The San Francisco real estate market didn’t seem to slow down this summer. I was “on vacation” last week, but still reported for duty to prep my upcoming listing, manage my current seller escrow and write offers. Many of my colleagues continued to bring on new listings straight through to the end of August, despite the threat of Burning Man and Labor Day weekend thinning the buyer pool.
And in fact, the last week of August saw many listings coming up dry when offer dates arrived. But I don’t think that this was because the market is softening significantly.
How did buyers and sellers fare in July and August—and what’s on tap for the Fall? I think it’s useful to take a brief look at the single-family home and condo markets individually, as they’re two different animals that need separate analysis:
Summer & Single-Family Homes
The selling pattern for houses continues to see buyers paying more than the list price. Of the 400 houses sold, only 12% closed for under asking, and a meager 4% changed hands for the actual list price. (And when I say that buyers paid less than asking, the differential was only in the 3-7% range under list.)
The average house price was $1.4M, up 9% over July-August 2013. But sales volume decreased by 22%, meaning less buyers weren’t willing or able to pay market value for San Francisco houses this summer.
The average overbid for a house citywide was 10%. But the SF Overbidders Club welcomed 70 new members who paid 25% or more for their homes. These massive overbid hot spots were centered around Bernal Heights, Glen Park and, for some reason, Lake Shore.
17% of the single-family homes sold in July and August were paid for in cash. The largest cash sale? 2602 Pacific in Pacific Heights, a 6BR/6.5BA property listed for $8,995,000 that closed for $8,250,000.
A healthy number of houses (67) sold for between $2M-$9.5M.
What’s Up for Houses in the Fall?
Sellers will heed their real estate agents’ advice and continue to list their homes for less than market value to attract as many buyers as possible. Volume will pick up in September through mid November, when a new crop of buyers (and, of course, existing buyers who have been unsuccessful to date) get serious about making a purchase before the end of the year. Sellers will do a double take of the summer stats and take advantage of the market, particularly in the hot spots. (Lake Shore homeowners, get on the ball.) Contractors and developers will be out in full force in popular neighborhoods, picking up fixers to flip.
Summer & Condos
I realize I sound like a broken record, but condo selling patterns also saw homeowners listing their homes for less than what they actually wanted. The condo market was a little more hospitable to buyers than that of the house market. Of the 437 condos sold, only 16% sold for under list price, and 13% traded hands for the asking price.
The average condo price of $1.1M saw an uptick of 13% over last July/August, but similar to that of the house market, there was a 24% decrease in sales volume.
The gap between list and sale price was narrower, with buyers citywide bidding an average of 6.5% over the list price. And the SF Overbidders Club had fewer new condo buyer members. Only 7% of units sold in July and August sold for 25% or more over asking.
Hot spots for overbidders were the usual suspects—Noe/Eureka Valleys, Mission Dolores, NoPa and Hayes Valley.
But the big news was that certain neighborhood markets definitely experienced some softening. Areas like Downtown, Nob/Russian Hills, Civic Center, Mission Bay, SoMa/Yerba Buena, South Beach, Potrero, and Dogpatch all saw their share of less-than-asking prices.
The condo cash sales didn’t slow down in July and August; 22% of sales were cash transactions. And these popped up most often in north-end enclaves like Pacific Heights, Russian Hill, and the North Waterfront (particularly in larger buildings like 101 Lombard). But Mission Bay and South Beach—most notably, in The Beacon and Arterra—saw a healthy share of cash sales, too. The largest cash sale was $3.5M for a 2BR view unit at the Four Seasons.
Not too many high-end condos sold in July and August. A total of 8% closed for between $2M-$4.5M.
What’s Up for Condos in the Fall?
A slower market for larger buildings in the aforementioned neighborhoods means buyers may take advantage of stabilizing prices. Who doesn’t want to make an offer for less than asking when you have the chance? I also think buyers will move on from the overbidding hot spots and branch out to other neighborhoods they might not have considered. Sellers of quintessential Victorian/Edwardian flats with all the amenities will do well, as will developers of new construction condos with releases planned in September/October.