“Don’t you think we should ask for more than a million dollars? A million dollars isn’t exactly a lot of money these days,” Number 2 – Austin Powers International Man of Mystery.

If your clients are looking to buy a home in San Francisco after relocating from elsewhere in the nation, they can be forgiven for making the same mistake Austin Powers did in thinking he could get what he wanted (in his case, world domination) for a mere $1 million. Newcomers to the area are often shocked to find that $1 million might not get them all the amenities in a home that they desire.

April, the kick-off month of peak spring home buying, found the median price for single-family homes in San Francisco reaching the $1 million mark, an increase of nearly 32 percent over the April 2012 median price. Click here to read SFAR’s press release about prices hitting the $1 million mark.

Add to escalating prices, high demand, tight inventory and stiff competition from investors who can pay all cash and homebuyers may too take a moment’s pause (with pinky finger firmly resting at the corner of one’s mouth).

Single-Family Home Sales

Compared to April of last year, the inventory of single-family homes for sale in the City fell by 19.6 percent, to a total of 541 properties. The number of homes under contract rose by 11.5 percent, while the number of homes sold dropped by 4.1 percent, to a total of 212 properties.

For homes that were priced below $700,000, the months supply of inventory dropped by 42.6 percent to 1.1 months. For higher-priced homes between $700,000 and $1.2 million, the months supply of inventory also fell, by 20.6 percent to 1.1 months.

Properties being sold within just a few weeks of listing indicates a strong sellers market. Sellers are, in most cases, getting multiple offers due to limited inventory.

One region of the City experiencing a boost of mojo is the Central East section known as District 9 which includes the neighborhoods of Portero Hill, Dog Patch, Inner Mission and Mission Bay. Since 2011, the inventory of homes in this district has shrunk more than 42 percent with just 48 properties for sale in April 2013. At the same time, median prices in the area hit a 2-year high in April 2013.

The Inner Mission neighborhood has become a popular area for young tech professionals, due to its proximity to downtown, availability of mass transit, shuttles to Silicon Valley and an abundance of popular restaurants. The median price for a home here is $1,001,000, up 33 percent from the same time last year.

Condominium Sales

Along with single-family homes, the inventory of condominiums for sale in the city fell by 17.1 percent, to a total of 740 condominiums. The number of condominiums under contract rose by 20.6 percent, while the number of condominiums sold decreased by 0.3 percent, to a total of 295 units.

For condominiums that were priced between $500,000 and $900,000, the months supply of inventory tightened by 46.2 percent to 0.8 months. For luxury condominiums priced above $900,000, the months supply of inventory also dropped by 64.2 percent to 0.9 months.

One area in the City, perhaps not often thought of for condos is District 1, which includes the neighborhoods of Richmond and Sea Cliff, which sits just south of the beautiful Presidio. Condos in the area have been a hot commodity with inventory there decreasing by nearly 60 percent over the last two years. The median price for a condo in the district reached $810,500 in April 2013.

Outlook

The Conference Board Consumer Confidence Index®, which had declined in March, increased in April. Lynn Franco, Director of Economic Indicators at The Conference Board said: “Consumer Confidence improved in April, as consumers’ expectations about the short-term economic outlook and their income prospects improved. However, consumers’ confidence has been challenged several times over the past few months by such events as the fiscal cliff, the payroll tax hike and the sequester. Thus, while expectations appear to have bounced back, it is too soon to tell if confidence is actually on the mend.”

The California Association of REALTORS® (C.A.R.) reported California home sales and prices experiencing strong increases in April, with the median price surpassing the $400,000-mark for the first time in five years. In addition, homes across the state sold more quickly in April 2013, with the median number of days dropping to 27.9 from 48 days in April 2012.

CNN Money recently reported that, “during the housing bust, sales were often derailed by low-ball appraisals that fell far shy of a home’s selling price. But now, as home prices climb and housing inventories shrink, appraisers are valuing homes at or above their selling prices.”

According to SF Gate, “San Francisco rental rates rose 15.8 percent in the first quarter of 2013 compared with the same time last year, to an average of $2,663 for all size units. Studio apartments averaged $2,075, up 16.5 percent in a year. The steepest rise came in one-bedroom, one-bathroom apartments, which are now $2,611 – up 19.9 percent in the past year and up 30 percent from two years ago.”

Article from the San Francisco Association of Realtors.

March often signals the start of spring and has historically brought an influx of property listings onto the market as seasonal home buying gets underway. In San Francisco, despite more properties being listed for sale in March than in either January or February of 2013, inventory levels are still below year-over-year figures.

The lack of inventory has fueled a drastic jump in median home sale prices for both single family homes and condominiums at the city and state levels.

According to the California Association of REALTORS®, strong sales in higher-cost coastal regions, coupled with heated market conditions have helped drive California’s median home price to its highest level in March since May 2008.

In San Francisco, that demand has resulted in 51 percent of single-family homes sold for more than 5 percent over list price and 35 percent of condos sold for more than 5 percent above list price.

SINGLE-FAMILY HOME SALES

Compared to March of last year, the inventory of single-family homes for sale in the city dropped by 34.2 percent, to a total of 487 properties currently for sale. The number of homes under contract also fell by 10.2 percent, while the number of homes sold decreased by 9.9 percent, to a total of 201 properties. The decrease in sales is a direct result of lack of inventory.

For homes that were priced below $700,000, the average number of days on market fell 55 percent to just 25 days. For higher-priced homes between $700,000 and $1.2 million, the average number of days on the market fell by 53 percent to 26 days.

District 6 in San Francisco exhibited the largest gain in median home prices of all the districts, jumping 102 percent in March 2013 compared to March 2012 figures. The jump was a result of very few home sales during the month. The median home price in the District (which includes the neighborhoods of Hayes Valley, Western Addition, NOPA and Lower Pacific Heights) rose to $2.2 million in March.

