December 7, 2018
Dramatic changes abound in the San Francisco Bay Area real estate market, according to new research by Compass. Chief among them are declining and sometimes negative year-over-year residential appreciation rates, comparative values between San Francisco and other cities, declines in sales volumes and overbidding, increases in price reductions and listings pulled off the market.
Compass Chief Market Analyst Patrick Carlisle notes they are hesitant to make too much of a single month’s or a few months’ data. That’s because short-term fluctuations in median sales prices and other market statistics are not uncommon and don’t always give definitive perspective as to where the market is heading on a longer-term basis. He writes, “Still, many of the changes seen over recent months are substantial – and none more so than the sudden plunge in year-over-year median price appreciation rates. A number of counties plummeted into negative territory in November, and the others saw drastic declines.”
Key findings include:
– Listings vs. Sales: Though not especially high by historical standards, the overall supply of listings on the market has been appreciably increasing this autumn, to its highest level in four years. But sales volume in September-November 2018 was down about 12.5% on a year-over-year basis.
– Overbidding & Under-Bidding: As demand declines and inventory increases, the competition between buyers, and the need to overbid asking price to win the sale, subsides. Carlisle notes, seasonality plays a big role in this statistic, and there are still many homes selling for over asking price, but the overall average Bay Area sales-price-to-original-list-price percentage has dropped below asking price – by a smidge – for the first time since January 2017.
– The dramatic increase in price reductions is a stark indicator of changes in the supply and demand dynamic. October saw a massive spike, but September and November numbers were also much higher than in the previous six years.
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