California real estate market topping out?
Here in San Diego, we all know that the housing market has really been booming. In my opinion, it’s a combination of unbelievably low mortgage rates and low inventories of affordable housing. This has resulted in properly priced homes selling within a few days or at most a few weeks of being listed. It’s also commonplace to have multiple counteroffers and the property selling for substantially over the listed price.
The San Diego real estate market has reminded me of the effervescence that is often seen in stock market highs. But, this is just my humble opinion, from three decades in the residential real estate market. But now, the first signs of a market top have appeared in San Francisco California.
California real estate market topping out?
A new report just out shows that although the San Francisco residential real estate market was very hot from July through September, it’s now developed and imbalance, with more housing supply then potential buyers!
In the third quarter, the number of residential sales rose by over 30% when compared to the third quarter of 2019. Sales climbed from 1151 two 1499. But the big and troubling statistic is that the number of property listings is now at a 15 year high with a ten-month inventory for some condominiums in certain neighborhoods. Also, when one compares September 2020 to September 2019, the number of price reductions shot up by 172% for homes and condos combined, the biggest percentage of of price reductions were for condominiums.
As is often the case in California real estate markets, the demand was much better for single-family homes when compared to condominiums. Also, larger homes in the San Francisco area were more popular than smaller homes, and in general, high rise offerings moved much slower than listings in the suburban neighborhoods. Actually, in some of the suburban neighborhoods, a number of single-family homes still sold for slightly over the asking price.
Now, the median sales price for a San Francisco single-family home moved up slightly from last year’s 1.57 million 2.66 million. The bifurcation of San Francisco single-family homes and condominiums, was also evident in the fact that single-family homes sold for an average of 102.5% of the listing price, while condominiums sold for an average of 97.5% of their listing price.
There are some neighborhoods in San Francisco that now have a ten-month inventory in the downtown neighborhoods, and yet nearby neighborhoods have just a four month supply inventory.
Even though San Francisco has a huge inventory build up of residential properties for sale, there was a 28% yearly increase in the luxury home section where the price range runs from 2.5 million and above! So, let’s not shed a tear for San Francisco just yet! But if the housing inventories continue to increase, the red flag that is now flying at half mast, will soon be at the top of the flagpole with the southern part of the state following along.
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