SF home sales drop, suggesting slowdown in market

A drop in property sales in San Francisco suggests a housing slowdown despite a booming economy, according to city Assessor-Recorder Carmen Chu.

The number of residential and commercial properties sold in San Francisco fell by 10.5% in the nine months from July through March compared with the same time frame last year. There were 5,948 transactions in that time, a drop of 722 deals during that period, Chu said. The reason for the slowdown is unclear, she said.

“We have seen a reduction in single-family homes that are being sold,” Chu said. “There’s a lot of questions about why that is. Is it because inventory isn’t there? Are people not willing to sell? Are people waiting to sell at a different time? Are there not willing buyers? Hard to say exactly what the reason is, but we definitely have seen a lower number.”

Since September, home sales have slowed throughout the Bay Area, according to research firm CoreLogic. Rising interest rates and high prices have deterred buyers. A seasonal drop, however, is to be expected: Winter is typically the housing market’s slowest time of year.

In the first three months of 2019, San Francisco home sales dropped 13% compared with the same period last year. The median home price was $1.39 million at the end of March, down 1% from the previous year, said Selma Hepp, chief economist at real estate brokerage Compass.

That decline was attributed mostly to fewer homes over $2 million being sold, said Hepp, who expects home prices to rise 2% to 3% this year — well below the double-digit growth of previous years.

“I don’t think we’ll get the frenzy” of that time, Hepp said.

Hepp said new condo construction has slowed, constraining supply further. Some sellers may be waiting to list their homes until after more tech companies such as Uber go public later this year, she said.

Despite the drop in sales, San Francisco’s transfer tax revenue is expected to be flat compared with the previous year, thanks to continued sales of major commercial buildings. From July through March, 55 deals over $25 million accounted for 62% of all transfer tax revenue, which totaled $272 million. In the previous fiscal year, July 2017 through June 2018, transfer tax revenue was $302 million.

The biggest sale of the fiscal year was related to Brookfield Property Partners’ acquisition of mall operator GGP Inc, which changed ownership of Stonestown Galleria and generated $14.9 million in transfer taxes, according to city data.

Other major deals included the Gap’s $342 million purchase of 550 Terry Francois Blvd. in Mission Bay. Gap’s Old Navy division had its headquarters in the building, and Gap plans to split Old Navy into a separate public company. Other deals include the $335 million sale of 215 Fremont St., an office building that was later leased by Google, and Macy’s $250 million sale of the historic I. Magnin building.

More Information

5,948

Number of S.F. property transactions, July through March

700

Approximate drop in transactions from first nine months of the previous fiscal year

$272 million

Transfer taxes generated from July through March

Source: S.F.

Office of the Assessor-Recorder

Annual property taxes are expected to hit another record high this year, thanks to new construction, according to Chu. Last year, property taxes funded nearly a fifth of the city’s record $11 billion budget.

Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf

Article source: https://www.sfchronicle.com/business/article/SF-building-sales-drop-suggesting-housing-market-13795616.php

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