After intense growth during the Covid-19 pandemic, San Francisco’s residential real estate market is beginning to show signs of falling, according to a Compass report released Monday.
Rising interest rates, stock market volatility and record home prices have put some buyers on hold. That translates to less competition for new listings and ultimately fewer offers. In April, the number of listings in San Francisco that entered into contract fell to about 625, down from about 725 contracts signed in March and more than 750 in April 2021, the data showed. Condominiums saw the biggest drop in transactions.
“Lower-expensive homes, and possibly second-home markets, may initially be more affected by rising interest rates,” Patrick Carlisle, chief market analyst for the San Francisco Bay Area at Compass, said in the report. Francisco. “In San Francisco, the condo market appears to be weakening faster than the housing market. Wealthy buyers tend to be deeply influenced by sustained changes in financial markets and economic news.”
The number of closed sales fell to around 640 in April from around 650 in March, according to the report. Those sales generally reflect homes that went into contract the previous month. Year-over-year sales were “very low” since April 2021, when more than 750 residences were sold.
At the high end of the market, there were nearly 70 sales of homes priced at $3 million or more in April, compared with about 63 in the same period last year, the data showed. More than 70 condo sales priced over $2 million were recorded in April, up from around 63 in April 2021.
“April sales primarily reflect buyers who locked in mortgage rates before the big jumps in late March/April, and the housing market is beginning to show preliminary reactions to the 69% rise in interest rates and the declines in interest rates. double digits in the stock markets to date. ”, noted Mr. Carlisle in the report.
Meanwhile, prices remain high, for now. The moving median price of a single-family home over the past three months increased 15% in April, compared to the same period in 2021, according to the report. Plus, they’re up 25% since 2020. Inventory also remains tight, with less than two months’ supply available for single-family homes and about three and a half months for condos.
“In the absence of an economic disaster event, major changes in market conditions, especially from an overheated market, often begin very gradually,” Mr. Carlisle continued. “For example, an initial change to a new listing that gets two, three, or four offers instead of 10-12 initially might not affect sales or selling prices, but if that changes to getting one offer (no multiple overbids) or no offer, the dynamics of supply and demand between the buyer and the seller begin to change rapidly.