With new supply continuing to outpace sales, the inventory of unsold homes listed for sale in San Francisco increased 9 percent over the past two weeks and is running 30 percent higher versus the same time last year. And in fact, the overall inventory level in San Francisco, as measured in early March, is the highest since 2012.
At a more granular level, the number of listed single-family homes on the market (211) is now running 15 percent higher on a year-over-year basis while the number of listed condos (300), which doesn’t include the majority of new construction units on the market across the city, is running 44 percent higher versus the same time last year.
We’re also seeing an uptick in the number of active listings for which the original list price has been reduced, the absolute number of which is nearly double the same time last year, along with a slowdown in the overall pace of sales.
I’d love to see the home inventory breakdown by price segment. E.g.
<750k
750k-1m
1m-1.25m
1.25m-1.5m etc.
Agreed. It seems that the inventory <$1MM is still scarce and what is available is going for much over asking. Perhaps that will change as inventory continues coming to the MLS.
yeah, that’s what I think too. Even up to mid to high 1Ms. This is what well compensated working people can afford, and the competition seems to still be pretty fierce.
In the few neighborhoods I looked, inventory is still low and new listings are rare. Which part of the city has dramatic increase of inventory?
Is the inventory increase limited to high end neighborhood?
Another possible sign of a stalling or pullback in prices. Add to VC funding falloff, jobs falling off a bit for 3 months in a row in SF and it may portend something – or not.
IMO it does portend a small 5% plus falloff in prices this year.
The market is frothy and how investors react will add to where things go.
Its one thing to invest in rental property and accept a smaller ROI (excluding appreciation) than can be gotten in a number of other markets. Taking the smaller return in exchange for significantly greater appreciation than in other markets.
But, if the appreciation gap narrows, those rental investments do not look as good and some investor money could shift from SF to other markets.
This is going to leave a mark: “Demand from foreign buyers is weakening, the National Association of Realtors says, undermined by a strong U.S. dollar and rising home prices.”
Contrary to popular perception, Non-US based foreigners make up a small part of SF home buyers. If the market is impacted at all, it would im the top segment for luxury homes. However, if you are somebody that has 1 to 2 million to stash away overseas in a secondary home, a 10-20% FX appreciation will not put you out of the market. On the contrary, the expectation of further dollar appreciations increases future returns on US property investments in terms of your domestic currency. Just my 2 cents.
Statewide it’s about 4%, already down from 8% in 2013. But this data is self-reported by a sample of 1,000 realtors and I think it is way under reported. I believe in SF, the buying is focused on new construction condos and there is often no buyer’s agent. I did find this quote from 10/2015: “Anne Hansen, a Realtor in Santa Clara County, said that about half the people who bought homes she listed over the past year were Chinese investors with all-cash offers.”
As I understand it, Chinese capital controls limit the amount of currency that each individual can expatriate to approx $50k. So it stands to reason that many or most of these transactions are illegal or in a grey area under Chinese law. This makes me think that there could be quite a bit of under-reporting or use of straw buyers.
I met a banker once in the airport lounge in Beijing. He described his business to me as follows:
1. A wealthy Chinese individual (call him “Person A”) wishes to transfer a substantial sum of money out of China. Said individual contacts a banker at “Bank X” to do so.
2. A corporation or other entity (“Entity B”) in the West wishes to transfer a large sum of money into China for the purchase of Chinese goods or to invest in a new development of some kind. This company also contacts a banker at the same “Bank X” with the intent of transferring money to
“Recipient C”.
3. The banker at Bank X helpfully processes this transaction, for a small fee, without any money actually crossing the Chinese border. He does so by transferring “Person A”‘s money to “Recipient C” inside of China, and “Entity B”‘s money to an account controlled by “Person A” outside of China.
Clever, don’t you think? And all that service for just a few percentage points fee … it’s practically an act of charity in my opinion.
Clever, don’t you think?
Clever until the Chinese gov’t catches him and extracts a confession.
That shouldn’t be too hard since he told me about it over a beer…
Auditing these financial transactions in China is more difficult than in the US. But they’ve been prosecuting people for this for years. The general model is to catch a few to keep the herd from over doing it, kind of like speeding tickets in the US. Also, the really ‘clever’ ones are either in the gov’t or very good friends/relatives of the authorities.
“According to Credit Suisse’s Eugene Klerk, the share of IPOs in the US that are losing money (i.e. reporting negative earnings per share) is now almost back to the ‘dot-com’ peak years.”