By Eric Castongia, Zephyr Real Estate
Ask a property owner what’s happening in the market and they think it’s gangbusters; ask a buyer and they think it’s changing in their favor. Both opinions have some truth to them, which makes it really hard to give a straight answer when someone asks what’s happening.
There was a spike citywide for listings in September. As a quick diagnostic, I measure the market by how many pages of listings we have on Brokers Tuesday; during the most constricted time in the market, it was 15, after Labor Day it was 27. That means inventory nearly doubled across the city in the matter of a few weeks. It makes it confusing for buyers, as they have more to see and consider. The type and condition of those listings varies greatly, but it is taking buyers longer to see everything in the marketplace to make a decision. The most desirable and well-priced properties are still selling quickly and over asking, others that are not getting buyers’ attention are lingering. The perception of the market changes fast and strategies need to be quickly re-evaluated. Dissecting the numbers:
- At the close of the third quarter of 2016, we had five active and nine sold (closed) properties. Of the nine sold, all received multiple offers, over asking.
- On average, the number of offers received on each property has come down across the board.
- The bids ranged from $55,000 to $300,000 over asking (down from a high last quarter of $580,000).
- One of the nine sales (11%) was reported as all cash (no loan), last year at this time, it was three of nine (33%). Fewer people need to pay cash to be competitive.
- Two of the five active listings have been on the market for 30 days or more, which is very unusual. The other three came on in September; West Portal/Inner Parkside, while in demand, is not immune to market changes.
- Marketing remains all about getting a buyers attention. Given the number of active listings in the marketplace, it seems clear that most often the strategy remains under-price to generate attention.
- Seller expectations must change; listing and selling prices may not be what they expect/want, or what they were six months ago.
- For the last 10 years, the average number of sales in the third quarter has been between 13 and 15, with the exceptions; 2007 & 08, and 2015 & 16, (between nine and 11). Last quarter I interpreted the exceptions as indicators of market changes. Interestingly, the 13-15 ‘normal’ range ran throughout the recession between 2009 through 2012, with the most recent exceptions in 2015 and 2016-these years did not have an expected post-Labor Day bump, which hampered activity, combined with two listings that have lingered on the market.
- Comparing the third quarters of 2015 and 2016, property values stayed even. This was true of all ranges compared, including those above $2 million.
- The most recent ‘apple’ on the market sold in 2014 for $1,354,000 and recently sold for $1,600,000 (a 15% increase in two years). Given the lack of appreciation in the last year, that means the 15% appreciation was in the first year of ownership.
Is a change coming? Yes, it always does. Changes come and go, but the last one was pretty brutal and no one knows if we will go there again or not. The ‘slow down’, for what it currently is seems more about sellers catching up to perceptions of market value; that things aren’t quite as hot as they were, and a lack of motivation on the part of buyers; thinking that the market will come down and they will have more affordable options. For those sellers who have to sell, they have to be more flexible, for those that don’t, wait to sell until the next bump in activity. When all is said and done, West Portal/Inner Parkside seems to move to its own, nimble drum beat, expanding and contracting to keep the supply and demand in check.
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.