Buyers had a seemingly endless appetite for houses when it came to San Francisco real estate in 2016. On the other hand, the condo market flatlined.
The fourth quarter of last year is the best indicator for market activity in early 2017. So here’s how things went down when it came to houses and condos, and what you can expect in the new year:
Single-Family Home Prices Rise, Overbidding Continues
Buyers purchased 590 houses in Q4 2016 for an average of $1,844,851. Many homes listed for $2,000,000 or less garnered multiple offers, particularly those listed for closer to $1,000,000.
Prices were up 15% year-over-year, which answers any questions you might have about much appreciation you can expect to see in San Francisco real estate. 20% of all houses were sold in all-cash transactions.
Overbidding was the norm in the last quarter, as 80% of all sales closed for above the list price. Standout sales included the large Inner Richmond teardown at 572 Funston listed for $1,200,000 that closed for $1,820,000. The latter is a good example of the market value of a contractor special these days. And let’s not forget the 1,076-square foot Eureka Valley house at 18th and Sanchez that sold for $600,000 above its $1,100,000 asking price.
The luxury market was the single-family home market’s achilles heel, however. Of the 106 houses withdrawn from the market, a majority were in the multi-million dollar range—most notably in Bernal Heights, Eureka Valley, and Pacific/Presidio Heights.
Interest rates may temper any dramatic price bumps in 2017. But buyers who aren’t quite flush with cash or in a position to afford the average house price need to be flexible on interior space and location. Also worth considering are condos that meet specific “must-haves” typically exclusive only to houses—for example, a unit with a walk-out, deeded garden.
Condos Flatlined in 2016
Condo owners weren’t as exuberant last year, though it wasn’t as if this segment of the market crashed. It just flatlined, and properties took longer to sell.
The average condo price was $1,213,317 in Q4 2016, roughly the same as it was in Q4 2015. Days on market went up from 33 to 40 year-over-year.
We saw a good chunk of withdrawn listings in the last quarter, meaning sellers didn’t get the prices they wanted and will most likely give it another shot in the new year. Withdrawn listings were most common in the new construction arena (Lower Pacific Heights’ The District and the Van Ness corridor’s Rockwell come to mind), as well as the Mission, Mission Bay, Yerba Buena and South Beach.
But it wasn’t all downbeat. Buyers paid an average of 3.5% over asking for Q4 2016 condos. Bucking the trend were the buyers for 3369 Jackson on a prime Presidio Heights block. The two-level Edwardian view condo was listed for $2,198,000 and was sold for $3,100,000. (Yes, that’s almost $1,000,000 over asking.)
Buyers looking to either purchase their first home or trade up to a larger unit will have good opportunities in 2017. But sellers aiming for prices based on high-flying or dated comps will be out of luck.