While the number of purchase contracts signed for new condominiums in San Francisco slipped 4 percent from February to March, the sales volume in March (91) was more than twice the volume at the same time last year (39) but with a number of new sales offices having opened over the past couple of months.

While the inventory of new construction condos available to purchase has ticked down to around 1,000 at the end of March, the level remains 56 percent higher on a year-over-year basis, according to sales data from The Mark Company.

And overall, the volume of new contract signings over the past twelve months is running 25 percent lower than the twelve months before, despite an average 60 percent more inventory from which to choose.

At the same time, and with seasonality in play, the Mark Company’s pricing index for new construction condos in San Francisco jumped 9.5 percent from February to March but remains 2.5 percent lower on a year-over-year basis and 8.1 percent below its August 2015 peak.

Keep in mind that there are around 6,200 units of housing under construction across the city, which does include both for sale and rental projects, and the overall inventory of homes listed for sale in San Francisco proper is running at a five-year high.

Comments from Plugged-In Readers

  1. Posted by anon

    According to this “index” prices jumped 9.5% in a single month? That is about as unreasonable as prior postings showing prices had fallen 16% since August 2015. I think it’s time to retire this “index” as an unreliable waste of ink.

    In the real world, 177 Townsend #631 just closed at $622,000 ($1285/sf) after having sold for $599,000 in June 2016. I suppose one could argue it was underwater until the giant 9.5% leap in the last month. And the NASDAQ closed today within about 0.3% of its all time high. Prices are crazy high, but don’t look for any big drop any time soon.

    • Posted by SocketSite

      In the real world, 301 Main Street #5C at the Infinity just closed at $1.75 million ($999 per square foot) having sold for $2.3 million in December of 2015.

      In related news, while the NASDAQ closed today within about 0.3% of its all time high, Twitter is trading at less than 23 percent of its 2014-era high. Perhaps it’s time to retire that so-called NASDAQ composite!

      And next week, perhaps we’ll explain how an index actually works.

      • Posted by anon

        Please explain how this “index” works. It would be the first explanation I’ve seen. This big leap is now discounted as “seasonality in play” – again, please explain.

        Look, I understand that this “index” is all you’ve got to support your thesis that prices have fallen significantly in SF, and so you’re sticking with it. But surely you realize that a real estate price index that jumps around so much is not a reliable indicator of anything other than, perhaps, a snapshot of some small, unrepresentative sample of something that has no significance. Time to retire it and move on.

        • Posted by SocketSite

          As usual, you seem to be putting a lot more stock in the index than we ever have while ignoring the sales data and broader trends. Consistently adding a nice strawman non-quote about “[our] thesis that prices have fallen significantly in SF” is a nice touch as well.

          • Posted by anon

            My apologies. From the fact that you posted this index every month and linked back to those postings frequently when people questioned whether prices were, in fact, falling in SF, I mistakenly assumed you did put some stock in this index. But I’m glad to hear that we are in agreement that it really is not something in which one should put much stock.

          • Posted by SocketSite

            You’re confusing the significance of the index’s directionality versus magnitude and now willfully ignoring the value of the sales data and broader trends.

          • Posted by anon

            You might be right. Could you explain the value of the sales data?

            The Mark Company release says there is just 1.3 months of inventory, on the low end of the “low supply” barometer, and that the “Pending Percentage = (Pending-180)/(Pending + Active-311 + Active Contingent-111)” is 30% indicating a seller’s market. It sounds like you read it differently, but perhaps I am, once again, mistaken.

          • Posted by SocketSite

            Any particular reason you’re shifting from new condo sales to the resale market? Regardless, the generic “Months of Inventory” statistic is misleading at best. But consistently applied to the new condo market, that’s over “10 Months of Inventory” (!) and a massive excess supply, right?

          • Posted by anon

            That’s for resales, by the way. They don’t seem to provide any metrics like that for new condos. So maybe you could give us your interpretation.

          • Posted by anon

            “Any particular reason you’re shifting from new condo sales to the resale market?” Well, yes. As I wrote, it’s because the Mark Company release only provided those metrics for the resale market and not for the new market.

            So your read is that the market for new condos is a strong buyers’ market, but the market for resale condos is a strong sellers’ market? Again, maybe the correct read is that this Mark Company index is just meaningless and should be retired.

          • Posted by SocketSite

            Our read is that despite an average 60 percent more inventory from which to choose over the past year, 25 percent fewer contracts for new condos have been signed; that resale inventory is at a five-year high; and that the directionality of the Mark Company’s pricing index isn’t inconsistent with other local trends and indicators, such as rents.

    • Posted by Please Stop, Anon

      Anon – You’re showing a real ignorance of indexes and how market analysis works. You may think you’re putting up a reasonable argument to SocketSite’s explanation(s), but…well… I think you need to brush up on the topic.

      • Posted by anon

        An index is only as good as the components of the index and how they are compiled. We know nothing about either of those two factors for this particular “index.” If you have different information, please share it. What we do know is that this index says nothing meaningful about the actual movement of real estate prices in San Francisco. Down 16% in 18 months! No, up 9.5% in just one month! Hence, it is a bit of a waste of time, and certainly unworthy of being frequently linked as basically the sole source of any rebuttal to evidence that prices are actually pretty stable or rising slightly.

  2. Posted by Markets_arent_panacea

    Can you tell us when the sfh market will act like the condo market? Sfhs, not on the high end, are still crazy.

    • Posted by Sabbie

      SFH market is still red hot as buyers snap up 2BR houses and add three separate in law units, cha-ching! Meanwhile street parking in the outer neighborhoods is getting as bad as Russian Hill used to be.

      But the recent saga of Juicero and the possibility of an Uber down round should come as a warning to those who are high on Silicon Valley hopium and unicorn dust.

      • Posted by SFRealist

        Just as record highs by Apple, Google, and Facebook should give warning to those who expect the market to crash.

        • Posted by Sabbie

          The higher they go, the more brutal it’s going to be. This has less to do with the worth of those companies and more to do with funds like risk parity that have to put their money somewhere, since there’s no safe return thanks to the Fed, so they choose those least volatile blue chip stocks. When you twist their arm hard enough they will cry uncle, and it might be all around the same time.

  3. Posted by realtor

    SFH under $1.3m give or take as about a median for SF and also probably close in areas north, east, and south. Basically you have a completely limited supply as there is no or very limited construction of smaller “affordable” SFH within 20 miles of SF. And there is always demand for SFH by those who don’t want condo living. So don’t expect drastic price adjustments.

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