The West Portal/Inner Parkside 2018 Annual State of the Neighborhood

The market took off like a shot at the beginning of 2018 and it calmed down just as quickly in July, coasting throughout the balance of the year.  2016 and 2017 saw similar cycles, so perhaps the historical ‘second bump’ after Labor Day is a thing of the past.  While West Portal/Inner Parkside remains in it’s own bubble of desirability; you will soon see that values year to year were lower than usual; perhaps as we reach the maximum of affordability.  Here are some interesting stats for the year:

  • The total number of sales for 2018 was 47, down from 58 in 2017.  The mean number of sales has historically been around 50 annual sales.  Interestly, there were 46 in 2016; so why the spike in 2017?  Perhaps sellers attempting to get out of the market for top dollar before a market change.
  • In the last quarter of 2018, there were 10 sold properties, three of the 10 received multiple offers and seven of them sold over asking, with two of the seven pre-emptive offers with significant overbids.  Two of the sold properties had price reductions.  The amount of overbids ranged from $1,000 to $555,000.  The most under asking was $148,000.
  • 24 of the 47 sales for the year were multiple offers, and 32 of them (68%) were over asking.  In 2017, 48 of the 58 sales for the year were multiple offers, and 46 of them (79%) were over asking.
  • Four of the year’s transactions identify as ‘failed to sell’; fewer of these generally indicate how motivated a seller is to get their home sold; it also indicates buyers in the market that are active and motivated.  Between 2012 and today, that number has ranged from one to seven annually.  From 2006 to 2011, it ranged from 10 to 19; with 19 being at the height of the market of the market cycle in 2006.  The higher number could mean two things: sellers were holding out for more money in their sale and the start of the coming recession.
  • For sales reported as all cash; there were nine reported for the year (19%).  The high point since I’ve been tracking cash sales were highs in 2014 and 2015 at 23-26%, with the low point in 2016 at 4%.
  • To determine property values from quarter to quarter and year to year, I look at various housing types (such as two story homes, or typical two bed, one bath homes with rooms down) and neighborhood sub-districts (such as core West Portal/Inner Parkside vs. North of Ulloa); I find this method more accurate than median price.
  • For example, values of typical ‘two ones’ with rooms down in core West Portal Inner Parkside, seem to be level from quarter to quarter and up 4% year to year. 
  • Two story homes have always been a premium, and interestingly, a lot more of them sold in 4th quarter than usual – five of the ten sales.  I’m figuring the value from quarter to quarter remained even and up two percent from year to year.  That doesn’t sound like a lot, but the majority of those homes had prices above $2 million; one topped $3.5 million.  And, hence the upcoming question, did we see a market change?
  • While two story homes were more available, homes North of Ulloa were practically non-existent; absolutely unheard of for this portion of the neighborhood, which usually top the number of sales.  This quarter, one. Values quarter to quarter remained constant and 10% year to year. 
  • My opinion is that the annual increase North of Ulloa was higher, because prices tend to be lower than core West Portal, so there was more possibility for people to purchase.  Conversely, the values of two story homes, and two bed, one bath homes with rooms down, was lower because they became less affordable.
  • The beginning of 2018 ramped up quickly and slowed down just as quickly mid year.  Buyers got tired and more picky, with talk of a recession and higher interest rates (still at historic lows!) giving buyers pause to consider if they should wait.
  • Citywide, underpricing and generating over asking offers didn’t work as well either, generally because the overbids didn’t generate what the seller was hoping for. 
  • There has been disagreement within the real estate community as to whether there has been a slow down in the market.  I think yes, partially.  1) Less desirable properties are selling slower and for less; and 2) we are seeing a shift, perhaps in the way property is listed – meaning we may start seeing properties priced more transparently (for what a seller is willing to accept).  We might also start seeing more withdrawn listings and reduced asking prices as we figure out what those prices are.
  • February and March will give us a good temperature as to strategy and pricing, as new buyers come out into the marketplace ready to fulfill their New Years’ Resolution of home ownership.

Eric Castongia, Broker Associate at Zephyr Real Estate (BRE Lic. No. 01188380) provided this information. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service, the County Tax Record, the internet and Eric’s observations in the marketplace.  Eric can be reached by e-mail at Eric@SFHotBuy.com, or via mobile phone at (415)307-1700.