San Francisco Real Estate Spring 2020 Report

Supply & demand statistics, median sales price trends, sales and values by city district, the luxury home market, and the ongoing effects of COVID-19

June 2020

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.

 

San Francisco Real Estate Market Begins to Bounce Back – Slowly

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.

Unemployment

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.

Bay Area Real Estate & the Coronavirus Effects on Market Supply & Demand Dynamics April 2020 Report

Note that there is a time lag – usually 3 to 6+ weeks – between a new listing coming on market, an offer being negotiated and accepted, and when the transaction actually closes sale. This means that almost all of the sales price data we have, as of the first week of April, still reflects the market BEFORE the shelter-in-place rules went into effect. In virtually all Bay Area counties, March median home sales prices were quite strong.

This report will look at the effects of the crisis on supply and demand by reviewing week by week statistics through April 5. The spring selling season is usually the most active of the year and, typically, the standard market indicators – new listings coming on market, total listings for sale, listings going into contract, sales closing escrow – all climb steadily from the mid-winter slowdown until peaking in late spring (or in a few markets, in summer). Since the coronavirus really began to impact the public consciousness locally in early March, and especially when the shelter in place rules came into effect, all these standard indicators have seen very significant declines. At the same time, the number of listings pulled off the market has spiked. Though the numbers are much reduced, some listings continue to go into contract.

San Francisco Real Estate & the Coronavirus April 2020 Report

The first thing to remember is that there is a time lag – usually 3 to 6+ weeks – between a new listing coming on market, an offer being negotiated and accepted, and when the transaction actually closes sale. This means that almost all of the sales price data we have, as of the first week of April, still reflects the market BEFORE the shelter-in-place rules went into effect. In virtually all Bay Area counties, first quarter and March median sales prices were quite strong.

This report will look at the effect of the crisis on supply and demand by reviewing week by week statistics, sales price trends reflecting the market before the crisis, and longer-term trend data to give context to how the market typically performs at this time of year. Spring is usually the most active selling season and often sees the highest median sales prices of the calendar year, due to both the level of buyer demand and the seasonal surge in the luxury home market. (A higher percentage of luxury home sales pulls up the overall median sales price.)

We do not know how the crisis will ultimately play out, depending as it does on so many, rapidly changing, socio-economic factors.

Median Sales Price Trends

These first 4 charts review median sales price trends in the short, medium and long-term. March and first quarter prices generally reflect the pre-crisis market.

Link to our San Francisco home price map

Shelter-in-Place Effect on Inventory & Deals
– by Week

The following 4 charts detail the plunge in listing and accepted-offer activity, and the surge in listings being pulled off the market by sellers, over the past 4 weeks. Typically, at this time of year, the first 3 charts would be seeing steady climbs over February numbers, and the 4th chart would have a very low, flat trend line.

Though the numbers are way down, some listings have still been going into contract.

Average Days on Market by Month

Those listings that did go into contract in March – a much lower number than normal – apparently did so quite quickly after coming on market, presumably seizing the attention of buyers despite the crisis. Or the buyers and sellers may already have been in the midst of negotiations when shelter in place rules began.