December Update

October-November Statistics Reflect Strong Demand

October-November statistics undoubtedly reflect a market still dominated by a very high demand/ very low supply/ upward-pressure-on-prices dynamic.

As it typical at this time of year, the number of new listings is now markedly declining for the holidays -- this won't change until January. But though inventory continues to decline, buyer demand is still relatively ferocious, so the holiday slowdown may be less than in most years, just as this past summer was much stronger than the usual summer market.

If you adjust your screen-view to zoom 125%, the charts will be that much easier to decipher. On Windows machines, one can usually accomplish this by pressing the Control key and the + (plus) key simultaneously.


Sales Price to List Price Percentage & Days on Market 

In November, the vast majority of San Francisco homes that sold, sold very quickly without any price reductions, at an average sales price 4% above the list price: That is a strong, hot market. Properties that had to go through price reductions took over 2 months longer to accept offers and sold at a significant discount to original list price. And even in a hot market, there are listings that do not sell at all, but expire or are withdrawn from the market: Many of these will ultimately be relisted at lower prices and eventually sold.

Median Sales Price

The median home sales price is that price at which half the sales occurred for more and half for less. It is a very general statistic and what's important is the trend over the longer term -- monthly fluctuations are normal. Still, October-November saw a large increase over the relatively static median prices seen in the previous 6 months, which followed the big jump in early 2012. Usually, median prices will fall in December and January as the higher end market checks out for the holidays. Remember that sales prices reflect accepted offer activity in the 4 to 10 weeks prior.

Average Sales Price

The average price is simply the total dollar volume of sales divided by the number of sales. Like median price, it is a general statistic affected by a variety of factors and often fluctuates without great significance on a monthly basis. Among other factors, a decline in distressed home sales and/or an increase in high-end home sales, both of which are occurring now in SF, can have an outsized effect on average sales price. October saw a big jump in average sales price, and then it went up again in November. If the market acts in its typical manner, it will now fall in December and January, since the more affluent home market tends to withdraw for the holidays.

New Listings & the Inventory of Listings for Sale

After the inventory spike in September from the large influx of new listings, in October and November the number of new listings (the first chart below) and the total number of homes for sale (second chart below) are markedly declining and will almost certainly continue to do so until early 2013.

Buyer Demand Still Extremely Strong

The statistic used on this chart boils down the supply and demand dynamics into a single statistic. The percentage of listings accepting offers in October and November was probably about as high as it has ever been, close to twice the level of last year at this time. The decline seen in September was the result of a large influx of new listings hitting the market in mid-month.

New Home Construction Blasting Off

After crashing in 2008, developers are building again in a big way: over 4000 housing units are currently under construction in San Francisco, with many thousands more in the planning/permit phases. The lack of new homes on the market in the past few years has greatly impacted the supply side of the supply and demand equation. However, with the significant time lag between construction beginning on the larger projects and new condos arriving on market, the effects of this building surge will be a while before being felt.

Distressed-Home Market Disappearing in San Francisco

The city was never as hard hit as many other areas by distressed home sales, and now they are declining rapidly with the market recovery. The number of distressed home listings has declined by 80% since it peaked in November 2010. On this course, this segment will soon be only a negligible part of the SF market.

Months Supply of Inventory: Very Low

MSI is a measure of how long it would take to sell the current supply of listings at the existing rate of sales. In October and November, it was about as low as it has ever been. This would typically be interpreted as a strong "seller's market."


Except in the new-development chart, sales not reported to MLS are not included in this analysis. All figures are derived from sources deemed reliable, but should be considered approximate. The data may contain errors and omissions, and is subject to revision. © Paragon Real Estate Group