By Eric Castongia, Zephyr Real Estate
Its been a great quarter (and year) in the West Portal real estate market. On average, we’ve seen an increase in property values through the second quarter of 2005 of approximately 12 percent. Here are some interesting statistics interpolated from the San Francisco Multiple Listing Service:
- We’ve seen an increase in property values of approximately 24 percent since January of 2004.
- With an approximate 12 percent increase in 2004, that means that 2005 is even more aggressive in property value increases as the year isn’t even over yet.
- In the First quarter for 2004 and 2005, there were 5 and 7 sales respectively
- In the Second quarter for 2004 and 2005, there were 19 and 21 sales respectively.
- The increase in property values from first to second quarter in 2004 was approximately 10 percent
- The increase in property values from first to second quarter in 2005 was approximately 12 percent
- The appreciation rate we have enjoyed is due in significant part to low interest rates, low listing supply and high buyer demand.
- In order to generate traffic in a property, the list price may have been set low to generate interest and exposure.
- Buyers know that in order to compete in the market place, they may have to pay more than the list price of the property to get it-it is not unheard of to report a home sale that sold 20-25 percent over the homes list price.
- We are beginning to see the number of purchase offers go down on a listing, although prices are staying up.
- We are seeing offer dates come and go on some properties without any potential buyers stepping up. After this date, there are may be multiple offers over the asking price (indicating buyer trepidation in the market), or the list prices are raised to correspond with what the seller’s real selling price expectation is (indicating seller trepidation in the market).
- We are seeing more listings than usual coming onto the market; indicating that sellers think we have reached the top of our market.
- As interest rates continue to rise as they have been for the last several months and prices get even more out of reach for the average consumer, it seems likely that home prices will stop escalating at their current level. We saw a slowing of the market occur in 2000-01 with sale prices getting closer to list prices and homes on the market for several weeks instead of several days.
- As the number of bidders go down and the offer price fails to go over asking at a level consistent with seller wishes, we will see properties listed at prices consistent with seller expectation.
Its not healthy for our appreciation rate to be 12 percent year after year-this makes it impossible for first time buyers to get into the market. With the scarcity of housing, improvements in the economy, desirability of San Francisco, and this neighborhood in particular because of its affordability and consistency, I do think we can continue to expect a generous rate of return on our investment, perhaps not at the same level we have gotten spoiled with in recent months. There will be a transition period as sellers and buyers set and play by the same rules.
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.