Once again, despite a pronounced slowdown in the relative number of condos and single-family homes that have been newly listed for sale over the past three weeks, a slowdown that has been driven by sellers either being unable or unwilling to accept an ongoing drop in values, the net number of homes on the market in San Francisco ticked up another 2 percent over the past week and is now 7 percent higher than at the same time last year, driven by an even greater slowdown in the pace of sales.

As such, inventory levels are still 30 percent higher than prior to the pandemic and nearly 50 percent higher than average over the past decade, with 25 percent more single-family homes on the market than at the same time last year as well.

And having ticked down in four of the five past weeks, the average asking price per square foot of the homes on the market in San Francisco is now hovering right around $1,000 per square foot, which is around 3 percent lower than at the same time last year but still 10 percent higher than the average asking price per square foot of the homes which are in contract, an expectation gap which has dropped 3 percentage points over the past month, driving by a drop in list prices.

Expect inventory levels to climb over the next couple months, with properties that failed to sell at the end of last year re-listed anew and new listing activity climbing as well, the absorption of which should provide some key insight into the lasting impact of higher mortgage rates. We’ll keep you posted and plugged-in.

50 thoughts on “Inventory Ticks Up in San Francisco, Asking Prices Down”
  1. There’s downward pressure in so many areas:

    – Mortgage rates
    – Tech layoffs
    – Hybrid work settling in as the standard (1-2 days per week in office only)
    – New housing coming online (should be around 4,000 units this year per the Socketsite pipeline report).

    Some steals will be had, especially if you can buy in cash?

    1. The bottom was in at the height of fear in summer. Prepare to be wrong.

      Tech layoffs happened, mortgage rates doubled last year, and they’re not going to double again. The worst damage was done last year.

      My wife has a real estate company – and the market is crazy this month. She’s sold 3 properties in 2 weeks. All had multiple bids, all went for over list price.

      1. Mortgage rates are still really high. Tech layoffs happened but many are still being paid as part of their package. Those packages will be done soon. Finally, more tech layoffs are happening.

  2. Possible divergence coming between SF inventory data and national data, as national inventory declined again this week and inventory is down nationally by 14% since January 1st with the explanation being not too many buyers but even less sellers. Before 2008 real estate recessions were always known as regional, then the entire system collapsed in 2008 and we had a real estate recession nationally, perhaps we are back to pre-2008 regional real estate recessions driven by local factors (job loss, demographics, population exodus) with some interest rate impacts sprinkled in.

    1. Its going to be worse than 2008. 30 years of monetarism (1991 on-wards) is coming to a close.

        1. How much more can Fed take on its balance sheet? They need to do a bit of house cleaning or risk a lower credit rating and overall systematic instability. This house cleaning is long overdue.

          1. Maybe stagflation with 50-100 yr mortgages is the way out. Those days of exorbitant year over year RE price increases may be over.

      1. Well, many people in houses already have low rates and don’t need to sell. Therefore there won’t be enough housing inventory to meet the sizeable millennial buyer pool demands. That will keep prices high. What won’t happen any time soon is rapid appreciation. But that’s not anything at all resembling 2008.

        1. In 2008, the crisis was driven by liquidity drying up by way of ARM resets on overvalued assets held by people who didn’t have matching incomes.
          In 2023, the crisis will be driven by liquidity drying up by way of increased rates, falling incomes, falling employment, lack of affordability and lack of headroom at Fed to cut rates.

          Wealth of Silicon Valley and by extension San Francisco was driven by value capture by software/hardware in combination with cheap capital. In the last 30 years, computer science related sw/hw has consolidated and matured to such a level, that opportunity for innovation now is marginal. And even those marginal gains are realized by mega firms and not by startups as was the case before. And cheap capital has also left the stage.

          1. I responded to you with measured reasoning. You respond to me with conflated hyperbole and error. Falling employment? Not according to today’s news as of a half hour ago. That’s just one. Most every single thing you wrote was either a mixture of several things, or exaggeration, or both. Innovation is now marginal would be another. The “rate increase = prolonged crash” take has already been disproven as well, last month.

          2. Why don’t you know how to use ad hominem properly, since you probably use it all the time? I spoke to your words. Not so, yourself. As to evidence, it was a header on this page, one, easy one. “Home buying activity ticks up, but … ” — that’s not what happened in 2008. I mean, easy.

          3. @Ohlonio – Exactly what did not happen in 2008? Can you share your knowledge of how the GFC of 2008 came to be? Short term month-to-month spikes do not indicate long term trends.

