Richmond year in review

by John M. Lee

Single-family home prices in the Richmond District rose for the sixth year in a row, with

median prices appreciating by 2.8 percent in 2017, a 100 percent increase from the

market low in 2011. The Richmond Home Sales Comparison table shows the results as

compared with prior years.

The data was gathered from the San Francisco Association of Realtors’ Multiple Listing

Service and consists of single-family home sales in the Richmond, Lake, Presidio Heights,

Jordan Park, Laurel Heights, Lone Mountain and Sea Cliff areas.

In 2017, there were 160 sales, versus 172 for 2016 and 190 for 2015, a 7 percent decrease

from 2016 and 15.8 percent decrease from 2015. The annual median price comparison

shows a 2.8 percent increase over the past year, as compared to a 10.3 percent increase

from 2015 to 2016 and a 13.4 percent increase from 2014 to 2015. The amount of

marketing time needed to sell a home decreased to 13 days in 2017, from 18 days in 2016

and 15 days in 2015.

This year’s results are from buyer demand in excess of seller supply, despite many

buyers being priced out of the market; low mortgage interest rates throughout

the year; a stable economy; low unemployment rates; and, higher consumer

confidence … all positive signs for the real estate market, except for the rising

interest rate.

During 2017, the major stock indexes did extremely well, rising steadily throughout the

year. As of the writing of this article in late December, the Dow Jones Industrial Average

has risen 24 percent for the year, S&P 18 percent and the NASDAQ 28 percent. The

consumer confidence index is the highest it has been the last 17 years and our

unemployment rate has been steady throughout the year, at about 4 percent, a level

which represents full employment in the eyes of most economists.

The interest rate hovered in the 3.75-4.25 percent range throughout the year for a 30-

year fixed-rate mortgage. However, it did jump about a quarter of a percent the last

quarter when the Feds raised short-term rates. 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 has equity in their properties.

The real estate market lags the general economy, meaning it will follow the other

markets up. The general sequence is 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, thus fueling the real estate

market and starting our up cycle.

Our market bottomed out in 2009 and with each cycle, there are two to three years when

we get substantial double-digit appreciation. We are past that point and are currently

seeing the slowing down of price appreciation.

Locally, the demand in San Francisco and the Richmond District will continue to be good,

with price appreciation slowing down to a more sustainable rate. There were some

properties listed towards the end of the year that were withdrawn from the marketplace

because they did not sell, especially in higher priced neighborhoods.

My prediction for 2018 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 and a leveling out in prices. Therefore, if you are contemplating buying into

the real estate market, be careful of overpaying.

If you are planning on selling, keep in mind that there is a short supply and you should

get a good price. If you want to reposition your real estate portfolio, this is an excellent

time to do so to take advantage of the still low mortgage interest rates.

I wish you all the best in 2018!

John M. Lee is a broker for Pacific Union. For questions regarding

real estate, call (415) 447-6231.