San Francisco Real Estate: a Year-Over-Year Study, Part I

Today we begin a more local focus in our blogs with a study of the San Francisco metro real estate performance over the past two years. This study, which includes our data on inventory, median sold prices, bidding, pending and sold transactions (and more!), allows us unique access to San Francisco, making possible not only a good understanding of the area’s past and present, but also its future.

Today we’ll start with ZipRealty data on inventory, prices, and pending and sold transactions. Together, this information lets us formulate an outlook for this area as the season changes over from summer to fall.

1. Inventory

Here, the X-axis represents the time period, while the Y-axis represents the number of active properties for sale in the metro area. By plotting the inventory line for current year and previous year together, we can observe not only the yearly trend, but can also make relatively informed assumptions about possible seasonal effects.

Interestingly, the graph shows an almost perfect flip year-over-year, with inventory starting higher in 2010-2011 than it did in 2009-2010, following a similar peak and valley pattern, but ending lower overall.

The lower inventory very likely affects prices. We could speculate that according to simple supply and demand, lower inventory means more buyer competition for each one unit on the market, a phenomenon that allows prices to stay high in the SF metro, and even to incite bidding wars, the likes of which evoke happier times in real estate history. Below is a chart showing SF’s distribution of sold homes sorted by the number that sold under, at, or over asking price for the past two years.

2. Asking and Selling Prices

 

Here, the total transactions are plotted in 100% scale, and each bar represents the percentages out of total. Over the course of the last 2 years, approximately 90% of properties have sold at prices above or below their asking prices; consequently, the volume of sales at asking prices hasn’t varied significantly, staying around 10%. We can also see that San Francisco sellers are basically split into two even groups: around half who get less than list price, and about half who get list or better.

Now we arrive at pending and sold transactions, because these data more than any other give us hints for the region’s fall outlook.

3. Pending and Sold Transactions

 

The Y-axis marks number of transactions closed during one month (on the red line), and monthly pending transactions (on the orange line). The number of pending transactions is a leading indicator of sold transactions since the latest 1-2 months’ section on the yellow pending trend line may be viewed as a forecast of sold transactions in the coming 1-2 months’ period. It is striking to see how similar the data are year-over-year, establishing the San Francisco real estate market as one of the more stable in the nation.

Our study on San Francisco will continue Wednesday. Stay tuned.