With the number of homes on the market in San Francisco, net of new sales and contract activity, having effectively plateaued over the past couple of weeks but poised to jump again in September, the number of homes on the market with an asking price that has been reduced at least once (470) is now over 450 percent higher than at the same last year (90) and holding at a 9-year high in the absolute.
Despite some misinformation making the rounds, the reductions are evenly distributed between single-family homes and condos on a relative basis, with 29 percent of the homes on the market having been reduced at least once and 30 percent of the condos.
And despite all the reductions to date, the average list price of the homes on the market is now running over 8 percent higher, on a price per square foot basis, than for the homes which are in contract, which is up from closer to 5 percent two weeks ago.
Noticed a few places that posted today immediately did price reductions. Seems like outlet pricing though (“compare at 24.99; our price: $19.99” but it’s worth 14.99). Interesting strategy.
I think there is going to be an absolute deluge of new places coming on the market, beginning next Tuesday. Probably the more fiscally conservative crew who were waiting out the last cycle to see what happens with COVID. Seems like right now is the time to sell, if you can, given the election and COVID uncertainty as we go into Oct/Nov. I expect there will be a ton of unsold places by mid-October, and sellers are going to have to concede – and concede hard – if they want to sell before next year.
And yea, the places that are available now tend to be ridiculously overpriced and/or a total mess (obscene fixer or horrible, tasteless flip), so it makes sense that the price of unsold places is higher per sq ft. The places that are good and priced within the realm of reasonableness are being snapped up.
My agent has been saying the same thing about expected increase after Labor Day. What is behind this prediction? Why will folks holding out suddenly all decide to go this month?
Listings that were withdrawn from the market having failed to sell are frequently re-listed after Labor Day, when buyers and agents are back from vacation, at least traditionally. Tax considerations typically yield a bolus of fourth quarter listings as well. And then there’s the data and historical trend.
I’m starting to see sellers get much more realistic about pricing. 188 Minna 23D just came on the market with an opening ask for the same price it sold for in 2008. The owner of the SFR at 2925 Larkin just took a $100,000 loss on their mid 2016 buy. 219 Brannan 17K just sold for a net (after fees and taxes) $500.00 per year gain on their year 2000 buy. 425 1st Street 1902 with views of the bay just sold for a stunning $500,000 loss on their early 2016 buy.
And now there are 1600 unhappy sellers whose properties didn’t sell with an October non-deductible property tax bill looming on a property they no longer want, in a market where 200 new homes come on, and only 100 homes get sold, every week in a state whose only new ideas are to give you worse air quality every year while raising taxes, now including consideration for wealth taxes that will be retroactive 10 years if you try to leave the state, unless you leave before it passes. Should be an interesting September.
This is one of the most ferocious/delicious comments I have read on here. Cheers!
The Marina house was an interesting one. Otherwise, dips on SOMA properties aren’t surprising. Disparate COVID impact aside (meaning, the fact that no one cares to live downtown in the COVID age where office proximity is irrelevant), SOMA prices are highly variable, compared with more established ‘classic SF’ neighborhoods.
On top of this SF will likely see a large population drop in the next few years. A good chunk of those will be techies and others allowed to permanently tele-work. The highly paid group which has boosted home and condo prices. The Pinterest decision to abandon their massive lease of a yet to be built building in the Bay Tennis Club development because of tele-work and because spreading their workforce outside of SF will allow for more diversity and talent acquisition is a sign of things to come. The demand for very expensive SFRs and condos, especially condos, could see a major drop. Some prescient enough to see the writing on the wall are deciding to cash in their chips.
You’ve been wrong about population decline many times on here, so continually wrong that it would not be surprising if most readers find that you’re completely unqualified to have anyone pay any attention to your words on the subject from now until the end of time.
“A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines” (When you leave out the second verse you lose the rhythm) And yet he finds an audience and an echo.
Even a broken clock is right twice a day. This is Dave’s time to be right. People are leaving SF like nothing I’ve seen before. More than even after the dot com bust.
And in fact, net migration into the city turned negative for the first time in a decade last year, having really slowed its roll in 2018, all prior to pandemic having hit (and none of which should have caught any plugged-in readers by surprise).
