Low inventory, high competition & affordability issues plague San Francisco housing market
It’s always interesting to take an in-depth look at the local housing market. It gives us a better idea of how the market is performing, and what that means for people buying or selling a home or condo. Thanks to newly released data from the San Francisco Association of Realtors, we’re able to compare the January 2022 San Francisco housing market to the same market in January 2021. We found some interesting data that can be helpful for buyers and sellers in the future.
Essentially, the National Association of Realtors points out the first month of the new year was much of a continuation of 2021. Home sales were up more than eight-percent over the previous year as homebuyers tried to take advantage of low mortgage rates. Home sales reached the highest level we’ve seen since 2006. The national association reports sales could have been even higher, if not for a shortage of homes for sale and soaring sales prices. In particular, new listings in January 2022 were down more than 28-percent for single family homes and down more than 33-percent for condos/coop/TIC properties. Pending sales were also down in the double digits for both.
This tells us the market is still extremely hot, but supply is extremely low. Even if people are thinking about moving to a bigger home, they may worry they can’t afford it because it’s so competitive right now. We found some interesting things in the January 2022 market report.
Prices in San Francisco were up, but not nearly as dramatically as in places like San Mateo County, which was up more than 10-percent, year-over-year. Still, there are some challenges for buyers. We started the year with an inventory of 910,000 existing homes. That’s the lowest recorded level in more than 20 years. Competition remains fierce, while affordability is challenged by soaring sales prices, increasing inflation, and increasing mortgage interest rates. Buyers are paying more per month compared to last year, which may result in slowing sales as more and more buyers are priced out of the market. More on that in a bit.
First, let’s just look at just single-family homes for the San Francisco market. When comparing this January to last January, new listings were down more than 28-percent, year-over-year. Pending sales were down more than 19-percent and sold listings down more than 20-percent. Again, the interesting part about the median sales price was that it was up only about four-percent, which isn’t that significant when compared to other markets. Active listings were down about 45-percent and days on the market increased by just one day from 2021.
Most single-family homes, or more than 76-percent of them in San Francisco, sold above listing price. That’s up more than 32-percent from January 2021. On average, buyers are paying about 18-percent over asking price for San Francisco single-family homes. But, what about condos?
Obviously, San Francisco’s condo market took a hard hit starting in Spring of 2020 when everything shut down. Now that we’re in 2022, things have opened back up and we’re closer to “normal” than we’ve been in some time. As for condo/TIC/Coop properties, new listings were down about 33-percent this January, pending sales were down about 16-percent and sold listings were down 33-percent compared to last January.
The median sales price increase was less than three-percent for condos, while the average sales price was up more than nine-percent. I’m predicting we could start to see this increase even more because people want to live in the city, but not everyone can afford single-family homes in San Francisco, so they’ll likely end up with condos.
The number of days on the market is still high at 63 days for condos, but that’s gone down about 10-percent. Active listings are down quite a bit, which we’ll probably see more of as federal interest rates rise. More and more condos are selling over list price, too. For the first time in quite a while, the percentage of list price received for condos in San Francisco was higher than asking price. It hit 101-percent this January. Months’ supply is down, and we’re back to a seller’s market territory when it comes to condos in San Francisco.
Of course, you need to keep in mind that San Francisco has a lot of micro and sub neighborhoods. It also has quite a bit of diversity in its neighborhoods, so remember that if you’re in the market to buy or sell a home in San Francisco.