          4. Apologize for incorrectly lobbing ad hominem at me apropos of zilch if you wish to continue exchanging opinions.

          5. @Ohlonio – I won’t stop you from sharing your opinions. If you need emotional succor to spew your thoughts, you won’t get that from me.

          6. You’re not my peer though. I think I’ll not teach you things, as you’re rude and can’t control your language very well. Have a nice day.

    2. The savings and loan crisis caused a third of all S&Ls to fail from 1986 to 1995 and amounted to a massive systemic shock. National in scope doesn’t even begin to cover the scale of this event. That mess came to a close only 13 years before the 2008 crisis. Systemic crises that are national in scope if not larger have been a basic element of the real estate market for a while now.

      1. You could argue that the S&L crisis wasn’t really a real estate crisis, but rather a banking/inflation crisis.

        “In the 1980s, the financial sector suffered through a period of distress that was focused on the nation’s savings and loan (S&L) industry. Inflation rates and interest rates both rose dramatically in the late 1970s and early 1980s. This produced two problems for S&Ls. First, the interest rates that they could pay on deposits were set by the federal government and were substantially below what could be earned elsewhere, leading savers to withdraw their funds. Second, S&Ls primarily made long-term fixed-rate mortgages. When interest rates rose, these mortgages lost a considerable amount of value, which essentially wiped out the S&L industry’s net worth. ”

        That prior inflationary time period seems very much worth studying given current events.

        “History doesn’t repeat itself, but it does rhyme.”
        ― Mark Twain

        It’s worth pointing out that people with fixed rate loans during that prolonged period of inflation did very well. The inflation greatly reduced the real cost of their mortgage. It was the lenders that suffered greatly.

  3. I am wondering if San Francisco County Supervisor Shamann Walton endorsing Honduras Fentanyl drug dealers in the Tenderloin and Mayor London Breed opening “safe” heron injection centers in the SoMa and City center, have any impact on buying and selling homes in San Francisco?

    Do these types of government policies make any difference in the market place? Or is buying and selling still based solely on supply, demand, jobs and interest rates? Hoping the realtors on the site can shed some light.

    1. Do you have any evidence you can provide a link to describing how Mayor Breed opened “safe” heron injection centers in either SoMa or City center? I don’t think you can.

      Yes, The Board of Supervisors voted last month to repeal a previous law that would have prevented overdose prevention centers from operating within San Francisco’s borders without a license from The City’s Department of Health, but most rational people would not consider the same thing as the Mayor opening more drug use sites in the SoMa and City Center.

      Operating a safe-injection or a supervised drug-use site like the one that was briefly open in The Tenderloin would be a violation of both state and federal law. As I am sure you are aware, the Tenderloin Center was shut down late last year.

      There was action by the notorious Sen. Scott Wiener, who wrote some legislation at the State level which would allow non-profits to operate such sites in the future, but that bill, SB 57, was vetoed by The Governor last summer.

      1. Not that it matters much – just to put this straight: About a month ago, London Breed and Hillary Ronen were tripping over each other in their rush to want to open a first consumption site until they were told they’d need to defer that to some NGO. So sure, technically it isn’t Breed opening any consumption sites.

      2. I’m just quite amused at the mental picture of someone trying to inject a heron. Would they have to put it in a blender first?

        1. You don’t inject the heron. The heron injects you. That’s what that long pointy beak is for.

        2. The “heron” have a very long pointy beak that makes it easy to inject the poison into a vane. I think you got my “point.” ….lol.

    2. Okay, I did a bit of web searching and found this from a few months back which directly addresses your concern (trolling); San Francisco’s proposal to open supervised drug consumption sites stalled by legal issues:

      San Francisco’s proposal to open a dozen so-called wellness hubs where people can use drugs under the supervision of trained staff, including a couple by next June, has stalled because of legal and logistical issues…The health department said in a statement Tuesday evening that…the timeline and certainty of opening any site is unclear. “The City is not planning to open 12 new drug consumption sites,” the statement read. “Proposals evolve and are revised based a number of factors, including legal barriers at the state and national level.”

      Emphasis mine.
      Even if the proposal had moved forward, it would have required private funding, and it isn’t at all clear such private funding for the non-profits that would operate the sites was or is available.

      1. What is your point? The subject is policy and its effect on propensity to invest in real estate given that any of the following could resurrect at any whim: a “safe injection site, a “navigation center” like the “temporary” one on the Embarcadero waterfront, “wellness hubs” which can recycle under a new moniker and probably will, a methadone clinic, and on it goes. Further research and beware of buying anything close to/adjacent to city owned property or land that could soon be designated for Section 8. Dealing with the uncertainty of all of it? No thanks. City policy leans toward subsidizing addicts and vagrants. Investing elsewhere where this kind of stuff is not continually roiling is much more prudent.

