A lack of supply and thriving buyer demand in San Francisco’s real estate market has the city’s housing market hot under the collar.
The market is “about as heated now as it has been at any time in the past 10 years,” according to a report Thursday by Paragon Real Estate Group, though the brokerage warned that it’s still early in the year to come to any definitive conclusions about where the year is going.
A rapidly increasing supply in the ultra-luxury condo market means that condos priced at over $3 million have the highest supply in the city, with over eight months of inventory.
But houses in particular are a coveted commodity in the California city and have far outpaced the price appreciation of condos for the past three years.
The median house price for the three months from December to February soared to $1.475 million, up from $1.293 million over the same time period the year previously. The median condo price inched up to $1.1 million over the past three months, from $1.05 million.
In February alone, San Francisco’s median house price hit a new high of $1.715 million, the report said.
The dramatic house price hike has been fueled by a lack of inventory. Only 2% of house owners are putting them on the market each year, the report said. In comparison, 5% of condo owners sell their homes each year, and inventory is further bolstered by new-construction condos.
Houses priced under $3 million are in highest demand, according to the report, with less than two months of inventory for those kinds of houses, making for a strong sellers’ market.