The post San Francisco Real Estate Market Accelerates March 2021 Report first appeared on Paragon Specific.
Our January report focused mostly on 2020’s annual statistics. This report will put most of its attention on quarterly and monthly indicators, which better illustrate changes occurring as 2020 progressed and 2021 began.
Of Bay Area counties, San Francisco was most negatively affected in the months immediately following the implementation of shelter-in-place. Inventory soared and sales plunged, especially in its condo market. In the second half of the year, buyers rushed back into the market.
Sales volume, very unusually, peaked for the year in December, hitting its highest point in history (for December). Home sales in January were up 67% over January 2020, a tremendous increase. Year-over-year, house median sales prices are up a little, and condo median prices, divided by size of unit, were down about 10%.
The city remains a very complex market, varying by neighborhood, property type and price segment. And vaccines may alter dynamics considerably in 2021.
New listings coming on market jumped up in January, as is the norm. The market seems to be heating up much more quickly than typical at the beginning of the new year.
This next chart illustrates the rapid growth in inventory that occurred after the pandemic struck: The spike was heavily weighted to condo listings, which hit an all-time high. In the last 3 months, inventory began dropping quickly – due to increasing demand, a drop in new listing activity, and a jump in listings being pulled off the market by sellers in December for the holidays.
Month by month, year-over-year comparison of home sales volumes – illustrating the initial pandemic crash in activity followed by the market rebound that saw monthly sales volumes climb far above the levels of the previous year. Blue columns represent monthly sales within the last 12 months, and gray columns, sales in the previous 12 months.
Sales were up 60% and peaked for the year in December (first time ever), and January sales soared 67% above January 2020.
Of the sales reported to MLS, closing in December and January, 43% were houses, 51% condos, 5% TICs and 1% co-ops.
Of the active/coming soon listings in MLS as of early February, 26% were houses, 63% condos, 9% TICs and 2% co-ops.
The chart below: Comparing 2020 to 2019, luxury house sales were up, luxury condo sales were well down, and non-luxury home sales were about flat. However, none of these statistics do justice to the rapid acceleration in market activity occurring in the second half of the year.
Sales price to original list price percentage: Over 100% – as seen in the 4 quarters of 2020 for houses – signifies an average sales price above original list price. Under 100% – as seen in the 2020 condo market – means, on average, sales prices were negotiated below asking price. Overbidding has declined substantially over the past 3 years.
As buyer demand bounced back, the number of price reductions dropped from the historic high reached in early autumn – however, on a year-over-year basis, the number remains higher than is typical for January.
A much larger number than usual of unsold listings were pulled off the market in December. We expect many of these to be re-listed early in the new year, some of them at lower prices than before.
The 2 tables below reflect market statistics and values for Q4 2020 only, by city district (each containing a variety of neighborhoods), first for houses and then for condos. Q4 stats will often be different than those for the full year 2020.
It is not unusual for more expensive markets to have softer supply and demand statistics, though this is not always the case.
City condo markets – especially in districts dominated by high-rises and large projects – often saw much cooler conditions than house markets.
Below is the first of 4 tables reviewing full-year 2020 SF home values by neighborhood. The full report along with a home price map is here: San Francisco Neighborhood Home Prices. And for the entire region: Bay Area 2020 Home Prices.
Two major factors behind the Bay Area housing market recovery were the dramatic drop in interest rates, and the significant rebound in the stock market – especially in the stock prices of some of our local high-tech giants.
Pandemic, shelter in place, mass unemployment, terrible financial hardships for many households and small businesses, new ways of working, office buildings empty, people move, rents plunge, dreadful fires, an anxious presidential election, interest rates to historic lows, stock markets to new highs, billionaires decamp to save on taxes, IPO mania breaks out again, vaccines begin to arrive – and the real estate market in San Francisco saw complicated dynamics in supply and demand, with a strong recovery after an initial crash in activity.
2020: a year of social, political, economic and environmental extremes. Let us give thanks to those who worked so hard and sometimes risked their lives to help others.
The following analyses were designed to be self-explanatory, but please don’t hesitate to contact us with any questions.
Though the pandemic upended many normal seasonal trends this year, the market did begin its typical “holiday season” slowdown in November – however activity remained well above levels of last year. It is unknown how the latest Covid-19 circumstances may affect the market in December, which is usually by far the slowest month of the year.
More importantly, we hope you and your loved ones stay safe and well during this challenging holiday season.
This first chart tracks percentage changes in median house sales price since 1990. It is based upon the Q1 2000 price being indexed to 100: A reading of 50 signifies a median price half that in Q1 2000; 200 means the price has doubled since then. In early 1990, the SF median house price was about $300,000; it is currently running about $1,650,000.
Year-over-year median sales prices for condos of various sizes, and for houses, in September through November of 2018, 2019 and 2020. A big increase in supply since the pandemic struck has led to declines in condo median sales prices.
A review of Q3 2020 median house sales prices (and SF condo prices) around the Bay Area. SF and San Mateo have been alternating in recent years for highest median house price. SF always has the highest median condo price in the region.
