Real Estate

Real Estate: John M. Lee

2021 Real Estate Review: Richmond District (See Sunset District Below)

By John M. Lee

The Richmond District’s single-family median home prices rose 20.2% in 2021, with about the same number of properties selling as the previous year. The Richmond Home Sales Comparison Table shows the results in 2021 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, Presidio Heights, Jordan Park, Laurel Heights, Lone Mountain and Sea Cliff areas.

In 2021, there were 216 sales versus 212 for 2020 and 173 for 2019, a 1.9% increase from 2020 and an 24.8% increase from 2019. The annual median price comparison shows a 20.2% increase year-over-year as compared to no increase from 2019 to 2020, and a 5% increase from 2018 to 2019. The amount of marketing time to sell a home is about 11-14 days for 2019, 2020 and 2021, all indicating a very good market. The flat number of sales is a direct result of not enough sellers deciding to sell. The buyer demand is still there through the pandemic to absorb more supply and the increase in prices shows that there are quite a lot of buyers looking in this area.

If you look at the attached chart, it shows that the number of sales bounced back significantly in the second quarter versus in 2020 when the coronavirus first appeared. The demand is accelerated through the trend of people moving from high-density housing, like condos, into single-family home districts like the Richmond.

During 2021, the major stock indexes are up about 19-27% at the writing of this article, rising steadily during the year, with minor dips here and there. The consumer confidence index recovered from the coronavirus but took a slight dip toward the end of the year due to the Omicron variant of COVID-19 and inflation. Our unemployment rate has come down from the high reached at the peak of the pandemic and is currently at about 7% in California and 4% in San Francisco. The interest rate has fluctuated between 2.75-3.1% throughout 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. 

Our real estate market has held up remarkably well through all the changes we experienced these last two years. Our service, hospitality and tourism industries are slowly recovering from the COVID damages. 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 continues to move along.

Locally, the demand in San Francisco and the Richmond District will continue to be good, but price appreciation has taken homes to a price point where fewer and fewer people can afford them. There were some properties listed towards the end of the year that were withdrawn from the market because they did not sell. The historically low interest rates and the gains in the stock market increased affordability and helped with the market.

However, our latest inflation numbers showed a 6.8% increase from last year and the Feds are signaling that they will be raising interest rates soon. This will affect affordability and further reduce the number of people who can afford these homes which will negatively affect our real estate market.

My prediction for 2022 is that we will continue to have a decent real estate market but not as strong as 2021. 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 it 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 2022. 

John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at (415) 465-0505 or email at johnlee@isellsf.com.

2021 Real Estate Review: Sunset District

The Sunset District’s single-family median home prices rose for the 10th year in a row, appreciating by 12.9%. The number of sales rose by 20.3% in 2021. The Sunset Home Sales Comparison Table shows the results in 2021 as compared with prior years.

The data were gathered from the San Francisco Association of Realtors’ Multiple Listing Service and consists of single-family home sales in the Sunset, Parkside and Golden Gate Heights areas.

In 2021, there were 515 sales versus 428 for 2020 and 377 for 2019, an increase of 20.3% year over year and 36.7% over 2019. The median sales price increased 12.9% to $1.705 million from 2020 to 2021 while it was flat from 2019 to 2020. The amount of marketing time to sell a home is about 13-14 days for 2019, 2020 and 2021, all indicating a very good market. The buyer demand is still there through the pandemic and able to absorb more supply and the increase in prices shows that there are quite a few buyers looking in the area.

 If you look at the attached chart, it shows that the number of sales bounced back significantly in the second quarter versus in 2020 when the coronavirus first appeared. The demand accelerated through the trend of people moving from high-density housing, like condos into single-family home districts like the Sunset.

During 2021, the major stock indexes are up about 19-27% at the writing of this article, rising steadily during the year with minor dips here and there. The consumer confidence index recovered from the coronavirus, but took a slight dip toward the end of the year due to the Omicron COVID variant and inflation. Our unemployment rate has come down from the high reached at the peak of COVID and is currently at about 7% in California and 4% in San Francisco. The interest rate has fluctuated between 2.75-3.1% throughout 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. 

Our real estate market has held up remarkably well through all the changes we experienced these last two years. Our service, hospitality, and tourism industries are slowly recovering from the COVID damages. 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 continues to move along.

Locally, the demand in San Francisco and the Sunset District will continue to be good, but price appreciation has taken homes to a price point where fewer and fewer people can afford them. There were some properties listed toward the end of the year that were withdrawn from the marketplace because they did not sell. The historically low interest rates and the gains in the stock market increased affordability and helped with the market.

However, our latest inflation numbers showed a 6.8% increase from last year, and the Feds are signaling that they will be raising interest rates soon. This will affect affordability and further reduce the number of people who can afford these homes, which will negatively affect our real estate market.

My prediction for 2022 is that we will continue to have a decent real estate market, but not as strong as 2021. It will continue to be a seller’s market with a shortage of good inventory and a leveling in prices. 

Therefore, if you are contemplating buying into the real estate market, be careful not to overpay. 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 it 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 2022!

John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at (415) 465-0505 or email at johnlee@isellsf.com.

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