San Francisco Housing Inventory Drops, Yet Outlook Remains Positive
The end of 2011 brought a decline in the number of homes for sale
throughout the city, setting up a seller’s market with prices trending
up. Stronger affordability conditions, a lower cost of owning versus
renting, and declining foreclosures, continue to steer the San Francisco
housing market in a positive direction.
Single-Family Homes
Even
though inventory dropped citywide by 48.5 percent compared to December
2010, the number of homes under contract only fell by a minimal 7.4
percent, while the number of homes sold dipped by 13.9 percent, ending
the month at 199 properties. For homes that were priced below $700,000,
the months of supply inventory fell by 66.8 percent to a reading of 1
month. For higher priced homes between $700,000 and $1.2 million, the
months of supply inventory fell by 65.6 percent to 1.2 months. These
short readings continue to indicate a seller’s market, where sellers
have more leveraging power over home buyers.
Despite the low
inventory, homes were still being sold in areas such as District 4, or
as many know it, Twin Peaks West. Since December 2010, the number of
homes under contract in this area has increased by 7.7 percent, but the
number of homes sold has also risen by 14.8 percent to a total of 31
properties. Located in the mid-western part of the city, Twin Peaks West
has a total of 16 neighborhoods, including the upscale and exclusive
St. Francis Wood and Forest Hill, and the more approachable and
family-friendly communities of Diamond Heights and West Portal. There is
an array of architectural styles available for everybody here, from
stately Spanish Mediterranean homes to charming craftsman bungalows.
Another
location of the city which experienced an increase in sales activity is
District 3, in the southwestern part of town, known as Lake Merced.
Compared to December 2010, the number of homes sold in this area has
increased by 61.5 percent to a total of 21 properties sold. From hiking
and biking to fishing and golfing, the neighborhoods around Lake Merced
offer a number of recreational activities for outdoors enthusiasts and
people looking to get into shape. Real estate here ranges from upscale
properties, such as those in Pine Lake Park, to more mid-priced homes
around Merced Heights and Stonestown Galleria Mall.
Condominium Sales
Just
like single-family homes, the number of condominiums for sale
throughout the city also contracted. Since December 2010, inventory
levels have declined by 57.2 percent, while the number of condominiums
under contract have fallen by 20.5 percent. Despite this, the number of
condominiums sold only decreased by a marginal 10.1 percent, to a total
of 178 units by the end of the month. For condominiums that were priced
between $500,000 and $900,000, the months of supply inventory contracted
by 73.1 percent to a reading of 1.3 months. For luxury condominiums
priced above $900,000, the months of supply inventory also decreased, by
63.1 percent to 1.7 months.
One part of the city which saw a
robust increase in condominium sales activity is District 6, located in
the central north area of town, whose neighborhoods include historic
Western Addition and the recently revitalized Hayes Valley. Since
December 2010, the number of condominium sold here has almost doubled,
increasing by 90.9 percent to a total of 21 units. The mid-century
Joseph Eichler
condominiums along the Western Addition are not to be missed by
prospective condominium buyers, nor can the contemporary and trendy
condominiums sprouting up throughout the new Hayes Valley.
Outlook
The
influx of technology companies into the city continues with the most
recent arrival being Salesforce.com, which just signed a
400,000-square-foot lease worth nearly $340 million. According to the
San Francisco Chronicle, “The number of employees climbed by at least
1,700 in the last year, reaching about 7,000. The company expects to add
many more employees in the years ahead.” More and more, companies
looking for growth and new innovation are finding San Francisco to be
the perfect place to live and work.
According to the most recent Case-Shiller
Home Price Index, a closely watched measure of the health of the
nation’s housing market, the Bay Area’s low-tier homes took a slight
fall in October, down 0.9 percent, while high-tier homes priced at over
$599,697 increased by 0.3 percent. The majority of homes in the city
qualify as high tier, such as properties in the aforementioned Twin
Peaks West, where homes in that area sold at an average of $775,500 last
month.
Nationally, the consumer confidence index, which had
improved in November, increased further in December. The Index now
stands at 64.5, up from 55.2 in November (a reading of 90 indicates a
healthy economy). Lynn Franco, director of the Conference Board Consumer
Research Center, says, “Looking ahead, consumers are more optimistic
that business conditions, employment prospects, and their financial
situations will continue to get better.”
With pent-up housing
demands, less pessimism over jobs, and improving corporate profits, more
people are spending and the San Francisco housing market is expected to
benefit.
(Source: SFRealtors)
Janice Lee
International President’s Circle
Top Producer, Realtor
415-832-9151
JaniceFLee@Gmail.com
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