San Francisco Real Estate Trends

FAST FACTS

For November 2010, the Median Selling Price (MSP) for Single Family Residences (SFRs) recovered from the prior month but were still down 2% year-over-year. Condos were flat M/M and up 3.5% Y/Y

                                               MSP                  %Change         %Change
                                             June 2010               M/M                  Y/Y

           All SFRs                       $785,000               +7%                -2%
           All Condos                    $699,000               +0.1%               +3.5%

LOOKING BACK

Real Estate prices in California hit their peak in May 2007 and have dropped since then.  Prices in San Francisco did not drop by as much, or as soon as they did statewide.

For October 2010, the statewide median price for an SFR was still down 49% from the market peak in May 2007. For San Francisco, using November numbers, SFRs are down 19% and Condos are down 15% from the market peak.

Market prices began their decline on a statewide basis a full year before they began to decline in San Francisco.

Average monthly sales volume has improved this year compared to 2009. This volume improvement has led to a more stable, albeit relatively flat market through most of the last year.

 
LOOKING FORWARD

We are now in the slow season for real estate sales, which typically runs from November through January. During this time we normally see reduced inventories as sellers exit the market in the hope of more favorable conditions in the spring. This appears to be the case in many but not all neighborhoods.

The city-wide Unsold Inventory Index (UII) was 17-weeks for SFRs and 20-weeks for Condos in early December. This suggests a relatively balanced market for SFRs and a mild Buyer’s Market for Condos. However, this masks big differences in market conditions between neighborhoods.

There is excess inventory and soft pricing for Condos in the North Eastern Neighborhoods such as SoMa, South Beach, Nob Hill, Telegraph Hill and others. The UII is well above 20 weeks in many of these areas. Expect condo prices in these areas to remain soft until the unsold inventory levels decline. This situation tends to predict further price declines looking forward.

The “condo surplus” is NOT manifested in all areas. The unsold inventory of Condos in Eureka Valley (Castro area), Noe Valley, Presidio Heights and other areas is running in the range of 7 – 9 weeks. This is characteristic of a strong Seller’s Market and prices for condos in these neighborhoods should remain firm, with an upward bias as we move past January.

For SFRs, inventories in the western and southern neighborhoods (Sunset, Ingleside, Excelsior) remains characteristic of a fairly balanced market. Because these are more “entry-level” neighborhoods there has been higher sales volume and more stable pricing in these areas over the last several quarters.

The central and northern neighborhoods are almost all in a low-inventory, Seller’s Market posture for SFRs at this moment. Neighborhoods with 7 – 10 weeks of unsold SFR inventory include Noe Valley, the Marina, Glen Park, Inner Sunset, the Castro and Forest Hill. This low level of inventory suggest firm pricing with an upward bias in these neighborhoods as we move past January.

Active buyers for SFRs in the central and northern neighborhoods are likely to be frustrated by the current lack of inventory and selection. If you’re in the market right now, you will need to pounce on anything you like over the next two months.

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