San Francisco Shifts to a “Buyer’s Market”

January 12, 2009

SF is one of the world’s most desirable places to live and still has the “strongest economy in the state”* but with September’s deterioration of financial markets, the real estate market underwent a seismic shift. Sales and median prices declined dramatically. Price reductions, time on market, and the months-supply of homes for sale soared. Where the market was strongest-generally the high end-activity dropped precipitately. Areas with the highest foreclosure rates-in the less affluent southeast quadrant of the city-saw large increases in sales. Some offers are being accepted well below asking price. It is too early to say exactly what this means for 2009: between macro-economic conditions and the holiday season, many neighborhoods had too few sales for meaningful statistics. And medians and averages are always generalities. Still, after years of being mostly a seller’s market-high demand, low supply, multiple offers over asking price-SF has made the transition to a buyer’s market-more choice, more negotiation, lower prices and low interest rates. This trend may well spark an upswing in sales in 09.

Comparing November 2008 with November 2007, SF house sales declined by 26%, condos by 55%, TICs by 74%, and 2-4 unit buildings by 65%.  This reflects a market in shock from national economic conditions.

Comparing November 2008 with November 2007, the average sales price as a percentage of list price for houses accepting offers within 30 days of going on market declined from 104.1% to 99.8%. Though still high by national standards, this is the first time in years that the average sales price has been below average list price for houses selling quickly in SF.

2008 San Francisco Home Market by Price Range
(As of 12/12/08)

Price RangeFor Sale        2008 Sales   Inventory Supply (MSI)
$500k & under




       4.7 months 
$501k – 1m




       5.5 months 
$1001k – 2m




     12.1 months
$2001k – 5m




     13.8 months
$5001k – 10m




Over $10m






Months-Supply-of-Inventory (MSI) is a measure of how long it would take to sell the existing inventory of homes at current sales rates. Generally speaking, an MSI below 4 is considered a seller’s market and an MSI over 5 or 6 is considered a buyer’s market.

Comparing 11/08 to 11/07, the MSI for houses increased from 3.8 to 4.8 months; for condos from 3.2 to 7.8 months; and for TICs from 4.2 to 8.9 months. Year over year, the MSI for many SF neighborhoods doubled, tripled or quadrupled, and are deep in “buyer’s market” territory.

SF Median Home Prices: Sold & Pending Sale  
  Sold Nov-07Sold Nov-08Pending 12-8-08
SF All Houses






SF All Condos













Median sales prices decline for 2 reasons: decreases in value and changes in buying patterns towards lower priced homes. The first reason applies, to some degree, to all 3 property types above, but the huge drop in median price for houses also reflects a large decrease in higher-end home sales and a large increase in sales of less expensive homes. For example, comparing 11/08 to 11/07, house sales in the affluent Realtor Districts 5 (Noe, Castro, Haight) and 7 (Pacific Hghts, Marina) decreased 65%, while house sales in District 10 (Bayview, Excelsior) -with the highest foreclosure rate in SF-increased 41%.

Median Price & Dollar per Square Foot by Neighborhood

The chart below compares median sales prices and average dollars per square foot for the 1st half of 2007-typically considered the peak of the market-with sales occurring since September 15, 2008, and then with homes pending sale as reported to MLS by 12/12/08. For pending sales, the calculations are based upon list price, since final sales prices were unknown. We see a general decline in both median price and dollar per square foot. These neighborhoods were chosen because there were sufficient sales for statistical analysis.

NeighborhoodProperty TypeSold 1/1 – 6/30/07Sold 9/15-12/12/08Pending Sale*
Noe ValleyHouse 






Pacific/Presidio HtsCondo 




Richmond DistrictHouse 






Noe/Castro ValleysCondo 






South BeachCondo 






















SOMA Condo 






South BeachCondo (to $2m)            $841/sq.ft.          $782/sq.ft.             N/A 
Pacific/Presidio HtsCondo        $830/sq.ft.          $731/sq.ft.             N/A 
SOMA Condo (to $2m)       $715/sq.ft.          $654/sq.ft.  $591/sq.ft. 
Hayes Vly/NOPACondo        $664/sq.ft.          $554/sq.ft.             N/A 
Bernal HghtsHouse       $629/sq.ft.          $571/sq.ft.  $560/sq.ft. 
Sunset/ParksideHouse       $605/sq.ft.          $551/sq.ft.  $535/sq.ft. 
Richmond DistrictHouse       $583/sq.ft.          $555/sq.ft.  $534/sq.ft. 
Bayview/ExcelsiorHouse       $526/sq.ft.          $439/sq.ft.  $420/sq.ft. 
Ingleside/OceanvwHouse       $487/sq.ft.          $456/sq.ft.  $451/sq.ft. 

All data from sources deemed reliable, but subject to error, omission or revision and not warranted. Medians and averages are generalities which can fluctuate dramatically and do not necessarily reflect values or changes in value for specific properties.

Foreclosure Sales Rates in the Bay Area

San Francisco continues to have the lowest foreclosure sales rate of any county in the Bay Area-less than half the rate of the second lowest county. According to DataQuick, in November 08, foreclosure sales in SF constituted 10% of property resale activity. The rates for the other 8 counties were as follows: San Mateo at 21.8%; Marin at 22.6%; Santa Clara at 38.9%;  Napa at 40.8%; Alameda at 44.4%; Sonoma at 51.6%; Contra Costa at 63% and Solano County at 63.6%.

60% of all SF foreclosure sales are occurring in just 3 of its 24 zip codes — 94134, 94124 & 94112 — all in the city’s SE quadrant (Bayview-Excelsior-Ingleside). Conversely, 94114, Noe & Eureka Valleys, had less than 1% of the city’s foreclosure sales.