Hello Friends and Prospective Buyers,
I hope you’re all keeping well despite the barrage of bad luck being thrown our way: The continued challenges of the pandemic, the fires throughout California, the on-going protests and the bombardment of political ads coming our way in preparation for the upcoming election. I’ve said it before, 2020 continues to be a collective ‘annus horribilis’.
In previous months I’ve commented on how current events will take their toll on the property market. The view that the San Francisco property market is immune to macro-economics, a bubble that will continue to grow is misguided and that bubble has burst.
I’m no pessimist, in fact, I believe there’s always opportunity for buyers and sellers, whatever the market looks like. I’m also not just giving you my opinion, I’m constantly monitoring the market, so with this in mind let’s look at the data and why I believe it’s a good time to buy in the city:
Firstly, the amount of condos for sale is the highest it’s been in SF for 10 years. Problem is, they’re not selling – the Months Supply of Inventory Index (MSI) is nearly 7 months – a balanced buyer/seller market is 4-5 months – and areas like District 9 (Condos in high-rise buildings whose main attraction WAS proximity to downtown) are particularly badly hit. The Condos that are selling are larger ( 2+ bed), within smaller buildings, with outdoor space and in good locations which is n’t rocket-science but does explain how The Median Sales Price (MSP) for Condos and Average Price Per Square Foot has increased yr-on-yr as these data point are over-indexing on this type of condo while overall sales are low. A good example would be a new-build, two-unit condo building around the corner from me in Alamo Square that came onto the market last weekend – both units sold within 2 days +10% over asking and they were listed at $2.6 and $2.9M respectively. This is the exception, so distorting the data somewhat. Nevertheless, I still have clients who are looking to bag a bargain loft in South Beach and are waiting just a little longer to swoop in and buy.
Moving onto the Single Family Home market and the pattern is similar but not as dire: Inventory levels are at the highest since 2011, the MSI is four months – suggesting a more balanced market, moving from the sellers market status quo enjoyed for many years in the city – and prices have dropped in the less desirable neighbourhoods, spreading to the more established ones. Again, I have a client who is looking to buy a fixer-upper in a good neighbourhood who is monitoring 2 to 3 properties, waiting for the next reduction from the seller to pounce.
Opportunities are out there and they’re looking more and more attractive.
One more thing, there’s been a lot of talk about the SF city exodus to neighbouring areas but how true can this be? From personal experience, I’ve recently been house-hunting for clients in Marin, Napa and Mid-Peninsula and I can tell you the market is extremely competitive which the data – I can send you on request – certainly backs-up along with the market updates we’re getting from partner agents … If people are leaving, will that make SF an even better opportunity for buyers in the coming months?
As always, if you’d like more data or to chat about any of the information above or better still, if you’re ready to make your next move, you know where to find me!