San Francisco housing market off to hot start in 2021

February 25, 2021

This is a re-posting of an article written by Ted Anderson of the San Francisco Business Times.

Demand for homes has ticked up in San Francisco this winter with new numbers from January showing just how hot the market has become.

The city is experiencing one of the busiest midwinter selling seasons in history, according to a recent Compass Real Estate report, which showed San Francisco saw a 67% increase in home sales compared to January 2020. Midwinter is typically a very slow period for sales, but the pandemic changed that dynamic with huge year-over-year increases in monthly home sales volumes.

December was also the busiest month of 2020 for closed sales in San Francisco, according to the Compass report, something that has never been seen before.

Jennifer Rosdail, a Keller Williams Bay Area broker associate, told me she’s been very busy so far in 2021 within the $1 million to $3 million sale range and also is seeing prices increase compared to earlier last year — including with condo sales, which slumped the most in the city during 2020. She said in one 10-day period in February, her team sold nine homes, almost one per day.

“February is usually pretty hard to sell anything because there is no inventory,” she said.

While the number of new listings peaked in October 2020 and has fallen off since then — which is typical during the winter — inventory levels this mid-winter remained much higher than in previous years. And another big shift in the market now is that demand for condos, mostly in smaller buildings as opposed to those in high-rises, is beginning to tick up again.

“I’ve heard of condos getting 20-plus and 30-plus offers when you couldn’t give them away in December,” Rosdail told me. “I think the gain is going to be most dramatic in condo prices between December and February closing because condo prices had been artificially deflated.

“It’s a very striking difference from two and a half months ago,” she said.

Rosdail gave an example of a condo she had listed in the fall in Bernal Heights that got weak offers mid-December that the seller declined, but after taking it off the market for 30 days and reintroducing it, the condo immediately fetched 9% above the highest offer garnered in December.

In terms of buyers, she told me she is seeing a mix of Bay Area people returning after being out of state for some time as well as local renters who’ve simply grown tired of renting during the pandemic and now want their own home.

“One thing I’m hearing across the board is, ‘We want to move because our place isn’t big enough,’ and ‘Because or Covid, I get to work from home more than ever before, so I need a bigger place,'” she said.

And it wasn’t just San Francisco. Across the entire Bay Area, the 4,704 home sales in January 2021 represented a 38% increase compared to the same time last year. Specifically, home sales for $2 million to $2.9 million were up 115% compared to January 2020, while homes selling for $3 million to $4.9 million were up 52%, according to the report. Meanwhile, for luxury homes of $5 million and above, sales increased by 57% compared to the same period last year.

In terms of spring, however, Lucier said he expected normal seasonality to return, but added that inventory levels are anybody’s guess looking that far forward.

Source: San Francisco Business Times