Dave did not say net migration. Dave said population drop. Feel free to stop the obtuse parsing which removes meaning at any juncture.
While the pandemic has certainly accelerated and amplified the trend, and provided cover for some egregious forecasting last year, the population of San Francisco was poised to fall based on net migration, which is the import of a so-called “parsing” of the data.
“Even a broken clock is right twice a day. This is Dave’s time to be right”
I’m not giving any credit whatsoever for a black swan event’s resultant migration patterns. It’s not a thing those — consistently wrong for years and years — posters ever mentioned once.
@Ohlone – indeed I said population drop. It is coming – it will follow on the rapidly slowing population growth. Hard to say exactly but a 10% drop seems a given.
Indeed. The decline has been in the works in recent years if you look at the rapidly slowing growth. It is a macro trend that will see the BA/SF decline in terms of relative number of jobs and population to other more robust metros and sub-metros. The black swan event has only accelerated the trend. Pinterest giving up on what was to be the first major office development in the Central SOMA is huge – though some still refuse to see. The future of thee Bay Tennis Club development is now uncertain. This is just the start.
“Rapidly slowing growth,” now. As the City was still increasing population, from all time high points, naysayers such as yourself and the editor pointed to millennial college migrations totaling sub 100 human souls? Yeah, I wasn’t having that either and am on record saying so. Eighty eight people out, and babies making up the difference, and you talked? That was weird too. But anyway …
Who cares what you say Seattle Dave? You are by now a wild mess of years upon years of horrific wrongness on here. Take a moment now that you’re stuck in bumper to bumper traffic on Washington’s State Rout 99 and you won’t be home for an hour or so, and rethink your world view.
Lets look at your track record Ohlone California…
Juul laying off 1/2 of their remaining employees on top of 1/3 cut earlier this year. Total drop in head count since IPO will be 2/3 of company.
When exactly is the Juul IPO wave hitting SF RE now???
How many different ways can posters who come at me this way not understand what went down with the Juul company? I mean, it’s pretty funny at this point. IPO? Layoffs? huh? Good grief.
Also the weather is bad. Haven’t seen too much sun around these Parkside parts in a while
I love all the comments about the demise of SF. The fact is, all things go in cycles and this remains one of the most desirable places on the planet. Believe it or not, there are a lot of people w/$ who don’t care about taxes and choose to live someplace amazing b/c life is short and you can’t take it with you.
We will see some n-t pressure, but if you really think the SF SFH market is dead, you’re either biased, stupid or haven’t been around very long.
Nice straw-man argument there. No one saying SF is done forever. What is being said though is that the SF real estate market was/is grossly overvalued and is facing a major correction.
“grossly” and “major” are interesting words. Condos aside, which are a new market, SFH has no history of “major” corrections. SFH fell ~10% in the last cycle, which was much, much worse than what we’re seeing today.
Factually speaking, single-family home values in San Francisco dropped an average of closer to 20 percent on a price per square foot basis in the Great Recession, with the best performing segment (Pacific Heights) having dropped around 10 percent and the worst (Bayview) having nearly dropped in half.
And the average drop for condos, the values for which tend to be more volatile but a leading indicator for the market as a whole, was roughly 20 percent as well.
Fair enough. My comment did not take into account the bottom third of the market eg Bayview. SFH in “desirable” neighborhoods was down ~10%. By my anecdotal measure, it’s already corrected 10% from last year. There might be more to go, but I don’t think the best neighborhoods will get hit much harder or stay down for long….
That’s incorrect. The average drop for single-family homes across the top two-thirds of the market at the time (i.e., removing Bayview, Excelsior, Ingleside, etc. from the analysis) was closer to 17 percent.
I completely agree with your observation of the previous downturn, that Pac dropped 10% ish.
I bought a condo in 2009 in Russian Hill after a 10 month wait from Lehman Brothers. They signed off the short sale the day before they announced bankruptcy. After that purchase, the overall price kept dropping nationwide and citywide, but I noticed at the bottom of that cycle, there was no listings in the more desirable neighborhood such as Pac Height or Russian Hill. What I learned there is that if you wait to catch the rock bottom price, you might not be able to get in the neighborhood that you wanted.
I wonder if the same is going to happen with this cycle, ie, by the time the price bottoms, no desirable listings.
