Alexander Clark Real Estate

‘The Front Steps’: Anxiety Aside, Housing Is Still Going Wild

Stocks are slumping and recession anxiety is on the rise, which means that speculation about a supposed “housing crash” has probably already infiltrated your social media and inbox.

It makes sense: Housing has been riding high for a very, very long time–even the pandemic did not really put a serious dent in it, at least here in SF–and with pretty much everything else in a downturn, so why should this be the exception?

The thing is, around here we don’t really like to speculate about what the market may or may not do; when prices or supply or any other major factor go down, we’ll tell you about it. Until then, predictions are free–meaning you can get them anywhere.

So, taking just the Richmond as a working example, what are housing metrics doing right now?

So far this year, for all of San Francisco’s first district–which, as always, consists mostly of the Richmond but does include a few surrounding areas, like Jordan Park–the figures we’re looking at are (and this is a highly technical term we’re about to use) absolutely bananas.

MLS lists 163 sales closed since the beginning of January, for a total sales volume of over $364 million. For comparison, over the past five years, the greatest number of sales in the district at this point in the year was 155, for a total of $285 million–and that was just last year.

In fact, if we go all the way back to 2017, that year only 91 homes closed, and the sales total was less than half what it currently is: a little under $167 million.

Prices are the flashy metric that gets the most attention, but the increase in the number of homes sold year after year is actually more impressive–or surreal, depending on your point of view.

Thus far, 2022 is not just a strong year for SF housing (or in this case, Richmond housing), thus far it’s been something like a feeding frenzy.

(Everything comes down sometime…but you should be skeptical of anyone who says they know when.)

Well that’s the year to date compared to past years, but at the very least we may wonder, are there signs of things slowing down over the past few weeks or months?

Maybe–but it’s too early to say. Winter months are always slow, and we expect volume of sales to rise as summer comes on, and for the most part that’s what’s happened this year: We had just 19 neighborhood sales in January, and then that figure steadily rose month to month, with 45 in both March and April.

However, it DOES look like May was slower; the month isn’t over yet, of course, but so far only 29 homes closed. And it’s not just the one neighborhood: volume was down citywide for May, by a difference of over 100 closings, although again that gap will tighten a bit more in the next week.

That’s a significant dip in both cases, and it’s not unreasonable to guess that it might be due to the larger economic woes of the nation/world.

However, it is just one month–just one more point on a much larger graph. And although some housing markets heat up during the summer, most years things actually cool down during the summer months in SF, so a bit of a decline now is not necessarily that surprising.

Let’s be clear about what we’re not saying: We’re not claiming that SF housing will keep going up forever; we’re not claiming our market is insulated from the rest of the world; we’re not claiming a big drop is or is not coming.

That’s the point: We’re not CLAIMING anything at all. We’re TELLING you that the numbers so far this year are a) through the roof, and b) not yet able to indicate a downturn even if one is coming.

Everyone wants to predict the future; we prefer to tell it it like it is in the present.

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