San Francisco Home Prices, Market Conditions & Trends January 2024
Our market Recap:
We hope the new year is treating you well so far, that you had a fantastic holiday, and that the year is one full of blessings and happy moments. While it is very early to forecast the 2024 residential real estate market in San Francisco, based on the market activity we have seen to date, it appears that demand has heightened and that buyers are beginning to make commitments to new homes again.
If these trends continue, we believe that we are on the path to a more normalized, healthy market with a notable resurgence in buyer activity. With imminent rate reduction/s forecasted for 2024 and the consensus that a recession is very unlikely, buyers appear to be out and ready to buy again. The Covid umbrella that permeated our daily life course, and for most all of us, redefined the “who, what, when where, and why” of how we live and work; appears to have resulted in seeing new buyers and sellers beginning to explore the market and make decisions about their future real estate needs. It is in these circumstances that we are providing our update as the new year gets underway.
Enjoy the information in our newsletter and let us know how we may assist you in 2024. We’re happy to assist with any questions or needs.
Our Market Recap – Dramatically Improving Economic Indicators Suggest a Brighter 2024 Housing Market
  • In the last 2 months of 2023, the average, weekly, 30-year mortgage interest rate dropped from 7.79% to 6.61%. With the fall in inflation this past year, the Fed is widely expected to begin dropping its benchmark rate, probably in multiple steps, in 2024. The consensus forecast among analysts is for further declines in mortgage interest rates.
  • After its end-of-year rally, the S&P Index was up 25% and the Nasdaq up 45% in 2023 (though it has ticked down in early 2024). This plays a major role in Bay Area household wealth.
  • On an annual basis, the 2023 median house sales price was down 13% from 2022, while on a quarterly basis, the Q4 price was down less than 1% year-over-year.
The 2023 market was characterized by a flurry of negatives for SF real estate: high interest rates, financial market uncertainty, negative media “doom-loop” narratives (terribly overdone), social/economic issues pertaining to the downtown district, and a low supply of new listings in most neighborhoods – generally much lower for houses than for condos. Total sales volume plunged, while for many prospective sellers, the motivation to move was reduced by the mortgage lock-in effect. With interest rates falling, media coverage turning more positive, AI companies expanding in downtown, and economic conditions and consumer confidence rebounding, the direction is trending positive for San Francisco real estate.
Some positive recent market quotes:
  • “Inflation around the globe is slowing way faster than expected. If economists are right…next year [will see] inflation back to normal levels for the first time in three years.” Wall Street Journal, 12/24/23, “For Much of the World, Inflation Will Be Normal in 2024 – Finally”
  • “Consumer sentiment…soared 14% in December [due to] substantial improvements in how consumers view the trajectory of inflation…All age, income, education, geographic, and political identification groups saw gains in sentiment… [2024] inflation expectations plunged from 4.5% last month to 3.1% this month.” University of Michigan, Consumer Sentiment Index, December 2023”
  • “Housing starts surged to a six-month high, sales of previously owned homes picked up from a 13-year low, and builder optimism boosted by increased interest from prospective buyers. Meanwhile, Americans’ home-buying plans rose this month by the most in more than a year. The bounce back comes as mortgage rates have declined by…the biggest drop over a comparable period since 2009.” Bloomberg News, 12/20/23
  • “The 30-year fixed-rate mortgage remained below 7%…after 17 consecutive weeks above. Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market…Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.” Freddie Mac, 12/21/23 & 12/28/23
  • Changes in economic indicators didn’t begin to affect market psychology until early mid-November, right before the big holiday slowdown, and the home buying process takes 30 to 60 days from loan qualification and offer acceptance to closed sale.
  • We are always looking in the rearview mirror, so the significant effects on sales statistics will not begin to show up until early 2024 data starts to become available.
  • Per Freddie Mac (FHLMC), on December 28, 2023, the weekly average, 30-year interest rate declined for the 9th week, to 6.61%. (For 15-year loans, the rate was 5.93%.)
Local Market Activity:
  • The median house sales price in 2023 was down about 13% from 2022.
  • Year over year, the Q4 2023 median house sales price was down less than 1% from Q4 2022.
  • The 2023 median condo sales price was down about 6% from 2022.
  • Year over year, the Q4 2023 median condo sales price was down about 1% from Q4 2022.
