Another month, another shift in the San Francisco market. Inventory remains tight, especially for single-family homes, which are selling fast and well over asking. Condos, on the other hand, are sticking around a bit longer.
For buyers, competition is heating up in the single-family home market, making it a tough space to break into. For sellers, well-priced homes are still moving quickly. And for those keeping an eye on the market, the numbers this month show an interesting trend that could shape the rest of the year.
This update breaks down whatโs happening with prices, mortgage rates, and inventory.
Quick Take:
- Inventory continues to be a huge problem throughout San Francisco, with continued year-over-year declines.
- Median sale prices continue to gyrate around the 2-year average, as supply and demand move roughly in-line with each other.
- Single-family homes continue to be a hot commodity, while condos continue to sit on the market.
Inventory continues to dwindle away in San Francisco
Over the past year or so, weโve seen a very concerning trend emerge in San Francisco that many of the other submarkets in the Bay Area havenโt exhibited. That is, inventory is dwindling away in San Francisco, especially within the single-family home market. While many submarkets throughout the Bay Area are seeing a resurgence in inventories, as sellers begin to list their homes again, sellers in San Francisco remain resilient in holding onto their properties. This has led to a 15.87% year-over-year decrease in active single-family home listings and a 7.70% decrease in the number of condo listings!
Single-family homes fetch the highest percentage of original price weโve seen in nearly two years
Due to the lack of supply on the market, single family homes are fetching well above asking price when they sell, making it a profoundly difficult market for first-time home buyers. The average single-family home listing sold for 113.3% of the original asking price in February, marking the highest level weโve seen since May of 2022! It is important to note, though, that weโre not seeing the same phenomenon in the condo market, as most condos sell either at the listing price or slightly below the listing price.
Supply and demand are remaining fairly balanced, for now
Luckily for buyers in the San Francisco area, supply and demand have been more or less moving in line with each other over the past couple of months. However, in order to have a meaningful change to the inventory levels weโre seeing, new listing growth will have to outstrip sold listing growth by a considerable margin for a long period of time.
Sellers control the single-family home market, while buyers control the condo market
When determining whether a market is a buyersโ market or a sellersโ market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a sellerโs market, whereas markets with more than three months of MSI are considered buyersโ markets.
San Francisco remains a divided market, as sellers have the negotiating power in the single-family home market. Whereas buyers have a bit more leverage in the condo market. Right now, San Franciscoโs single-family home market has roughly 1.2 monthsโ worth of supply, and its condo market has around 3.4 monthsโ worth of supply.
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