Heading into a typically quiet Labor Day weekend, after which the inventory of homes on the market in San Francisco typically starts to climb, the number of homes listed for sale in the city (545) is already running 14 percent higher versus the same time last year (480) and 33 percent above its mark at the same time in 2015 (410) which remains an inflection point for the current cycle.

At a more granular level, the number of single-family homes currently listed for sale in the city (205) is now running 40 percent higher versus the same time last year while the number of listed condominiums (340) is up a little over 1 percent, a total which doesn’t include the vast majority of new construction condos for sale across the city, the inventory of which has been hovering around 500.

In terms of pricing and expectations, 17 percent of the active listings in San Francisco have undergone at least one price reduction versus 16 percent at the same time last year, while 37 percent of the homes on the market are currently listed for under a million dollars, up from 35 percent at the same time last year.

And the average list price per square foot of all the San Francisco homes that are currently in contract remains under $900 per square foot, down 3 percent versus the first half of the year.

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Comments from “Plugged-In” Readers

  1. Posted by bender

    So it looks like it continues to be a strong seller’s market, although a tad less strong than in 2015. New record highs in NASDAQ and S&P500 will probably keep that going for a while longer. Will be nice when seller and buyers get back into more equilibrium. Need a lot more sellers or fewer buyers for that to happen.

  2. Posted by James

    Why is a 40% rise in inventory a strong seller’s market???

    • Posted by bender

      Because inventory is still low and buyer demand remains strong. If you went from 5 homes for sale to 7, that’d be a 40% rise, but still a low number. “Strong” does not necessarily mean “getting even stronger.” Nor does “getting less strong” necessarily mean “weak.”

      • Posted by SocketSite

        Of course inventory levels didn’t go from 5 to 7. And recorded sales in the first half of 2018 were 2 percent lower than in the first half of 2017 despite “new record highs in NASDAQ and S&P500” (and the aforementioned trends in inventory levels and pricing).

        • Posted by bender

          Exactly. The still high stock market is a large part of what is fueling the high demand. This is why prices have continued to rise, measured by either MLS median sale prices or the case shiller index. And DOM remains very low, lower than last year. Stuff is selling quickly due to high demand. Perhaps more homes coming on the market will start to close the gap between the low supply and high demand. Not there yet, but maybe moving in that direction.

          • Posted by SocketSite

            Actually, despite the increase in inventory levels, demand for homes in San Francisco was at a seven year seasonal low in the first half of the year. Pricing for new condos peaked in 2015, as did rents. The price per square foot (versus median price) of homes in contract in San Francisco (versus the Bay Area) has actually slipped. And on an apples-to-apples basis, well…

          • Posted by bender

            Demand for homes in San Francisco is at a seven year low? By what measure could one possibly derive that? Makes no sense at all.

            As for pricing of new condos or rents, okay. I talked about MLS median sale prices and the case shiller index. Those measure resales. And your post doesn’t include new condos (at least, that’s what you say in the post). Price per square foot of homes in contract? Huh? You’re mixing up things an awful lot, and I can’t tell what your point is.

          • Posted by SocketSite

            Perhaps sales would be a good measure of actual demand. And when supply (new listings) outpaces demand (new sales) inventory levels, as tracked above, increase.

            As always, while movements in the median sale price are a great measure of what’s selling, they’re not necessarily a great measure of appreciation or changes in value and are susceptible to changes in mix, as opposed to movements in the Case-Shiller Index. But the Case-Shiller index is for the Bay Area as a whole, the nine segments of which aren’t moving in lockstep.

            And in terms of movements in the price per square foot of homes in contract, it’s a leading indicator.

          • Posted by bender

            No, sales volume does not measure demand. The number of places for sale has a huge impact on the number of sales that close. DOM provides some measure of demand. That is still extremely low, indicating demand is grabbing supply quite quickly. Prices, going up, offers some guidance but is also affected by numbers of listings. Demand is certainly not at a seven year low, by any reasonable stretch. Way more demand now than in 2012, for example.

          • Posted by SocketSite

            And once again, you seem to be confusing “desirability” with “demand” and the relationship of price.

          • Posted by bender

            Confusing “desirability” with “demand”? That makes no sense at all. I’m just saying that if sales volume is down (or up), that does not indicate that demand is down (or up). That is a huge mistake and a basic misunderstanding of simple economics. Apples and oranges. On the other hand, if a product is flying off the shelf, like with the current very low DOM, that is a pretty good, albeit not perfect, indicator of strong demand.

            Your post indicates listings continue to be low. Because prices continue to rise, or charitably, to remain at their high levels, and DOM is very low, we can pretty confidently infer that demand remains strong. Low inventory and high demand makes a strong sellers’ market. That was my post, pretty controversial, and saying odd things like demand is at a 7 year low (whoops, I mean sales volume) or but new condo pricing was higher a couple years ago, or price/sf (not the selling price, by the way) on homes in contract is down 3% from last year doesn’t really add anything relevant. Reaching quite a bit on this one.

          • Posted by SocketSite

            Unfortunately, what you’re just saying, in terms of defining “demand,” is a basic misunderstanding and simply wrong.

            Our post doesn’t actually indicate that “listings,” which some seem to confuse with inventory levels, continue to be low, but rather that inventory levels (i.e., listings (supply) less sales (demand)) have been ticking up which typically has an impact on…(wait for it)…price!

          • Posted by bender

            Yes, more supply and less demand would have an impact on price. Your error is that you are measuring “demand” all wrong.

            In addition, where supply remains low (even if it isn’t as low), and demand remains high, there remains an upward pressure on prices (even if it isn’t as much upward pressure). Your conclusions simply aren’t supported by the facts you present. You can see that in continuing high prices, which is really the direct evidence of what you’re incorrectly trying to infer indirectly.

          • Posted by SocketSite

            Got it. So when sales drop and inventory increases, it’s actually a sign of increased demand and market strength. We obviously missed that chapter on alternative economic facts and figuring back in school.

            And now back to the actual inventory facts, figures and trends at hand…

          • Posted by doc java

            Inventory up, but sales down is classic low demand. The homes showed up, but the buyers didn’t. Industry reported DOM is heavily manipulated with re-listings and off market shopping. Totally unreliable. And even true DOM is an indicator of the gap between buyers and sellers, not demand. High DOM means buyers and sellers far apart on pricing.

          • Posted by bender

            “Inventory up, but sales down is classic low demand.”

            That’s the same error socketsite made. Again, “not quite as high” does not equal “low.” Even more wrong when you measure demand incorrectly/

  3. Posted by Cynthia

    “Demand” is vastly different than “need”

    • Posted by SocketSite

      That’s true. It’s also vastly different than “want,” but industry folks tend to conflate all three.

  4. Posted by oakland lover

    Socketsite, do you know the price per sq ft drop from peak? I thought I saw SF peak at 1100 or 1000 per sq ft.

    I see its down -3% from earlier this year, but what about vs peak? 10%, 15%?

  5. Posted by Ohlone Californio

    I thought we saw last week that prices are at or near an all time high. Maybe not last week, but recently? Anyway, I mean a slight gain in price is what it looked like. Well, one could look at the 14% inventory increase and deduce that a number of fence sitter sellers have watched the market for long enough. They figured three years of super high prices means another price increase is unlikely. Couple that with the same-same price reduction percentages of 16 and 17%. And yeah, to me that’s very much still a sellers market.

  6. Posted by Hi

    Good, some balance coming back to the market. This is way too little inventory to be making any conclusions on trends – so what if 5 more homes had a price reduction compared to last year, especially with the tendency to re-list or add a price drop right before closing. Net net it sucks to be a buyer in August because once you settle on a neighborhood and pick a price range that is in your budget, you effectively have a choice of <10 properties (unless you want – new condo). There should be at least 1,000 homes for sale to give people at least some options for every size family and budget.

    • Posted by SocketSite

      There are 150 more homes on the market right now versus the same time in 2015, that’s 30 percent of total sales/turnover in a typical month.

      • Posted by Hi

        For comparison, Realtor.com shows 4,800 homes for sale in Phoenix and 1,800 for sale in San Jose (city limits for both). 1.5mm and 1.0mm population respectively. The same stat for SF is 1,100 (not sure why diff from your number but let’s compare apples to apples. SF inventory is significantly lower per capita. Perhaps more people rent here than in SJ (seems dubious as the markets are close enough to be substitutable). But compared to other markets, SF remains a tight supply environment with less inventory to choose from than other cities of comparable size.

        • Posted by SocketSite

          We’d be willing to bet that your query includes all listings, including those which are in contract and which renders any comparisons moot (unless you normalize for differences and changes in average closing times). Either that or it’s otherwise wrong. But more to the point, the market in San Francisco has never mimicked the market in Phoenix or San Jose and the proper comparison for San Francisco is to itself at different points in time.

        • Posted by doc java

          I wouldn’t take that bet about SF v SF. Most of my SF friends rent.
          Professor Google throws down that SJ home ownership rate is 57% for SF it is 38%
          53% for Phoenix for the record, but poverty rate is 20% and average home value is 200k, so thats a different world there.

    • Posted by Joe

      People are beginning to sell the less desirable properties that are beginning to fetch enough to motivate a move to other regions which have slowed. The exodus hype has suddenly vanished? Couldn’t this add to inventory? Same number of buyers, just a little more inventory of undesirable homes trying to get in on the show. Curious about the inventory of DECENT homes.

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