Down 3 percent since the start of the year, the average list price per square foot of the homes on the market in San Francisco is back under $1,000 per square foot.

And with the drop in the average list price per square foot, the expectation gap between the price per square foot of the homes which remain unsold versus those which are in contract, which was up to 15 percent last year, has dropped from an average of 6 percent in the first quarter to an average of 4 percent in the second quarter to around 1 percent as of today.

At the same time, the average sale price per square foot in San Francisco is actually down 2 percent over the past year, not up, to around $1,035 per square foot.

21 thoughts on “Average Price in San Francisco Drops, Expectation Gap Down”
  1. From Zillow, there are 300+ MFH currently listed on the market, comparing to some 40 listings back in 2019…For those that are willing to be patient and disciplined, there will be good buying opportunities in the next 2-3 years, I am thinking

    1. While directionally correct, multi-family home inventory is actually up 30 percent, year-over-year, and closer to 40 percent, not 7x, versus July of 2019.

  2. I hope this is true, but there is nothing or very little on the MLS for south of $1000 a sq ft. Most properties seem to have multiple offers and selling into the $1100 to $1200 / sq ft cost. (I am talking about properties less than 1.5M)

    1. While “very little” is subjective, over half the homes on the MLS are currently listed for under $1,000 per square foot, which is the case for properties listed for less than $1.5 million as well.

      And once again, while there are 25 percent fewer homes on the MLS than there were at the same time last year, when inventory levels spiked, there are 50 percent more homes on the market than there were prior to the pandemic and 98 percent more than there were in July of 2015.

  3. To me, the biggest story here is that a crisis seemingly has been averted. Last fall, a number of metrics looked frightening, including sale prices on condos, number of new listings, days on market, etc.

    Those numbers have since rebounded quite a bit. We’re not out of the woods yet, as the editor has pointed out, but we have stability in a more acceptable place.

    1. Thank god a “crisis” (i.e., housing getting more affordable) has been averted. It’s amazing what eternal ZIRP, QE infinity (as in Fed purchasing trillions of dollars of MBS), and media that act as the real estate industrial complex’s press agent can do!

      1. I have snarked at you in the past, but in this case, I think you are spot on. Maybe because I am, by birth, a Midwesterner, but the idea of housing costs being on a continuous rapid escalator (while incomes largely stagnate for many/most people) seems insane to me. From a broader economics standpoint, is it really a good idea to ENCOURAGE asset price inflation through pouring money in versus encouraging more productive investment?

        1. I agree with you both, and almost included a comment about how this is not really a crisis. I don’t want housing prices to skyrocket either as its unhealthy. I don’t want them to crater, either (as a homeowner but also because that bodes poorly for the economy etc)

          1. “I don’t want them to crater, either”

            Then how, pray tell, is the “affordability” crisis ever to be solved, if prices are currently (much) too high, yet we won’t allow them to decrease to market-clearing levels (maybe that magical supply of new ‘affordable’ housing that comes online but somehow doesn’t impact existing housing)?

            Like it or not – and it’s not a back-handed compliment (wink, wink) to say you just told us which you’ll choose – but ‘cratering’ is a good way to level the field.

          2. Fair point. I think there’s a difference between a decline and cratering. I’d be fine with a decline or a flattening via more housing construction in order to approve affordability, at the expense of my home price, because it would make for a better city overall. My problem with “cratering” is that it might come with a variety of other societal and economic problems, a la Detroit.

          3. And a fair return volley; of course there’s always a noisy contingent who thinks anything other than double-digit increases in R/E every year is a “crisis” that needs intervention…and they frequently get it.

          4. “Then how, pray tell, is the “affordability” crisis ever to be solved, if prices are currently (much) too high, yet we won’t allow them to decrease to market-clearing levels”

            My guess, and what looks like is playing out now, is that we have a gradual nominal decline of prices with inflation doing the heavy lifting of bringing down prices in real terms.

          5. The “affordability” crisis doesn’t ever have “to be solved”, and if you’d like real world proof of that, just look at other cities with natural constraints on buildable land and you can see that prices can keep going up indefinitely.

