A couple weeks ago, Redfin reported that housing prices in San Francisco fell for the first time in 4 years. This made for great headlines, but at Open Listings our buyers are seeing prices go up and up with more offer competition in the ranges they're shopping in. So we drilled down into the MLS data to figure out what's really going on.
You can't shop by median
While it is true that the median sale price fell by 1.8 percent (to a still astronomical $1,042,500) that's a pretty blunt statistic that fails to provide insight into what's driving that change. It can also be distorted by the mix of homes that happened to be sold in a given month.
Comparing price per sqft YOY
Price per sqft is a more normalized way to compare prices and measure changes within different segments of the market. Examining sales below and above $1M by price per sqft shows two different SF markets:
- Prices jumped 20.1% in the last year for SF homes under $1M on a per sqft basis.
- Prices for condos under $1M were up 5.1%
- The average price per sqft for homes and condos sold for over $1M fell 3.5% compared with last year.
Quantifying bidding wars
Price above or below asking is a useful way to measure competition in a market, since it's usually multiple offers (or lack thereof) driving sale prices above an asking price.
- The market for homes and condos under $1M is even more competitive than one year ago: sold prices are 11.7% higher than asking prices on average.
- Still lots of competition for homes and condos between $1m and $3m
- Listings above $3M are selling below the asking price on average, which should lead to listing price decreases at the high end
Looking at homes and condos separately, it's even clearer that the market downturn is mostly affecting condos above $3M:
Where's the market headed?
We expect more of the same for homes sales in SF: extreme competition on the low-end, and flat or declining prices for new construction, condos and more expensive homes.
Here are couple recent stories to keep an eye on:
Oversupply in high-end condos are driving median prices down
As of early April, the number of condo listings actively for sale in MLS is up over 40% year over year, and that does not include most of the new-construction condo units hitting the market (not listed in MLS).
Lots more new housing will soon be available
A record 63,400 apartments and condos in San Francisco’s housing pipeline, including 7,300 units which are currently under construction and should be ready for occupancy within the next year or two.