While Bay Area home sales plunged nearly 20 percent on a year-over-year basis in September, to an 11-year seasonal low, home sales in San Francisco were only down 6.5 percent on a year-over-year basis but totaled the fewest transactions in the month of September in over 15 years.

At the same time, the inventory of homes for sale in San Francisco is currently running around 40 percent higher on a year-over-year basis with price cuts on the rise.

And while we’ve seen numerous recent mis-reports dismissing the September sales figures as anomalous, or simply a “seasonal” effect, the number of homes in contract across San Francisco is still running around 13 percent lower versus the same time last year versus 5 percent lower on a year-over-year basis in September.

9 thoughts on “Pending Home Sales in San Francisco Haven’t Rebounded”
  1. I got an email from a realtor who sends out a newsletter about this stuff. YoY, SF October sales are going to be up and looking quite strong. Is that how the market “felt” though? Not really.

    1. They say “It’s different this time” are the most expensive words in the English language.

      But “I got an email (or postcard) from a Realtor” might come in a close second!! At least during the back end of a RE cycle.

      You have to understand that Realtors (and many others in the RE industry) get paid via a cut of transactions. No transactions equals no revenue. The fact that the industry’s analysis always ends up in one way or another concluding “there’s never been a better time to buy” teeters between being comical and being tragic depending on what part of the cycle we are in.

      That being said, don’t expect the top of a cycle to be flat as a tabletop. Look back at the 2007-era cycle and notice that the was a good amount of bouncing around at the top. The key was to watch for the transition from shooting up to topping out. Don’t be fooled by some 0.1% increase in some cherry picked metric or some DOM/median price nonsense that some Realtor puts on a postcard and drops in your mailbox.

      1. I will look for you to provide a summation of things that I read and you have not sometime, never. You do not know what I read. But I will tell you now. It was a newsletter with flat language and sales figures, and metrics for single family homes in San Francisco, year over year. The idea that you can somehow take an imprecise post that I wrote and insert a narrative of your creation, as some sort of summary, is truly bizarre.

  2. How about changes in pending sales for entire Bay Area?

    Bay Area saw a bigger plunge in home sales on a YoY basis. I would expect to see pending sales to mirror September’s sales numbers if the trend were “real”.

  3. It looks like the downward trend in sales is accelerating. This is actually an eye popping statistic – SF home sales down 6.5% YOY with inventory up 40% YOY. 2019 will be very interesting…

    1. Maybe eye popping, but not unexpected when you consider the dynamics of a real estate cycle.

      Rising prices fed back and induced even more demand and people clamored to get a seat on the rocket-ship. Price in the absolute didn’t matter that much since you were going to get years (or decades many thought) of double digit appreciation.

      But when the market turns and people face the prospect of years of high holding costs only to eventually lose a chunk of their equity to selling costs, no surprise that demand drops.
      And when the downward momentum really gets going, that is going to be a real buzz kill.

  4. For the past six years, they’ve been saying that anemic sales volume would increase if only some inventory would free up.

  5. Good thing. The trends need to reverse. Lack of affordibility has gotten beyond ridiculous. Even the rich can barely afford to buy anything. Affordable housing is a good thing.

    1. The thing is that while there are some static affordability metrics that just look at current prices, the reality is that things are much more affordable on a life cycle basis when prices are rising strongly. High paying jobs are often unstable, particularly in tech companies may not have long lifespans, and many don’t offer pensions or retirement health benefits. So many many more people can hit an income at some point in their career to get into the housing market vs a much smaller number that could afford a home on a life cycle basis.

      When there is rapid appreciation of the housing market, anyone who can get a toehold on the market can afford it. Market appreciation does all the heavy lifting. But during the high flat tops (or the downslopes) people need to really be able to Afford the home. And that is a much much tougher row to hoe!!!

      The flat top and the downslope will be financial train wrecks, anything but affordable. In fact there are probably many people for whom even the bottom of the market won’t be affordable. In hindsight, these extremely large run-ups in 2007 and recent times will have allowed many to get into the housing market that would never have been able to otherwise.

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