CONDOMINIUM SALES

Just like single-family homes, the inventory of condominiums for sale across San Francisco’s 10 Districts fell by 27.6 percent, to 682 condominiums. The number of condominiums under contract, meanwhile, grew by 3 percent to a total of 313.

For condominiums that were priced between $500,000 and $900,000, the months supply of inventory decreased by 28.6 percent to 1 month. For luxury condominiums priced above $900,000, the months supply of inventory dropped by 41.6 percent to 1 month.

District 8 in San Francisco showed the largest jump in median sales price for condos, bounding 65 percent over March 2012 numbers. The median price for the area (which includes Telegraph Hill, Nob Hill and Russian Hill) was $1.07 million.

IN THE NEWS

Consumer Confidence Falls in March

Lynn Franco, Director of Economic Indicators at The Conference Board recently said in a statement, “Consumer Confidence fell sharply in March, following February’s uptick. This month’s retreat was driven primarily by a sharp decline in expectations, although consumers were also more pessimistic in their assessment of current conditions. The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.”

Highest month-to-month median price jump since 1979

The California Association of REALTORS® highlighted the record jump in statewide median home sales prices in a recent press release saying, “The statewide median price of an existing, single-family detached home climbed 13.7 percent from February’s $333,380 median price to $378,960 in March, reversing a two-month decline.  The month-to-month increase was the highest since C.A.R. began tracking this statistic in 1979. The March price was up 28.2 percent from a revised $295,630 recorded in March 2012, marking the 13th consecutive month of annual price increases and the ninth consecutive month of double-digit annual gains.”

Better to rent or buy?

CNNMoney recently categorized San Francisco as a one of the 10 major cities that it is better to rent in than to buy in. The report said with home prices still among the highest in the nation, it can take at least five years before buyers begin reaping the financial benefits of homeownership.

Article from the San Francisco Association of Realtors

February, a month often spent reflecting on love, brought with it continued affection for home sellers in the San Francisco residential market. Buyers, however, were not as enchanted. The month was characterized by increasing residential real estate demand and shrinking supply, resulting in bidding wars between buyers that continue to send home prices upward. Meanwhile, real estate agents have been employing both old and new tactics to entice homeowners to sell, from dropping flyers door-to-door, to blasting potential clients through social media and email channels.

Single-Family Home Sales

Compared to February of last year, the inventory of single-family homes for sale in the city dropped by 38 percent, to a total of 430 properties. The number of homes under contract also fell by 20.1 percent, while the number of homes sold decreased by 30.8 percent, to a total of 126 properties sold.

For homes that were priced below $700,000, the months supply of inventory shortened by 51.4 percent to just 1 month. For higher-priced homes between $700,000 and $1.2 million, the months supply of inventory also fell, by 29.1 percent to 1.4 months.

With homes on the market selling in weeks, rather than months, homeowners are wise not to set their hearts on a particular property or neighborhood. A prime example is the Central District, made up of a diverse array of neighborhoods including Cole Valley, Mission Dolores, Haight Ashbury, Noe Valley, Twin Peaks, Claredon Heights and Glen Park. Since February 2011, the number of homes sold in this area has jumped more than 40 percent, while just a handful – 20 total – were sold in February.

With its close proximity to the beautiful Golden Gate Park, family-friendly Noe Valley and the foodie haven that is the Mission District, there may be a shortage of property, but there is no shortage of entertainment in this sought-after region.The median single-family home price here is $1,602,500, up just 2.2 percent from a year ago. Year over year, the average number of days homes stay on the market is just 29, down from 53 in 2012.

Condominium Sales

Following similar trends as single-family homes, the inventory of condominiums for sale in the city fell by 33.3 percent, to a total of 612 condominiums. The number of condominiums under contract fell by 5.2 percent, to a total of 191 units.

For condominiums that were priced between $500,000 and $900,000, the months supply of inventory tapered by 40.2 percent to 1.1 months. For luxury condominiums priced above $900,000, the months supply of inventory dropped by 38.9 percent to 1.7 months.

One area of the city with limited condominium inventory is the Northeast District encompassing North Beach, Russian Hill and Nob Hill. Low supply has helped push up demand and median price, which grew by 10.9 percent. The median home price here rose to $696,000 over the past year, while the number of condominiums sold decreased to 117 from 187. With awe-inspiring views of the Bay from the neighborhoods of Russian and Nob Hill and proximity to North Beach, the Little Italy of San Francisco, condominiums in the area were snapped up quickly. Staying on the market an average of just 45 days.

Outlook

The Consumer Confidence Index®, which had declined in January, rebounded in February. At the end of February, The Index stood at 69.6, up from 58.4 in January. Lynn Franco, Director of Economic Indicators at The Conference Board said in a statement, “Consumer Confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated. Consumers’ assessment of current business and labor market conditions is more positive than last month. Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions. Income expectations, which had turned rather negative last month, have improved modestly.”

The California Association of REALTORS® highlighted the lack of inventory available for buyers in a recent press release. “The demand for homes remains solid, but a shortage of homes for sale, especially in the lower-priced segments, is negatively impacting housing sales,” said C.A.R. President Don Faught.  “Sales of homes priced above $500,000 continue to be strong, posting nearly 31 percent higher than a year ago, while homes priced below $300,000 were down 27 percent from last February due to fewer available homes for sale.”

A recent SFGate report shed some light on the city’s shrinking inventory, saying that home sellers remain reluctant to put their homes on the market for a number of reasons including: being underwater on their mortgages, not wanting to have to go through a short sale and sellers continuing to hold out for higher offers.

Article from the San Francisco Association of Realtors