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San Francisco Home Prices, Market Conditions & Trends February 2024
Spring flowers are blooming and there are heartfelt signs of life in the SF real estate market!
 
As we step into March, it’s time to take a closer look at the latest trends shaping our local real estate market. After Easter, we will have the first quarter of 2024 to review. Let’s now dive into key metrics that provide valuable insights into the current state of the market – Open house visitor numbers have surged, new listings coming on the market have risen, the pipeline of coming listings is filling up faster than last year, and the number of homes going into contract is climbing rapidly as the market wakes up. With dramatic improvements since October in interest rates, stock markets, and consumer confidence, both buyers and sellers are re-engaging to a much greater degree, and the velocity of the market is accelerating.
 
The inventory of house listings remains very low compared to pre-pandemic norms, and the demand vs. supply dynamic is very tight in that segment: One of the big questions in 2024 is how many homeowners, having held off listing their houses since mid-2022, move forward with selling. The supply of condo listings is considerably higher, and while condo and house sales numbers are similar, condo inventory is 130% higher. But condo market conditions also appear to be heating up in 2024, with market conditions varying significantly between neighborhoods.
 
“Although affordability continues to impact homeownership, the combination of a solid economy, strong demographics, and lower mortgage rates are setting the stage for a more robust housing market. Mortgage rates have been stable for nearly two months, but with continued deceleration in inflation, rates are expected to decline further. The economy continues to outperform due to solid job and income growth, while household formation is increasing at rates above pre-pandemic levels. These favorable factors should provide strong fundamental support to the market in the months ahead.
 
The California Association of Realtors forecasts that compared to 2023, the number of state home sales in 2024 will increase 23%, the CA median house sales price will rise 6.2%, and the average 30-year mortgage interest rate will decline to 6.3%.
 
Local Market Activity:
  • After hitting its low point in December, new listing activity picks up rapidly in the new year, as it has in January 2024 (and would be significantly higher if “coming- soon” listings were included). New listings were up about 14% from January 2023.
  • Well-priced homes in quality locations are experiencing bidding frenzies with multiple offers, and while this is the high end of the demand spectrum, many condos (outside of downtown locations) are also experiencing offer dates and multiple bids.
  • Year over year, the number of accepted offers in January 2024 was up over 30%
  • Year-over-year, the 3-month-rolling San Francisco median house sales price in January 2024 was up about 2%. The January reading mostly reflects offers accepted in late 2023.
  • Year-over-year, the 3-month-rolling SF median condo sales price in January 2024 was up about 1%.
  • Over the past 12 months, approximately 57% of San Francisco houses sold between $1 million and $2 million, most of them with 2 or 3 bedrooms.
  • Of the listings for sale on February 1, 2024, 28% were houses, and 72% were condos, co-ops, TICs & townhouses.
  • Sales in one month mostly reflect accepted offers in the previous month: January sales volume mostly reflects market activity in December (usually the slowest month of the year). Year-over-year sales volume was basically unchanged in January 2024.
  • Home sales of $3 million+ in January 2024 were up over 70% from January 2023 (which may or may not be an anomalous fluctuation).
 
Interest Rates Update:
 
Interest rates have fallen from almost 8% last fall to roughly 6.5% a couple of weeks ago and now are leaning into the 7% range. This has bolstered confidence in the buyer pool relative to 2023. Given the dormant market last year, with buyers delaying purchases, there is a lot of pent-up demand. Add to that the annual influx of new buyers that come into the market after the new year, activity has ticked up quickly. What’s the crystal ball tell us about what happens next?
 
Other positive recent market comments:
  • The change in stock markets has had an enormous effect on household wealth in the Bay Area – especially among more affluent buyers – who seem to be jumping back into the market in greater numbers than buyers in lower price segments.
  • Nationally, per NAR, the percentage of all-cash sales hit 9+ year high. Besides investors, who often pay cash, 40% of homeowners own their homes free and clear – when they sell, they have plenty of cash to buy. And long-term owners who still have mortgages have accumulated a lot of equity. Then there’s the new stock market wealth, and, of course, the very affluent.
  • The Fed’s favorite measure of inflation, Personal Consumption Expenditures (PCE), showed that Headline or all-in inflation rose .3% for the month, which was in line with expectations. Year-over-year inflation declined from 2.6% to 2.4%, which was also as expected. The Core rate, which strips out food and energy prices, fell from 2.9% to 2.8% as anticipated. Bottom line – PCE inflation continues to make progress, albeit slower progress on the core. Annualizing the last 8 months of PCE, the index is at 2.28%, which is not far from the Fed’s 2% target. Could this lead to some rate cuts??? Let’s hope! (MBS Highway 02/29/2024)
 
In summary, we have had some positive action in our local market and expect it to continue. Interest rates are steady, and the market is reacting to them. Sure they may get better, but if you are thinking about trying to time the housing market by waiting for lower rates – that isn’t a promising idea. As we have messaged before – when is the right time to buy? – It’s really when you’re financially ready, and emotionally ready, and you find that home that fits your dreams and/or your needs. It’s always important to listen to the bell if a home rings yours 😊.
 
So our advice is to be ready. Life circumstances change and it’s always better to have the facts and plan a successful strategy to buy or sell. We know we can help you seek and find your opportunities. We are happy to assist you as well as your family and friends with their real estate needs – in our local market, across the country, or internationally. Our network is extensive in our Compass family and beyond.
 
Are you wondering about the 2024 market specific to your property or one you have been watching? Or considering a sale ? – we are happy to provide you with a free-market evaluation relative to a purchase or sale and address any questions you may have about the current market.
 
We Love What We Do – We can help you and your friends and family find opportunities in this market. Call us anytime and feel free to forward our newsletters or introduce us via email to anyone you know.
 
Warm Regards,
Callista & RicRoc
 
Open house visitor numbers have surged, new listings coming on market have risen, the pipeline of coming listings is filling up faster than last year, and the number of homes going into contract is climbing rapidly as the market wakes up.    
    The post San Francisco Home Prices, Market Conditions & Trends February 2024 first appeared on Paragon Specific.

Ric Rocchiccioli

San Francisco Bay Area

DRE 01017500
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