Are San Francisco Home Prices at a Plateau?
Is the San Francisco homes market on the cusp of a change and starting to experience a lessening in its ferocious, red-hot heat? Are buyers finally pushing back at the relentless increase in prices we have been experiencing in the city?
- The San Francisco Median Home Sales Price has leveled off, dropping somewhat from an April-May peak. (chart above)
- Buyer demand is still extremely high as measured by Percentage of Listings Accepting Offers.
- Inventory is still extremely low as measured by Months Supply of Inventory and Units for Sale.
- The number of Expired & Withdrawn listings climbed in July and was about 19% higher than July of 2012 (though less than half the number of July 2011). The main reason why listings expire or are withdrawn from the market is that buyers have concluded they are priced too high.
- The July Market Snapshot overview still indicates a very hot market by any reasonable measure. However, offers being negotiated now won't typically close escrow and show up in the sales statistics for 6 to 8 weeks. To a large degree in real estate, we are always looking in the rearview mirror.
- Mortgage interest rates, while having risen relatively dramatically from spring's historic lows, are still extremely low by any other measure.
An uptick in expired and withdrawn listings could be an early indication of buyers walking away from listings they feel are just too highly priced.
Looking at the July snapshot showing that 87% of sales sold without a price reduction at an average of 7% over list price makes it clear the market is still very hot, even if it may be on the cusp on a transition to a somewhat less fevered state.