Back-to-School Special: Real Estate Report Card for San Francisco
Writings about residential real estate, San Francisco, and all things home, by Cynthia Traina, Kindred SF Homes Associate.
It’s October. We’re back to school. And we just got the Summertime report card for San Francisco real estate. A prevalence of D’s means there’s room for improvement, yet an emergence of A’s for the 4th quarter of the year bodes well for 2024.
The first D of summer 2023 is for Doldrums. *Comparing numbers for August of 2023 with August of 2022, average home prices were up 7.9%. But the number of sales were down 27%; days on market increased by 14.6%; and months of supply increased by 19%. We all know the culprits, yet the main reason seems to be that homeowners locked in the lowest interest rates in history during the pandemic and now are held hostage to their mortgages.
The second D is for Discounts. San Francisco home prices are down from their all-time highs that were fueled by those low interest rates. Higher interest rates impact affordability, and homeowners are having to set more realistic expectations on what their homes can fetch. Forget about those stratospheric prices from 2021!
The third, fourth, fifth and sixth Ds are the most common reasons for home sales right now:
Looking forward, one could argue that San Francisco is getting closer to an overall A, with this trifecta of trends:
Availability: Home owners are getting more realistic about pricing, and more houses are going on the market. SF County had 310 active single family homes listed in July, 330 in August and 443 in September, a 34% increase, according to InfoSpark.
Affordability: Yes, interest rates are high, but prices have come down from their stratospheric levels. Also, lower prices means you lock in your lower tax base until you sell (yes, with the 2% annual increase, but on a lower basis). Buy lower now, and when interest rates come down, lock in a more favorable interest rate. If you are a cash buyer, add a “+” to your grade.
Access: With lower prices, homebuyers can now look at neighborhoods that were once out-of-reach to them.
As always, we’re here to help educate you about what the market has to offer, and we’re eager to learn all about you and your real estate dreams!
*per San Francisco Multiple Listing Service
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