After intense growth during the Covid-19 pandemic, San Francisco’s residential real estate market is starting to show signs of slipping, according to a report from Compass released Monday.
Rising interest rates, the volatile stock market and record-high home prices have stopped some buyers in their tracks. That’s translated into less competition for new listings, and, ultimately, fewer deals. In April, the number of listings in San Francisco going into contract dropped to about 625, down from roughly 725 contracts signed in March and more than 750 in April 2021, the data showed. Condos saw the biggest drop off in transactions.
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“Less expensive homes—and possibly second-home markets—may initially be more affected by rising interest rates,” Patrick Carlisle, chief market analyst at Compass in the San Francisco Bay Area, said in the report. “In San Francisco, the condo market seems to be softening more quickly than the house market. Affluent buyers tend to be deeply influenced by sustained changes in financial markets and economic news.”
The number of closed sales ticked down to around 640 in April, from about 650 in March, the report said. Those sales generally reflect homes that went into contract the previous month. Year over year, sales were “well down” from April 2021, when more than 750 residences sold.
At the upper end of the market, there were nearly 70 sales of homes priced at $3 million or more in April, compared to roughly 63 in the same time period last year, the data showed. More than 70 sales of condos prices at $2 million-plus were recorded in April, up from around 63 in April 2021.
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“April sales mostly reflect buyers who locked in mortgage rates before the big late-March/April jumps, and the housing market is beginning to show preliminary reactions to the 69% jump in interest rates and double-digit declines in stock markets year to date,” Mr. Carlisle noted in the report.
Meanwhile, prices remain elevated—for now. The rolling median price of a single-family home over the last three months was up 15% in April, compared to the same time in 2021, according the report. In addition, they’ve risen 25% since 2020. Inventory also remains constricted, with less than two months of supply available for single-family homes and about three-and-a-half months’ worth of condos.
“Absent an economic disaster event, major shifts in market conditions, especially from a superheated market, often begin very gradually,” Mr. Carlisle continued. “For example, an initial shift to a new listing receiving two, three or four offers instead of 10 to 12 might not initially affect sales or sales prices, but if that changes to receiving one offer (no multiple-offer overbidding) or no offers, the supply and demand dynamics between buyer and seller start to shift quickly.”
Article source: https://www.mansionglobal.com/articles/san-francisco-market-shows-early-indicators-of-slowdown-01652120612