Market Update

I have a big statistical update for you this issue, but the highlights are a) normal seasonal market slowdown, b) buyers shift toward less expensive inventory, and c) buyers are gaining power as inventory climbs.

Statistics from the last two weeks show a slowing market, which typically occurs as the holiday season begins. Fewer new listings and fewer accepted offers. There are still large numbers of price reductions and of properties coming back on market (from deals falling through), as well as increasing numbers of listings expiring without sale and listings being withdrawn from the market. (Listings are often withdrawn for the holiday season to be relisted in the new year. Sellers who have given up on getting their price will also withdraw their properties from the market.)

MLS Hotsheet Statistics comparing the last two weeks, 11/24/08 – 12/8/08
with the 2-week period 11/10/08 – 11/24/08

Districts 1-10 (All SF)

Opinions vary but generally speaking, 4-6 months supply of inventory is considered a “balanced” market between buyers and sellers; less than 4 months is considered a sellers’ market; and more than 6 months is considered a buyers’ market. By these definitions, for the first time in many years, the residential market in most of San Francisco’s neighborhoods is moving into a buyers’ market.

 AVERAGE DAYS ON MARKET (DOM) is defined as the average number of days it took all of the properties that went under contract during the period to accept a first position offer.

MONTH’S SUPPLY OF INVENTORY (MSI) is a measure of how long it would take, in months, to sell the existing inventory at the current sales rate for the specific neighborhood and property type. MSI is defined as the number of active properties on the market for one day or more during the month, less the number of properties that have been withdrawn or expired, divided by the number of properties that have gone under contract during the month.

As this analysis was done on 12/5/08 regarding November 08 activity, the Months-Supply-of-Inventory figure is possibly skewed a little higher than it should be since a number of ratifications occurring in November may not have yet been reported to MLS.

The only districts showing a decline in MSI year to year are Districts 3 & 10 – where sales activity has picked up in recent months, probably due to foreclosure sales. Many districts saw a major increase of MSI – sometimes doubling, tripling or more – comparing 11/08 to 11/07.

Average days-on-market have increased significantly for both sold and pending-sale homes, but it is the “For Sale” DOM which particularly stands out. Many properties are sitting on the market for much longer periods of time. Subsequently, the number of price reductions has soared as well.

All data is derived from Agent Metrics, may contain errors and omissions and is not guaranteed. Statistical data can sometimes swing dramatically from month to month.