As we outlined yesterday, while the net number of homes on the market in San Francisco (i.e., inventory) is currently unchanged, month-over-month and year-over-year, it’s not due to a jump in demand.

In fact, pending home sales in San Francisco, which were down an average of 40 percent on a year-over-year basis in January and February, have been down nearly 45 percent on a year-over-year basis in March, despite the traditional start of the “spring buying season” having passed a few weeks ago.

As such, pending home sales in San Francisco remain at their lowest levels in over six years on a seasonally adjusted basis, with the average price of the homes which are in contract down an average of 9 percent on a year-over-year basis this month and 10 percent lower than last May.

Comments from Plugged-In Readers

  1. Posted by Fred Mack

    As the great gas off continues. How could the nadir of this cycle be any less than a year away?

    • Posted by Ohlone Californio

      Because sales activity is not trending down from the late fall early winter. Therefore, ultimately one of those months will be juxtaposed against a month from the spring ’22 heights on a chart, displaying nadir. That would be why.

      • Posted by Fred Mack

        Perhaps optimism runs deeper within the industry, it appears inherent. Taking a more macro view, I’m looking at SF home prices and how they have been effected by various social, business, political, and cultural changes across the longer term. When I see charts like this, and look around at the current state of affairs, it’s hard for this 40 year local observer to not believe the floor is still a little ways out.

        • Posted by Ohlone Californio

          I answered your question from a place of fact. You spoke of nadir. In point of fact, February and now March display relative gains from much lower late fall and early winter $/ft prices. Now you insert narrative, an op-ed dig, “optimism”? And you cite a trailing indicator as well, displaying the exact periods I already referenced. Heh. OK bro.

          • Posted by Fred Mack

            I’m not sure how your Feb/March increased sales activity fact has anything to do with a 35 year sales price index fact, but you did kind of make my opinion about industry optimism ring true.

          • Posted by SocketSite

            Once again, “pending home sales in San Francisco remain at their lowest levels in over six years on a seasonally adjusted basis.” And while the average price per square foot has inched up from the end of last year, keep in mind that there’s seasonality to prices as well, which some might be conflating with a rebound, with the average price per square foot of the homes in contract over the past month “down an average of 9 percent on a year-over-year basis (versus down 6 percent in the fourth quarter of last year).

          • Posted by Ohlone Californio

            No. You spoke of future nadir. When countered with current, improving prices? You cited a trailing indicator. The editor inserted the mitigating factor of seasonality subsequently. Fair enough, typically, however, is seasonality really in play during a true sea change? Not that I’ve seen. But you, Fred Mack? you can’t talk future nadir while ignoring contemporaneous rebound, while citing old data. Sorry. You’ve lost the debate. Whether or not there will be a next one depends upon my boredom / desktop work to do list.

          • Posted by The Milkshake of Despair

            “… is seasonality really in play during a true sea change?”

            Of course. Seasonality is always in effect. SocketSite brings up seasonality because it can distort analysis of longer trends. If you don’t normalize or factor out seasonality it adds noise to the analysis and obscures longer term trends. Without that normalization every spring it would look like the market is going gangbusters and then every winter would look like doom and gloom.

          • Posted by Notcom

            Yeah you’d have someone on here hailing every Spring figure as the Truth and every Fall figure derided as cherry-picked. Unless, of course even the Spring figures are down….then someone’s spouse will be brought onboard to give impartial expert testimony.

          • Posted by Ohlone Californio

            I guess so. I looked at spring ’09 just now and it was up slightly $/ft over winter 2009, like $25/ft. That said, this March so far is up $104/ft over this February. (I only looked at single family homes) I think the nadir is in the rear view mirror, myself. Happy palindrome day 3/23/23 everybody by the way.

          • Posted by Ohlone Californio

            No, scratch that. Single family homes $/ft went down month over month, February to March 2009. So no, I don’t buy that seasonality is necessarily in effect during a massive downturn.

      • Posted by jimbo

        i wonder if the awful weather is playing a part here in the low spring start

        • Posted by The Milkshake of Despair

          Could be. Putting on the foul weather booties to see an open house might deter some home seekers, especially those who aren’t limber enough to don shoes while standing.

    • Posted by thattechguy

      I think what’s not understood, is that there is very little inventory. Nobody is moving with high interest rates. No inventory, way less sales.

      It doesnt’ mean those homes, (mostly homes out of the downtown core of SF) aren’t getting multiple offers. The property in Bernal today in the 1.5m range got 11 offers. Our clients were out bid 100k over their “over asking” on a forest hill property.

      Don’t be fooled, people are buying.

  2. Posted by Dixon Hill

    I assumed this was due to interest rates but national sales of existing homes reflect decent activity in February with prices down only 0.2%.

  3. Posted by soccermom

    That mortgage rates have approximately doubled what they were a year ago is likely to have had a negative impact on sales.

    Fed policy works.

    • Posted by SocketSite

      Or as we outlined at the end of 2021 and shouldn’t have caught any plugged-in readers, other than the most obstinate, by surprise rate hikes in 2022 “should translate into higher mortgage rates, less purchasing power for buyers and downward pressure on home values,” while others were misprojecting that higher rates would simply result in higher prices across the board.

      • Posted by soccermom

        Who said that higher rates would produce higher prices? I don’t recall anyone saying that here or elsewhere.

        • Posted by Brahma (incensed renter)

          You two are talking past each other. One is talking about the impact on prices that today’s mortgage rates are having. The other, soccermom, seems to be talking about sales volume, or the number of homes trading during a given period of consideration.

          But it’s a bit too early, and too glib, to keep saying “Fed policy works”.

          The Fed isn’t raising interest rates to slow down the turnover rate of homes and therefore depress the revenue into real estate brokerages. They are doing this to control inflation, and housing costs are a main reason inflation is still high. From the Consumer Price Index – February 2023 dated Tuesday, March 14, 2023 (that same link might change to point to a future release in the coming months) , 2nd ‘graph:

          The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in February on a seasonally adjusted basis, after increasing 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 6.0 percent before seasonal adjustment.

          The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the indexes for food, recreation, and household furnishings and operations also contributing. The food index increased 0.4 percent over the month with the food at home index rising 0.3 percent. The energy index decreased 0.6 percent over the month as the natural gas and fuel oil indexes both declined.

          Emphasis mine.

          Inflation isn’t coming down, but it isn’t increasing as fast as it once was.

  4. Posted by Jimmy The Landlord

    “Prices have reached a permanently high plateau!”

  5. Posted by Fred Mack

    Forest, I’d like you to meet Ohlone. He has a tree you may like.

    • Posted by Ohlone Californio

      Huh? That didn’t even make any sense…

Comments are closed.

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