The Richmond District’s single-family median home prices were flat in 2020, but with 22.5% more homes sold than the previous year. The Richmond Home Sales Comparison Table shows the results in 2020 as compared with prior years.
The data were gathered from the San Francisco Association of Realtors’ Multiple Listing Service and consist of single-family home sales in the Richmond, Lake Street, Presidio Heights, Jordan Park, Laurel Heights, Lone Mountain, and Sea Cliff areas.
In 2020, there were 212 sales versus 173 for 2019 and 190 for 2018, a 22.5% increase from 2019 and an 11.5% increase from 2018. The annual median price comparison shows no increase year over year as compared to a 5% increase from 2018 to 2019, and a 6% increase from 2017 to 2018. The amount of marketing time to sell a home has been about 13-14 days for 2018, 2019, and 2020, indicating a very good market. The buyer demand is still here, even during the pandemic, which absorbs more supply.
If you look at the attached chart, it shows that the sales slowed significantly in the second quarter when the coronavirus first appeared and the prices took a dip due to the uncertainty. However, sales activity just got pushed back into the third and fourth quarters, and the median sales prices did pick up year-over-year in those quarters.
During 2020, the major stock indexes are up: the DJIA is up about 6%, S&P 500 is up about 16% and NASDAQ is up 40% as of the writing of this column. They rose steadily during the year after a major drop at the start of the pandemic in March. The consumer confidence index took a big dive and continued to stay down throughout the year, especially with the latest coronavirus surge.
The unemployment rate has risen to levels not seen since the Great Depression and stands currently at about 9% in California and 7% in San Francisco. The interest rate has decreased from about 3.75% to 3% by the end of the year for a 30-year fixed-rate mortgage – very low rates by historical standards. The foreclosure of homes is still virtually non-existent; however, the forbearance rate for mortgages is high, which will inevitably lead to foreclosures.
However, even with all this bad news, our real estate market has held up remarkably well, which points to the economic inequality we have in San Francisco. Our service and hospitality industries have been decimated with the shutdown orders. However, the tech and biotech industries are booming, as well as other professions where people can work remotely. With our high prices, typically only these highly paid professionals can afford to purchase homes in San Francisco, and thus our market continued to move along unabated.
The real estate market lags the general economy, meaning that it will follow the other markets up or down. The general sequence is, as the economy improves and more people have jobs and receive higher wages, they feel more comfortable about getting into long-term commitments, like mortgages and purchasing homes. These factors fuel the real estate market and start an up cycle. Our market bottomed in 2009, and with each cycle, there are 2-3 years when we get substantial double-digit appreciation. We have passed that point and are currently seeing the slowing of appreciation.
Locally, the demand in San Francisco and the Richmond District will continue to be good. But price appreciation has slowed down from double digits to a more sustainable rate. There were some properties listed toward the end of the year that were withdrawn from the marketplace because they did not sell. The decrease in interest rates and the gains in the stock market increased affordability and helped with the market.
My prediction for 2021 is that we will continue to have a decent real estate market, but not as strong as the last nine years. It will continue to be a seller’s market with shortage of good inventory and leveling 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 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 and take advantage of the still-low mortgage rates before they move up.
Wishing you all a Happy New Year and all the best in 2021!
John M. Lee is a broker at Compass specializing in the Richmond and Sunset districts. For real estate questions, call him at (415) 465-0505 or email email@example.com.
Categories: Real Estate