San Francisco Market Update
Although there’s been a lot of press, lots of aggregate numbers, and predictions of market direction over the past months, there have simply been too many competing market and environmental factors, mixed sentiments and uncertainty to really take a position with confidence on which you could rely. So, now that we’ve had a chance to watch this post-pandemic (hopefully!) market response over the past few months (cautioned now by a Delta variant rebound), we can confidently give some insight to support what has transpired, where the market seems to be heading, and where it will likely go in the remainder of 2021 – assuming we don’t have a massive pullback due to a new COVID surge.
Where we are today:
The numbers (and current volume of recent vacationers) speak for themselves. The overall real estate sales market hit a crescendo in June as expected, with the fury and flurry of late spring purchase contracts and buyers chasing the rising spring market (mostly in May) to a year high and a $1,810,000 average sales price, a median sales price of $1,415,000, plus a $1,119 average price per sq. foot and over 792 sales across the city (up from 675 sales in May and average/medium prices slightly below June’s numbers.)
July’s sales numbers (total sales) were down precipitously at 593 sales, and average/median prices at $1,723,000 and $1,450,000, respectively, and a fairly consistent $1,116 average price per sq. foot. The July reduction wasn’t a surprise at all, with the combination of some buyer burnout from an accelerated spring market, a bit of COVID restriction burnout, and an opening of metropolitan markets with travel relaxations that sent home-weary families out and about for extended travel, along with a significant number of real estate agents deciding to take a simultaneous breather while their clients were away as well.
Anecdotally and literally, August is starting out with reasonably low inventory numbers and a perceived “normalizing” of the accelerated spring market. We’ve seen this type of market response and sentiment several times before in the past 21 years following surging markets (e.g., 2000, 2004, 2005, 2007, 2012, and most recently 2017). These markets all had accelerated spring surges, followed by a milder summer with buyer burnout from competition, followed by a robust fall inventory with buyers more patient but ready to pounce and sellers desiring to sell before the holidays.
It’s the type of market that works well for both sides…with intense activity but more selection condensed in a short period of time (fall markets are always more condensed than spring markets, with a peak selling period of only 9-11 weeks vs. 15-20 weeks for spring). The only caution for our selling clients moving forward this year is to be careful not to look at mid-spring sales comparables as they tend to be the peak of the market and skew higher than where fall sales likely land.
Moving forward:
My expectation for the next several months is this: A slow buildup of inventory starting mid-August for a couple weeks (slightly earlier buildup than traditional) with a crescendo of properties hitting the market between September 1 and September 21 (common), and robust buyer engagement in an assertive but not aggressive manner in most cases. As inventory likely builds in late September and early October, expect there to be opportunities to pick off less-than-perfect properties that have been overpriced and are languishing on the market into late October….and then expect to see diminishing, very low, new inventory numbers as we hit early November.
My assumption is that this is the year most sellers aren’t going to enter the fray after October, even if the market is going well…as this year has caused almost everyone to be a bit more (fore)thoughtful about a desire to sell and/or having reasonable motivation to sell. Expect sale prices and medians to remain within the range of July figures (noted above) or slightly lower, along with slightly lower average prices per sq. foot, as overpriced listings sit and get picked up at lower prices than in spring. It’s a market for serious buyers willing and ready to transact….and a very solid market for our sellers for whom this is a good time to sell for personal, financial, or logistical reasons. And of course, this prognosis might fly completely out the window if the Delta and other COVID variants run out of control, and San Francisco and the surrounding counties get locked down…with ensuing lockdowns on flexibility of showing property, open houses, and diminished buyer confidence.
In the end:
Most importantly, and you’ve heard it before, keep a focus on what’s most important to you and reliably consistent vs. what seems opportunistic. Whether you’re buying or selling (real estate or other), making a big personal, family, or business decision, or simply taking a personal change of course, take the approach and mindset that’s rewarded you most often in the past with the least amount of stress and transactional/executional hassle. Gunning for the big payoff or perfection can be exhilarating at times or aspirational, but it’s rarely sustainable, often exhausting, rarely let’s one breathe calmly during the process, and seldom feels intrinsically rewarding in the end. And we could all use some personal, deeply gratifying, intrinsic reward these days….or at least I assume so!
There’s a new (old) favorite stanza from a poem entitled “Wild Geese” by Mary Oliver that’s truly resonated with me this year (thank you, Tim Ferris, for sharing with me), which somewhat espouses the sentiment above, and it is:
“You do not have to be good.
You do not have to walk on your knees
For a hundred miles through the desert, repenting.
You only have to let the soft animal of your body
love what it loves.”
I’ll be back with a new perspective again later this year.
For a more detailed review of market specifics or to gain a perspective on your own property in this dynamic market, contact Rob at Rob@RobLevy.net or 415-385-8011.