With a recent mid-September rally over at Wall Street, an improving local economy and a pent-up buyer demand for homes, REALTORS® in San Francisco are keeping busy and the housing market seems to be heading toward a state of normalcy, unseen for some years now. And, as inventory continues to drop throughout the city and the medium price for a single-family home continues to climb, we should expect to see inventory levels beginning to rise once more as sellers look to capitalize on opportunities to sell at higher price points.
Single-Family Home Sales
Since August of 2011, the inventory of single-family homes for sale in the city shrunk by 42.4 percent, to just 558 properties in total. The number of homes under contract also fell, but marginally, by 4.7 percent. By the end of last month, the total number of homes sold increased by 11.5 percent, to a total of 233 properties sold.
For homes that were priced below $700,000, the months of supply inventory dropped by 69.7 percent to a reading of 1 month. For higher-priced homes between $700,000 and $1.2 million, the months of supply inventory also fell, by 37.2 percent to 1.5 months.
One region of the city which continues to experience healthy sales activity is the area in the mid-western part of town, known as Twin Peaks West. Compared to August of last year, the number of homes under contract here has rose by 65 percent, while the total number of homes sold has also spiked by 50 percent, to 33 properties sold. Twin Peaks West has a total of 16 neighborhoods, with Mt. Davidson, the highest natural point in San Francisco, at its center. From the small town atmosphere of West Portal, to the well-kept homes of Balboa Terrace and the panoramic views of Diamond Heights, Twin Peaks West is a highly desirable location. And unlike the rest of the city, whose streets usually follow a grid type of style, the streets here follow the natural hilly contours of its topography. The median price for a home here is $1,170,000, which is up by 33.7 percent from 2011.
Despite a citywide shortage in inventory, another area of the city which has maintained positive real estate activity is in the geographic center of San Francisco, aptly named as the Central District. Since August 2011, the number of homes under contract here has increased by 39.1 percent, while the number of homes sold has jumped by 45.8 percent, to 35 properties sold. The Central District’s innate charm and countless points of interest, including Mission Dolores, the Haight-Ashbury, and the Castro, offers something unique and interesting for just about any home buyer new to the city. The median price for a home here is $1,380,000, which is down slightly by 7.8 percent from 2011.
Much like single-family homes, the inventory of condominiums for sale in the city fell by 38.6 percent, while the number of condominiums under contract increased by 24.4 percent. At the end of the month, the total number of condominiums sold increased by 35.1 percent, to a total of 304 units sold.
For condominiums that were priced between $500,000 and $900,000, the months of supply inventory tightened by 57.9 percent to a reading of 1.2 months. For luxury condominiums priced above $900,000, the months of supply inventory also fell by 65.6 percent to 1.7 months.
One region of town which saw an increase in condominium sales activity is Downtown San Francisco, in the northeast section of the city. Compared to August of last year, the number of condominiums sold here has rose by 47.9 percent, to 51 units sold. Despite being traditionally a commercial sector of the city, Downtown San Francisco does offer a number of luxury condominiums amidst the financial skyscrapers and famous landmark hotels. The median price for a condominium here is $625,000, which is up by 13.7 percent from 2011.
Another area which continues to experience vibrant condominium sales activity is in the central-eastern part of town, notably in the Rincon Hill and South Beach neighborhoods which border the waterfront. Since August 2011, the number of condominiums under contract here has rose by 26 percent, while the number of condominiums sold has jumped by 45.5 percent, from 66 units to 96 units in total. With the mayor in talks with the Golden Gate Warriors to build a new stadium along Piers 30 through 32, combined with the continuous influx of technology workers into the city, this area has moved beyond “up-and-coming” and is a recognized and sought-after destination for young professional couples. The median price for a condominium here is around $722,500, which is up by 12.3 percent from 2011.
The Los Angeles Times recently reported that, “Nationwide home prices shot up 3.8% in July, making their largest year-over-year leap since 2006, according to real estate data provider CoreLogic. The gain marks the fifth straight rise in the gauge, part of a positive swing following a year and a half of slumps. The last time prices rose so much was in August 2006, when they jumped 4.1%.”
From Fannie Mae, “Consumer sentiment regarding the housing market continues its modestly positive trend, according to results from August 2012 National Housing Survey. Supported by the expectation that home prices will rise in the next year and more saying it is a good time to sell, Americans have maintained a cautious but improving view of the housing market and homeownership. However, their stalling household financial expectations and declining economic optimism will likely mean the rate at which the housing market recovers will remain tempered.”
The consumer confidence index, which had improved in July, declined in August. The index now stands at 60.6, down from a reading of 65.4 in July. Lynn Franco, director of the Conference Board Consumer Research Center, says that, “The Consumer Confidence Index is now at its lowest level since late last year (Nov. 2011, 55.2). A more pessimistic outlook was the primary reason for this month’s decline in confidence. Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations. Consumers’ assessment of current conditions was virtually unchanged, suggesting no significant pickup or deterioration in the pace of growth.”
Earlier this month, the San Francisco Chronicle reported that, “Drawn by the relative bargains after housing’s free fall of the past few years, many foreign citizens view U.S. residential real estate as a safe place to park their euros, pesos, rupees, loonies, pounds or yuan.” The article went further to explain that, “In the nine-county Bay Area, about 6 percent of all property searches by prospective buyers come from abroad, according to Trulia.com, which gets 100 million page views on its site every month. San Francisco is by far the most popular search location for foreigners. Since it is a high-cost area with a thriving job market, it seems likely that many searchers are not looking for rental properties for investment purposes but instead are looking to move to the city.”RELATED CONTENT