by Beckie Strum | Mansion Global
Sales and price growth have slowed ahead of major tech IPOs this year
San Francisco’s median house price was $1.545 million in the first quarter of 2019, a 4% decline from a year ago, according to a quarterly report on Thursday from Compass.
The median condo price, which reflects mostly resales and some new developments that choose to log closings in the multiple listing service, held steady from a year ago. Overall sales in the Golden Gate City plummeted 13% in the first quarter compared to a year ago, reflecting tech stock volatility and the high interest rates that dealt a double blow to buyer confidence at the end of 2018, according to Patrick Carlisle, chief market analyst at Compass and author of the report.
Stock prices, particularly for high-tech companies, hit new peaks in the summer of 2018, then came crashing down several months later, only to spike again in recent weeks, Mr. Carlisle explained.
“Huge amounts of wealth appearing, disappearing and reappearing—a major influence on consumer confidence and home-buyer demand,” he said.
The softness in the San Francisco market over the past two quarters could end up being the calm before a potential buying storm if Bay Area tech companies deliver on Wall Street.
Tech stocks have returned to near record levels, and last week ride-sharing company Lyft went public, the first in a line-up of major initial public offerings, including Uber later this month.
Initial Public Offerings “have historically created vast quantities of new wealth in the Bay Area, though the magnitude of the effect of this new wave on the San Francisco housing market is yet unknown,” Mr. Carlisle said in the report.
“Anecdotally, there have certainly been reports of buyers moving more quickly to beat the ‘rush of new millionaires’ and of sellers waiting to list in order to catch the rush.”
Inventory levels have indeed signaled that buyers are holding out, with new listings on the multiple listing service down by 20%.
Meanwhile, fixed-30-year mortgage rates have fallen from a November peak, making home buying more affordable to more homebuyers.
“What occurs this spring will be critical to understanding market trends,” Mr. Carlisle added.