The first quarter of 2014 is history, but the sales stats and other market conditions I’m experiencing give us an idea as to where the market is heading this year.
Let’s take a look at activity for single-family homes and condos first:
Single-Family Home Market
# Sold: 442
Average Price: $1,401,901
Percentage of Cash Sales: 25%
# Homes Sold for $1M or Less: 226
Where to Buy for $1M or Less: Outer Parkside/Sunset; Parkside/Central Sunset; Merced Heights; Ingleside; Midtown Terrace; Miraloma Park; Sunnyside; Bayview; Crocker Amazon; Excelsior; Outer Mission; Visitacion Valley; Portola; Silver Terrace.
Volume Lower, Prices Higher: It was full speed ahead for the single-family home market in the first quarter. Though volume was down slightly from the first quarter of 2013 when 497 houses sold, the average price was up from $1,164,962 (Q1 2013). Of the 109 cash sales, more than half were for homes above $1M, including a $10M home on Green Street in Pacific Heights and a $7M property on Duncan in Noe Valley.
Condo Market
# Sold: 568
Average Price: $1,033,560
Percentage of Cash Sales: 24%
# Homes Sold for $1M or Less: 321
Where to Buy for $1M or Less: Ingleside Heights; Diamond Heights; 1BRs in Eureka Valley and NoPa; Western Addition; Downtown; Van Ness Corridor; Bernal Heights; Mission; Mission Bay; Potrero; SoMa; South Beach; Dogpatch.
Volume Again Lower, Prices Higher: The condo market also didn’t miss a beat where prices were concerned. A total of 546 condos sold for an average of $901,046 in Q1 2013. A year later, the average has broken $1M.
Where Are We Headed in 2014?
I’ve received at least half a dozen calls or emails from clients in the past two weeks asking whether it’s a good time to sell. The concern is that selling now may find them leaving money on the table if prices increase.
I think that if you own a home right now and are in a position to sell it, you should take advantage of this market. For one thing, interest rates are on the rise. And though 25% of buyers are running around with cash, the other 75% of the buyer pool will be sensitive to higher interest rates, and will be watching their offer prices a bit more closely. I also believe that we’re in somewhat of a peak period, and that prices have only so much further to go this year before they flatten. I didn’t feel that way in 2010, 2011, 2012 or 2013. But based on market activity to date, it feels like 2014 will be different.
Another major factor that may keep resale prices even in 2014 is the expected increase in inventory. We’ll see the typical inventory bump in Spring and Fall, as well as many new construction condo projects kicking off sales on many buildings in the city pipline. This means that buyers will have more properties to choose from. And for sellers, that will translate into less offers per property and less intense overbidding.