Mid-year market update
by John M. Lee
As I write this column, the first half of 2018 is just about over. We have had a very volatile stock market, with the major indexes currently about even for the year. But, what about the real estate market? Let us look at some data and really decide for ourselves where the local market is at currently and try to figure out where it will be going.
I examined the single-family home markets in the Richmond and Sunset districts because these two markets generally track very closely together and compared them against the data in San Francisco as a whole.
For the first six months in 2018, 82 single-family homes sold in the Richmond, versus 70 in 2017, an increase of 17.7 percent. The median price went from $1.84 million in 2017 to $2 million in 2018, an increase of 8.7 percent. The median days on the market went from 13 to 14 days, or about the same. Thus, we had more sales, higher prices and about the same amount of marketing time in the Richmond.
In the Sunset, 160 homes sold during the first six months in 2018, versus 159 in 2017, a negligible difference. The median price rose from $1.3 million in 2017 to $1.48 million in 2018, an increase of 13.8 percent. The median days on the market decreased from 14 to 13 days, so about the same there too. In the Sunset then, we are experiencing the same number of sales, higher appreciation and about the same amount of marketing time.
As a comparison to San Francisco as a whole, the number of single-family home sales increased by 1.8 percent and the median price increased by 15.7 percent over the first six months. The marketing time remained about the same.
I interpret that to mean as compared to the City, the Richmond is not performing as well in terms of appreciation, while the Sunset is performing about the same as the citywide pace. There are couple of reasons for this.
Richmond homes sell at higher prices so fewer people can afford them, so the price appreciation is slower. I am seeing more tech buyers who want good access to the freeway so they can head south for work, so the Sunset location is more convenient for them, thus the higher price appreciation for the Sunset over the Richmond.
This is consistent with other data showing the higher priced areas in San Francisco have been slowing down, whereas more affordable locations are outperforming the overall market. This also means that we are a real estate market in transition as some segments are slowing while others are still red hot.
The stability in sales numbers are indicating we might be reaching a balance in the marketplace. As I have written repeatedly in the past, we have seen historically low mortgage interest rates for a while, but they are increasing this year. As we go into the summer months, look for a slower pace of home sales and a moderation of price appreciation.
This does not mean it will become a buyer’s market, however, as there is not enough inventory to meet demand. We will have a good market running at a slower pace.
So, my advice is that if you are thinking about buying, there are opportunities as prices are still moving up and interest rates are relatively low. If you get locked into a 30-year fixed rate loan now, chances are when you look back a few years from now, you will realize what a tremenandous rate you have.
If you are thinking about trading up, it is a great time to do so because you can position your real estate portfolio for the long run.
If you are thinking of a straight sale, you will be realizing the strong price appreciation we had in the last few years!
As always, I would strongly recommend that you consult with a Realtor, accountant and perhaps an attorney prior to making any real estate decisions.
John M. Lee is a broker at Pacific Union specializing in the Richmond and Sunset districts. For questions regarding real estate, call (415) 447-6231 or email to firstname.lastname@example.org.
Categories: Real Estate