San Francisco Real Estate – Complicated Market Conditions August 2020

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.

Napa County Real Estate Market Rebounds Dramatically July 2020 Report

Despite the ongoing health and economic crisis precipitated by COVID-19, the Napa County real estate market staged a remarkable recovery from the steep year-over-year declines in March and April. Demand for high-end homes, in particular, has been very strong across the Wine Country and, indeed, the Bay Area as a whole. 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 first chart below illustrates the rebound in buyer demand, as the number of listings accepting offers in June 2020 soared well above last year’s levels.

In a fascinating shift, 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: Monterey (up 61%), Santa Cruz (58%), Sonoma (47%) and Napa (37%). These are huge jumps. These 4 also have among the lowest population densities in the Bay Area. The more urban counties saw much more modest y-o-y increases: San Francisco (6%) and Alameda (7%).

Two charts illustrating the big, sudden jump in higher-price home sales activity in Napa. The county is a relatively small sales-volume market, with sales across an extremely wide range of prices. This makes many of its statistics more prone to fluctuation, especially in shorter time periods.

Closed-sales volume is a lagging indicator, reflecting offers accepted 3 to 6 weeks earlier. Therefore, the recent rebound in demand does not show up well in Q2 sales numbers – which plunged due to the crash in demand in early spring.

Median house sales prices have been relatively steady over the past 5 quarters.

Average dollar per square foot values can be significantly affected by increased sales of high-price and estate homes, especially if on larger lot sizes/ acreage. (Land value gets mixed up into house dollar per square foot value.)

The inventory of homes for sale in June 2020, though climbing rapidly, remained slightly below the level in late spring 2019.

Average days on market followed by sales price to list price percentage, both standard indicators of demand.

Home price tables for Napa County communities as well as selected markets in Sonoma. Note that some submarkets in Napa have relatively few sales across a wide range of sales prices. This makes median home price calculations less reliable.

And mortgage interest rates hit yet another historic low, adding fuel to buyer demand.

San Francisco Market Rebounds – July 2020 Report

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.

SF Trend Sheet | April 2020

• The Compass Condominium Price Tracker remained positive in April with an uptick of 0.9% YoY to $1,234/SF. Keep in mind, sales price data still reflects a proportion of offers accepted prior to the shelter-in-place order going into effect in early March.
• The Hayes Valley price tracker reported the strongest YoY increase, up 15%, to $1,337/SF; the avg. sales price was $1.187M, an uptick of 1.2% YoY.
• The Financial District-Jackson price tracker reported the largest YoY decrease for the third straight month, down 22%, to $1,203/SF — this can be largely explained by minimal closings for the FiDi-Jackson area in Apr ’20.

YoY Inventory Up 78%

• New construction continued its steep drop in activity as only 2 new contracts were signed in Apr ’20 — the shelterin-place order, which put limitations to showings and construction activity, shows signs of its effect on transaction activity.
• The new construction price tracker was down 5.5% YoY, to $1,292/SF; the
down trend in valuation YoY is partly contributed by limited closings in the high-priced segment of the market.
• New construction inventory was at 995 units in Apr ‘20, a 78% YoY increase — this is contributed in part by a combination of available inventory and limitations in the market due to the shelter-in-place order

Napa County Real Estate Spring 2020 Report

Supply & demand statistics, sales and values by city, the luxury home market, and the dwindling effects of COVID-19

June 2020

Depending on the statistic, analyses will reflect Napa County alone or the combined markets of Napa and Sonoma Counties. 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, remained 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. In fact, based on the strength of buyer demand, some analysts believe the coming months may be busier than in 2019, as sales activity that would have occurred in spring gets pushed into summer instead.

The Napa County median house sales price dropped in May 2020, but it is based on a very low number of sales across a very wide range of sales prices, so should not be taken too seriously unless substantiated over the longer term.

Interest rates hit another historic low at the end of May.

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. They are lagging indicators, and May closed-sales data to a large degree reflects the much weaker market in April.

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.

 

Napa Real Estate Market Begins to Bounce Back

Shelter-in-place caused steep drops in activity across the board in what is typically the beginning of the busy spring and summer selling seasons. However, though still well 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, year-over-year median home prices have increased in 2020, but a fair proportion of the sales behind the April median sales price 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 best 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 often substantial, year-over-year increases in median home sales prices across the Bay Area.

Long-Term Trends in Median Home Prices – 12-Month Rolling Illustration

Monthly Supply & Demand, Year-over-Year Comparisons

The next series of charts reflects the dramatic changes in seller and buyer dynamics by MONTH as compared to spring 2019. These don’t illustrate the uptick in activity in the most recent weeks.

Though significantly affected, Napa County has seen less drastic drops than most Bay Area counties.

Year-over-Year Changes in Higher-Price Home Markets

Mortgage Interest Rates

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 terrible trend can be reversed will probably be the single largest factor behind an economic recovery (after the discovery of a vaccine).

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.