Mid-Year Real Estate Review
By John M. Lee
As I write this column, the first half of 2019 is just about over. We have had a very good stock market with the major indexes rising between 14-20 percent for the year. But, what about the real estate market? Let us look at some data and really decide for ourselves where the 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 of 2019, 82 single-family homes sold in the Richmond, exactly the same as in 2018. The median price however went from $2 million in 2018 to $2.175 million in 2019, an increase of 8.8 percent. The median amount of time on the market remained the same at 14 days. Thus we had the same number of sales, higher prices and the same amount of marketing time in the Richmond.
In the Sunset, 165 homes sold during the first six months in 2019 versus 160 in 2018, an increase of 3.1 percent. The median price rose from $1.48 million in 2018 to $1.576 million in 2019, an increase of 6.5 percent. The median amount of time on the market remained the same at 14 days. In the Sunset then, we are experiencing a similar trend as the Richmond; about the same number of sales, higher appreciation and the same amount of marketing time.
As a comparison to San Francisco as a whole, the number of single-family home sales decreased by 3.3 percent, the median price remained the same over the first six months and the marketing time remains the same over both years at 14 days. Compared to the City, the Richmond and Sunset districts are outperforming the rest of San Francisco.
There are a couple of reasons for this. Single-family home prices have appreciated substantially in the other neighborhoods and the Richmond and Sunset finally have gone up the last few years. With the tech initial public offerings over the last few months, we are seeing the effect of employees who have stock options buying properties.
The data is consistent showing that the higher priced areas in San Francisco have been slowing down whereas the more affordable locations are outperforming the overall market, thus the reason for no increase in the median sales price citywide. This also means that we are a real estate market in transition as some segments are slowing while others are still red hot, such as the Richmond and Sunset. The stability in sales numbers is 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 and are poised to stay this way for the rest of the 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 as there is not enough inventory to meet demand, but just a good market at a slower pace.
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 that when you look back a few years from now, you will realize what a tremendous rate you have. If you are thinking about trading up, it is a great time to do it 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 Compass specializing in the Ricmond and Sunset districts. For real estate questions, call him at (415) 465-0505 or email firstname.lastname@example.org.
Categories: Real Estate