Um Yeah, Can You Say Sellers’ Market?
Market Focus from the San Francisco Association of REALTORS, DECEMBER 2012
San Francisco Housing Market Remains Upbeat Throughout Holiday Season
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Even though the city’s housing market has had to deal with month-after-month of low housing stock in 2012, it has not stopped a wave of motivated buyers from making San Francisco their home. Families have been rushing all year round to purchase and settle into their new homes, eager to take advantage of historically low interest rates, knowing that rental prices will only continue to rise.
Single-Family Home Sales
Compared to November of last year, the inventory of single-family homes for sale in the city fell by 38.1 percent, to a total of 516 properties. The number of homes under contract improved by 1.4 percent, while the number of homes sold also increased by 14.2 percent, to a total of 265 properties sold.
For homes that were priced below $700,000, the months of supply inventory dropped by 56.6 percent to a reading of 0.9 months. For higher-priced homes between $700,000 and $1.2 million, the months of supply inventory also fell, by 63.8 percent to 1.2 months.
(These exceedingly short time frames are indicative of a seller’s market, where sellers have more leveraging power over buyers who are all vying against a limited amount of properties.)
One region of the city that experienced a heightened boost of activity is in the northwestern section, more commonly referred to as the Richmond District, which includes such neighborhoods as Laurel Heights, Outer, Central and Inner Richmond and Sea Cliff. Since November 2011, the number of homes sold in this area jumped by as much as 64.3 percent, to a total of 23 properties sold.
With its close proximity to Golden Gate Park, Ocean Beach and the ethnic shopping corridors of Geary Boulevard and Clement Street, there is a never a shortage of activities to do here. Growing families will find the neighborhood vibe of the Richmond District and its abundance of turn-of-the-century Edwardian homes and stucco houses alluring. The median price for a home here is $1,280,888, which is up by a dramatic 49.8 percent from this time last year.
Another region of the city which continues to experience vibrant sales activity is in the area of San Francisco known as Twin Peaks West. Compared to this time last year, the number of homes under contract here moved ahead by 13.8 percent, while the total number of homes sold boosted by a whopping 100 percent, to 46 properties sold. Located in the mid-western part of the city, Twin Peaks West has a total of 16 neighborhoods, including the upscale and exclusive St. Francis Wood and Forest Hill, and the more approachable and family-friendly communities of Diamond Heights and West Portal. There is an array of architectural styles available for everybody here, from stately Spanish Mediterranean homes to charming craftsman bungalows. The median price for a home here is $950,000, which is up by 20.3 percent from November 2012.
Along with single-family homes, the inventory of condominiums for sale in the city fell by 36.3 percent, to a total of 660 condominiums. The number of condominiums under contract rose by 20 percent, while the number of condominiums sold increased by 25.1 percent, to a total of 259 units sold.
For condominiums that were priced between $500,000 and $900,000, the months of supply inventory tightened by 48.4 percent to a reading of 1.4 months. For luxury condominiums priced above $900,000, the months of supply inventory also dropped by 46.7 percent to 1.6 months.
One area which saw a robust increase in condominium sales activity is in the Marina, Cow Hollow, and Pacific and Presidio Heights neighborhoods of the northernmost section of the city. Since November of last year, the number of condominiums under contract here increased by 43.5 percent, while the number of condominiums sold has also magnified by 54.5 percent to a total of 34 units sold. Successful professionals, both young and old, who prefer to live in what many consider to be “old San Francisco,” will find satisfaction in any of these four neighborhoods where luxury condominiums reside next to posh shopping destinations and unique restaurants. The median price for a condominium here is around $1,041,250, which is up by 12 percent from this time a year ago.
The consumer confidence index, which had increased in October, posted a moderate increase in November. The index now stands at 73.7, up from a reading of 73.1 in October.
Lynn Franco, Director of Economic Indicators at the Conference Board, says that, “The Consumer Confidence Index increased in November and is now at its highest level in more than four and a half years (76.4 Feb. 2008). This month’s moderate improvement was the result of an uptick in expectations, while consumers’ assessment of present-day conditions continues to hold steady. Over the past few months, consumers have grown increasingly more upbeat about the current and expected state of the job market, and this turnaround in sentiment is helping to boost confidence.”
CNN Money recently reported that, “In another sign of a housing market rebound, home prices posted the biggest percentage gain in more than two years in the third quarter, according to the closely followed S&P/Case-Shiller index. The 3.6% increase from a year earlier is more than three times the rise in the previous quarter and was the biggest jump in prices since the second quarter of 2010. But that 2010 rise was much more of a temporary blip caused by a homebuyer’s tax credit of up to $8,000 on homes purchased in late 2009 and early 2010. This latest rise comes as the housing market has shown numerous other signs of recovery in recent months. The rebound is spurred by a combination of record low mortgage rates, an improving jobs market and a drop in foreclosures to a five-year low, reducing the supply of distressed homes available. There is also a tighter supply of both new and previously owned homes on the market. The improvement in housing market fundamentals have helped to lift the pace of both home sales and home building.”
According to USA Today, “Apartment rents will go up again next year for the fourth consecutive year as the economy improves—good news for landlords but tough on renters. Rents for apartments—which make up about half of all rental housing—will jump 4.6% nationally next year after a 4.1% increase this year, the National Association of REALTORS® predicted Monday [November 26, 2012] in its commercial forecast. Rents will keep rising, more than 4% a year for 2014 and 2015, says market researcher Reis.”
From the SF Chronicle, “San Franciscans appear to have avoided slashed library hours, surging swim lesson fees and fewer street sweepers, at least in the near term. The city has a projected deficit of $129 million for the fiscal year that starts July 1—the lowest shortfall in five years and one that isn’t expected to mean draconian service cuts, according to budget projections that Mayor Ed Lee’s office released Tuesday [December 11, 2012]. San Francisco’s improving fiscal picture is due to a recovering economy and the early effect of reforms implemented in recent years, including two-year budgets and pension program changes, officials said.”