As is typical, the number of new listings plunged in November. In the first week of December – not illustrated on this chart – new listing activity ticked back up from the short Thanksgiving week, but remained well below pre-November numbers. December is usually the month with the lowest number of new listings coming on market.
With the decline in new listings, overall listing inventory dropped, but remained much higher than in previous years.
The number of condos on the market dramatically increased since the pandemic struck, but began to decline in November.
Market activity as measured by the number of listings going into contract is significantly higher on a year-over-year basis: over 40% higher in November 2020.
The below chart measures demand as compared to the supply of listings available to buy. By this metric, the house market has been significantly stronger than the market for condos since the pandemic struck.
Monthly home sales volume by property type:
The number of listings reducing price dropped in November, but remained elevated over previous years.
4 charts and tables looking at the luxury home markets of San Francisco and those within the larger region.
The Bay Area counties which have seen the largest percentage increases in the sales of luxury homes since May have been Sonoma and Santa Cruz (despite the fires), and Monterey. Not shown on this chart: Lake Tahoe saw a incredible 187% jump in luxury home sales.
This next table looks highest priced listings on the market in early November, and the highest priced sales in the May-October period. Since it was compiled, a higher sale closed in San Francisco, in the Sea Cliff neighborhood, at $24,000,000.
If you’re looking for a home priced $5 million and above, these are the places where you will have the greatest choice of listings.
The post A Strange Year Begins Winding Down December 2020 San Francisco Real Estate first appeared on Paragon Specific.
SF house and condo markets have been affected differently by the pandemic. This report attempts a deeper dive into the data across the city and within different city districts.
The market typically starts a big slowdown in mid-November, running through the mid-winter holidays, until it begins to wake up in mid-January. High-price segments normally see the most dramatic plunges in mid-winter activity.
This year, the pandemic upended seasonality: Spring, usually the strongest selling season, saw a crash in activity; summer, which typically slows down – especially for luxury home sales – saw high demand; and the summer market accelerated into autumn. But supply has been accelerating even faster than demand.
We suspect late Q4 will see something of a slowdown, but remain more active than in past years.
Link to a comparative review of Bay Area County Markets.
General City Dynamics, House & Condo
Sales rebounded strongly from the early-spring pandemic crash: House sales are higher than in recent years and condo, co-op and TIC sales are at levels comparable to peak sales volumes over that period.
The most dramatic change is the increase in the number of listings for sale. Condo, co-op and TIC listings in MLS are at their highest point ever, approximately 85% higher than one year ago. House listings are also up, but much less dramatically, running about 20% to 25% higher than in autumn 2019.
Steady demand but soaring inventory has led to an increase in price reductions. When demand outweighs supply, buyers compete for listings, usually by overbidding. When supply outweighs demand, sellers often compete for buyers through price reductions. The condo market is probably seeing its highest number of reductions in history.
Long-term median sales price trends, 6-month rolling:
Year-over-year changes in median sales prices and average dollar per square foot values in selected home configurations. The condo market has been hit by significant declines in these 2 measurements.
Luxury Home Sales by Property Type & Price Segment
Of the luxury home segments broken out in the chart below, the market for houses selling for $3,000,000 to $4,999,999 (red line) has rebounded very strongly over the past 6 months, hitting a new peak in sales (on a 6-month rolling basis). The other segments – luxury condos and co-ops, and $5m+ houses – have seen much smaller rebounds from shelter-in-place lows, and remain far below previous peaks.
House Markets by District/Neighborhood
Within the city, there are significant differences in market dynamics by location. This report will look first at house markets, followed by a series of analyses on condo markets. How these charts apply to any particular home is unknown without a specific comparative market analysis.
By most standard measurements, the greater Sunset/Parkside district has the strongest house market in the city with house values just below the SF median house price. At the softer end of dynamics are 2 of the city’s most expensive districts, which feature the largest luxury house segments.
Overbidding on house listings is well down from the crazed levels of recent years, but is still relatively common in more affordable districts. Some part of the overbidding percentages is caused by strategic underpricing of listings (to get buyers excited).
A breakdown of house sales, $3 million and above, by district over the past 12 months.
San Francisco Condo Markets by District/Neighborhood
Since the pandemic hit, the softest condo markets have been those dominated by larger complexes and high-rises. The greater South Beach/ SoMa/ Mission Bay area – by far the largest condo market in SF – has the weakest supply and demand dynamic, followed by the greater Russian, Nob and Telegraph Hills area, and the Van Ness/Civic Center area.
Markets dominated by smaller buildings, often with separate unit entrances and dedicated outdoor spaces, have seen stronger buyer demand.
As a statistical average, overbidding above the original list price has disappeared from the condo market. This ties in with the previous chart on price reductions.
A breakdown of luxury condo, co-op and TIC sales – $2 million and above – by district.
The post San Francisco House & Condo Markets Diverge – November 2020 Report first appeared on Paragon Specific.
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.