The ongoing Covid crisis, combined with other factors, may actually bode well for the city’s residential real estate outlook during what is usually a chilly time of year.
The pandemic upended normal residential real estate market seasonality this year in San Francisco, pushing the demand usually expected in April — normally the hottest month for listings going into contract — into the typically quieter summer season.
In normal years, the fourth quarter sees a big slowdown that starts in mid-November and doesn’t turn around until into the new year, especially in the luxury home market. Compass Real Estate Chief Market Analyst Patrick Carlisle said he expects market activity to decline during the mid-winter season, but remain perhaps much higher than in previous years.
“I presume activity will still significantly decline during the mid-winter holidays, but suspect activity will be significantly higher than in past years with the dynamics of the pandemic — i.e., people not wanting to travel, kids already being out of school all the time, interest rates crazy low, stock markets very high, and so on,” Carlisle said.
While San Francisco luxury condo sales have plunged over the past six months, sales of houses $3 million to $5 million have climbed to their highest level ever, though house sales over $5 million have dropped, Carlisle said.
Frank Nolan, co-owner of Vanguard Properties, told me that August and December are typically the slowest months of the year but that things were different for the brokerage in 2020. “We had a banner August,” he said. “The reason it was so good was people were around, interest rates were low and it was before inventory ballooned in September.”
Nolan told me he thinks Q4 may also hold different fortunes this year.
“My gut tells me it’s going to be busier than most,” he said. “I think we are going to see a more-than-typical amount of transactions.”
The activity is concentrated in what is, for San Francisco homes, the middle of the market. Nolan said that while condos continue to sit, single-family homes in the city between $1.5 and $3 million are turning over quickly. For high-end homes, however, there are still a pretty good number of them sitting, he said, and he doesn’t expect some more luxurious properties to come online until February.
Nolan said some sellers will inevitably pull homes off the market now, but he noted that he has clients who have already done that and are reentering the market, which is not what sellers usually do at this time.
Keller Williams agent Jennifer Rosdail told me she also anticipated a busy fourth quarter for single-family homes.
“I got 60 offers on a single-family home in the Sunset and sold a home in Mission yesterday with five offers,” she told me on Thursday, explaining that by listing homes 15% to 20% under typical market prices, she is routinely generating a strong pool of buyers for each property.
Rosdail said the smoky September fire season was another factor that stunted demand in a hot time of year, keeping it pent up until later in the year. While she said she expects the city to have a very busy season until the end of the year, she also sees opportunity for disruption.
“I think people are experiencing a huge sense of relief right now. There is the potential of a huge market upset if things get worse with President Trump not conceding,” she said. “We are subject to environmental, circumstantial and emotional stuff. And Trump’s not getting out of the White House — if it gets scarier, it will get worse. People will just not buy houses — that’s what they do when they are emotional.”