SF Real Estate Market Quarterly | Q3-2018

Current Economic Overview // Q3

While most Bay Area regions saw sales slow in the third quarter, activity in San Francisco was on par with last year, with continued increases in higher-priced sales. Buyers were finally presented with more options, as single-family home inventory rose compared with the same period last year.

Buyers of homes priced between $2 million and $3 million were more restrained than those in lower or higher price ranges. As a result, there were fewer bidding wars and more price reductions. By contrast, buyer demand for homes priced below $2 million remained steady, with eight in 10 homes selling for more than asking price for an average 16 percent premium.

Condominium sales maintained strong momentum in the third quarter, and buyers continued to compete, leading to an increase in the share of units selling for more than asking price. Supply also improved compared with last year, giving buyers more choices.

Looking Forward: Demand for San Francisco real estate remains steady despite some rebalancing of market expectations elsewhere in the Bay Area. With a lack of desirably priced inventory, sales activity going forward will be constrained, although continued economic strength will help fuel buyer demand.

San Francisco Single Family Homes

SF Single Family Home Trends - Q3, 2018
SF Single Family Home Trends - Q3, 2018

San Francisco Condominiums

SF Condominium Trends - Q3, 2018
SF Condominium Trends - Q3, 2018

Market Statistics of Note

Third-quarter, year-over-year median single-family home price growth in San Francisco returned back to the four-year average of 12 percent after spikes in the first and second quarters of more than 20 percent growth. Historically, the growth rate has averaged 7 percent.

Median condominium price growth in San Francisco cooled in the third quarter following a slightly higher appreciation rate in the first quarter and over the summer. The third-quarter growth rate is now in line with the 5 percent average seen since 2006.

CA Housing Inventory Near a 3-Year High in September

  • California had a 4.2-month supply of inventory in September, the highest level recorded in 31 months.

  • Statewide, home sales declined by 12.4 percent from September 2017 while dropping by 16.4 percent in the nine-county Bay Area.

  • The Bay Area’s median sales price was $930,000 in September, an annual gain of 9.8 percent after 14 straight months of double-digit-percent annual appreciation.

Although the Golden State’s tight housing supply situation improved again in September, rising mortgage rates and buyer sentiment that the market may be topping out conspired to hold back home sales.

That’s according to the latest home sales and price report from the California Association of Realtors, which puts the state’s months’ supply of inventory at 4.2 as of September, the highest level in 31 months. Active listings increased for the sixth consecutive month and were up by 20.4 percent from September 2017.

The nine-county Bay Area saw the number of homes for sale improve on both a monthly and annual basis, as the month’s supply of inventory rose to 3.2. All counties posted year-over-year gains, with the monthly supply of inventory ranging from 2.7 in Alameda County to 5.6 in Napa County.

An increased number of homes on the market did not translate to higher sales, which declined by 12.4 percent year over year statewide, the largest such drop in more than four years. All major regions of the state saw double-digit-percent annual sales declines, with Bay Area activity down by 16.4 percent, the biggest decrease in nearly eight years.

California home appreciation continued to moderate in September, with the $578,850 median sales price up by 4.3 percent on an annual basis. In a statement accompanying the report, CAR Senior Vice President and Chief Economist Leslie Appleton-Young said that she expects appreciation to further decelerate in the coming months, driven by homebuyer reluctance to enter the market given current prices.

The median sales price for a single-family home in the Bay Area ended September at $930,000, a year-over-year gain of 9.8 percent. For the previous 14 months, the region had posted double-digit-percent annual home prices gains.

All nine counties recorded home price growth from September 2017, ranging from 14.2 percent in San Mateo County to 5.5 percent in Alameda County. San Mateo County overtook San Francisco as the state’s most expensive county, with a median sales price of $1,600,000, followed by San Francisco ($1,507,500), Marin ($1,395,000), and Santa Clara ($1,250,000) counties.

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