February Real Estate Review
Your Monthly Real Estate Report
Prices are still the highest they’ve been in 10 years. Early spring sales activity is picking up. List with Robyn today.
As of early February, the government shutdown is over – at least for a little while – the stock market has recovered dramatically from its late 2018 plunge, and interest rates are well down from November highs. A good number of large, local, high-tech “unicorns” continue to plan IPOs in 2019. All these are positive economic indicators for the Bay Area real estate market – but indicators have proven to be quite volatile over the past 5 months and future movements are not to be taken for granted.
# of Active Listings in San Francisco
As detailed in our last report, there was considerable cooling in the market in the second half of 2018. The month of January typically has the fewest sales of the year, sales which mostly reflect activity during the December market doldrums. Median sales prices often fluctuate by month and by season. It is not unusual for them to spike to new peaks during the spring selling season, and then decline and/or plateau afterward (until the next spring). So, the question is: What’s going to happen in spring 2019? In the Bay Area, the beginning of the spring sales season can start as early as February – activity in the coming weeks will soon provide more direction as to where the market is heading.
The San Francisco Condo Market
Median condo sales prices, especially on a monthly basis, can be confused by new-project condo sales reported to MLS, which sometimes occur in quantity in a single month. Monthly fluctuations are common, and it is always the longer term trend that is most meaningful. With that said, condo sales in San Francisco have significantly outnumbered house sales, and this trend will continue with the ongoing construction of new-condo projects. See new building projects in the city here.
Since the market recovery began in 2012, home sales at prices under $1 million have dropped by 68%. The most common property type for sales in the city was the 2-bedroom condo at a 2018 median sales price of $1,375,000. In comparison, the median price of a 2-bedroom home was $1,274,000.
Did you know…
Compared to more suburban Bay Area counties, San Francisco is a city of relatively small, older homes occupied by relatively small households: Almost half of SF housing was built before WWII, 61% of homes are of less than 1500 square feet, and, per census data, 38% of SF households consist of a single person. SF also has the lowest percentage – 4.5% – of children under the age of 5 of any major city in the country.
San Francisco Long-Term Rent Trends
Generally speaking, there should be a relatively close correlation between home prices and rents: They constitute the 2 main options for paying for one’s housing. It is not an apples-to-apples comparison, because there are other issues at play, such as building equity, the ability to remodel and improve, certain tax advantages (though greatly diminished under new tax laws) and so on. If home prices continue to appreciate while rents plateau or decline, it can be a warning sign of an imbalance in the market – if it extends beyond the short term.
When one breaks 2018 down by quarter, it is clear that the big increases in price occurred in the first half of the year, after which the median house sales price declined. By the 4th quarter of 2018, the quarterly, year-over-year median house appreciation rate had basically dropped to zero. Condo prices were basically flat Q2 to Q4. This trend of high appreciation rates in the first half plunging during the second half was relatively common around the Bay Area.
Robyn Tops Sales Records In San Francisco:
Robyn’s Average Sales Price, 2018
Robyn’s Average Price Per Square Foot, 2018
Average Sales Price in San Francisco
Price Per Square Foot in San Francisco
Interest rates appeared to be headed relentlessly higher, but instead dropped sharply since the latest November 2018 high point. Substantial declines in interest rates can spark renewed buyer motivation to purchase.