By Eric Castongia, Zephyr Real Estate
The market has been changing, slowly enough that it has been more a question than a clear statement. In looking back, it started at the end of last summer with less than perfect properties in the marketplace not getting snapped up for big bucks with multiple offers. Buyers are more selective, price range is more important than location and a current remodel is more important than a large home. Properties that fall outside those parameters are most susceptible to negotiation, particularly if they are priced inappropriately to start with. Here is what happened in the neighborhood for the past quarter:
- At the close of the second quarter of 2016, we had one active and 18 sold (closed) properties.
- Of the 18 sold, 17 sold over their asking price, 15 received multiple offers (two of the 18 sold off market, so they received one offer).
- The bids ranged from $32,000 to $580,000 over asking; one property sold under asking.
- If we dig deeper, we would find that the number of offers have come down across the board, and to make sure buyers come in the door, list prices have come down. With that, overbid amounts have gone up giving the illusion that prices have gone up significantly, when in actuality, they may not have.
- For the last 10 years, the number of sales in the second quarter have been between 10 and 14, except for the three years; 1) 2016, 2) 2008, 16 (toward the beginning of the economic downturn), and 3) 2010, 21 (before the start of the economic recovery, when some had to sell). Interpreting this, I think sellers want to cash in on what they may believe is the height of the market.
- Two of the 18 sales (11%), were reported as all cash (no loan). In the second quarter of 2015, it was 42%. This means to me that fewer people need to pay cash to be competitive-sellers and listing agents have to be a little more flexible.
- The most recent ‘apple’ on the market sold last year for $1,025,000 and recently sold for $1,140,000 (an 11% increase year over year).
- Comparing the second quarters of 2015 and 2016, we saw as much as a 8% increase, while year to year, we saw 3-10%, with one anomaly at 30%.
- Fewer buyers can purchase higher end properties, so values at that level are not escalating at the same rate. The breaking point seems to be around $1.8 million; year to year, those values and above are essentially flat. For example, a home that sold recently in West Portal for $2.2 million, sold for about the same amount as a similar home last year. Conversely a house worth $1.3 million last year, might be worth $1.4 million now because it is in a more affordable price range.
- As the affordable price range continues to shrink, price sensitive buyers are going further and further out; case in point, remodeled homes in the outer sunset are selling over $1.3 million.
- Is a real change coming? I think yes, but hard to say when and what that means. Looking at history, my guess is that the prime hub of West Portal Inner Parkside will continue to be popular with a smaller correction, while areas with less desirable locations, will see larger changes.
- Not long ago, West Portal and Inner Parkside were considered affordable; I guess it really is the next Noe Valley.
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.