Continued Low Inventory & Price Increases: Tracking the San Francisco Condo Market
There was an article written on a survey of California homeowners that expected a price correction by 2020. Here in the city, fears of property values dropping since mid-2017 has indeed kept sellers from putting their homes on the market. But now, low inventory has currently created a period of pronounced price inflation and a high demand for homes that we’re seeing today.
Average Sales Price in South Beach
# of Active Listings in South Beach
Sales of condos picked up when compared with the same period from last year. Resale condos saw an increase in median price, while newly constructed condo experienced relatively slower price growth.
For first-time homebuyers, homes priced below $1million remain scarce because low inventory has driven up prices – there was a 11.4% price growth on an annual basis in May 2018 citywide. Affordability is a huge concern, but with many qualified buyers in San Francisco, overbids on a $1 million listing drives property values up. Expect to find most 1 bedroom prices in the city hovering at about $1 million.
41% of renters are thinking of purchasing a home while only 11% of owners plan to sell. Demand for home ownership in high home priced areas such as SF is particularly more high because renting is so expensive.
Renting V. Buying in San Francisco
|Rent V. Buy
|1 Bedroom Apartment
|Monthly Mortgage Payment* – $1M Loan
|$1 Million Dollar Property
* Based on: Maximum Sales Price: $2,000,000 Loan Amount: $1,600,000 20% Down Payment: $400,000
Another interesting reason for the recent increase of home prices is that new parents that rent are looking to buy property in amenity-rich neighborhoods that are safe and walkable with a good school district, many of which San Francisco’s neighborhoods offers.
In conclusion, many homeowners are not opting to sell at this time, however, those that are looking to offload property are seeing high returns on their property investment, due to the leverage they have in an inventory-scarce market. If you are thinking of selling and would like a real-time analysis of your property’s value, I’m here to help.