Leave a Message

Thank you for your message. We will be in touch with you shortly.

The house prices have remained very strong, while condos have shown weakness

The house prices have remained very strong, while condos have shown weakness

SAN FRANCISCO MARKET UPDATE

December 2020

Welcome to our December newsletter. This month, we look at how the San Francisco real estate market is a tale of two cities. On one hand, the house prices have remained very strong, while condos have shown weakness.

In October, the median single-family home price slightly retracted year-over-year, with a median home price of $1.63 million. The median condo price continued to see the effects of excess supply, with the median dropping to $1.2 million.

Year-over-year, median single-family home prices were down 1%, while condos experienced the largest decline at 13% down.

Total inventory decreased slightly in October because the number of sold homes rose, while new listings decreased. Lack of supply compared to demand typically buoys San Francisco’s prices. Even though it might not feel like it, this is still the case for single-family homes. Single-family home inventory is noticeably higher, but it is still low relative to demand.

The number of condos on the market remains high in absolute and historical terms. The drop in condo prices is consistent with the runup in supply. The large supply of condos has successfully given buyers a greater opportunity to find the right home for them, which we can see by the number of homes sold. Supply, however, is simply outpacing demand. With the current supply of condos, the market cannot support the prices seen pre-pandemic. This trend is likely to continue, as new listings are still coming to market and inventory remains near historic highs.

The increases in inventory and sales have created more efficiency in the market. San Francisco is known for homes selling well above list. While this has become the norm in San Francisco, it remains atypical nationally. Because San Francisco has been so undersupplied, buyers have been incentivized to offer the highest bids for the houses they love. The increased inventory San Francisco is currently seeing gives buyers more options, meaning they are no longer forced to offer huge amounts over list prices. Single-family homes are not commanding as large of a premium as they were pre-pandemic, and condos are even selling below list.

We can use Months of Supply Inventory (MSI) as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three means that buyers dominate the market and there are relatively few sellers (i.e., it’s a sellers’ market), while a higher MSI means there are more sellers than buyers (i.e., it’s a buyers’ market). In October, the MSI for single-family homes decreased to 1.8, favoring sellers. The MSI for condos fell to 4.7, still favoring buyers.

In summary, the high inventory levels have made the condo market favor buyers. The single-family home market, however, once again favors sellers in San Francisco. Overall, the housing market has shown its resilience through the pandemic and remains one of the safest asset classes. Economic indicators are in an anomalous state, meaning that they are out of trend with each other. The data show that housing has remained consistently strong through this period.

We anticipate new listings to slow until excess inventory lowers. Single-family home prices will likely remain stable with no outsized gains or losses through the winter months. The median condo price will likely continue to decline. The autumn/winter season tends to see a slowdown in activity, although we may see a new trend this year with higher-than-normal sales

 

 

 


Recent Blog Posts

Real Estate

Polaris Realty: November 2022 Newsletter

November 15, 2022

Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifi… Read more

Holiday Happenings in the Bay Area 2022

November 11, 2022

It is finally that time of year again—the holidays are officially here! In just a few short weeks, Thanksgiving will be at our doorsteps, kicking off the coveted seaso… Read more

Edwardian House Styles—and how to get the look in your home!

Ron Abta  |  November 8, 2022

San Francisco is notorious for its unique architectural styles that have been duplicated across the world. A style of home that is prevalent in San Francisco yet does … Read more

Top Fall Events 2022 in San Francisco Bay Area

September 29, 2022

Fall is officially here! Break out the autumn décor, Halloween decorations, and hot apple cider. Some fan favorites of the season include: Hayrides Apple and pumpkin p… Read more

Polaris Realty: October Market Updates

September 27, 2022

The Big Story Housing market recession? Depends on who you ask. Quick Take: Home prices fell for the first time this year, declining 2.4% month-over-month, according t… Read more

Polaris Realty: September Market Updates

August 23, 2022

Natural Hazard Report

August 23, 2022

Real Estate

The Best Bay Area Beaches You MUST Visit This Summer

July 29, 2022

Real Estate

Easy Ways to Decorate Your Home in Mid-Century Style

July 29, 2022

Let's Talk

You’ve got questions and we can’t wait to answer them.

Follow Us on Instagram