Looking back at 2018, entering the second half of the year we started to experience a transition in the market. Inventory levels were up considerably and for the first time in approximately five years buyers had choice and the possibility to negotiate as they wrote offers on some neighborhood properties.
When you pull back and look at the overall Bay Area numbers from November, they are down in terms of sales volume and median price. The December numbers have not been published but I would not expect to see much of a change.
This may sound like doom & gloom (unless you are a buyer) but that is not what I see when it comes to neighborhoods. Property in A and B-level neighborhoods are still in demand and I would expect buyers to compete for well-priced, quality properties. There is no reason this should change until hiring slows significantly and unemployment numbers start to rise.
Overall, 2018 was another solid performer in terms of appreciation of San Francisco real estate. In comparison, S&P 500, Dow Jones Industrial Average & Nasdaq all went into negative territory for the year.
In Seacliff and the Lake Street Corridor we saw quite an increase in sales activity; the year-over-year activity doubled and the consecutive quarter numbers were up 6x and 5x respectively. Another indicator that helps demonstrate the desirability of our neighborhood is the final sales price as a percent of the list price. Sea Cliff properties sold for 106% of asking and Lake Street properties 104% of asking. Not such a picture of gloom in our corner of the City.
The Seacliff top sale of the quarter is interesting; 840 El Camino Del Mar was an off-market sale and the property was never marketed or exposed to the brokerage community. The house had been vacant for some time and had a few notices of violation. The house quietly sold for $21,900,000. The structure is not worthy of the world class lot of just under 27,000 square feet. Expect to see major construction on this property over the next couple years.
For reference, the top San Francisco sale in 2018 was 2900 Broadway Street. This 8,525 foot five-bedroom, six-bath home sold for $32,000,000.
Here are the numbers for the quarter.
The top neighborhood sales of the quarter:
In other news, I want you to know about our new Concierge Program. In short, the program enables sellers to get their home looking its best so it will achieve the highest possible sales price, without any out of pocket expenses.
Compass and I will cover the upfront cost of certain services that can increase your homes selling price. From deep cleaning, landscaping, painting, staging to cosmetic renovations; we’ll work together to elevate your home value and create a tailored plan to maximize its potential on the market. Give me a call or email if you’d like more details. We are also working on a bridge loan program for sellers that want to buy before selling their home. This should be ready to launch in the first quarter.
What to look for in 2019:
- Expect to see buyers demand more quality (i.e. condition of the property) when they write aggressive offers in the premium & luxury categories (this is where my Concierge Program will set sellers apart from the competition)
- Expect interest rates to climb (30 year money in the low 5’s)
- Appreciation rates in San Francisco will slow to single digits
- Off shore flow of capital into San Francisco (and Bay Area) real estate will continue to slow
- Unemployment may start to creep up towards the end of the second half of the year
- The Giants will trade away a few aging high-salary players (for nothing in return) and finish under 500