The Sky Remains in Place in the SF Luxury Market

August 25, 2010

Due to the significant differences between the market for homes over 1.5 Million and homes under that price point I though that comparing it with the statistics in my Lowest Sales Volume in 15 Years? Not so fast . . . article, would be useful.

Below is a chart that shows closed sales.  The highest number of closed home sales for 2010 so far was in March.  This is unusual, but will make sense as we analyze other sales data, below.

Closed Home Sales Over 1.5 MM in SF over the past 25 Months:

Unlike the market for all home sales in San Francisco, for which ratifications peaked early in April in 2010, the luxury home market peaked at a more traditional time, in May.  The chart below shows the luxury home market that was perhaps affected INVERSELY by the government tax credits – it’s possible attention was focused on properties for which the tax credits were available.  We also see that ratifications in June and July remained relatively strong.

Accepted Offers on SF Homes over $1.5MM over the past 25 Months:

Our final measure is the months supply of inventory which is generally used to show whether it is a buyers’ market or a sellers’ market.  The market earlier in the year was a definite buyers’ market, but with the glut of ratifications in February that ate up the sitting inventory from Fall 2009, the late spring and summer market turned an advantage towards sellers.  Looking at luxury home sales over the past six months, the main factor seems to be pricing.  There were 196 homes sold in San Francisco over $1.5MM in the last six months and 144 homes either expired or were withdrawn.  Of those that sold, 80 sold over their original asking price at an average of 105.33% in an average of 24.35 days on the market.  The remaining 116 sold homes were reduced on average about 10% before receiving an offer and sold for 92.04% of their original asking price after an average of 78 days on the market.

As always in San Francisco, pricing is king and these numbers prove again s to go you that just because a seller “wants” or “needs” a price, buyers won’t move until they are perceived as a value – and then they rush to outbid each other.

The large number of listings withdrawn or expired without selling combined with low short and REO sales volume tells us that a large percentage of sellers over $1.5MM are attempting to delay until the market brings them the price they want.  After 2 years of waiting, I wonder if luxury sellers will finally be ready to sell at the prices the market will bear … It will be interesting to see what the fall brings.

Months Supply of Inventory:  SF Homes over $1.5MM over the past 25 Months: