While the number of homes actively listed for sale in San Francisco peaked at a 7-year high of around 960 this past October and has since ticked down to 775 with typical seasonality in play, there are now 53 percent more homes on the market than there were at the same time last year and inventory remains at a 7-year seasonal high.

At a more granular level, the number of single-family homes currently listed for sale in the city (260) is now running 47 percent higher on a year-over-year basis while the number of listed condominiums (515) is up 56 percent, not including the vast majority of new construction condos still for sale across the city.

The number of homes on the market priced at under a million dollars in San Francisco is now running 53 percent higher on a year-over-year basis as well. And 26 percent of all the homes currently listed for sale in the city have undergone at least one price reduction, which is even with the same time last year.

Expect inventory levels to continue to decline though the end of December and the percentage of listings with a price cut, which topped out at 27 percent in San Francisco last year and 32 percent in 2016, to continue to tick up.

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Comments from “Plugged-In” Readers

  1. Posted by bachman_erlich_overdrive

    The article in Friday’s Mansion in the WSJ suggests capitulation on pricing has already arrived in Manhattan.

    • Posted by anon2

      And Dallas as well
      https://www.wsj.com/articles/the-u-s-housing-boom-is-coming-to-an-end-starting-in-dallas-1543248073
      People often float some theories about why prices have risen here citing some very localized factors (The FANG companies, Tech IPO’s, SF’s natural beauty, young people flocking to SF,…) But in the last (2007) cycle, both prices and price-income ratio rose, flattened and then fell across the country. This cycle was mostly coastal cities, but also saw both prices and price-income ratio shoot up in a similar pattern in multiples places. And now we’ve seen the market turn a corner here in SF at around the same time the market is turning in other cities as well.
      If you see an effect happening in 20 different places, while it’s theoretically possible that 20 different causes are coincidentally producing the same result that’s not the most likely situation. Occam’s razor should point you towards looking towards a common cause.
      If you think we’re still going to have an endless summer except for a temporary oversupply of SOMA condos, you should wonder why prices have taken a hit in the Mission, in Saint Francis Woods and now Manhattan and Dallas!

      • Posted by anon2

        And notice that there is tech wealth here, finance wealth in Manhattan, oil wealth in Dallas. So there’s scant evidence that wealth alone prevents the operation of a RE cycle. The US median home price is around $300k. Prices in high end areas already reflect the increased earning potential of those areas.
        And in fact you may see larger amplitude cycles in those areas since high paying jobs can have highly variable compensation ( Options/RSU’s for tech, bonuses for Finance, tied to oil prices for the energy sector,…) You combine a expansion of valuations ( price-to-income) and the same time that fundamentals ( total pay ) is increasing. And during downtimes, pay can contract at the same time that valuations are falling.

      • Posted by Sabbie

        Again no mention of foreign buyers. Like I said, they don’t need to be a huge percentage to drive up home prices. They are often price insensitive due to atypical motivation- the need to park expatriated cash.

        Today the high end builder Toll Brothers released less than stellar earnings, and mentioned foreign buyers as a top three factor: “Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates all contributed to this slowdown.”

        Not sure why people support massive government spending to “solve our housing crisis” but not common sense restrictions on foreign buyers, unless it’s because of some twisted idea of multiculturalism.

        • Posted by anon2

          While I think foreign buyers probably increased the amplitude of these last two cycles, fundamentally they were just chasing momentum like everyone else. And not all absentee owners are foreign, there are SF locals who picked up one or more condo units as investments. Whenever you have an up cycle that gets very large you are going to get all sorts of people wanting to get a piece of that and as the prospect of appreciation overshadows any rental or hedonistic values of ownership you will inevitably see more units bought and left vacant.

          People who just want to park money somewhere aren’t the ones engaging in heated bidding wars for bland condos in the most expensive markets in the US.

          Foreign or domestic, SF, Dallas or Manhattan, If you see all these types of demand turn down at roughly the same time, it’s likely because of a cyclical turn of the market and not and factor specific to each sub-group.

        • Posted by Philip

          If we were to ban non-citizens from owning houses here, the economic repercussions would be huge, since people would no longer see the US as a reliable place to invest. If we had some kind of quota system, the foreigners would bid prices higher yet, because of the artificially limited supply. Anyhow, it would be awfully easy to evade such a scheme.

          The best way to lower home prices is to get rid of the mortgage interest deduction. Eliminating Prop 13 (which I think would be a terrible idea) would really tank home prices.

  2. Posted by Amewsed

    This metric means there are much fewer buyers than sellers. Some want to take cash/profits off the table while others may have found greener pastures elsewhere. Like the stock market, stocks can keep going lower until there is an attractive buy in price.

    As for restrictions on foreign buyers, I am against it, even if it means speculation and housing shortages. The two track systems (one for locals, and another for foreigners) or housing stamp taxes have not worked well for cities which utilize it. How is it a fair system or an attractive investment if an item is priced differently for different kinds of money? Even a city/state like Singapore which has very restrictive immigration and foreign investment criteria will hit a financial wall in a recession, especially compared with cheaper adjacent countries like Malaysia and Thailand.

    CA and SF, independent of any foreign buyers, have the obligation to guide projects to fruition based on good planning, and not ideology or a series of patch-up jobs after “unintended” consequences of bad policies/laws. This has not been done for the past 40 yrs (or longer.)

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