Year-End Real Estate Market Update
By Eric Castongia, Zephyr Real Estate
2016 started strong as expected. New buyers came into the marketplace, met with a constricted inventory, and generated competition, multiple offers and overbids. By the third quarter, the activity waned, as it has for the last two years. The lack of a second bounce after Labor Day created a flattening for the balance of the year. We continued to see multiple offers and overbids during that time, but there were not a sure thing, with the numbers of offers and the amount of overbids coming down. For West Portal/Inner Parkside we saw:
- The total number of sales for 2016 was 46, up from 42 in 2015. The normal has historically been around 50 annual sales.
- In the last quarter of 2016, there were 13 sold properties, with 9 receiving multiple offers over asking. The amount of over bids ranged from as little as $2,000 to as much as $304,000. I find two significant data points in here; the number of overbids verses sales is down, as is the amount of the overbids.
- Of the 19 transactions in the last quarter, which included pending, sold and failed to sell properties, the failed to sell category is up to four. When a property doesn’t sell (withdrawn from the market, expired, or temporarily taken off the market) it most generally means the property was priced too high or had some issue that a buyer was not willing to take on at the price offered. It is unusual to see nearly all of this category in one quarter; in this case, I believe that reinforces a change, since there were five such properties for the whole year.
- For 2015, 36 of the 42 sales were multiple offers, and 39 were over asking; that’s 93% of the sales being more than asking price. For 2016, 38 of the 46 sales were multiple offers and 40 were over asking; that’s 87% of the sales being more than asking, which is still a healthy market. Interestingly, the reduction in multiple and over asking offers was in the last quarter of the year. Note how this corresponds with the increase in the number of failed to sell properties.
- As for sales reported as all cash (no loan); we had a total of seven for the year (15%)-in 2015, there were 11 (26%). It looks like fewer people needed to pay cash to be competitive. It’s important to note that contingencies are back too-another indicator that buyers are feeling like they will buy on their own terms.
- Year to year, prices stayed even in the West Portal/Inner Parkside core; the flattening/retreat in the summer and fall, brought us back to the previous year’s values.
- I found a comparison North of Ulloa indicating prices could up as much as four percent, but given the lack of inventory and comparisons, that could be reflective of one special property and situation.
- The number of two bedroom, one bathroom homes (and smaller homes) are shrinking, as more downstairs rooms are built out and larger homes are more the norm.
- There are more large, super-done homes (think Dwell Magazine) selling for a premium. I remember one such home in 2015 that sold for $2.3m, which at the time was astounding. Now, we’re seeing $2.4m to $2.6m for such homes. The premium for super-done homes is reflective of buyers having more dollars than time or expertise to handle remodeling.
- I would suggest that the changes we have seen in the market are a result of many buyers being priced out of the market. As buyers are tire of losing out on homes, they are looking to other more affordable neighborhoods, including moving out of San Francisco.
- It’s early to tell (or feel) what will happen in 2017. If history has anything to do with it, I expect we will see the same bump in property value at the beginning of 2017, mainly as a result of renewed activity. Perhaps we will gain what was lost toward the end of the year, although it could be slower ascent. By March, we should have a clearer picture as buyers come out of the woodwork post holidays and show us what they are thinking.
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.