  • The number of new listings in 2023 was the lowest in decades.
  • 2023 sales volume was down about 27% from 2022.
  • Though home sales of $5 million+ fell in 2023 (from the high sales volumes during the pandemic boom), $10 million+ sales were relatively unchanged from 2022 (though well down from the 2021 peak).
  • There were 15 house sales of $10 million+ reported to MLS during the 12-month period and 2 listing currently pending sale. 3 sales were reported of $20 million+. Data presented represents 12 months of sales and pending sales reported to NorCal MLS Alliance by 12/18/23. Not all luxury home sales are reported.
  • Some new-project luxury condo sales are not reported to MLS. These projects are mostly concentrated in the greater South Beach/Yerba Buena/SoMa area.
  • 96 of these sales were condos, 9 were co-ops, 7 TICs and 2 townhouses.
  • There were 2 sales of $10 million+ reported during the 12-month period.
  • Of the listings for sale on January 1, 2024, 27% were houses, and 73% were condos, co-ops, TICs & townhouses.
Interest Rates Update:
After 30+ years thriving in a dynamic real estate market where reading the tea leaves is essential, we are very excited that 2024 will be a stronger, more stable, and more robust market for both buyers and sellers.
After the big decline in November and December, interest rates have basically been flat for the last five weeks: Mortgage rates stabilized in the past week but remain close to the narrow range observed since the start of this month. The 30-year fixed-rate mortgage averaged 6.69% as of Jan. 25, an increase from last week’s figure of 6.60%, according to Freddie Mac’s Primary Mortgage Market Survey released on Thursday. Meanwhile, the 15-year fixed rate averaged 5.96% this week, up from 5.76% during the prior week. (Housing Wire 01/25/2024)
It’s hard to overstate the rebound in stock markets seen since late October 2023. The S&P has hit a new high, and the Nasdaq is getting very close. This has had an enormous effect on household wealth and consumer confidence, especially in more affluent households, which make up a very large percentage of prospective home buyers and sellers in the Bay Area. Psychology – optimism or pessimism about the future – plays an enormous role in the housing market.
If you are thinking about trying to time the housing market by waiting for lower rates – that isn’t a good idea. 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 😊
One critical dynamic in the market is that, for the last 10+ years, homebuyers have generally jumped back into the market earlier and in greater numbers than sellers with new listings as the market wakes up in the new year. This sets the stage for a big mismatch between supply and demand right from the start, which typically manifests in fast sales, competitive overbidding, and price increases moving into the spring selling season. Median sales prices often peak for the year in spring as a consequence.
The market has heated up considerably since the last 2 weeks of December 2023. Multiple offers and overbidding are the norm again. Buyers understand that waiting for an even hotter spring market is just paying more for the same home. A rate can always be refinanced when rates drop this year. All eyes are on the Fed meeting in March 2024.
January data will be a much more important indicator than December’s – as it should begin to reflect the recent changes in interest rates, financial markets, and consumer confidence.
Fun fact- 10,000 people a day are turning 65, fueling a “silver tsunami” in the housing market. The AARP estimates that among people over 50 (74% of homeowners), 51% of them have downsized their homes.
Fun fact – The things that bring you day-to-day happiness usually start around the age of 53, an age when you realize the things that make you happy are not what you had anticipated would make you happy in your 20’s. (CNBC)
We wish you a healthy and happy 2024!
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 – feel free to forward our newsletters or introduce us via email to anyone you know. Our network is extensive in our Compass family and beyond.
Are you wondering about the 2024 market specific to your property or one you saw online?
Need a revisit to your home value or understand capital gains – we are happy to provide you with a free-market evaluation and address any questions you may have about the market.
We have clients stepping back into the market as buyers and sellers prepping for the spring market this year. It’s a great time to plan your next move. Call or email us anytime.
We Love What We Do – We can help you and your friends and family find opportunities in this market – The market is waking up. Let’s talk…
Warm Regards,
Callista & RicRoc

Dramatically Improving Economic Indicators Suggest a Brighter 2024 Housing Market. In the last 2 months of 2023, the average, weekly, 30-year mortgage interest rate dropped from 7.79% to 6.61%.  

Ric Rocchiccioli

San Francisco Bay Area

DRE 01017500
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