Tag Archives: Sellers

Overheated Real Estate Market? Yes. Bubble? We’re Saying No…

Many adjectives are used to describe San Francisco, but normal isn’t a common one – and the same can be said about our real estate market. Even taking into account its tendency to be different in one way or another, this past spring’s market was overheated by virtually any definition. Surging consumer confidence and huge buyer demand chased a deeply inadequate supply of homes for sale, abetted by interest rates so low that loans – factoring in inflation and mortgage interest deduction – were almost like free money. All this led to an extreme seller’s market, a feeding frenzy and dramatic price appreciation.

But not, in our opinion, a bubble. The Economist, one of the first to sound the alarm for the last bubble, sees no sign of a U.S. housing bubble, basing its conclusion upon historical comparisons of home prices with rents and incomes. Also, it is not unusual for the market to go somewhat crazy following a 4-5 year down cycle after all the repressed demand bursts forth – this happened in 1996-1997 too. Besides which, we are only about 18 months into the current recovery. Though real estate is susceptible to sudden economic and political shocks, in past cycles, recoveries have typically lasted at least 6-8 years before peaking. That doesn’t mean there won’t be any short-term market adjustments, up or down, for one reason or another, along the way.

There are some signs of a normalizing market. After a year of declines, the number of new listings in the 2nd quarter was a little higher than the 2nd quarter of 2012. Though this inventory was quickly gobbled up and overall supply remains very low, it’s a good sign more sellers are entering the market. Median prices may be leveling off after spring’s big pop – it’s still too soon to be sure, but summer often sees a cooling down. It’s not welcome news to buyers, but interest rates have increased from extreme lows – though remaining very low by any historical scale. (See below: The Sky is Not Falling.) The distressed home segment, which distorts markets, is disappearing in the city and declining everywhere. And new-home construction continues to increase: even though we won’t see much of this new inventory until 2014 and later, it’s a very positive sign.

San Francisco Median Home Prices

For both houses and condos, the second quarter saw jumps well above previous peak values. Median sales prices are affected by other factors besides changes in value – seasonality, inventory, buyer profile, big changes in the distressed and luxury home segments – but the dramatic increases do reflect rapidly climbing home values in the city. Though all SF neighborhoods have been experiencing striking appreciation, this does not mean that all of them have now exceeded previous peak values.

Sales Over & Under List Price

This chart illustrates the enormous percentage of listings that sold for over – and sometimes far over – asking price. One in four houses sold for 20% or more above asking, which in San Francisco often equals hundreds of thousands of dollars.

San Francisco Luxury Home Sales

No market segment has been affected more dramatically by the recovery than luxury homes. In an inventory constrained environment, it has far out-performed the general market in unit sales – general unit sales were actually down, second quarter, year over year. Our new report also delineates the neighborhoods which dominate high-end house and condo sales: SF Luxury Home Report

Interest Rates: The Sky is Not Falling

Not to diminish legitimate concerns regarding rising mortgage rates and their effects on housing costs, but this graph puts recent increases in context. At any time 2011 and before, the current interest rates, even after their recent big percentage jump, would be reason for conga lines of celebration in the streets. Rates had to rise from their historic and artificial lows – how far and fast this may continue is unknown to us, but we don’t presently expect big shocks to the real estate market in the immediate future.

Very Few Price Reductions

89% of second quarter sales sold quickly without price reductions, at an average of 8% over list price – a clear indication of overheating. Still, not every listing sold without a price reduction and some didn’t sell at all, but ended up withdrawn from the market – in the last quarter, over 300 listings. (Many of these will eventually be re-listed, often at lower prices, and then sold.)

What Sells Where

What district of San Francisco has more house sales than any other? Which area has far more condo sales? You may be surprised at the answers.

Distressed Home Sales

The distressed home market in San Francisco is dwindling into insignificance. In most neighborhoods, the effect of these sales has disappeared altogether.

New Listings Coming on Market

The second quarter saw an increase in new listings not only against the first quarter of the year, which is normal, but against the second quarter of 2012. This is a hopeful sign if it continues.

Months Supply of Inventory (MSI)

Even with the increase in new listings in the second quarter, inventory remains drastically low by this measurement of demand versus supply.

Listings for Sale

Average Days on Market (DOM)

Time on market before acceptance of offer has also hit historic lows for virtually every property type in the city.

Percentage of Listings Accepting Offers

This is another clear statistic measuring demand against supply, and it is at historic highs.

All data from sources deemed reliable, but may contain errors and is subject to revision. Statistics are generalities and how they apply to any specific property is unknown. All numbers should be considered approximate.

 

San Francisco’s Real Estate Market Surge Is A Doozy

For further evidence of San Francisco’s housing recovery and new peak (for Condos and Single Family Homes), have a look at these numbers as they pertain to short-term appreciation trends.

This chart breaks down the rise in values occurring over the past 2 ½ years. Though it appears 2013 prices surged after the first quarter, the surge actually started in March, which is when the market really started to reflect offers negotiated in 2013. January and February sales mostly reflect the holiday season market, when the higher-end home market typically checks out. We prefer quarterly or longer time periods because they make for more reliable statistics: monthly statistics often fluctuate without great meaning. The high overall median prices achieved in March-May may drop somewhat during the summer due to seasonal and other factors.
[Click Images to Enlarge.]
Median_SFD-Condo_by-Qtr_Short-term

Still more graphs and data to come, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Data Source: Paragon Real Estate

San Francisco Condo Market Exceeds Previous Peak Values, Outpaces Single Family Home Sales In The Process

Not to be outdone by yesterday’s news of the Single Family Home recovery in San Francisco, today we present some data about all those condos dotting our skyline and filling our neighborhoods.

