our strongest “Buyer’s markets” are more balanced than elsewhere…) *
- Increase in San Francisco Condo Sales (sales have doubled since last year) and increase in pending condo sales
Find out the details of what is going on by reading the full market analysis for the San Francisco real estate market or just skim the summary of local SF home values:
* What is Month’s Supply of Inventory and why should you care? MSI basically refers to how long it would take all of the current real estate for sale to be “absorbed” or sold. The lower the number, the more competitive the market. Low numbers = seller’s market; High numbers = buyer’s market. This will depend on local market conditions. For SF, our MSI is usually quite low compared to most of the country.