November 2023: San Francisco Real Estate Insider
As we push through the second week of November, the majority of the fall market new inventory is in the rear view mirror. Sure, we will have some new inventory come to market in the next few weeks, but the bulk of the fall inventory is available, pending (to be sold) or sold. Overall, San Francisco sales activity is well below the numbers from the same time period last fall.
Citywide, we are seeing single family sales down about 13% and condo sales are down about 24%. You will notice the days on the market (DOM) for the sold properties are fairly low and steady. What you can read into the low days on the market numbers is that properties sell when they are (a) move-in ready and or (b) priced to sell. If they are priced to sell, they generally receive multiple offers (and that means they sell above asking price).
Speaking of market priced properties and the value that the seller receives when it’s done properly. I wrote an offer for a buyer client on a home in the Inner Richmond this week. The home was priced aggressively at ~$2M. Fair market value was in the $2.5M range. We submitted an offer in the $2.6M range, all cash with zero contingencies. The home received eight offers; four were all cash, all eight had no contingencies. The home will sell for about $2.7M - a nice premium for the seller. This is also not an isolated scenario. As I mentioned, homes that are priced properly or have a well-planned marketing strategy are selling quickly. Keep this in mind when you read another “doom & gloom” story about the local housing market.
As we close in on Thanksgiving the chatter in the office (and in the greater broker community) is whether to withdraw or leave properties on MLS that are not selling. This is obviously a seller decision, but if all efforts to market the property produced no offers, then a price reduction (to a market price) needs to occur if the seller wants a sale prior to year end. The alternatives are the obvious withdrawal from MLS and return to market in spring, or simply decide not to sell at all.
Some interesting data points for the month. First, one way to assist the market in terms of motivating buyers is the downward movement in interest rates. This week interest rates dropped to their lowest point in some time. Hopefully this trend continues.
As far as the state of the current inventory in San Francisco, price reductions are often needed to get a home to meet the market expectations. With the high inventory counts the numbers of reductions are starting to peak for the season (but, we are still below the October ’22 numbers).
The condo market is very fragmented right now. Neighborhood condos in smaller buildings are selling. The downtown / SOMA market has yet to recover in general. The chart below provides clarity between neighborhood and downtown condo sales.
We already touched on citywide sales, but the higher priced segment is fairly flat on a year over year basis. We are seeing some positive movement in the $5M+ plus category, which has been one of the most stagnant categories for the last 18 months. Hopefully this trend continues.
Finally, if you are in the market for a house or condo and have a very specific idea of what neighborhood you want to buy into, the chart below will provide you with some metrics on the price of entry.
