CURRENT MARKET TREND
The table below shows the median price increase for all home sales in San Francisco for each of the last three years. The numbers for 2014 are as of mid December. We have now experienced a third consecutive year of double-digit price increases in San Francisco for both Condos and Single Family Homes. The inventory of homes actively for sale (Unsold Inventory Index) has remained under 10-weeks for the last two years and continues to be the problem facing virtually all buyers. Or, at least most buyers with a budget under $2.5 million. Hopefully inventory will improve somewhat in the coming months as we approach the Spring of 2015.
|SFR’s||– Median Selling Price:||760,000||910,000||1,075,000|
|- Year over Year Increase||10%||20%||18%|
|Condos||- Median Selling Price:||730,000||835,000||959,000|
|- Year over Year Increase||14%||14%||15%|
Price increases over the last few years have been driven by the combination of strong local employment in high-wage sectors, strong local population growth and relatively low interest rates. These factors appear to be continuing into 2015. Looking forward we need to break down the supply-side of the equation from the demand side. On the supply-side there continues to be an acute shortage of homes for sale. This argues for continued price increases.
On the demand side we are seeing a severe lack of affordability. Most homes and condos are selling for $800 – $1,000 per square foot and the median selling price for a single family home is now over $1 million. Double digit price increases cannot continue forever and there will be a break in the recent trend at some point. One solution for buyers “at the margin” is to relocate outside of the city, which employers have facilitated in the previous boom cycle. If people cannot access reasonable housing at an affordable price they will move and they will often take their job with them. It is difficult to imagine that 2015 can bring another year of double digit price increases and this could be the year the market takes a breath.
|Moving into 2015, we are looking back on three consecutive years of double digit price increases in SF. Inventory remains extremely tight... [Read More]|
|The state-wide median price for single family homes dropped an eye-popping 59% from the market peak to the trough. Prices have since... [Read More]|
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