With a seasonal culling of unsold inventory underway, the net number of homes listed for sale in San Francisco dropped 12 percent over the past week to 1,250 and will likely drop another 40 percent through the end of the year.

That being said, inventory levels are now running 135 percent higher than they were at the same time last year, which is up 5 percentage points over the past week and versus 10 percent lower at the same time last year, with 160 percent more condos on the market and 80 percent more single-family homes.

Of those homes currently listed for sale in the city, roughly 39 percent are now listed for under a million dollars, versus 19 percent at the same time last year, and 35 percent have undergone at least one price reduction (including 28 percent of the single-family homes and versus 29 percent of all listings at the same time last year).

And with the increases in inventory levels and share of homes that have been listed for under a million dollars, there are now five times as many sub-million dollar homes on the market (490) than there were at the same time last year (100).

Comments from Plugged-In Readers

  1. Posted by sforthright

    Is anyone else in the market for a multi unit property? Curious where folks see that heading (attached/detached from condos & SFH trends) heading into the new year

    • Posted by Dave (Seattle dude)

      I’m an investor but personally wouldn’t purchase an investment property in San Francisco or the Bay Area for that matter. My properties are all out of state. That said, IMO investment properties in the BA that are outside of San Francisco will outperform SF properties.

      The East Bay offers the best investment opportunities in the Bay Area for multi-unit properties with jobs and population growth coming. A friend who works for Credit Karma (officially confirmed moving to Oakland) is selling his Outer Sunset home and moving to the Oakland Hills. He’s surprised how “reasonable” the prices there are compared to the Sunset. For much nicer homes and neighborhoods. The East Bay offers a lot of affordable multi-family investment opportunities. I’d suggest focusing your search there.

      • Posted by sforthright

        Thanks, fwiw I’m looking at a place I can live in and and condo convert as opposed to a pure rental income property. Agree that the latter doesn’t seem appealing in SF right now.

        • Posted by ST

          I did a condo convert, and let me tell you I would not wish that experience on my worst enemy. So, don’t go down that route, is my advice. Buy a condo.

          • Posted by sforthright

            Interesting, what did you run into? I only know one person who did it who was glad he did, but I understand there are risks.

          • Posted by ST

            There are many, many, many risks and uncontrollables.

            In our case, which is a 5 unit building, as we waited for the owner occupy years, some folks wanted to / have to sell, or rent, which pushed out the years waited. Some did not have the money to do the DBI fixes, some were laid off and could not re-finance.

            It took us 10 years to finish the process. And by the time the building was finally converted, 4 of the original owners were looooong gone, and I was the only one left from the original group.

            So, not worth it…

          • Posted by sforthright

            That sounds harrowing! Yeah, I’m looking to do a two unit, that would ideally be vacant to start with, and with a family member – so that cuts down on some of those uncontrollable. But it’s still scary.

    • Posted by Rod Capelli

      Many are coming to market but are still at elevated sqf rates (pricing in 2019 vacancy and rents). There is a reason they are coming to market – some longer term landlords trying to get out. Deals are not out there yet for multi family but next Feb-May we will see more as evictions get processed.

      • Posted by sforthright

        That assumes evictions are allowed again then right? Could see that getting pushed back

        • Posted by Dave (Seattle dude)

          Exactly. This is an unknown and to the extent eviction restrictions are pushed back I’m betting it will not be completely so. Meaning that going forward it will be harder than ever to evict a tenant in SF.

          • Posted by sickandtiredSF

            Agree. If eviction moratoriums are extended to let’s say Dec 2021, there will be widespread shock to the existing rental supply in SF. This may be the reason why the supes voted in housing stock inventory initiative, it is in preparation for a temporary vacancy tax if eviction moratorium extension is passed. This comment is purely speculative however, i do not have inside info.

          • Posted by jimbo

            i think its clear that BoS deciding to collect info on empty rentals is a preamble to a vacancy tax

          • Posted by Dave (Seattle dude)

            The vacancy tax seems inevitable. Whether it withstands court challenge is another thing. This is but one more reason I’m amazed some investors on this site are still investing in SF. Don’t get the reason given appreciation for the next decade will lag the national average, the ROI is very poor and, as a landlord, you are enemy number one in SF.

      • Posted by wilson

        The big unanswered economic question is how the losses for all the unpaid rent/mortgages piling up will be split between landlords, tenants or banks. I think the big issue for rentals is going to be collections vs evictions. Economic data suggests that many of the tenants piling up back rent simply don’t have the money. With rents dropping and vacancies up and the possibility of moving out of the area, I think leaving and not paying back rent is going to be the most attractive option for most.

  2. Posted by ST

    I definitely see now as an opportunity, but I feel that price on MFH has not completely caught up with the down swing in rent YET. More newer landlords will be washed out in 2021 – 2022.

    That said, a friend has been shopping for condo in the 1.0m to 1.4m range, and I got curious and took a look, and listings in the bucket are still insanely expensive if you ask me. For 1.3m, you are basically looking at 2/2 without parking, 1100 sq ft.

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