The percentage of homes on the market in San Francisco which have undergone at least one official price cut has ticked up another two (2) percentage points over the past two weeks to 23 percent, which is three (3) full percentage points, or 15 percent, higher than at the same time last year.

And with twice as many homes on the market in San Francisco, year-over-year, there are now 130 percent more reduced listings on the MLS than there were at the same time last year, and five times (5x) the  number of reduced listings than there were in July of 2015, for the most reduced listings, in the absolute, since the fourth quarter of 2011.

Comments from Plugged-In Readers

  1. Posted by john p downey

    I had a look at the Compass Site moments ago, as the SFARMLS is terribly designed and clunky. There may be reductions, but the norm seems to be 1 bedrooms for 850K + and virtually nothing less than 650k. I see rents dropping, but I do not believe real estate will drop in any meaningful way.

    • Posted by SocketSite

      Don’t confuse “cheaper” with “cheap.” But directionally, the market is currently headed down.

  2. Posted by Conifer

    There can be no doubt that rents are falling, but the height they reached, greater than any American city and greater than Paris, were “irrational exuberance,” to borrow Mr Greenspan’s phrase.

    Similarly the price per square foot of property in the best neighborhoods is equal any city in the US, including New York, Boston, and Washington, as well as any city in western Europe except London.

    So a correction is not unexpected, but the sky will not fall. San Francisco is no longer the blue collar city of the 1970s, and it will remain very expensive, even if it falls 15 percent. It is not and will not be a suitable place for “mom and pop” to invest, as I have said here many times, as a result of the endless so-called progressive rent controls. Perhaps NYC will again be the most expensive place; that is not unusual historically. Perhaps SOMA and other soul-less neighborhoods will again be cheaper than traditional areas.

    It is interesting to follow the statistics, nevertheless. Those of us who carried on survived the 2008 recession, and will survive this one. Worry is one of the least useful emotions.

    • Posted by Some Guy

      How anyone could ever conceive of SOMA becoming a “neighborhood” is beyond me. It is a former commercial-light industrial zone, still substantially used as such, and its layout reflects that. Grids of huge 4-lane streets with continuous streams of 20-35mph through traffic will never have a human-scale “neighborhood” feel.

      • Posted by jimbo

        SOMA will get decimated IMHO, except for units close to the embarcadero

        • Posted by loftlover

          Units close to the Embarcadero are not actually SOMA; they are “South Beach” and “The East Cut.” And yes, prices in this area are trending down, but not significantly.

          • Posted by Jimbo

            Both are part of SOMA. “East cut” has literally been used for <3 urs and I’ve never actually heard anyone say it out loud.

          • Posted by Brahma (incensed renter)

            Jimbo, you may have never actually heard anyone say it out loud, but as I have pointed out before:

            The East Cut name originated from a neighborhood nonprofit group in San Francisco that residents voted to create in 2015 to clean and secure the area…Andrew Robinson, executive director of the nonprofit, now called the East Cut Community Benefit District…said the group’s board…chose the East Cut, partly because it referenced an 1869 construction project to cut through nearby Rincon Hill. The nonprofit then paid for streetlight banners and outfitted street cleaners with East Cut apparel.

            Emphasis added.

            Wouldn’t it be great if S.F. residents could depend on the public sector to keep the streets clean and safe in the face of an onslaught of out-of-the-area penny ante landlords actively supercharging homelessness and rampant gentrification?

          • Posted by two beers

            Brahma, why should the public sector clean up the mess created (in part) by “out-of-the-area penny ante landlords”?

            Why not just regulate and/or tax the market to reduce the market activity that causes these social problems to begin with?

          • Posted by jimbo

            OK sorry, you’re right. the name was made up 5 yrs ago and not 3yrs ago. Its still part of SOMA, which applies to everything south of market above division st

  3. Posted by Chris

    Really curious to see how this all plays out, the number of SFH sales in June largely recovered (down 14.2% y-o-y) and the sales data is pretty astonishing: all times highs for median and average price ($1.82 mil and $2.31 mil). There seems to be a growing premium for SFH over condos.

    • Posted by SocketSite

      As we noted last month, the “median/average” sales price stats over the past couple of months have been dramatically skewed by an uneven drop in sale volumes (i.e., driven by a change in the mix).

      Condos tend to be a leading indicator for the market as a whole.

      And as always, while movements in the median and average sale prices are a great measure of what’s selling, they’re not a great measure of actual changes in value, especially when sales volumes are down.

      • Posted by Chris

        I don’t disagree, but this is the data we have to work with currently and it suggests that the SFHs that sell are selling for higher prices than ever.

        I believe there will be a divergence between condo and SFH prices. There are so many benefits to a SFH in the age of Covid.

        • Posted by Jimbo

          All condos are not the same either. I can’t imagine a flat in a 3 unit building in noe, the Richmond, marina, etc will get hit like a 20+ unit condo in SOMA. Many of those flats are relatively large with shared yard, etc

        • Posted by wilson

          “and it suggests that the SFHs that sell are selling for higher prices than ever.”

          But does it suggest that a particular SFH is selling for a higher price than ever or does it suggest that higher price SFHs are whats selling?

          What is happening in rents (and incomes) is an apocalypse at the bottom and cuts at the top. This pushes up the median and average, but that is just a mathematical artifact.

          If the bottom 15% of workers lose their jobs and the top 85% take a pay cut, then average & median wage might go up but the reality is that everyone is worse off.

          Remember that you can always increase the average of a group by cutting out the bottom. But that increased average doesn’t mean that anything has improved for the top portion that survived the cut.

          • Posted by wilson

            Unemployment is off the charts, but the stock market is sailing along. It’s just seems so clear that this pandemic is hitting the low end so much harder than the high end. And I expect to see that play through in all the data. Rents, Incomes, Sales Prices…

        • Posted by SocketSite

          Luckily, this is not “the only data” with which we have to work as it’s one of the most misleading stats in terms of values and market strength. Which brings us back to the data above, actual inventory levels, indexed values and apples-to-apples sales to boot. And then there are the underlying price per square foot trends

  4. Posted by Jason Calacanis

    The number of high-end executives and VCs I’m seeing leave SF is a really shocking. Half are heading to out of the city and the other half are going to Austin, Los Angeles, Portland, Canada (!!!) etc

    low cost of living + remote work being standard for everyone + lower taxes + SF crime/homelessness are what insiders are telling me… I think rents go down 30-40% from peak and housing goes down 10-20% from peak.

    We moved the greatest hack in the area: HIllsborough (15-20 minutes from city and Palo Alto… 9 minutes to the airport).

    • Posted by Jake T

      Execs leaving San Francisco for LA for lower taxes, crime, and homelessness are in for a surprise. You forgot to include evergreen darlings Seattle and New York, but I’m assuming that was a mistake.

      Rents down 30%, the lower end of your range, would put them in real terms just around what they were in the middle of the financial crisis. 40% would be mid-2000s rents. That would be hard to believe, especially with the relatively inelastic demand of the large South Bay employers. But anything can happen.

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