In the 3rdQ, low inventory coupled with steady demand kept San Francisco in a strong, yet moderating housing market. According to the MLS, the median sales price for a single-family home rose 7% in the City, year-over-year, to $1,450,000. 625 SFRs were sold, a 4% decrease. Strong buyer demand led to a 21% higher final sales price vs. original list price ratio for SFRs. Unlike SFRs, the total number of condo/co-ops/TIC units increased 5% to 785 -- the first increase recorded for condos in Q2 since 2013. The median sale price for condos across all of the City increase to $1,150,000, a modest 2% year-over-year increase.
While most San Francisco saw moderate gains, some Districts in the City experienced above-average gains. In District 5, the median sales price for SFRs climbed 23% year-over-year to $2,400,000. That median sales price continued to grow as the total number of houses sold remained relatively flat from 91 units in Q2 2016 to 88 units in Q2 2017. Notably, the median sales price for a condo/co-op/TIC in District 1 rose 25% in Q2 year-over-year. The total number of condos sold in District 1 fell 35% to 26 units.
Rents peaked in 2015 and have dropped by a small percentage, and remain nationally high. Supply has increased dramatically in new construction.
Generally speaking, the luxury market has cooled more than the more affordable segments, and the luxury condo market has cooled more than the luxury house market. This is mostly due to the recent surge of new-construction luxury condos onto the market in the city.
BUYERS. In many ways this slowing market is a nice breather after the wildly overheated selling seasons of the last 4 years. With listing inventory up, buyers are finding they can take their time. Some homes are being passed over altogether; the number of listings that expired without selling rose by over 50%. If you have been waiting to buy, the time has arrived. Interest rates are inching up. Be prepared to compete with tech innovators, finance or tech executives, global families seeking safe harbor investments, or empty nesters returning to the City. Your lender relationship and being ready to act immediately are crucial. Buy for the long term: 5+ years. San Francisco was effected by the Great Recession for 3 years, so it seems that 5 years is a safe time frame to hold a property until its value returns, if and when the next adjustment occurs.
SELLERS. We are still pricing slightly under expected selling price, in the hopes of attracting more than 1 offer. Generally speaking, the market for more affordable homes is stronger than for luxury properties; demand for houses exceeds condos. Areas with a high concentration of new construction also have a weaker demand (SOMA, South Beach). San Francisco remains a strong attraction for technology companies who recruit and hire employees with the desire and resources to live in the City. Along with the traditional needs of existing residents, 2nd home buyers, and investors, ongoing demand is fueled. Ours is a global market, especially for those homes that have been recently renovated and in move-in-condition.
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