The San Francisco real estate market hit new highs in 2012. Activity significantly picked up over the summer, when serious multiple-offer scenarios and buyer overbidding proliferated. And I’m expecting this robust activity to continue in the coming year.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from Oct 2011, the biggest 12-month advance since May 2010. It was the fifth straight month of year-over-year gains. In San Francisco, the year-over-year increase was 6.04 percent.
Indeed, home value averages were impressively high in the last quarter of 2012. A total of 672 single-family homes sold with an average price of $1,272,509 (propped up by 15 homes sold in the $5M-$28M range). Additionally, 598 condos sold at an average price of $914,198, with 23 such properties selling in the $2M-$8M range.
This year was also one during which many all-cash transactions took place, particularly in higher price ranges. For example, there were 114 single-family homes and 123 condos that sold in the last quarter for cash. As a result, it was sometimes challenging for buyers with loans to compete.
Buyers in our currently low-inventory market will welcome the return of new construction in the city, which is expected to increase in 2013-2014. As of October 2012, there were 4,200 new housing units under construction in San Francisco. Building permits for another 1,450 units have been approved, and permits for another 2,610 units have been requested. These predominantly include residential developments downtown, along the Market Street corridor in Eureka/Hayes Valleys, SoMa and South Beach.
Historically low loan interest rates, along with a growing tech sector and overall Bay Area population increase will continue to fuel demand for home purchases in 2013.