San Francisco’s Housing Market Heats Up Amid Inventory Crunch
After a period of relative calm, the real estate market in San Francisco is once again becoming a battleground for homebuyers, particularly in sought-after neighborhoods. Properties in these coveted areas are fetching significantly higher prices than their listing amounts. For example, a home in Hayes Valley that was initially listed just under $2 million recently sold for $2.65 million, setting a new record for the highest price per square foot in the neighborhood. This is part of a broader trend that has returned after being briefly halted by factors such as rising interest rates and negative headlines about the city’s future.
Data Indicates a Renewed Frenzy for Single-Family Homes
Data from real estate firms suggest that the competition among buyers has indeed ramped up, especially for homes in the $1-to-$3-million price range. During the first half of 2023, nearly 60 percent of sales in this category were above the list price, with about 40 percent of homes between $3 million and $7.5 million also selling over list. This marks a rebound from the latter half of 2022 when only 30 percent of homes were selling above their asking price. According to experts, this renewed frenzy is the result of pent-up buyer demand colliding with a scarcity of desirable listings. In July alone, new listings were down by 17 percent compared to the previous year, contributing to the resurgence of bidding wars for turnkey homes.
Condos Lag Behind, Sellers Adjust Expectations
While the market for single-family homes is on fire, the situation for condominiums is notably different. Data shows that less than 40 percent of condos are selling above their list price, a stark contrast to the roughly 70 percent of single-family homes that are. Despite this, demand for condos in areas outside the downtown core remains strong, skewed by an abundance of listings in downtown districts where demand is weaker. Meanwhile, sellers are beginning to recalibrate their expectations. While the market may be hot, it’s not as feverish as it was a few years ago, meaning sellers hoping for exorbitant amounts above their listing prices may need to temper their aspirations. Those failing to adjust have found themselves pulling their homes off the market rather than settling for less.
In sum, the San Francisco real estate market appears to be in a phase of resurgence, driven by the dynamics of low supply and high demand. While single-family homes are the hot commodity, condos and other property types have yet to catch up, painting a complex picture of a market in flux.
Disclaimer: This blog post is a summary of an article originally published in The Real Deal. The full citation can be found at the end of this post.
Landes, E. (2023, September 5). “They’re baa-aack: Bidding wars return to San Francisco.” The Real Deal. Full Article