San Francisco Spring Market: Low Inventory Means Homes are Being Snapped Up Quickly
by Alina Aeby.
When people call from out of town and ask if they can buy a 2 bedroom/1 bath condo or a single-family home for $200,000, it’s hard to explain how difficult that is in San Francisco.
San Francisco County is always grouped in with the other Bay Area counties in national reports on the Bay Area housing market, but we all know that’s not a fair comparison. San Francisco has its own trends, economy and market conditions.
San Francisco homes are selling fast these days, and many of them receive multiple offers. It’s common to have an open house during the weekend and have the house is under contract by the middle of the next week. Cash or well-financed purchases are very common as well.
How can this happen? For one thing, inventory of homes for sale is very low. Many sellers have decided to hold onto their homes while they wait for prices to go up. On the other hand, buyers fear an increase in interest rates and in housing prices and feel rushed to buy now. Finally, there are very few new homes for sale - new buildings will be used as rentals, not condos or townhouses.
The city's inventory has dropped by 22.7% compared to March 2011, 42.3% more homes sold in March 2012 than in the same month of 2011 - a total of 175 properties. The median sold price of a single-family home was $648,000, up by 3.7% from $625,000 in March 2011. There has also been a decrease in days on market, from 64 days in March 2011 to 51 days in March 2012. The months of supply inventory fell by 37% from 4.6 to 2.9 months.
Houses under $800,000 seem to be the most popular and go into a contract quickly. That is also because they are more “affordable” by San Francisco standards, making it easier for home buyers to obtain loans in the amount of $729,000 or less.
There were 133 condos sold in March 2012 compared to 146 in March 2011, but that is also because the inventory dropped by 30.1% from 900 to 629 units. The average sales price rose to $748,000 from $563,500 in March last year. Days on market is up a bit this year: 74 days versus 65 days in March 2011, but the months supply is definitely lower - 3.8 months, 11.6% down from 4.3 months last year.
The San Francisco real estate market is likely to experience the same trend of low inventory and high sales in the next few months as home prices are expected to go up. When they do, San Francisco should begin to see a greater number of homes hitting the market.