With the number of homes on the market in San Francisco poised to jump, the percentage of listings with an asking price that has been reduced at least once has ticked up to 31 percent, which is 19 percentage points higher than at the same time last year and shouldn’t catch any plugged-in readers by surprise.

And despite the uptick in reductions, the average list price of the homes on the market is now running over 15 percent higher, on a price per square foot basis, than for the homes which are in contract, which is up from an 8 percent gap two weeks ago and closer to 5 percent last month.

Comments from Plugged-In Readers

  1. Posted by ST

    This round of price reduction is far from done, IMO. However, if I have learned anything from 2008~2012, where I bought in both 2009 and 2012, is that if you are buying to live where you have very specific criteria around location/floor plan that sort of thing, NOW is a good time to start looking. If you are buying to invest where number is your top criteria, sit tight another 9-12 months and it will be cheaper.

    By the time price bottoms, there usually are NO attractive listings…

    • Posted by Kyle S.

      We six months left on our lease, so we’ve been keeping an eye on the market. There have been a few listings that meet our criteria, but are still priced too high. Some of which have been on the market for almost two months.

      There’s a very good chance we’ll still be renters come next year, and unless our property management matches the competition by reducing our rent by 20%, it will be in a different building.

    • Posted by Skankel

      I wouldn’t be so quick to assume the only wave of good places is now. For example, if there’s a significant second wave, which shuts down the city again for an extended period, I expect that will push a number of people over the edge. As another example, if Trump loses, I expect him to intentionally poison the economy on his way out, and that would yield a new and completely different wave of people having to move out.

      It’s not necessarily as straight of a line as compared to the last recession.

    • Posted by scurvy

      Good areas are still moving and at good prices. I’m selling one of my condos in Russian Hill. Some stats for those that care. 10 DOM, 20+ showings, multiple offers over ask, 21 day no contingency close. Good stuff sells for good prices. Soma/downtown condos will get slaughtered. Adjust your expectations appropriately.

      • Posted by SocketSite

        Keep in mind that the average sale price per square foot for Russian Hill condos has dropped around 4 percent over the past six months. And pricing around 10 percent under market is a good way to garner multiple “over asking” offers.

        • Posted by scurvy

          I’m getting $1350 sq ft. I think it’s pretty fair considering all of the developments. In January, my agent said we can get $X which translated into $1415 sq ft. I felt that was high and not attainable and that $1375 sq ft was closer to the real value (in January).

          My point isn’t to quibble for a dozen dollars per square foot here or there. My point is that good stuff is still selling for good prices. I’m not saying prices aren’t “down” during this period; you did. Even then, it’s a BS stat. You can only sell a single property once at any given time, and that time is just a snapshot of the current conditions. You can’t keep selling it week after week to get a true gauge of sentiment and price.

          As for pricing under market, it was priced at $1345 sq ft, which is where I thought the value was. My agent wanted it lower at $1260, but I ignored him. It wasn’t listed at teaser pricing. But hey, keep grinding that axe.

          • Posted by sockettome

            Your agent said you can get $1415 per square foot in January. Your now selling it at $1350 per square foot, which is 4.5% down and aligns with the editor’s comment, that Russian Hill condos are down around 4 percent over the past six months.

          • Posted by SocketSite

            With the newly added context that the “20+ showings,” with “multiple offers over ask” and a “21 day no contingency close,” resulted in a contract price that was 0.3 percent “over asking” (having been priced down 2-5 percent from January comps with the agent having advocated for pricing it down an additional 6-9 percent).

          • Posted by scurvy

            And being lower 4% equates to the heavens falling? Still, I didn’t agree with my agent’s valuation then. Going off my own numbers, it’s only “down 1.8%”, which is insignificant enough to be noise.

            Again, my point is that good places are still holding value and selling without the market crashing down. There are buyers looking with the expectations of 10,15,20% lower prices and it’s not the case in good areas. Might happen in soma, Market St, other areas…but not in the stronger ones.

  2. Posted by Dave (Seattle dude)

    The downward pressure on home and condo prices will accelerate for the next several years. Tech jobs pushed home prices and rents in SF through the roof and now tech companies are realizing they really don’t need an SF footprint. Maybe a case of the emperor having no clothes.

  3. Posted by EBGuy

    No one has mentioned the CARES Act yet. If you’re a retiree looking to get out of Dodge — who relies mostly on retirement accounts for income — this could be an extremely advantageous time to do so. The CARES Act allows you forgo the required minimum distributions (RMDs) for retirement accounts and 401ks in 2020. By minimizing your income, you can end up with a very low capital gains rates on a home sale (after the $250k personal exemption). Don’t know how many of those folks are out there so YMMV…

  4. Posted by HG

    I’m going to be the contrarian and argue that the telework thing will end up being a correction and not a massive change in how we do business.

    In-person work, even in tech, has a lot of advantages. It will take time for everyone to figure it out, but I predict that six months to a year after it’s truly safe to return to the office, we’ll see a slew of articles on how awesome people think it is (as we are seeing now with telework).

    Local real estate prices will respond accordingly.

    • Posted by Anon

      Totally agree. If I had more capital right now, as a contrarian I would be buying downtown condos left and right.

      • Posted by jimbo

        agree, but think youre timing is off. i would be looking to buy in Q2 next year. we have more room to fall

        • Posted by wilson

          Agree about more room to fall. But I think even your timeline for recovery is aggressive.

          From the 2018 peak of this cycle back to 2008 was 10 years, from then back to the 1999-2000 dot com top was 8-9. I just don’t see any reason why recovery would be any faster this time. I think it’s going to be slower because of all the economic damage being done during this extended crisis. And the clock doesn’t even start until we have things under control. There are vaccines in the works, but none are ready yet. And once it is ready we need to produce and distribute it in large quantities.

          I think we would be very lucky to start the recovery clock by Q2 next year. After that it is going to be a long road back.

          • Posted by Skankel

            I don’t think that the impact on the economy is having much impact on the folks buying $1M+ condos in downtown SF. How many upper management employees of airlines and hotels live in SF?

            The more major factors seem to be: (1) businesses are not open downtown, so there’s no need to buy down there right now, (2) there isn’t much movement into SF from other locations at the moment, (3) a lot of the higher-end downtown condo activity was investors, and they know there’s more room to fall, and (4) the self-perpetuating deflationary cycle.

            On #4, each of the banks I am speaking to about a mortgage wanted to make sure that I wasn’t looking downtown or in SOMA, because places aren’t passing appraisal and deals are falling through or being pushed down in price, which just feeds into the cycle.

          • Posted by jimbo

            i agree. i meant looking to buy. i certainly dont think the market will beging to recover by then, but prices should be lower then than now. i think now is way too early. maybe mid year next year is probably too early too, but much better than now

          • Posted by jimbo

            skankel, i would add that downtown is miserable with the worsening homeless/addict/ uncontrolled mental health crisis. its has been getting worse over the past 5 years, and the pandemic probably pushed people voer the edge who were already considering getting out. Since there is currently no reason to live close to your office, there is little reason to be downtown. if i lived downtown, it would certinly be reason #1 for me to get out

    • Posted by ST

      yeap, agreed too.

      If I looked back at the last cycle, I bought a bit early in the downward trend in a desirable location in 2009, and bought again on a nice street in a “hood” at the absolute bottom of that cycle in 2012. The 2009 purchase of $700K is now $1.4M, and the 2012 purchase of $350K is now $950K. Better than remaining a renter, even though the 2009 purchase was a bit of early…

      I am definitely watching the market and will buy again.

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