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San Francisco Real Estate Market Update:2017 in Review | 2018 Looking Ahead

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.

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San Francisco Real Estate Market Update:December 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.

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Living415: Property tax due tomorrow! And, a potential strategy for saving some bucks.

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 →

San Francisco Real Estate Market Update – September 2017

Single Family Homes:
August’s median sales price continued its predictable seasonal backing off from its Spring peak, dropping 6.4% to $1,380,000 from May’s $1,475,000. However, in the same time frame last year prices dipped 7.4%. Prices are still up 10.4% above August, 2016.

Since August, 2012, the median sold price in San Francisco is up 81%.

Inventory continues to be at its lowest level, 1.6 months, since last December. This is the ongoing result of fewer homes coming on the market while sales stay fairly constant. The number of new listings on the market year-to-date is down 7% from 2016 while the number of sales is up 3.3%.

The incredibly tight supply coupled with strong demand kept the level of overbids high as well, down a bit from July but still at 114%, and 79% of single family homes sold above the list price, up from 75.9% last August.

Condo/Loft/TIC’s:
Median sold prices are up 10.8%, to $1,175,000, compared to August 2016. And, while not as great a rise as with single family homes, the median sold price is up 62.5% compared to August 2012’s $723,000.

In August, 63.4% sold above list price and the median bid was 3.2% above list price.

The number of Condo/Loft/TIC listings are also down year-to-date compared to 2016, by 10.7%. And, like single family homes, sales are up, by 2.6%. Current inventory stands at a 2 months supply.

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San Francisco Real Estate Market Update – August 2017

July’s median sales price for single family in San Francisco followed its seasonal backing off of its May peak, dropping to $1,431,000 from May’s $1,500,838.

Single family home inventory continues to be at its lowest level, 1.6 months, since last December, and its lowest July level in a decade. This continues to be caused by fewer homes coming on the market, while sales stay fairly constant. The number of new listings on the market in 2017 is down 10% from 2016 while the number of sales is up 1.4%.

The incredibly tight supply coupled with strong demand pushed overbids up as well, to 117%, the highest since September, 2015.

Condo listings are also down year-to-date compared to 2016, by 12.7%. And, like homes, sales are up, by 4.3%, leading to a 2 months supply. And, like single family homes, condos were bid up above list price to a median overbid of 107%.

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San Francisco Real Estate Market Update – July 2017

June’s median sales price for single family in San Francisco backed off a bit from its all-time high in May, dropping from $1,502,675 to $1,465,989. At the same time, single family home inventory was at the lowest level, 1.6 months, for June in 10 years. This is largely due to the fact that the number of new listings on the market in 2017 is down 8.8% from 2016 while the number of sales is up 1.3%.

The incredibly tight supply coupled with strong demand pushed overbids up as well, to 115%, the highest since October, 2015.

Condo listings are also down from 2016, by 13.3%. And, like homes, sales are up, by 6.6%, leading to a 2.2 months supply. So, like single family homes, condos sold at a median overbid of 102.5%, off just slightly from May’s 102.7%.

The exceptionally strong San Francisco economy continues to be behind these numbers. Unemployment stands at just 3.0%, down from 2016’s 3.4%. There are more jobs filled in every category tracked by the Bureau of Labor Statistics in June, 2017 than there were in June, 2016. And while the increase in the number of new jobs is slowing, jobs are still being added.

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San Francisco Real Estate Market Update – June 2017

The median sales price hit an all-time high for both single family houses and condo/loft/TIC’s in May. The incredibly tight supply coupled with strong demand pushed the prices up and the overbids as well. Single family homes sold at a median overbid of 114.7%, the highest since October, 2015. Condos sold at a median of 103% of list price, the highest overbid percentage since May 2016.

As we discussed last month, the number of new single family home listings coming on the market was down sharply in April, 25.5%, and we saw that repeated again in May with a 12% year-on-year drop.

Likewise, the precipitous decline, 33.5%, in new condo/loft/TIC listings coming on the market in April, was followed by a 23% drop year-on-year for May. This is the third double-digit monthly year-on-year decline for new condo/loft/TIC listings this year.

The total number of single family homes sold was up 5.5% in May while condo/loft/TIC sales were unchanged.
Inventory stands at 1.8 months for single family homes, down 25% year-on-year, and 2.3 months for condo/loft/TICs, also down 25%.

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December 2016 – Ho Ho Hum

Entering the heart of the holiday season, the number of sales and sales prices were mixed in the single family home and condominium/loft/TIC markets.

Single family home median sales prices dipped in November to $1,372,500 from October’s all time high of $1,407,500, but are still up $110,000, or 8.7%, from November, 2015.

In condominium/loft/TIC sales, median sold prices have been bobbing up and down between $1,000,000 and $1,150,000 for the past two years, and closed November at $1,044,500, just above the $1,023,500 where they started in January. Year-on-year, there is a 6.9%, or $78,000, decrease in the median sold price.

Inventory levels in November took their typical seasonal nosedive, dropping to just 1.7 months of inventory for single family homes and 2.1 months for condo/loft/TICs.

Finally, the median percent of list price received for single family homes was the lowest it’s been since January 2015: 106.8%. This could indicate that prices are peaking in the single family home market.

