San Francisco Real Estate Market Report for September 2021

In this San Francisco Real Estate Market Update for September 2021, we cover the performance of house, condo and rental market segments, compare the past 12 months of San Francisco home sales with the previous 12 months, examine the factors behind San Francisco’s real estate market recovery, and compare 2021 market seasonality with previous years.

Houses vs Condos vs Rentals

Different Drop, Same Recovery

The general belief among economists is that various types of housing (single-family homes, condos, apartment or home rentals, etc) should reach an equilibrium.

If that’s the case, then why is San Francisco real estate still all over the place?

Since the start of the pandemic, results have varied widely:

  • Median price for a 3-bedroom single-family home is up 13%
  • Median price for a 2-bedroom condo is flat
  • Average asking rent for apartments is down 17%

However, each housing type has experienced a similar level of recovery since the market bottom in December 2020:

  • Median price for a 3-bedroom single-family home rose 14%
  • Median price for a 2-bedroom condo rose 11%
  • Average asking rent for apartments rose 8%

In terms of recovery, the delta between the best- and worst-performing sectors is only 6%, rather than a 30% difference as measured from before the pandemic.

These stats reflect how consumer tastes shifted when the pandemic hit. Due to shelter-in-place, homebuyers wanted outdoor space, bigger floor plans, and extra rooms for at-home work and schooling. These factors combined with historically low mortgage rates to drive demand for single-family homes, even in the height of the pandemic.

A Busy Year for San Francisco Home Sales

Comparing Sales Numbers from the Past 12 Months to the Prior 12 Months

Across all price ranges, from under $1 million to over $5 million, home sales skyrocketed in the past 12 months.

Compared to the period of August 2019 to August 2020, the last 12 months saw:

  • 172% more homes sold over $5MM
  • 85% more homes sold under $1MM
  • 65% more homes sold for $3 to 4MM
  • 63% more homes sold for $2 to 3MM
  • 51% more homes sold for $1 to 2MM

The biggest “winners” among these San Francisco real estate market segments were the ultra-luxury market and the lower end of the market.

The big rise in homes sold for under $1MM reflects the dramatic jump in condo sales after inventory soared and prices dropped in the early days of the pandemic.

Even more dramatic was the rise in ultra-luxury home sales of $5MM and up. A number of factors were involved, which we’ll dig into below.

Factors Driving San Francisco’s Real Estate Market

What caused the market rebound since Spring of 2020?

  • Historic low interest rates: The average 30-year conventional, fixed rate mortgage fell below 3% in mid-2020, and has been hovering at or below 3% since then. Fifteen-year fixed-rate and 5/1 adjustable rate mortgages (ARM) have been at historic lows as well. This spurred many would-be buyers to get off the fence and lock in a deal.
  • More household movement: For a number of reasons related to the pandemic, remote work, housing costs, wealth and health, household movement has been abnormally high since Spring of 2020. More people moving means more homes purchased, increased demand and increased prices. With the rollout of vaccines, demand for San Francisco condos returned as well.
  • Growing wealth: For far too many people, the pandemic has led to reduced work hours, job loss, and other financial hardship. However, this segment of the workforce was more likely to rent rather than own their home. On the flipside, wealthier, white-collar workers saw their wealth increase in the form of a soaring stock market, higher home values, and government stimulus that they didn’t necessarily need. Altogether, those who could work from home, who already owned a home, or who were already wealthy were in an even better position to buy a home throughout the pandemic.

Seasonality in San Francisco Real Estate

Real estate slowed this summer, following expected seasonal trends. But it has still been busier than most.

Sold real estate listings in San Francisco, 2018-2020
Source: InfoSparks & San Francisco Association of REALTORS

Real estate markets around the country, including in San Francisco, tend to follow seasonal trends.

In 2018 and 2019, closed sales hit their lowest point in September. (Closed sales lag roughly one month behind pending sales, so the fewest deals were made in August.)

Of course, 2020 threw everything off kilter. San Francisco home sales in fell sharply in the usually busy spring season, and pending deals ultimately peaked in December which started 2021 with a boom in closings. A very unusual end to a very unusual year.

Now in 2021, we appear to be back on track with typical real estate seasonality. Except this “summer slowdown” was still far busier than in previous years.

If seasonal trends continue, we can expect a busy fall selling season with more homes hitting the market and more options for buyers.

San Francisco Real Estate Updates and Insights

We hope this August real estate market update for San Francisco will help you in planning your next move or investment.

If you have questions about the market or your next steps to buying or selling, let us know! We’re always happy to help you and anyone you send our way.

If you are considering selling a home in San Francisco, fill out our Seller Worksheet to tell us more about your situation.

If you want to buy a home in San Francisco, tell us your goals and timeframe in our Buyer Worksheet. Or send us a message with any general inquiries.

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