With the pace of home sales in San Francisco currently running 14 percent lower versus the same time last year, the inventory of homes listed for sale in the city (705) has been holding at its 2015 peak and is now 18 percent higher versus the same time last year, the greatest year-over-year gain in listed inventory since the first quarter of 2011.

At the same time, the number of active listings for which the asking price has been reduced ticked up another 10 percent over the past week to 120, which is 18 percent higher, year-over-year, as well.  The number of homes on the market listed for less than a million dollars, including both houses and condos, remains at 42 percent.

If typical seasonality holds true, the absolute number of homes on the market with at least one price cut should continue to rise through the end of November, at which point unsold inventory will start to be withdrawn from the market, driving the overall percentage of homes on the market with a reduced price higher through the end of the year.

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Comments from “Plugged-In” Readers

  1. Posted by curmudgeon

    what’s not to like? I think nearly everyone would agree we could use a “pause”.

  2. Posted by Hitman

    I agree that market is toppy. I cashed-in on my major commercial project in July and I am waiting for a decent pullback to re-enter. I remain bullish on the SF market over the long-term and I think there will be some decent opportunities in the winter. If Prop I passes I am going to make the liberals pay for their insolence.

    • Posted by san FronziScheme

      Yes, there’s nothing like a constrain in supply to get those property values in check!

    • Posted by Backtotheburbs

      Oh, you mean poor people?
      Make them pay!

      • Posted by Hitman

        I mean tenants that depend on landlords for their housing subsidies. Prop I is not going to change state law and I will exploit state law to transfer their private subsidies to my pocketbook.

        • Posted by two beers

          You mean the tenants who pay the landlords’ mortgages for them?

          • Posted by Hitman

            I would not know about that – I buy with cash. The lawyers I hire for evictions only take cash too.

    • Posted by Dave

      I am a small investor and can’t afford the SF market. I do invest in syndications here though, the most recent in Dublin, and it did extremely well Pulte bought the entitled land from the syndication at much more than was expected.

      This is especially good news for those looking to buy a personal residence in the Bay Area. That is where the crunch is and anything to lessen it a bit is welcome news.

    • Posted by Wai Yip Tung

      Prop I stop housing development in Mission. The bulk of new housing come from the east side, not Mission. I don’t believe it is going to material impact on the overall housing market.

      On the other hand, by keeping 16th St BART in the current state, it visibly slow gentrification in Mission. The supporters feel vindicated. They gain an upper hand on any future development planning. Expect longer approval process and more concessions needed for any future development projects.

  3. Posted by dwf

    The predicted El Nino this winter will put a damper on sales and shake out more than a few sellers wishing they had sold in the summer.

    • Posted by SFrentier

      Why?

      • Posted by dwf

        I’m thinking “family homes”. I don’t track the condo market. House shopping is (for most people) not much fun, even less so when it’s raining cats’n’dogs, and you have toddlers in tow. Fewer shoppers, fewer buyers.

  4. Posted by Dave

    This is a good and natural thing. The cycle peaking for now. How long it stays flat and how much of a pull-back in prices there will be is anyone’s guess. I am hearing 10% or so.

    This was inevitable for several reasons but one being that SF is even less affordable historically than other markets. A bit of a catch-up by other markets to their more historic relationship to SF prices.

    Its good too for business as tech workers are leaving the Bay Area for Seatle and Portland and other places where they can find work and buy a home. One of the business channels did a piece on this. Seattle is the top choice for the outflow of tech workers from the Bay Area.

    Hopefully Bay Area companies will join Google and UCSF during this pull-back to help develop housing solutions for their workers.

  5. Posted by SFrentier

    won’t. drop. 10%. dave.

    Maybe flatline until spring 16 than a more modest 5-6% appreciation.

    Frankly it doesn’t matter to me one way or the other. I brought a few multi family buildings in SF this past 18 months. Just gotta know what you’re doing, think outside the box, and has Hitman says, exploit all the loopholes our clueless supervisors create. 2016 will continue to be good in SF if you’re already well positioned.

