The end of 2011 brought a decline in the number of homes for sale throughout the city, setting up a seller’s market with prices trending up. Stronger affordability conditions, a lower cost of owning versus renting, and declining foreclosures, continue to steer the San Francisco housing market in a positive direction.
Even though inventory dropped citywide by 48.5 percent compared to December 2010, the number of homes under contract only fell by a minimal 7.4 percent, while the number of homes sold dipped by 13.9 percent, ending the month at 199 properties. For homes that were priced below $700,000, the months of supply inventory fell by 66.8 percent to a reading of 1 month. For higher priced homes between $700,000 and $1.2 million, the months of supply inventory fell by 65.6 percent to 1.2 months. These short readings continue to indicate a seller’s market, where sellers have more leveraging power over home buyers.
Despite the low inventory, homes were still being sold in areas such as District 4, or as many know it, Twin Peaks West. Since December 2010, the number of homes under contract in this area has increased by 7.7 percent, but the number of homes sold has also risen by 14.8 percent to a total of 31 properties. Located in the mid-western part of the city, Twin Peaks West has a total of 16 neighborhoods, including the upscale and exclusive St. Francis Wood and Forest Hill, and the more approachable and family-friendly communities of Diamond Heights and West Portal. There is an array of architectural styles available for everybody here, from stately Spanish Mediterranean homes to charming craftsman bungalows.
Another location of the city which experienced an increase in sales activity is District 3, in the southwestern part of town, known as Lake Merced. Compared to December 2010, the number of homes sold in this area has increased by 61.5 percent to a total of 21 properties sold. From hiking and biking to fishing and golfing, the neighborhoods around Lake Merced offer a number of recreational activities for outdoors enthusiasts and people looking to get into shape. Real estate here ranges from upscale properties, such as those in Pine Lake Park, to more mid-priced homes around Merced Heights and Stonestown Galleria Mall.
Just like single-family homes, the number of condominiums for sale throughout the city also contracted. Since December 2010, inventory levels have declined by 57.2 percent, while the number of condominiums under contract have fallen by 20.5 percent. Despite this, the number of condominiums sold only decreased by a marginal 10.1 percent, to a total of 178 units by the end of the month. For condominiums that were priced between $500,000 and $900,000, the months of supply inventory contracted by 73.1 percent to a reading of 1.3 months. For luxury condominiums priced above $900,000, the months of supply inventory also decreased, by 63.1 percent to 1.7 months.
One part of the city which saw a robust increase in condominium sales activity is District 6, located in the central north area of town, whose neighborhoods include historic Western Addition and the recently revitalized Hayes Valley. Since December 2010, the number of condominium sold here has almost doubled, increasing by 90.9 percent to a total of 21 units. The mid-century Joseph Eichler condominiums along the Western Addition are not to be missed by prospective condominium buyers, nor can the contemporary and trendy condominiums sprouting up throughout the new Hayes Valley.
The influx of technology companies into the city continues with the most recent arrival being Salesforce.com, which just signed a 400,000-square-foot lease worth nearly $340 million. According to the San Francisco Chronicle, “The number of employees climbed by at least 1,700 in the last year, reaching about 7,000. The company expects to add many more employees in the years ahead.” More and more, companies looking for growth and new innovation are finding San Francisco to be the perfect place to live and work.
According to the most recent Case-Shiller Home Price Index, a closely watched measure of the health of the nation’s housing market, the Bay Area’s low-tier homes took a slight fall in October, down 0.9 percent, while high-tier homes priced at over $599,697 increased by 0.3 percent. The majority of homes in the city qualify as high tier, such as properties in the aforementioned Twin Peaks West, where homes in that area sold at an average of $775,500 last month.
Nationally, the consumer confidence index, which had improved in November, increased further in December. The Index now stands at 64.5, up from 55.2 in November (a reading of 90 indicates a healthy economy). Lynn Franco, director of the Conference Board Consumer Research Center, says, “Looking ahead, consumers are more optimistic that business conditions, employment prospects, and their financial situations will continue to get better.”
With pent-up housing demands, less pessimism over jobs, and improving corporate profits, more people are spending and the San Francisco housing market is expected to benefit.
Article from the San Francisco Association of Realtors
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