Mixed Signals in San Francisco Real Estate Market

Autumn markets in counties around the Bay Area have seen significant shifts, with wide variance in the magnitude of these changes between counties. So far, San Francisco itself has seen less dramatic changes than  other local markets such as Santa Clara and Sonoma Counties.

More new listings came on market in autumn 2018, providing buyers with more choices and lessening the sense of urgency and competitive bidding.

The number of active listings on the market is significantly higher than in October 2017, 2015 or 2014, but comparable to October 2016 and 2013. Further increases might considerably alter the supply and demand dynamic.

Looking at the past 3 months, sales volume has dropped about 2% year over year. September 2018 saw the lowest volume of any September in 10 years, but then September is not typically a high volume month: It mostly reflects accepted-offer activity in August when the market slows way down.

October 2018 saw the highest number of price reductions in 6 years. Some other counties saw much more dramatic increases. This is an important indicator of changing market conditions.

The number of expired and withdrawn listings - no sale - started to climb in October 2018 above previous years. December is the big month for listings being pulled off the market for the mid-winter holiday slowdown.  This statistic will bear watching to see if there is a big jump in homes that sellers have not been able to sell at prices they consider acceptable.

Average percentage of sales price to original list price (overbidding) declined from the heat of the spring selling season, as is typical, was lower than in October 2017, 2015 or 2014, but higher than in October 2016.

Looking at the past 3 months of median sales price to final list price percentages, overbidding varied greatly by property type and by price segment, and some rates remain staggeringly high. But the increased number of listings undergoing price reductions this autumn has generally not yet had time to sell and thus be reflected in these statistics - when they do, if they do, they may well lower the rates seen in the charts above and below.

So far, those listings selling this autumn have generally sold relatively quickly. But this statistic won't reflect properties that have not yet sold, perhaps after necessary price reductions. If the market is in the midst of a sustained transition, future months may see significant adjustments in this metric.

Houses selling for $3 million and above hit an all-time high - by a tad at 38 sales - in October 2018, as reported to MLS. The great majority of these sales occurred in 2 districts, the Noe, Eureka and Cole Valley district, and the Pacific & Presidio Heights-Marina district - though smaller numbers of sales took place in a wide variety of other neighborhoods. The highest-price sales were for $32 million in Pacific Heights and $16 million in Nob Hill. There were 4.5 months of inventory at the end of October, not a particularly high level of inventory for this market segment, and down 15% from October 2017.

Luxury condos, co-ops and TICs selling for $2 million+ hit their highest point ever for the month of October - 32 sales - but were well below highs hit in previous spring selling seasons. The highest sale in October, as reported to MLS, was for $10.9 million - a 3200 sq.ft. unit in the St. Regis in Yerba Buena. However, the number of active listings also hit an all-time high in September (144) and  October (141) - 11% higher than October 2017, the previous peak (not illustrated on the sales chart below). The months supply of inventory stood at 6.5 months, which would be considered high as compared to the last 5 years - and does not include many new-project luxury condos not listed in MLS.

Short-term fluctuations are not particularly meaningful as pertaining to changes in fair market values - and big fluctuations are more common in more expensive areas. What are important are the longer term trends.

New condo construction can muddy the water of apples-to-apples comparisons of median condo sales prices over time, but the the general trends are still relatively clear.

In Pacific Heights, a neighborhood of big, very expensive houses, both median sales prices and average dollar per square foot values (illustrated below) have dropped from peaks hit in 2015-2016.