            A great example of this is Hong Kong, they’ve been doing what the real estate shills and chain yankers in these comment threads have been saying S.F. should do (allow developers to build more, enable developers to build higher, etc.) for decades and prices have yet to level out, much less become “affordable” to the actual workforce with longtime residency. The only thing on the horizon that will address the problem, if anything does, is demand reduction via mass emigration (in Hong Kong’s case, in response to the crackdowns on freedom).

        2. “From a broader economics standpoint, is it really a good idea to ENCOURAGE asset price inflation through pouring money in versus encouraging more productive investment?”

          Good question!

          The answer, of course, is “NO.”

          Empirically, its farcical “dual mandate” notwithstanding, the Fed isn’t concerned with “broader economics,” only with boosting the assets (chiefly stocks and RE) of several thousand extremely wealthy entities. Without the Fed’s endless ZIRP policy and its massive purchasing of MBS that have crushed savers and workers, displacing millions of families, and driving millions into poverty, RE would move towards its historical mean that more or less tracked with inflation, instead of exponentially leaving it behind after the Greenspan put became de facto policy.

          1. I also agree that there has been a lot of ‘the tail wagging the dog’ with policies trying to boost the price of housing (and other assets). If prices rise because people are getting more value, either from pleasure or productivity, from their purchase then I don’t see anything wrong with that. But merely trying to prop up prices seems rife with problems.

            They say ‘It’s different this time’ are the four most dangerous words in the English language, but I’ll throw caution to the wind and say it’s a bit different this time. In 2008 there was a national housing crisis which (eventually) responded to a national policy intervention.

            With the current and coming changes to how and where people work, I think that we are going to see more regional winners and losers. Lower rates can incentivize someone to buy a house, but it doesn’t constrain where they buy that house. L

            SF and other regions are going to have to recognize that people and businesses now have more choices and are going to have to compete to provide quality of life and/or business productivity commensurate with their regional costs. (Or fail to do so and allow migration to bring costs down to the level of value being provided.)

          2. It’s never good enough when it comes to absolutists. Trillions in stimulus payments? Rent forgiveness? $30,000 a year in enhanced unemployment that millions are stocking away or blowing on meme stocks? Ultra low interest rates and myriad ways to buy the 1st time home? Student loan help for loans that in many cases represented excessive spending on non-education activities and purchases by millennial and gen z students? Its not enough! Instead it’s name calling and bullying akin to the other side of the same coin of the far right and far left’s little zero sum blame game of simplistic thinking. In my experience the ONLY people that ever talked that way to other people were themselves poster children of privilege, often raise by their “help,” aka people of color in wealthy suburbs. Then they come here to heckle.

            Now, back to real estate: if you want to see some real shenanigans look no further than the black box processes for populating the many 1000’s of near million dollar apiece “affordable” units being built across SF. Its often alarmingly rigged. Oh and of course those many thousands of new units? Never enough! Shame on us all!

      2. two beers, champion of the people, advocate of painful monetary recessions. something doesn’t add up.

        1. “painful monetary recessions”

          The monetary policies that bailed out Wall St and real estate assets after the GFC have directly created the greatest economic inequality since the Great Depression.

          ZIRP and QE Infinity was plenty good for you and your associates, though, so anyone saying asset bubble economies are a recipe for social meltdown is a commie, amirite?

          1. I think I explored your knowledge of macroeconomics pretty definitively on another comment thread on this site, and informed observers can only conclude that it’s essentially nil. I’ve seen AI bots trained on Zerohedge that are more coherent.

          2. Stephen Moore, is that you? I take it your “exploration” is a de facto refutation of post-Keynesian and other schools of heterodox economics? Well done, sir! Sloppy neo-classical tautologies are no match for critical thinking. Upton Sinclair’s adage applies, as always.

  4. Well this is good news. We’re cuttingly in the buying process and have put in offers in the past month, which we’ve lost. All condos we’ve put offers for (west of van ness north of Haight) have sold for over $1,000 sq/ft. The nicer places sold for over $1,100. I expect prices to stay the same or increase

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