The West Portal/Inner Parkside Year-End Real Estate Market Update

By Eric Castongia, Zephyr Real Estate

Another interesting year in the San Francisco Real Estate Market has just ended.  I feel pummeled by the number of articles written about how the market is down and there is still more to come.  There are some truths about what is being reported if one can figure out how to sift through it.  Nationally the real estate market is slower, reflected both in the number of sales and lowering sales prices.  San Francisco has experienced the slow-down as well, although historically, we have not seen as large a drop in sales prices as areas outside San Francisco.  Being surrounded by water on three sides, space at a premium and the effect of a high volume of new construction less significant, are all contributors to our overall stability.  The following is an interpolation of data from the San Francisco Multiple Listing Service and my analysis of the real estate market in the West Portal/Inner Parkside area.

  • The real estate market in West Portal/Inner Parkside is generally quite consistent quarter to quarter and year to year; the total number of sales for 2006 was 54, down from 60 in 2005
  • The number of sales in the fourth quarter of 2006 was seven, significantly down from 18 in the same quarter of 2005.
  • Of the 18 fourth quarter 2005 sales, 11 sold for over the asking price (61%), five sold under.
  • Of the seven fourth quarter 2006 sales, five sold for over the asking price (71%), two sold under.
  • Listing price, condition, location and desirability of a property being sold, is crucial.  These factors determine if a property will sell for over its asking price, or linger on the market.  In an accelerated market, excited buyers are more forgiving about condition and location.
  • Buyers in the marketplace are taking longer to make decisions on properties with question marks or quirkiness; the list price needs to reflect property and market conditions.
  • The yearly total number of transactions for 2006, which included 19 withdrawn (failed to sell) properties was 73; in 2005, the total was 71 with 11 withdrawn.  An increased number of properties being withdrawn from the market generally indicates inappropriate listing prices for market conditions-some sellers have not adjusted their list prices to reflect the change in market conditions.  Sellers not obtaining their desired sales price are pulling their properties off the market.  Note to buyers-you may not be able to negotiate as much as you want.
  • The year started out slower than it ended; we saw a flurry of activity in the last several weeks of year.  In the last quarter we saw values stay even to go up as much as 10 % from the previous quarter.
  • For the year, appreciation was flat in 2006.  I expected 3-5 percent appreciation over the year, which we did not see.  We did, however, see more fluctuation than usual throughout the year, so the trend is an increase in value, making up for losses in value throughout the year.  Supply and demand factors influence this as well; with only seven sales in the last quarter, there were fewer homes to purchase.
  • I read that the Federal Reserve is letting up on its threat of raising interest rates.  Note that interest rates went down last year.  Zephyr Real Estate’s in-house mortgage broker predicts that rates will stay even for a while longer; this should have the positive affect of bringing and/or keeping buyers in the marketplace.
  • I anticipate the built up demand from people who didn’t buy in 2006 waiting for the bubble to burst will buy this year.
  • I anticipate we’ll look back and see that this was a good time to buy real estate.
  • If you are going to buy, select well; if you are going to sell, prepare your home for sale to make it desirable.
  • The desirability of San Francisco and the bustling West Portal commercial strip establish our market stability and contribute to our expectation of steady appreciation.

Eric Castongia, Residential Sales Specialist at Zephyr Real Estate provided the information in this article.  Eric can be reached by e-mail at Eric@EricSellSF.com, or via mobile phone at (415)307-1700.