San Francisco Home Prices, Market Conditions & Trends June 2023
Happy Pride!
Despite the well-advertised gloom and doom in the media these days, there is some good news for us to report. The second quarter of 2023 has marked the first quarter-over-quarter of price growth we’ve had in a year! It’s done so while there’s been a perfect storm for one of the tightest markets anyone can remember over the past few months, which gives us cautious hope that things may be shifting. While it’s too early to tell, this uptick may indicate we’re past the bottom and are starting to climb out of the hole. So, in some areas, primarily with single family homes, with correct pricing from what we have seen, bidding wars are more common, particularly with the low inventory.
Also at this point, the pandemic bump appears to have worn off as we’re starting to see the end of this wild and strange trip we’ve been on for the past three years.
Indeed, the median sale price is back up to $1.6M, which is about where we were in the Fall last year.
The difference now is buyers are out but there’s not much to buy. As a result, house sales were half of thus far this Spring than since the start of the pandemic.
That’s at least in part because interest rates have been stuck in the sassy 6%s since November last year. Let’s keep all in perspective – median interest rates over the last 40 years have trended in the 5-7% range. For homeowners that locked in a 2 or 3 percent rate, however, it’s hard to get excited about selling and taking on a higher rate.
But now that inflation seems to be getting under control, we anticipate interest rates will follow suit hopefully towards the end of the year. We will not likely see pandemic low rates (3% or even 4%) anytime soon unless we have another cataclysmic event like the pandemic, but rates in the 5%s are more likely.
This may be just the push the Sellers who feel stuck need to get out of their current property and into one that’s a better fit.
We’re expecting slow growth in the Bay Area, but as rates start to come down, the pent up demand will likely explode into a frenzy of activity that San Francisco is infamous for. We have already seen strong overbidding in our local primary market areas in the recent past. And we see lots of opportunity in SoMa housing products and condos around the city.
If you are thinking of Buying, Selling, or investing in Bay Area Real Estate, or just want to understand the current market pulse, give us a call – we’d be happy to help.
Recapping the Spring 2023 Market:
  • Median home sales prices have begun to recover from mid-winter lows, though remaining far below peak prices hit in spring 2022.
  • The SF house market continues to be substantially stronger than the condo market, and the condo market in the downtown/South of Market/Civic Center area – affected by several economic and social factors – is considerably weaker than condo markets in the rest of the city.
  • The number of new listings coming on market and the number of home sales over the past 12 months were the lowest since both plunged after the pandemic first struck. New listing and sales volumes have risen from their nadirs in mid-winter but remain historically low. Average days on the market dropped considerably in 2023 as buyer demand recovered, and the percentage of home sales closing over asking price increased.
  • The average house sale is now, once again, selling well above its original asking price.
  • The average condo sale is slightly below list price.
  • Luxury home sales remain well down from peaks seen at the height of the pandemic boom, but significantly up from late 2022.
  • Interest Rates – With bank crises, Fed actions, inflation readings, and U.S. debt-default fears, interest rates have been volatile in 2023, with significant ups and downs. As of early June 30-year, fixed-rate mortgages are running about a quarter percent below 7% (but rates can change quickly).
  • Homeowners Insurance – The 1st and 4th largest insurers of CA homes, State Farm and Allstate, have announced they will no longer write new policies in the state due to rising claims costs. It is too early to quantify the exact financial, political and market effects of their actions, or if other insurers will follow suit. Similar issues have come up in other states, such as Florida and Louisiana, and occurred with earthquake insurance in CA in the mid-1990’s, leading to the creation of CA Earthquake Authority.
  • Year over year, the 3-month rolling, median house sales price in May 2023, $1,626,500, was down about 19.5%, but has been climbing in recent months.
  • Year over year, the 3-month rolling, median house$/sq.ft. value in May 2023, $1002, was down about 14%, but has been climbing in recent months.
  • Due to the age of its inventory of houses, San Francisco has a higher percentage of 2-bedroom houses and a smaller percentage of 5+ bedroom houses than most other Bay Area Counties, which were built out much later (during more affluent periods).
  • Year over year, the 3-month rolling, SF median condo sales price in May 2023, $1,150,000, was down about 11.5%, but has been rising in spring 2023.
  • Year over year, the 3-month rolling, SF median condo $/sq.ft. value in May 2023, $1004, was down about 13.5%, but has been climbing in spring 2023.
  • The greater downtown/SoMa/Civic Center condo market has been more negatively affected by several economic, demographic, and social factors impacting supply and demand than condo markets in other city districts.
  • Reverses in economic conditions led to the 2022 market correction. Due to the “mortgage lock-in effect,” the number of new listings dropped, but housing costs increased with rising interest rates, consumer confidence slumped with inflation and stock market declines, demand fell, and prices declined significantly from 2022 peaks.
  • In 2023, buyer demand rebounded, and prices started to rise again, though trends vary by market segment. (2023 changes do not yet stand out in the 12-month-rolling data. See 1-month-rolling charts later in this report for more recent, shorter-term trends.)
  • On a 12-month-rolling basis, the number of new listings and the number of sales is both at their lowest points since the initial impact of the pandemic. The latest “market correction” began significantly impacting the market about 1 year ago.
  • Year over year, the new-listing volume in May 2023 was down 33%.
  • Of the listings for sale on June 1, 32%were houses, and 68% were condos, co-ops, TICs & townhouses.
  • 87% of active listings under $1,000,000 were condos, co-ops, or TICs. 7 active listings were priced at $19.9 million+.
  • Year over year, May 2023 sales volume was down about 35%.
  • Year over year, May 2023 $3m+ home sales were down 57%.
  • Measuring how long it takes for sold listings to accept offers. Houses have significantly lower average days-on-market readings than condos, but both have fallen in spring 2023.
  • By property type, the % selling over list price in May 2023 for houses was 63%, and for condos, co-ops, and TICs, 41%.
  • On average, SF houses are selling well above asking price, and condos slightly below. This statistic fluctuates by season and is a lagging indicator of market activity 3-6 weeks earlier.
  • Prices remain below peak prices hit in spring 2022.
We are happy to update you on market parameters for any property. Call us anytime.
There are opportunities for buyers and sellers in the current market. We’ve had several winning buyers in the current market, and sellers who have had recent successful sales.
Buyer activity has picked up at open houses and it’s beginning to feel and look like Summer. We can help you seek and find your opportunities. Contact us anytime to review your future plans and needs.
We are happy to assist you as well as your family & friends with their real estate needs – in our local market, across the country, or international – feel free to forward our newsletters or introduce us via email to anyone you know. Our network is extensive.
We know the market – and how best to navigate through it – What questions are on your mind? Call or email us anytime.
We love what we do – We can help you find opportunities in this market – Let us hear from you.
Warm Regards,
Callista & RicRoc

Ric Rocchiccioli

San Francisco Bay Area

DRE 01017500
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