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The information contained in this report is taken from a variety of sources including SFARMLS, SPUR, the City of San Francisco Planning Department, the Federal Reserve Bank of San Francisco, the Bureau of Labor Statistics, and others. The data may have errors, omissions and be subject to revisions and is not warranted. It is deemed reliable but is not guaranteed. Questions may be directed to Keller Williams San Francisco | 415.483.9285 | CalBRE 01995149 | © Keller Williams San Francisco 2016 read more →

November 2016 – After the Election

The local election brought two significant changes that will affect the San Francisco real estate market. First, Measure W passed, significantly raising the transfer tax on residential and commercial properties of $5,000,000 or more, from an additional 12.5% at the low end to 20% at $25,000,000 and above. Second, measure X now requires developers who convert Production, Design & Repair Use, Institutional Community Use, and Arts Activities Use to not only replace the space on a 1:1 basis but also get a conditional use permit from the Planning Department to do so. What this means is that developers can no longer purchase buildings and convert the use to office or residential, even if those uses are allowed for that area, unless they also build back the use they’ve displaced.

An unanticipated negative result of the presidential election is that interest rates jumped .25%-.375% higher in just two days. This is only the second time that significant a rise has happened in two days. The immediate effect of this on housing sales is that buyers borrowing capacity just dropped.

For example, let’s say someone qualified last week for a $1,000,000 loan at 3.75%.

This week, with the higher interest rate, they only qualify for a $956,000 loan. So, buyers can afford less so offers go down, and then sales prices go down.

In looking backwards at the sales data, October brought its seasonal home sales boomlet, with the second highest number of single family home sales this year. The median price of $1,407,000, 11% higher than last October, and just above May’ 2015’s previous peak of $1,400,000.

The number of Condos/TIC’s sold was down but the median price popped up to $1,164,000, just above June’s peak of $1,162,500. That’s up 6.3% from October 2015.

PowerPoint PresentationPowerPoint PresentationPowerPoint PresentationThe information contained in this report is taken from a variety of sources including SFARMLS, SPUR, the City of San Francisco Planning Department, the Federal Reserve Bank of San Francisco, the Bureau of Labor Statistics, and others. The data may have errors, omissions and be subject to revisions and is not warranted. It is deemed reliable but is not guaranteed. Questions may be directed to Keller Williams San Francisco | 415.483.9285 | CalBRE 01995149 | © Keller Williams San Francisco 2016 read more →

August 2016 – The Shift Has Started

At last week’s Keller Williams Mega Camp in Austin, Texas, Co-Founder and Chairman Gary Keller focused heavily on the Shift that is beginning in the real estate market and how sellers, buyers and agents must be preparing for it.

What’s the Shift? It’s the inevitable cyclicality of the real estate sales market. It is the constant tide flowing from a sellers market to a balanced market to a buyers market to a balanced market and back to a sellers market.

In San Francisco and the Bay Area, we have been in a strong sellers market for the past three years. This year in San Francisco, single family home median prices peaked in February at $1,390,000 and have been trending down since then, currently at $1,335,000 in July. In a normal buying season, median price peaks in June or July (as it did in the past three years).

198 single family homes sold in July, down sharply from June’s 245, and also the lowest number of July sales in four years.

In the Condo/Loft market, median price has been bouncing around $1.1M for the past 16 months. This June’s $1,162,500 was the top so far (a fraction above last June’s $1,150,000), but it dropped sharply ($100,000!) in July to $1,062,500. Count on June being the top of the market for this cycle.

Mimicking the falling number of single family home sales, the 220 condo/lofts sold in July was also the lowest number of July sales for the past four years.

How to prepare? When pricing property, sellers and agents should be looking at three sets of data:

  • Past Sales
  • Current Competition
  • Forecasted Trending

Once the market has started shifting, the critical action is to get out ahead of a falling curve. A great question to ask is “How much of the gain from the last three years do you want to give up? Because in a down-trending market, that’s the cost of incorrect pricing – the longer the property is on the market, the more of that gain is lost.

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As in June, year-on-year Median Days on Market are up considerably for Resale Condos-Lofts clocking in this month at a 50% increase over July 2015. Likewise, Single Family Homes also continued the upwards trend , at 37% ahead of last July’s number. We still have a strong sellers market, but buyers are shopping more and standing on the sidelines more.

Months Supply of Inventory dropped slightly from June to July for Resale Condos-Lofts and was level for Single Family Homes. It is up, however, year-on-year (see next page for details)

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Single Family Homes New Listings dropped by 18 from June to July, 2016 and is also down 124 year-to-date from 2015.

Resale Condos/Lofts is also down year-to-date, with 76, or 4.4%, fewer new listings in 2016 than 2015.

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Why Months of Inventory is Rising:

Single Family homes have had 115 fewer sales in 2016 than 2015, while the number of new homes on the market has also fallen, but only by 124. Likewise, Resale Condo/Lofts have had 92 fewer sales year-to-date than 2015, while the number of new listings has also fallen, but only by 76.

So, we have a less active sales market, coupled with a slight inventory build up, which leads to a larger months-of-inventory calculation. read more →