With the number of homes actively listed for sale in the San Francisco hovering around 960, the 7-year high it hit last week, inventory levels appear to have peaked for the year and are now running an average of 40 percent higher on a year-over-year basis.

At a more granular level, the number of single-family homes currently listed for sale in the city (350) is now running 58 percent higher versus the same time last year while the number of listed condominiums (610) is up 32 percent, not including the vast majority of new construction condos still for sale across the city.

At the same time, with the number of homes on the market listed for under a million dollars having hit a two-year high last week, 25 percent of the homes currently listed for sale in San Francisco have undergone at least one price reduction, which 4 percent higher than at the same time last year.

And while inventory levels in San Francisco should now decline though the end of December with normal seasonality in play, expect the percentage of listings with a price cut to rise.

Comments from Plugged-In Readers

  1. Posted by denis

    Good. I’m glad to see prices start to fall a bit. I wonder if this will put a pause button on the aggressive flip market. Some majorly expensive remodels failed to sell this year and some wildly inflated prices may come back to earth. This is a terrible example, but wasn’t 1945 Franklin listed at 12 earlier this year? Its down 30% to 8.3.

    Still, SF is pretty resilient. A lot of pulled listings might disappear from inventory for 5+ years. It happened last time inventory was high. The next 3-4 years will be interesting. Higher inventory and then a fairly quick drop? Or will SF plateau at 1k residences for sale for a while?

    • Posted by SocketSite

      That’s correct with respect to 1945 Franklin. But considering the ACQUISITION cost, we’d be willing to bet there’s room for another reduction (or two).

      • Posted by denis

        The Franklin house is a terrible example of anything other than seller, er, over-enthusiasm. Horrible location. I fully expect another 40% reduction before a sale.

        I think the Raycliff and Green sales at 5% and 4% under list are more indicative of the high-end market. A+ locations both not selling over or at list is notable and sellers settling for lower offers is also telling.

        • Posted by hundo_p

          Re Raycliff and Green: what’s notable is the $psf of A+ locations. Still very, very high demand with little supply. The sellers didn’t get their aspirational prices, though they still did quite well.

      • Posted by SocketSite

        Speaking of which, the list price for 1945 Franklin, which hit the market priced at $12 million in June, has just been reduced to $7.5 million and now with an official “15” days on the market having been relisted for $8.38 million last month.

  2. Posted by Anonoly

    This is just the beginning. The market has not even processed the effect of new tax laws yet. Interest rates will continue to rise; tech stocks and the NASDAQ in general have begun a decline; the trade spat with China is getting worse; lots of new condos hitting the market. 2019 will be a doozy.

    • Posted by john downey

      Home Prices may not go up, but they will not go down either in 2019. Not sure it will be a doozy. The tax laws will have a small effect on the market if any. People on sidelines often hope for a “correction”, but I doubt there is going to be one. Tech stocks are having a rough patch, but will end the year higher.

      • Posted by Anonoly

        We will see very soon. In my opinion, there is just too much downside pressure to not see a decline in 2019. A decade plus of historically low interest rates, tax cuts, and a wild run up in tech valuations have put us in a bubble.

        • Posted by sparky-b

          how much decline? Where will these lower cost houses be?

      • Posted by Sabbie

        There are two things that can happen. Home and tech stock prices will fall. Or they will continue to rise… which will lead to higher interest rates… which will lead to home and tech stock prices falling.

        • Posted by sparky-b

          tech isn’t national, while interest rates are, so tech leading to higher interest rates has a limit.

    • Posted by hundo_p

      As discussed previously, the 2017 SALT elimination changed little for those in AMT. In fact many high-income taxpayers actually saw their total federal tax burden shrink a bit.

      • Posted by Anonoly

        SALT elimination is only one of the myriad of issues facing RE prices in the Bay. Those in AMT are not the only buyers in the greater Bar Area.

        • Posted by hundo_p

          This article is about SFHs in SF, and the vast majority of those buyers are in AMT. Also the vast majority of SF SFH buyers have wealth vs. only income, and are more likely to remain in the market, helping support prices.

  3. Posted by hundo_p

    Oh really? The subject sentence of the second paragraph states, “At a more granular level, the number of single-family homes currently listed for sale in the city (350) is now running 58 percent higher versus the same time last year…”

    Regarding buyers in the market, keep in mind that A+ properties are still receiving multiple offers, despite not always realizing sometimes aspirational prices.

  4. Posted by Brahma (incensed renter)

    I’m not trying to refute the point of this post, but I wanted to point out that in their story today on luxury real-estate rankings in Prime Global Cities, Bloomberg says that San Francisco was the only city in the United States to make the Top 10 in terms of rate of annual growth (Amewsed’s beloved Singapore came in first).

    OTOH, they have a weird little footnote attached that reads “Data for San Francisco is provisional and based on top-tier of mainstream market in metro area”; I’m assuming metro area is the entire Bay Area minus the South Bay. I don’t know what to make of “top tier of mainstream market”.

    • Posted by Notcom

      Sounds like they had a sample size of two houses (which is one more than many posters on this site base their observations on)

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