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Ric Rocchiccioli
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San Francisco Home Prices, Market Conditions & Trends September 2023
Stepping into October … As fall gets underway, and Halloween approaches, the real estate market has shown bits of good news but caution among sellers and buyers remains…
See below for some other quiet enjoyment information in this newsletter to encourage all to take a break and enjoy each day.
Our Market Recap:
“The surprisingly quick recovery [of the housing market] suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected after mortgage rates soared last year…There still aren’t enough homes for sale to meet demand.” The Wall Street Journal, “The Fall in Home Prices May Already Be Over,” 9/8/23
Generally speaking, the market rebounded much more strongly in 2023 than seemed possible at the end of 2022, when, after hitting historic peaks during the pandemic boom, economic and demand indicators hit their lowest points since the great recession. The decline in the number of sellers putting their homes on the market continues to be a factor in the balance between supply and demand, in the recovery in home prices, and the decline of overall sales volumes.
In San Francisco, the situation is a little more complicated, with distinct differences between the house and condo markets, and between condo markets in different parts of the city (differences which are illustrated in this report).
Local Market Activity:
  • In August, the average, weekly, 30-year mortgage rate, as published by FHLMC, ticked back up over 7%, a situation which continues to impact housing affordability.
  • Perhaps in response, the percentage of buyers paying all cash has generally been running at its highest national level in 8 years. (this is at the national level), though it typically ebbs and flows to seasonal market trends.
  • After the usual summer slowdown from spring, the autumn selling season began after Labor Day and runs until early-mid November, when the market typically begins its big, mid-winter holiday slowdown. By Thanksgiving, the number of new listings coming on market is expected to plummet, and December commonly sees by far the lowest level of monthly sales activity.
  • But, in the meantime, we expect to see substantial activity this fall. Historically speaking, September is often the single month of the year with the highest number of new listings. Luxury home listings in San Francisco commonly see a particularly large spike in autumn sales.
  • We expect to see the year recession-over-year price decline continue to drop in coming months.
  • The market correction in mid-2022 ended the high appreciation rates of the pandemic boom. Home prices then began to see increasing year-over-year price declines, which peaked in spring. Those y-o-y declines are now rapidly dropping.
  • The greater downtown/SoMa/Civic Center condo market has been more negatively affected by a number of economic, demographic and social factors impacting supply and demand than condo markets in other city districts.
  • 84% of sales were condos, 13% TICs, 2% co-ops, 2% townhouses. 31 were “below market rate” units, almost all below $500,000. There were 4 sales of$5+ million reported to MLS during the period. 6 house sales of more than $10 million were reported to MLS during the 6-month period.
Active/Coming-Soon Listings with Median List (Asking) Prices* (as of 9-7-23)
  • Houses – 390 listings – $1,700,000
  • Condos – 712 listings – $1,096,500
  • TICs – 83 listings – $1,050,000
  • Co-ops – 17 listings – $2,595,000
  • Townhouses – 9 listings – $1,139,000
Residential Income Properties:
  • 2-Unit Buildings – 86 listings – $1,750,000
  • 3-Unit Buildings – 44 listings – $2,142,500
  • 4-Unit Buildings – 26 listings – $2,050,000
  • By property type, the % selling over list price in August 2023 for houses was 66%, selling about 7% above asking price, and condos (orange line) about 2.5% below. This statistic fluctuates by season, and is a lagging indicator of market activity 3-6 weeks earlier and for condos, co-ops and TICs, 30%.
  • Historically speaking, the month of September typically sees one of the year’s highest numbers of new listings coming on market, which then fuels the autumn selling season. This spike in new listings was not as dramatic in 2022 as in most years due to specific economic factors at play.
  • Of the listings for sale on September 1, 33.5% were houses, and 66.5% were condos, co-ops, TICs & townhouses.*
  • As noted, after slowing in summer from the high demand of the spring market, activity usually rebounds in September and October (though that did not happen in 2022 due to other market factors). Once November hits, activity typically plunges to its mid-winter holiday low point.
Interest Rates Update:
  • Per Freddie Mac (FHLMC), on September 7, 2023, the weekly average, 30-year interest rate ticked down to 7.12%. (For 15-year loans, the rate was 6.52%).
  • Per a recent National Association of Realtors survey – 35% of consumers are not buying due to higher rates. The second biggest reason (29%) is that people want to avoid multiple bidding situations. During this time, it is important to become educated about “The cost of waiting”. Please reach out to us! We are happy to put you in touch with a local lender professional to provide an analysis that details the cost of waiting to clearly highlight the impact of appreciation and how it overwhelms the savings in interest rate reductions by waiting.
Enjoy your review and any questions let us know.
We wish you the best and wish you a spooky and fun October.
We know we can help you seek and find your opportunities. Contact us anytime to review your 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 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 market specific to your property or one you saw online? We are happy to provide you a market evaluation and address any questions you may have. We have clients stepping back into the market as buyers and sellers prepping for next 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 & family find opportunities in this market – Let us hear from you.
Warm Regards,
Callista & RicRoc
   
  “The surprisingly quick recovery [of the housing market] suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected after mortgage rates soared last year…There still aren’t enough homes for sale to meet demand.” The Wall Street Journal, “The Fall in Home Prices May Already Be Over,” 9/8/23  

Ric Rocchiccioli

San Francisco Bay Area

DRE 01017500
415.265.1164 ric@ricroc.com
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