By John M Lee
In the Richmond District, single-family home prices rose by double digits for the fifth year in a row, with median prices appreciating by 10.3 percent in 2016 – a 94 percent increase from 2011. The Richmond Home Sales Comparison chart shows the results in 2016 as compared with prior years.
The data was gathered from the SF Association of Realtors’ Multiple Listing Service and consists of single-family home sales in the Richmond, Lake Street, Presidio Heights, Jordan Park, Laurel Heights, Lone Mountain and Sea Cliff areas.
In 2016, there were 172 sales, versus 190 for 2015 and 224 for 2014, a 9.5 percent decrease from 2015 and 23.2 percent de- crease from 2014. The annual median price comparison shows a 10.3 percent increase year over year, as compared to a 12.9 per- cent increase from 2014 to 2015, and an 24.5 percent increase from 2014. This represents five straight years of double-digit ap- preciation on large numbers! The amount of marketing time need- ed to sell a home increased from 13 days in 2015 to 18 days in 2016, versus 26 days in 2014, an increase of three days, or 20 per- cent, from 2015 and a decrease of eight days, or 30.8 percent, from 2014.
These are results of buyer de- mand in excess of seller supply; buyers being priced out of the market; low mortgage interest
rates throughout the year, with a half percentage point jump after the November election; a stable economy; low unemployment rates; and higher consumer con- fidence … all positive signs for the real estate market, except for the rising interest rate.
During 2016, the major stock indexes dipped in the first quar- ter but recovered nicely the rest of the year, ending with a post- election jump. As of the writing of this article, the Dow Jones has risen 14.4 percent for the year. The consumer confidence index was relatively flat and will finish at a high point this year. The good news is that our unemploy- ment rate has been steady throughout the year at about 4 percent, a level which represents full employment in the eyes of many economists.
The interest rate hovered under the 4 percent range through- out the year for a 30-year fixed rate mortgage, but it did jump about a half a percent since the November election. As well, the federal reserve banks did raise short-term interest rates in December to three-quarters of one percent. This should not have an immediate effect on mortgage rates, but might in the future. The foreclosure of homes is still virtually non-existent. The prices of homes have risen substantially above that of the last peak in our real estate cycle so almost everyone who owns a home has equity in their property.
The real estate market lags behind the general economy, meaning that it will follow the other markets up. The general sequence is that as the economy improves, more people have jobs and receive higher wages, making them feel more comfortable about getting into long-term commitments, like mortgages, to purchase homes.
Our market bottomed out in 2009 and with each cycle, there are 2-3 years when we get substantial double-digit appreciation. We are currently seeing the slowing of that appreciation.
Locally, the demand in San Francisco and the Richmond District will continue to be good, but price appreciation will most likely slow down moving from this point forward. There were some properties listed towards the end of the year that were withdrawn from the marketplace because they did not sell, espe- cially amongst the higher prices in the neighborhood.
My prediction for 2017 is that we will have a decent real estate market, but not as strong as the last five years. It will continue to be a seller’s market, with a shortage of good inventory.
Therefore, if you are contem- plating buying into the real es- tate market, be careful of over- paying. If you are planning on selling, keep in mind that there is short supply and you should get a good price. If you want to reposition your real estate port- folio, this is an excellent time to do so to take advantage of still- low mortgage interest rates be- fore they move up. Wishing you all the best in 2017!
John M. Lee is a top-selling broker for Pacific Union and specializes in the Richmond and Sunset districts. If you have any questions regarding real estate, call him at (415) 447-6231 or e-mail email@example.com.