        1. The point is that the policy you and ‘ExSFLandlord’ are concern trolling about isn’t actually happening. I don’t like the idea of safe injection sites, either, but they are a non-issue since none are actually opening and neither of you can point to any evidence that there are plans to do so. Since they are just talk, they can’t have an effect on ‘propensity to invest in real estate’.

          1. The question really should be “Do these types of government policies policy discussions make any difference in the market place? ”
            Given that the ongoing topic on these boards over the past decade – decades– has been how unafforadble SF real estate is, and how much it’s appreciated (in the same time period these ideas have been put forth), the apparent answr is “No. But thanks for asking…sort of.”

    3. Also, please provide proof that Walton “endorsed Honduras Fentanyl drug dealers in the Tenderloin”.

  4. Allow me to provide some direct quotes from Supervisor Walton.

    San Francisco County Supervisor Shamann Walton told San Franciscans this week the U.S. shouldn’t deport illegal immigrant drug dealers for selling fentanyl, the deadly synthetic opioid that was largely responsible for nearly 2,000 drug overdose deaths in the city since 2020.

    “There’s been a drug issue in this country for a very long time. But there’s no way we’re going to stand by and allow people to say that one race or immigrants are responsible for these fentanyl deaths,” Walton said at a rally on the steps of City Hall on Feb. 28.”

    “You cannot violate sanctuary policy for any reason. It goes against the morals of our fabric here in San Francisco, and it also allows people who don’t share our values to persecute people that need us the most,” Walton said at the rally. “People are going crazy over fentanyl because we’re starting to see more white people die from this drug. Where the hell were these people when my mothers and my grandmothers were on crack?”

    Walton was speaking at a noon rally in support of Supervisor Hillary Ronen’s proposed resolution denouncing criticism of sanctuary city policies at City Hall ahead of the Feb. 28 Board of Supervisors meeting. Supervisors Myrna Melgar and Dean Preston also attended the rally.

    1. this line from Walton is dumb “People are going crazy over fentanyl because we’re starting to see more white people die from this drug.”
      backwards logic. most people dying of fentanyl is SF are black despite the fact that only 5% of SF is black. Hes basically allowiing illegal immigrants to sell deadly poison that disproportionatley kills the few black people left in SF.
      Not getting rid of these dealers is racist. allowing the status quo is anti-black

    2. In time Supervisor Walton will probably come to regret giving that inflamatory speech. I’m not defending it, but the line jimbo is referring to probably wasn’t meant sincerely; he was probably quoting a pretty infamous David Chappelle bit.

      I’ll concede that to the extent holding that rally gave Fox News yet another opportunity to say “look at what those crazy liberals in San Francisco are doing”, then sure, wealthy people who often watch Fox, consider themselves “anti-Woke” and are looking to make real estate investments probably won’t do so in San Francisco.

      But you have to be honest. Had that rally not taken place, and the proposed resolution denouncing criticism of sanctuary city policies not been drafted and put forward for consideration, those individuals weren’t going to make any investments in S.F. real estate anyway. They have all kinds of other policies to be offended about, and these recent theatrics aren’t changing that.

    3. I agree with Brahma. I’m not defending Walton. My point was that he was not “endorsing Honduras Fentanyl drug dealers in the Tenderloin.”

      He was prioritizing the sanctuary city policy over any other policy. But he said it in an incredibly clumsy way and it was perfect for Fox News and NewsMax.

      1. It’s perfect fodder for practically every media outlet to the right of Mother Jones: for years SF has operated in a risk free world where it enacts nose-thumbing policies while reaping in billions of state and federal dollar$. Given CA’s blue tilt the former will probably never be an issue, but the Day of Reckoning will come when nationally Democrats realize their electoral chances hinge on throwing the City under the bus.

        1. Considering that California already contributes more to the federal government than it takes in, I don’t think that’s likely or possible. We still pay the federal government’s bills.

          That being said, it was in fact perfect fodder. We have a long history of electing people like this.

    4. Ah yes, Shamann Walton. The small time street crim from Vallejo who like so many of his type in the past discovered there was far more money to be made as a “progressive politician”. A much more lucrative hustle. Very lucrative. A long tradition in San Francisco politics. Small time petty criminal turned “politician”. Bill Maher back in the 1980’s/1990’s being the last great example.

      So of course Walton just loves criminals. His type of people.

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