October 2023: San Francisco Real Estate Insider
I hope you are well as we enter the final quarter of the year. The market is in full force but we are not seeing the same pace of sales activity as we did last year. Sales of single family homes in San Francisco are down ~20%; 553 sales in ‘Q3 2022 vs. 445 in ‘Q3 2023.
This fall, I am seeing a buyers’ market as the inventory is definitely up. Sure, there are still competitive listings in all price segments, but the majority of available homes are waiting for “their” buyer.
Where are the values for the motivated buyer? The luxury segment – although moving – has a lot of inventory. Also, the $2M+ category for downtown/SOMA condos is showing strong seller competition. Looking at neighborhood inventory for single family homes, some (neighborhoods) have a lot; others not so much.
Pacific Heights: 29 homes available
Noe Valley: 20 homes available
Richmond District: 33 homes available
Presidio Heights: 5 homes available
Potrero Hill: 5 homes available
Lake Street Corridor: 8 homes available
The cost of money is the biggest reason we have so many buyers on the sidelines. The current interest rates definitely take away some of your buying power, but the reality is that we will not see the cheap 3% access to capital again anytime soon.
In speaking to buyers at open houses as well as feedback in the agent community, a lot of buyers say they will sit on the sidelines until they see interest rates fall to the low 6% range. If and when that happens, the buyers will already be back ‘en masse and I’d expect to see all property segments (more) competitive again. I think buyers are better off getting a value today using a 3-2-1 or 2-1 loan buy down product (funded by the seller) vs. paying more for a property in a competitive environment at a ~1% lower interest rate. If for some strange reason rates dropped more than 1%, one can always refinance.
On to some data points for the month. The median price in San Francisco is down to under $1.6M (from a Covid high of ~$2M in early 2022).
Looking at the sales of high priced homes, as referenced, we are definitely experiencing a slowdown.
Looking at luxury condo – co-op market, the high-end sales are happening on the north side of town.
Looking at the availability of luxury property, San Francisco has highest inventory in the Bay Area.
Where are the luxury sales occurring in the Bay Area? San Mateo and Santa Clara Counties are way out in front of San Francisco.
