Having turned negative in mid-May, which led to an effective push in recorded home sales for the month, actual contract activity in San Francisco (versus anecdotal reports of “open house traffic”) has dropped over the past month and is currently running 10 percent lower versus the same time last year.
At the same time, while inventory levels have hit a seasonal peak, the number of homes on the market in San Francisco (640) is currently running 7 percent higher versus the same time last year.
And all the while, the average rate for a 30-year mortgage has dropped to a 31-month low.
# of homes are fewer, but the prices are soaring. More and more are selling way above asking again. The main reason is the 30 month low on mortgage rates attracting buyers to buy now and lock in the lower rate. I am seeing (factual not anecdotal) the most number of “sold for at least $100,000 or 10% above asking, whichever is higher” in 2 years. Red hot market in SF is BACK! (well until mortgage rates remain this low)
Quite simply, most “over asking” metrics are complete garbage as they’re a function of pricing versus actual market strength.
Average days on the market are up 95% from last year, in spite of all the games the realtors play of taking the off and putting them back on. That’s not indicative of a red hot market.
1150 Sacramento 202 is languishing after a $300,000 price cut that is $150K less than the owner paid for it in 2016. The general consensus at the time of the price cut here was that it would generate a bidding war, but that doesn’t appear to have happened, nearly a month later.
I’ll be the first to admit to some surprise by the lack of effect that a drop in interest rates is having, but maybe people see a recession coming, and realize that both prices and interest rates will be lower when it hits. But I do agree that, in a difficult market, the only way to sell is to price aggressively, which may be why you are seeing overbids in a slowing market.
It’s one thing seeing all the price drops out there, but the most comical are all the price increases. Agents no longer able to start bidding wars by pricing below market. Buyers only offering asking price forcing sellers increase list prices. You need to change your game agents, it ain’t 2017 no more…
From Homebuyer Bidding Wars Are Fading Fast, Even in San Francisco:
Emphasis added. Of course, almost every S.F. real estate agent thinks their listing is going to fall into the first group, the twenty-eight percent drawing multiple offers.
I wouldn’t care about getting lots of offers as much as one that is way over the asking.
Funny that whenever the editor exposes the industry’s manipulation of over-asking and days on market, someone pipes up saying that it’s a straw man because no one really believes that stuff. But then whenever real world bad data on the real estate market shows up some realtor pops his head up touting “over asking”.
am I the realtor in this scenario? If so, then I would say 28% of houses getting over asking is not “real world bad data”. But I was really making a comment on how pointless amount of bidding wars is as a data point. As a seller would you rather have 10 people offer 100k above your asking price or just one offer $500k more? I think the reduction of bidding wars is more likely sellers/agents pricing with aspirational lists vs. previous plan of price low bring in multiple offers. Here are a few examples: this came out at $7.9 and “only got 7.2, but 7.2 is a huge number. they could have priced this at $6.5 and gotten multiple offers. or this one that listed for $5.3 and got $5.4, a few years back this prices at $4.5 and gets a bidding war going.
There are different kinds of markets currently in SF. Single family homes priced under $2m are still quite in demand. Price depending on location of course. And assuming vacant/owner occupied. Higher end tending to take longer. Condos are taking longer for sure and have peaked for the most part. Exceptions being classic flats in smaller buildings in established neighborhoods. ie, almost like a sfr.
Yeah, 10y treasuries off 120 bps or so from the high yld, economy beyond full employment, nasdaq recovered, sp500 back to the highs, and all of the IPO hype — would have expected a bit better than this.
Based largely on anecdotal evidence, I think the ~$1.5M price point seems to be a tipping point of sorts. The folks I know that are in the market seem to top out around there. And these are highly educated professional couples, some of whom work in tech (but not in Big Tech, where the salaries are insane). The pool of buyers above that price point just isn’t that deep, which is why we are seeing some cooling on the higher end. And with the low end of the SF market reaching ~1.5M, it feels like we might finally have reached the tipping point.
I think the rise in interest rates showed the first signs of weakness, but the subsequent drop in rates kept things bottled up. But at this point, I don’t see prices moving much higher on the low end of the market, barring crazy inflation or wide spread wage increases.
That anecdote doesn’t match my charting of the markets at all. I see the central and outer sunset getting high 1s/ low 2mm. Same with inner Parkside. I see about as many big number southern hood sales as we’ve seen in the last few years even with bigger dollars. I see the south slope of Bernal getting over the 1.5 number for little houses, and on and on. Maybe some neighborhoods are 1.5 sales, but those are hoods that didn’t used to get that price.
This is houses only, not condos as realtor laid out above
Perceptions don’t always match reality (or at least the data at hand).
For example, the average sale price for a single-family home in the Outer Sunset was $1.380 million over the past year as compared to $1.377 million over the past two.
Including all Sunset homes west of 19th as well as Parkside and the average sale price was $1.41 million over the past year as compared to $1.40 million over the past two.
But we are seeing an increase in speculative renovations and flips in the less expensive neighborhoods, which tend to yield larger and higher price point sales than average (and can muddle the underlying trends by effectively changing the mix).
Condos peaked last year. I’m having mixed results communicating that to sellers though. Smart sellers are pricing ahead of the market and greedy ones are getting left behind. It’s very similar to what I saw in ’07.