The new San Francisco real estate market is shaping up to be a more measured version of the market seen last year. As an example, properties are taking about a week longer to sell than before, and the rate of appreciation has gone from double to single digit rates. Furthermore, the Months Supply of Inventory (MSI) has expanded to almost two months, versus the one month level seen last year.
There is, however, continued upward pressure on pricing. The most recent median sales pricegrew 8% year-over-year. Additionally, April’s citywide median sales price is 15% higher, when compared to January’s median. Strong economic fundamentals continue to propel property values upward. The City’s unemployment rate is hovering around 3%, andthe office vacancy rate measures around 5%, both at near record lows. With the prospect of oil prices stabilizing, the national economy appears to be on better ground. Reuters recently reported on the markets, stating that “First-quarter earnings for S&P 500 companies are mostly beating analysts’ expectations”.
Very generally speaking, the house market has remained hotter than the condo market, which appears to have cooled to some degree (but nothing remotely approximating a “crash”), and more affordable homes are seeing significantly greater demand than luxury homes, where the pool of potential buyers is much smaller. The luxury condo market, in particular, may be being impacted by an increase in large, new, luxury condo projects arriving on market, especially in those districts where they are mostly being built. The number of resale luxury condo listings in San Francisco hit an all-time high in April.