July 2012 Market Update
(Analytical Charts Follow the Introductory Text)
Not much new to report beyond what’s been happening for months: huge buyer demand + the lowest interest rates in history + extremely low inventory of listings = (often ferocious) competitive bidding and increasing prices. Though this trend began in the city’s more affluent areas, it has now spread to virtually every neighborhood, every property type and every price range. Which, of course, doesn’t mean that every listing, no matter how overpriced, is selling. Since closed sales activity follows the time of offer acceptance by 4 to 8 weeks, the appreciation in home values has not yet shown up in the statistics for certain neighborhoods. We believe it will soon.
Though this situation is to the advantage of sellers (after years of market doldrums), homebuyers might take consolation in the fact that the last time the market dramatically shifted after a similar downturn, in 1996 after the early nineties recession, there was a market frenzy very like ours today. However, people who bought at that time still ended up doing very well by getting in at the beginning of a market rebound that went on for many years, even before the housing bubble years began. And interest rates then were close to double today’s.
When reviewing the map analyses below, remember that median and average statistics are generalities: how they apply to any specific property is unknown. Also, some neighborhoods have relatively small numbers of sales, which make statistics less reliable and more liable to fluctuate; in other areas, it may simply be that the size/quality mix of homes sold shifted from one period to the other. Still, overall, it is clear that SF is experiencing a general surge in home values.
Explanations for the statistics referenced can be found here: Statistical Definitions
If you adjust your screen view to a 125% zoom, the charts will be that much easier to read. On Windows systems, pressing the Control and + keys simultaneously should do this quickly.
SF Median House Sales Prices and Appreciation
Many of the city’s neighborhoods are showing significant increases in the house median sales price, and this appears to be accelerating as we get deeper into the year.
SF Condo Median Sales Prices and Appreciation
Many of the city’s neighborhoods are showing significant increases in the condo median sales price, and this appears to be accelerating. (As an example of how statistics are not 100% reliable, the chart shows no appreciation for condos in Pacific and Presidio Heights over the past year: however, we believe there was indeed significant appreciation there on par with nearby areas, but the median price statistic is reflecting other factors, such as the different inventory for sale within the different time periods.)
San Francisco Home Sales: Average Dollar per Square Foot
Average dollar per square foot has been increasing in 2012, and this appears to be accelerating.
San Francisco Dollar Volume Sales
Two factors affect dollar volume: the number of sales and the average sales price. In 2012 both of these statistics have been jumping.
San Francisco Unit Sales
The number of sales reported to MLS has jumped to its highest number in over 4 years. However, there are two additional factors: new-development condo sales which are often not reported to MLS are lower than in many previous years due to the crash in building after 2008 (though this is turning around too). On the other hand, it appears that the number of “off-market” sales, not listed in or reported to MLS, has surged in 2012.
SF Home Sales by Property Type
Houses and condos make up the great majority of sales in San Francisco, though TIC sales seem to be making a big recovery in the low-inventory situation the city has found itself in.
Average Sales Price
Average sales price and median sales price are different statistics, but they’re both showing the same trend in San Francisco.
SF Home Sales by Price Range
As the market has heated up, prices have risen and distressed home listings have plunged. This is causing something of a
shift upward in the percentage of sales in the higher price segments.
San Francisco Luxury Home Sales
Homes selling for over $1,500,000 hit their highest level in years in the second quarter of 2012.
Sales Price to List Price Percentage & Days on Market
San Francisco homes selling without a price reduction are growing as a percentage of sales. They are averaging well over the asking price (multiple offers) and selling in the shortest time period in years.
Expired and Withdrawn Listings
As the market gets hotter, fewer listings expire without selling – though there are always listings that the market ignores for one reason or another, usually overpricing. Right now,the percentage of expired and withdrawn listings is incredibly low.
Long-term Trends in 2-Bedroom Condo Median Prices
These neighborhoods have all been showing significant price appreciation since the home-price crash in 2008-2009.
If this chart went back to 1995, it would show that median prices pretty much doubled between 1995 and 2000.
Percentage of Listings Accepting Offers
The stronger the buyer demand and the lower the inventory, the higher the percentage of listings accepting offers.
Every San Francisco property type is at its highest percentage in many years, and perhaps its highest ever.
Ratio of Sold Listings to Active Listings
Sold listings as a percentage of active home listings for sale is also very high, but remember that closed sales follow the market (accepted offer activity) by 4-8 weeks, so much of this statistic reflects the market heat in the previous quarter.
Distressed Home Sales as a Percentage of Total Sales
As the market rebounds and values increase, distressed home listings are in major decline (not shown on this chart) and distressed home sales as a percentage of total sales are also in decline. Since distressed home listings exert downward pressure on values, this becomes a virtuous circle in an appreciating market.
These statistics are based upon sales reported to the Multiple Listing Service (MLS) by July 4th. June data reported after that date will change the numbers but probably not significantly. We are always reluctant to make too much of statistical fluctuations over relatively short periods of time, but as virtually every statistic points to the same conclusion, we believe they indicate a genuine, substantiated trend in the market. Of course, the eruption of a new financial or political crisis could always disrupt the market. All data herein is from sources deemed reliable but may contain errors and is subject to revision.
July 2012 © Paragon Real Estate Group