Quarter 4 ANALYSIS from Selma Hepp, Chief Economist Pacific Union International – 1/13/2017
“San Francisco’s real estate market report for 2016’s Fourth quarter is now out! This is adapted from Pacific Union and Selma Hepp, Chief Economist at Pacific Union. Fourth-quarter home sales activity in San Francisco sustained the same momentum as recorded in previous quarters, with relatively fewer sales than last year but a better balance between buyers and sellers. Generally, the largest slowdown in homes sales occurred among properties priced below $1 million and between $2 million and $3 million. The lower-priced category continues to suffer from depleted inventory, while the slowing activity of higher-priced homes resulted from the general uncertainty in the market that began earlier in the year.
Despite a slight increase in inventory, sellers were still reluctant to reduce prices, causing the pace of sales to slow. At the same time, homebuyers remained cautious and were less likely to engage in bidding wars and pay premiums. The percentage of listings selling over the original asking price has decreased in nearly all Bay Area markets, but particularly in San Francisco. Likewise, the premium buyers are willing to pay over asking price has diminished by approximately 3 to 4 percent. Interested in what’s going on in South Beach. Click here for the South Beach Real Estate Market Report.
Watch the real estate market report in 1 minute:
Looking Forward: Given the recent increase in mortgage rates, along with uncertainties surrounding the new administration, the first quarter may start softer than in previous years. However, with strong housing fundamentals and the Bay Area’s continued economic power, the San Francisco housing market should see another solid spring.
Part of this real estate market report includes information about new construction and condominium development. While the Bay Area as a whole is generally a supply-constrained environment, San Francisco has a healthy level of inventory in its pipeline. There is roughly a year’s supply in the city, with 1,090 condominium units currently selling, as well as 950 units under construction. Condominiums that are approved for construction total over 3,000 units with an additional 30,000 +/- units yet to be determined as for-sale or rental. San Francisco condo inventory is just above the historical norm, though not considered oversupplied and will need additional construction going forward to satisfy demand.”