Previous peak values for city condos occurred in 2008, and once again we’ve taken the highest-end sales (over $2m) out of the analysis since they distort average statistics. As with houses, condos sales values over the last 3 months have exceeded previous peak values. Condos now make up the largest percentage of home sales in the city.
[Click Images to Enlarge.]
Condo_Median-Averages_Change

Over the past 5 years, the San Francisco market has switched from being dominated by house sales to being dominated by condo sales; with the continuing construction of large condo projects, we expect this trend to continue. TIC sales have dropped significantly over that time period, both as a percentage of sales and in actual unit sales: This is due to a number of complex issues such as changes in city condo conversion and tenant protection regulations, and availability of financing.
Prop-Type_Percentages-Changes

We still have a ton more graphs and data to share with you in the next few days, so make sure to check back, get theFrontSteps delivered to your inbox, and/or bookmark Our Stats & Numbers page.

Time to sell? Rolling the dice to see if prices can still go higher? We did some recent comparables for a building in the city that has 180+ units, and there is currently not one unit for sale in the building, yet demand is through the roof. That building is not unique. Your neighborhood is not unique. If ever there is a time to sell and get out of San Francisco real estate (on top, or damn near it), now might be your time.

Data Source: Paragon Real Estate

Thinking Of Selling Your Property? Read This First

Sellers, it’s time. We need your inventory, and look how happy you could be!

Alex thanks for selling my home as quickly and painless as possible at a price way beyond my expectation! I especially liked that you provided expert advice/service from staging, lighting and photography to make this a success. Using [electronic signature solutions] for all document signing made my life so much easier, and not to mention saving wasted paper from going into the environment. You keep up with the latest trends, you have access to new and potential audience/followers via social networking sites, and you’re just damn good at what you do so, THANKS!!!!

Cheers,
Judy

Brings a tear to one’s eye, doesn’t it. You’re welcome Judy! Thanks for the great testimonial. Call us when you’re ready to buy.

And to all of you other sellers, did you notice how good to the environment we can be? I’ll even come meet you on my bike. Just give a shout, and we’ll get the ball rolling to getting you top dollar on your property too.

-More Testimonials [theFrontSteps]
-Maximum Overbid Of The Week: 235 28th St, Noe Valley [theFrontSteps]

Hey Buyers! Turns Out There’s More Inventory Than You Thought

Have a look at what hit our email in the past couple months, and the companies heavily marketing “pocket listings”, “off market” property, or “not on MLS” opportunities.

You, the buyer, would probably like to know about these opportunities, wouldn’t you? Well…you can’t. Not until these brokerages wake up and join the year 2013, move beyond “private” or internal email as the method of choice for delivering these opportunities, look to social networks for some guidance as to where the buying (and selling) public lives, and get with the program!

Pacific Union, McGuire, Zephyr, Paragon, TRI Coldwell Banker, Vanguard, Sotheby’s, the list goes on and on…you ALL have pocket listings, and you’re all marketing them “privately”, so let’s make an effort to encourage each other to participate in an alternative marketplace to bring these opportunities to your fellow agents and the public, rather than continuing to shove this growing marketplace under the massive bureaucratic rug that is our National, State, and Local Association of Realtors. And for heaven’s sake, quit throwing your colleagues (Climb Real Estate) under the bus for taking a step in the right direction! (You know who you are.) It’s high time an alternative to the MLS takes shape, and the opportunity is right here and now.

[The same properties shown above, with links to the site:]
-Dominican Estate [Decker Bullock/Sothebys]
-53 Clifford Terrace [Vanguard]
-1299 Bush Street [Vanguard]
-219 Brannan [Vanguard]
-524 Roosevelt [Vanguard]
-2876 25th Ave [Vanguard]
-466 Hill [Vanguard]
-2509 Polk [McGuire]
-855 Folsom [McGuire]
-2094 Bush [McGuire]
-66 Parker [McGuire]
-2200 Pacific [McGuire]
-171 Caznea [McGuire]
-615 Buena Vista West [Sotheby's]
-2245 Francisco [Sotheby's]
-29 Oak Springs [Sotheby's]
-26 Sanford Lane [Pacific Union]
-1200 Laguna [Zephyr]
-1278 Stanyan [Zephyr]
-50 Lansing [Zephyr]
-Nob Hill Secret address [TRI Coldwell Banker]
-2325 Divisadero [TRI Coldwell Banker]
-2220 Sacramento [TRI Coldwell Banker]
-465 10th St [TRI Coldwell Banker]
-6 Emlin, Kentfield [TRI Coldwell Banker]
-595 12th Ave [TRI Coldwell Banker]
-850 Powell [TRI Coldwell Banker]
-287 Mangels [Barbegelata]

[Editor's Note: Some of these properties were placed on PocketListings.net, and others have since hit MLS and are now sold, but they did land in our email a very short time ago. You can expect some of these links to be killed by day's end, due to panicking brokerages.
Finally, if you'd like to be alerted when these opportunities hit our inbox, drop us a line, and we'll figure out a way to get them to you.]

-PocketListings.net: How To Tutorial [blog.pocketlistings.net]
-Climb Real Estate, PocketListings.net Join To Bring You More Buying And Selling Opportunity [theFrontSteps]
-It’s not listed, but it’s definitely for sale [New York Times]
-Remaking Real Estate, Again [SF Gate]