Big difference between nothing in PH/RH and no desirable listings.
Incorrect. While 2008 was nationally much worse, the effects of this pandemic will hit real estate in expensive metros such as SF and NYC much harder than the Great Recession.
Are you referring to % decrease or $ decrease? Maybe I’m naive but even a 25% or 30% drop from current 2020 pricing, which would be greater % decrease than the Great Recession, still results in homes priced at around 2014 / 2015 home prices: A net positive relative to Great Recession pricing. no?
We could be just in the 2nd inning of the effects of this pandemic, but so far, pricing for homes still remains relatively stable with SF’s SFHs. Don’t get me wrong… I was anticipating a significant decrease too for SFH, but sadly I am just not seeing it in more “desirable” neighborhoods.
Pinterest didn’t just abandon their SF expansion plans, they paid a nearly $90 million dollar break up fee to get out of their lease. This should be a wake up call to all those who think that companies are not serious when making these announcements about greatly expanding their remote work force.
Even in Dave’s Pacific Northwest paradise of Seattle, REI is selling their brand new HQ without ever having taking occupancy and planning a much more WFH future. These WFH announcements are not being made lightly. Serious money and serious changes in real estate planning are happening.
My pedestrian POV……with city’s like SF which consist of mostly sophisticated educated sheeple who have been scared senseless into submission by their elected “leaders”. It’s no wonder why tech companies are rethinking how they assess their wokeforce and where their sheeple should toil away on their computers from. Here’s my truth…a year from now this virus will be a thing of the past. Just like SARS, MERS and SWINE flu ended.
For those who have been following the “work from home” employee shift, it ain’t working as planed. Several articles have appeared in several publications analyzing this new work environment. Start ups say it’s not conducive to “group think” or “creative collaboration”. Some employees complain they are not able to advance in their company because there is no eyeball to eyeball contact with their managers…no social interaction. Manager to employee…how do I assess this employee’s true capabilities without physical interaction…..I think you get the point. So I’d be willing to bet that this time next year office’s will once again be rocking and rolling. My real concern is whether the wokeforce will have any eating establishments left to feast in after their elected “leaders” are through putting them out of business.
You talked a bunch of nonsense about restaurants in greateer Asheville, NC vs SF, and restaurants not opening back up a while ago. And I pwned you. Then you disappeared. Own that.
Mr. Californio…see name link to the SF Biz times opinion page. You might want to take your issue up with the editor. My friends, those who haven’t left the city yet, are telling me that the city is dead and are pissed that the surrounding areas are open for business. I guess you see things differently. As for those of us living in the Blue Ridge, life seems to be back to normal. Wear a mask indoors, wash your hands, enjoy eating inside or outside at your favored restaurant.
I don’t really see surrounding areas too open for business. Nor does this editorial have much to do about the things I mentioned that you had said. But I tend to agree with this editorial by and large. The City has got to do a lot better. These proposed taxes are not timely to say the least.
“This time, they say, feels completely different.” The old – it’s different this time!
That SF BIZ opinion doesn’t tell anybody anything – such as a solution. The reality is, those people didn’t care when tech and it’s vast influence were pushing everybody else out, so why should anybody care about them now?
“One day, after this pandemic, San Francisco will need a healthy and vibrant economy to re-emerge if it is to recover.” Tech has never been “healthy” in SF – it’s been parasitic. Maybe small business will return and regular people will buy houses again to live in.
“Maybe small business will return and regular people will buy houses again to live in.”
Not if the board of sups have anything to do with it. Ask a small business person how long it takes to get a permit to operate a business. And God forbid they have to make building modifications and go though the permit/inspection grinder. On average a small business will eat 12 months of rent before they can open their door. Welcome to business not friendly San Francisco.
Perhaps those small business persons will, after the corona virus-driven exodus gets going in earnest, have the bargaining power to negotiate lease terms with commercial landlords so that their lease begins after the permit/inspection process has completed. If the commercial property is vacant anyway, it’s a win-win for both parties.
The reality is that any populous city with people arriving in it daily from all over the world with dollar signs in their eyes ready to make a quick buck and then leave is going to have more onerous regulations than [insert favorite “business friendly” city here]. Because it has to.