Annual Real Estate Market Update for 2021
By Eric Castongia, Corcoran Global Living
I hope you are having a great start to your New Year!
My last Annual Real Estate Market update was in January of 2020, so we have a lot to catch up on.
With the start of shelter in place in March of 2020, the real estate market throughout the Bay Area mostly ground to a halt for two months. Initially, there were no open houses, brokers tours, or in person showings, so all property tours had to be done virtually. Keep in mind, we also needed to get stagers, contractors and photographers in the property to perform work, which couldn’t happen for a while either. Once we could prepare a property, then show it, it had to be by private appointment. Owner occupied property had to be vacant for two weeks, no more than two people from the same family plus their realtor could visit at a time, with everyone masked, listing agent standing outside, signed Covid property entry forms for every visit, and cleanings between showings – it was a lot of organization and preparation for each showing. One listing I had earlier in 2021, had over 100 scheduled individual showings. It took over a year for the rules to start loosening up, and for modified open houses and brokers tours to come back.
As for the market itself, the pandemic had the negative effect of making properties that derived the most benefit from being seen in person, unavailable. Those properties took longer to sell and, in general, sold for less than in a regular market. Lack of access had the effect of creating two markets – 1) properties that had recognizable floor plans, photographed well and in desirable locations; and 2) everything else. A ‘1’ might have looked like a single-family home that didn’t need much work, had at least two bedrooms, parking and outdoor space. They would be priced a little below what they might be worth to generate interest and would receive a few over-asking offers. A ‘2’ might have looked like a condo in a larger building, and/or less than two bedrooms. These properties would be ‘transparently’ priced, meaning a list price that the seller would be willing to take, and negotiation might still occur. Prices did decrease on those properties over the past two years. Although we are back to open houses and brokers tours, we still have two markets.
I strive to be a glass half full sort of person, so, while shelter in place was a challenge, agents started incorporating more useful tools in their marketing. Personally, I started adding raw video taken from my cell phone, floor plans, three-d tours and drone photography, making it easier for prospective buyers to get a sense of a property and the neighborhood before making the appointment to see the house. Adding these largely weeded out looky-loos and buyers that a property wouldn’t work for. Communication with the showing agent also helped in providing insight into what the client was looking for and if it was a fit. Our visits were down in terms of the number of viewers, but the ones who did see it were vetted.
As for the local West Portal / Inner Parkside Market:
- 2020 recorded 40 sales.
- 2021 recorded 68 sales; this is the largest number of annual sales I’ve seen since I started tracking in 2004.
- Activity is a good indicator, but what doesn’t sell, may give us a better idea of how constricted/competitive the market is. So, I looked at the number of ‘failed to sell’ listings as an indicator as to how tight the real estate market is; think of it as a gauge of buyer and seller motivation. Fewer means buyers are snapping up almost everything, more means sellers are holding out for their price and buyers are being more selective. Starting from tightest market, to loosest market:
- 2015 – 42 sales, one failed to sell (2% of total sales) hot market, tightest recorded; multiple offers and overbids on most properties.
- 2017 – 58 sales, two failed to sell (3% of total sales) hot market, second tightest recorded.
- 2021 – 68 sales, four failed to sell (5% of total sales) hot market, third tightest, recovering from shelter in place.
- 2013 – 64 sales, four failed to sell (6% of total sales) recovering from melt down, second highest number of sales since 2004 and fourth tightest market recorded
- 2020 – 40 sales, seven failed to sell (15% of total sales) pandemic/shelter in place, thirteenth tightest market recorded.
- 2006 – 54 sales, 19 failed to sell (26% of total sales) hot market and precursor to the economic meltdown in 2007/2008, lowest ranking of tight market (out of the 18 years I’ve kept track). Since this was still a hot market, this is most likely a measure of unmotivated sellers.
- Interestingly, 2010 was the height of the economic meltdown and the failed to sell ratio was 16%. The number of sales that year was 58.
- Noting that we mostly have desirable, single-family homes in the neighborhood, the failed to sell market will be lower here, than in other SF neighborhoods.
As to property values year to year:
- 2019 to 2020 saw no appreciation, the pandemic effect.
- 2020 to 2021 saw appreciation of 3-5%, people digging their way back to normal.
- From quarter to quarter, appreciation was likely higher because it would have been more volatile in a shorter time frame, fluctuating over time. Note, I am also not looking at median home values; I compare specific property types, quarter to quarter and year to year.
- The market was very active, but list prices didn’t go up, and in some cases went down, which made overbids and sales prices look larger.
Working with both sellers and buyers was a challenge during the pandemic, but it also made the relationships more connected, even when they were virtual. Buyers and sellers, guided by their agents, found a way to navigate through a constantly changing puzzle. The chaos gave agents and brokerages the necessary push to change some ways of doing business that will be positive going forward.
Eric Castongia, Broker Associate at Corcoran Global Living (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.