San Francisco Shifts to a Buyers Market

San Francisco Shifts to a "Buyer's Market"

SF is one of the world’s most desirable places to live and still has the “strongest economy in the state*,” but with September’s deterioration of financial markets, the real estate market underwent a seismic shift. Sales and median prices declined dramatically. Price reductions, time on market, and the months-supply of homes for sale soared. Where the market was strongest—generally the high end—activity dropped precipitately. Areas with the highest foreclosure rates—in the less affluent southeast quadrant of the city—saw large increases in sales. Some offers are being accepted well below asking price. It is too early to say exactly what this means for 2009: between macro-economic conditions and the holiday season, many neighborhoods had too few sales for meaningful statistics. And medians and averages are always generalities. Still, after years of being mostly a seller’s market—high demand, low supply, multiple offers over asking price—SF has made the transition to a buyer’s market—more choice, more negotiation, lower prices and very low interest rates. This trend may well spark an upswing in sales in 09.
Comparing November 2008 with November 2007, SF house sales declined by 26%, condos by 55%, TICs by 74%, and 2-4 unit buildings by 65%. This reflects a market in shock from national economic conditions.

Comparing November 2008 with November 2007, the average sales price as a percentage of list price for houses accepting offers within 30 days of going on market declined from 104.1% to 99.8%. Though still high by national standards, this is the first time in years that the average sales price has been below average list price for houses selling quickly in SF.

* Beacon Economics, October 2008 Forecast