    • Posted by Backtotheburbs

      The recent stats were inflated by the top end of the market. IPO and buyout outlook is stalling bigtime so less cash and bravado. And this is without any global downturn factoring.

      How long before majority of investors realize there are many, many great locations for tech startups worldwide with 50% or even 10% of the burn rate? Especially since skilled people are being imported here anyway…

      • Posted by SFrentier

        Good question, but that hasn’t happened over the last 30+ years. Guess there is something in the air that makes SF/Silicon Valley the (continued) location of choice for the tech gold rush.

        • Posted by Michael

          First, layoffs at Twitter. And now…

          “Payments startup Square Inc. on Monday disclosed that its quarterly losses are mounting and sales growth is slowing, a troubling sign as the company approaches an initial public offering.”

          It feels like the tide is turning. Don’t get caught with your shorts down.

          • Posted by SFRealist

            You know that we learned about this because Square is filing for an IPO, right? And you are aware that an IPO is usually seen as a sign of health, right?

            And you are aware that Uber (which I dislike but still) is raising *another* billion dollars, right?

            People have been saying that the tide is turning for a long time and they’ve been wrong for a long time. But talk is cheap. If you have balls, short Twitter and Square (post-IPO). Short Salesforce too, and maybe Apple and Facebook and Google. Good luck!

          • Posted by SocketSite

            Speaking of the Square IPO, the company priced today with a midpoint valuation of $3.9 billion, a 35 percent discount to Square’s last private round which valued the company at $6 billion.

        • Posted by dwf

          In theory we can all work from anywhere, anytime, but you’re right, after years of predicted shift from big cities reality is the opposite. SF’s magnetism drew me from Australia in ’94 and has kept me here ever since but even I am questioning… though like Michael I’m bearish on the current cycle.

          • Posted by cleverpunhere

            The WSJ had an interesting article two days ago: “For Startups Seeking Money, It Pays to Be From Silicon Valley.” The gist: “In San Francisco, there is an ecosystem that allows entrepreneurs to start a company on Monday, get funding on Friday and either succeed or fail in rapid succession.

            It’s crazy what the SF ‘shine’ will do for a company. Competing with them for cash, engineers and press—the lifeblood of startups—is extremely hard for startups outside this environment.”

          • Posted by SydneyBound

            dwf….if you are by chance originally from Sydney, I can understand why are “questioning”. I was recently in Sydney Australia and was amazed at how beautiful and clean that city was. If I could, I would move to Sydney tomorrow.

    • Posted by BayviewSF

      Multi-family buildings in SF are under rent control. It should be a pretty safe investment since your tenants will not leave. And when your tenants do leave, it is a positive to you. However, with a controlled rent, the appreciation would be disappointing.

      • Posted by SFrentier

        Not really. RC bldgs have had great appreciation. It’s just that the income sucks relative to the new price. Hence you need deep pockets to buy them. Then you hope for a tenant turn over or two, and whamo, you’re cash flowing too.

        • Posted by san FronziScheme

          In bull times, people buy the hope of returns. In downturns, people buy the despair.

          People buying poorly performing rent controlled buildings today are baking in much of the potential increase in returns, which could come from pure luck or hard work. Some are also factoring in the value of a TIC conversion.

          People buying similar buildings in 2009-2012 were buying a risk and a poor return, plus the fact that a poor economy was shaking off the weak owners.

          • Posted by SFrentier

            The only difference is the purchase timeframe. But looking into the future either way, if you brought a bldg, 5-10 years down the road you made money. If you brought in 09-12, you took a risk and had less financing options, but you made bank. If you buy in 2015 you’ll still do well, but less than the downtown. Either way, if you buy decent and know how to manage it, you’ll do well. Been going on like that for decades now. Nothing new.

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