With purchase activity having started to rebound last month, the number of homes in contract to be sold across San Francisco is now back to within 5 percent of its mark at the same time last year.

That being said, the pace of sales has been down an average of 30 percent on a year-over-year basis over the past three months, a drop in volume which will be difficult to make up when it comes to annual sales, particularly as the hit occurred at the height of the typical spring buying/selling season.

And with the rebound in purchase activity still lagging the pace of new listings, inventory levels continue to tick up across the city.

11 thoughts on “Number of Homes in Contract in S.F. Nearly Even YOY, But…”
  1. It’s time for a long-overdue correction in SF’s real estate market. The price increases of the last decade are simply unsustainable.

    1. Based on sales of SFH in SF, I am not seeing any correction so far (the market seems to still be strong with an all-time record Avg Sales Price in April)

    2. While most markets are underpricing the probability of a covid resurgence, deeper economic damage even without that, or the time to mass vaccine production, one can make a case for just a modest downturn for the same reason as the last twenty+ years: the Fed will stop at nothing and will do ever more experimental programs in arbitrarily large size until their tools completely stop working or there is inflation and they are stuck. While it’s not their primary goal, they have essentially rescued most asset markets from any downturn since the 90’s.

      I know people like to think SF housing is special, but so is the SP500, so are VC’s that get flooded with money by institutions reaching for yield and forced to move away from fixed income etc, so are tech companies that get funded with no hope of profits etc, so are retirees that can’t get return from fixed income and have to buy stocks or another house etc. These are all heavily influenced by Fed policy, the implicit Fed put, and beyond ZIRP for 12 years going into the future indefinitely.

      There is also certainly a case to be made that it will be very different this time and not just for SF housing; but that will probably take a year+ to play out.

  2. I’d like to believe and hope you are correct, but I am not seeing any significant price reductions. Crappy 1 bedrooms listed for 850k. Even it went down 10%, that still 775k for a 1 bedroom at the bottom floor of a TIC, with no parking, windows looking onto shared yards under the upper units deck/ patio. LOL. Good luck to folks trying to buy their form apartment in this place.

    1. At the same time, there are now twice as many homes on the market with a list price that’s been reduced at least once than there were at the same time last year.

  3. People have been calling for a correction in SF real estate prices for decades. They were calling them unsustainable twenty years ago. They were wrong then, and are probably wrong now.

    Last time I checked, prices across San Francisco (the city, not the whole Bay Area) have (overall) never declined significantly year-over-year, they’ve only more-or-less plateaued when the rest of the market declined. They may have dropped a couple percent for short times, but if you look at the graph, it’s really more of a plateau. The only people who got burned were those who, for some reason, HAD to sell at the wrong time (and my first rule of real estate is to never get into a position where you have to sell, right now.) A year or two of perseverance would have put nearly all of those “I bought at the top and it dropped” people back into the black.

    There are some neighborhoods which have briefly declined but the city as a whole hasn’t, at least not significantly enough to really matter. That doesn’t mean it couldn’t happen, but I think the ratio of prices to average incomes here is still not too out-of-whack compared to other cities.

    I’m not saying it isn’t all a bit crazy — it is. But it seemed just as crazy when 1 bedroom condos were trading for outrageous prices around $300K, and look where they went from there. This is all a long-winded way of saying that I am not holding my breath for a major correction. If it happens, it’ll be because our civic leaders have allowed our streets to become an urban dystopia and people just can’t stand to live here any more.

    1. The average decline for property values in San Francisco during the last downturn, which started back in 2006, at which point “median prices” were still on the rise, was actually around 20 percent “as a whole,” with drops ranging from nearly 50 percent in Bayview to around 10 percent in Pacific Heights and greater volatility for condos – which tend to be a leading indicator for the market overall – across the board.

    2. I think that’s pretty much spot on.

      There was a 10% correction from the 2001 tech bubble…and it was back even by 2003. Very minor blip. As the editor stated, there was a 20% correction in 2008 but it was back in a few years.

      I’m expecting about a 10% correction, then back by 2021. However, I do think a very specific set of inventory is worrisome which is the SOMA condo. Huge increase in supply, undifferentiated/bland, high HOA fees, questionable street safety.

      1. To be clear, the last decline in local values actually started in 2006 (and lasted through early 2012), with the southern neighborhoods peaking in mid-2006, the middle-tier neighborhoods peaking in early 2007 and the top-tier areas having peaked in the first half of 2008.

  4. I am seeing very nice houses in the outer richmond go for less than $1,000 /sq ft and lots of reductions and several sold for under asking. Hard to say the timing but this downturn – although we hit rock bottom, is just getting started. I would expect more softening as I dont see net SF employment expanding for some time.

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