2017 saw two foundational trends continue in the San Francisco real estate housing market. Prices continued their trend upward while inventory continued its trend downward. It marked the sixth straight year for higher sales prices for both single family homes and condo/loft/TIC’s.
Two changes, one already implemented and one in the making, may have a significant impact on the housing market, in San Francisco and across the country. First, the tax changes may impact buyer behavior with the reduction in deductibility of mortgage interest and possibly state income taxes and property taxes, with the latter two still up in the air.
Second, the projected three hikes in the federal funds rate by the Federal Reserve are anticipated to result in mortgage rate increases of ½ to ¾ percent by the end of 2018. Additional factors will affect mortgage rates so it’s impossible to predict where they’ll end up and how they’ll get there. No expert expects them to stay as low as they are currently.
Single Family Homes: 2017’s median sales price is up 12.2% from 2016.
There were 5.5% fewer new listings in 2017, and 1.5% more sales.
Inventory ended 2017 down 31% from 2016, the lowest level in 10 years.
78.7% of homes sold over their list price and the median percent of list price received was 113.4% for 2017.
Condo/Loft/TIC’s: 2017’s median sales price is up 9.3% from 2016.
There were 6.2% fewer new listings in 2017, and 3.4% more sales.
Inventory ended 2017 down 24% from 2016, the lowest level in 3 years.
59.5% of homes sold over their list price and the median percent of list price received was 101.9% for 2017.
The November San Francisco real estate market moved along pretty much as expected, with continued low inventory and the majority of properties selling above list price. Condo prices hit an all-time high of $1,230,000.
The proposed tax changes are very likely to affect future buyer behavior as they lose purchasing power with the loss of full deductibility of state income taxes and property taxes. That loss of purchasing power will likely dampen sales price increases. Stay tuned…
Single Family Homes: November’s median sales price eased off a bit from October’s all-time high of $1,588,000, down to $1,500,000. However, prices are still up 10.7% compared to last year.
While new listings typically fall off in November, this year’s were exceptionally low at just 112, 19% fewer than last November. The number of new listings on the market year-to-date is down 5% from 2016 while the number of sales is up 4.2%. Inventory remains very low at a 1.4 months supply, the lowest level since December 2016.
The incredibly tight supply coupled with strong demand kept the level of overbids high as well, staying at 115%, much higher than last November’s 107%. 81% of single family homes sold above the list price.
Condo/Loft/TIC’s: As mentioned above, the median sold price hit an all-time high in November. On a three-month rolling average, the median sold price is up 7.7% compared to last year.
Inventory is down 23%from October and 19% compared to November, 2016. Like single family homes, the number of Condo/Loft/TIC listings are down year-to-date compared to 2016, by 5.6%, while sales are up 3.2%.
59% of condo/loft/TIC listings sold above list price, down from 67% in October and 64% last November. The median overbid was 102%, the same as last November.
First, Just a friendly reminder that tomorrow is the last day to pay the first installment of your 2017-2018 property taxes without a 10% penalty.
To pay your San Francisco property tax, click here.
Second, I want to take just a moment to distill the thoughts I’ve been having about the current Republican Tax Reform effort: OH MY.
The tax reform plan may not really become effective due to some “glitches,” but it is probably prudent to observe some of the punitive portions of the proposed legislation directed at states with relatively high property values and therefore relatively high property taxes, which are:
Eliminating some or all of the mortgage interest deduction,
Limiting the deductibility of property tax payments; AND
Shortening depreciation on investment properties.
These things might affect many of my clients as, well, the opposite of a tax cut. While I’m happy to pay taxes in the larger sense, I don’t much like it that it that my clients are going to foot the bill for massive tax cuts to only the biggest corporations.
Of immediate and actionable interest: according to FORBES, and many other sources, both the House and Senate versions agree to limit property tax deduction to $10,000 per year. In the past, property taxes on a personal residence could be deducted without limit. If your property taxes are more than $10,000 a year on all of your personal residences, it might makes sense to pay all of them for the 2017-2018 tax year tomorrow (or, at any rate, before the end of 2017) if you can. If you’re taxes are figured using the AMT rather than itemized deductions, this change might make no difference to you at all. I am not a tax expert, just a Realtor reading the newspaper trying to make sense of it all, so please do check with your tax advisor.
Many thanks to Living415sters Anne and Jesse for pointing out this workaround to me today. I couldn’t do any of this without ALL OF YOU! Thank you for your referrals, ideas and support. read more →
The fires now occurring in Southern California– as well as those in Wine Country a few weeks ago–serve as a warning to all of us to prepare for emergencies. One place to begin is at http://www.uphelp.org/roadmap-preparedness Policyholders, a national nonprofit consumer advocacy organization based in San Francisco, provides an array of very practical tools based on 26 years of helping disaster survivors level the playing field with their insurance companies. If nothing else– download their free home inventory app and document your contents now BEFORE you face a disaster. Most of the insurance companies in Sonoma, Napa and Mendocino are requiring survivors to prepare an inventory of their lost contents– an almost impossible pressure on people who are already stressed. The link to the free app is on their home page.
We just received word that the new loan limits in 2018 for the government agencies (Fannie and Freddie) have been increased! The conforming loan limit of $424,100 has increased to $453,100, and the agency The limit for high-balance conforming loans have gone from $636,150 to $678,650.
Loans that are below these limits generally have better terms, so this is a change that can help people in a lot of different situations.
Are you currently paying PMI (Private Mortgage Insurance)?
Do you want to take some cash out of your home to do some work or financing a special need?
Would you like to refinance out of a 2nd loan to a single loan?
The benefits are open to homeowners of condominiums, Townhouses and Single Family residences, from 1-4 units. Loans on 2 to 4 units have higher limits.
This article was provided by friend and trusted resource Eric Nelson. You can reach me at email@example.com, or 408-268-2442. Please contact him if you want more information.