SF Market Heads Into the Home Stretch

The third quarter of 2011 is under our belts, and it's a good time to assess the current San Francisco market.

My response to the typical "How's the market?" inquiry that I get from clients, neighbors and friends continues to be: "It depends where you're talking about." San Francisco has its fog/warm weather microclimates, and it also has real estate microclimates.

Since the downturn of 2008, some neighborhoods have been moving along somewhat unscathed (Pacific Heights, Noe Valley), while others continue to take dives (Ingleside, Bayview). Additionally, certain price ranges have been going gangbusters, while others have dried up.

There's still new development happening in the city, though on a smaller scale. Though we don't have any big highrises in the works, a number of small-scale (i.e., four to six units) new construction properties continue to hit the market. So funding for these projects has not diminished.

A total of 576 single-family homes sold in the third quarter at an average of $966,113. They spent an average of 61 days on market, which is far below that of the national or even state average.

But the real news here is the fact that almost half of these houses sold in the $500,000-$1M price range. And only 159 homes sold above $1M.

There's a similar story on the condo end of things. 504 condos sold in the last quarter, with 300 such properties selling in that same $500,000-$1M range. Only 68 sold above $1M. The average condo price? $711,029.

However, the luxury segment of the market has been relatively strong, despite the economy. For example, a $5,750,000 Nob Hill penthouse in "raw condition" changed hands recently and is now ready for the new owner to renovate. There were also a fair number of multi-million dollar cash sales that took place.

Sellers ended up withdrawing listings or letting them expire in a big way. A total of 286 houses and almost 400 condos fell into this category in the third quarter---a very high number for only a few months' time. That means there are still many sellers out there who haven't yet adjusted to the fact that their properties may not be what they believe they're worth.

I'm seeing strong buyer activity heading into the fourth quarter, fueled by the low interest rates and healthy job market in the San Francisco area (particularly where tech companies are concerned).

My prediction for sales numbers by year end is that they'll be an improvement over 2010, but not by a landslide. We still have a few years to go before we emerge from the murky waters of the current real estate pond.