2022 Review of Selected Indicators

Real Estate Market Statistics, Comparing Q4 2022 to Q4 2021

• Quarterly Median House Sales Price: Down 13.5% from Q4 2021

• Quarterly Median Condo Sales Price: Down 12.5% from Q4 2021

• Quarterly Sales Volume: Down 42%

• % of Sales over Final List Price: 43%, down from 66% in Q4 2021

• Avg. Sales Price to Original List Price %: 100% (at list price), down from 108% in Q4 2021

• Absorption Rate (% of listings into contract): 36% of listings, down from 49% in Q4 2021

• Average Days on Market: 44 days, up from 34 days in Q4 2021

• Luxury Home Sales Volume, Sales $3 Million+: Down 52% from Q4 2021

Major Economic Indicators in 2022

• Weekly Avg. 30-Year Mortgage Rate: Climbed from 3.11% to 6.42% (but is down from 7.08% peak in November 2022)

• Consumer Price Index (inflation rate): January to November, dropped from 7.5% to 7.1% (It is down from 9% peak in June 2022, but up from 1.4% in January 2020.)

• S&P Stock Index: Opening to closing bell in 2022, down approximately 19.4%

• NASDAQ Stock Index: Opening to closing bell in 2022, down approximately 33.5%

• Employment: Bay Area unemployment rates remain close to historic lows. (According to the WSJ, “Most laid off tech workers are finding jobs shortly after beginning their search”).

“Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market. While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023. Homebuyers are waiting for rates to decrease more significantly, and when they do, a strong job market and a large demographic tailwind of Millennial renters will provide support to the purchase market.” FHLMC, 1/5/2023

In 2022, the market saw a dramatic shift from Q2 (spring), at which time the market peaked after a dramatic 10-year upcycle supercharged at its end by the pandemic boom, through the 2nd half of the year, when the market cooled significantly. Prompted by a number of economic factors — especially inflation and interest rates, and financial markets — this played out in substantial declines in sales volumes, median sales prices, appreciation rates, and virtually all the standard measurements of buyer demand. However, tens of thousands of Bay Area homes continued to sell in the second half, a considerable, but declining percentage still selling quickly at over asking price. On the other hand, some buyers are making the best deals in years. For sellers, pricing, preparation and marketing are now critical, while buyers shouldn’t hesitate to negotiate aggressively, especially on homes with longer days-on-market.

The period from just before Thanksgiving through mid-January usually sees the lowest levels of listing and offer-acceptance activity of the year, so it’s difficult to derive definitive conclusions about market trends from its numbers. The early spring market – which, weather cooperating, can begin as early as February in the Bay Area – would typically provide the next major indicator of market direction, but developments may occur sooner to provide increased clarity regarding what awaits us in 2023. For the time being, the market remains in a period of adjustment, with major macroeconomic conditions still in flux.

This report will look at the market from a variety of angles, including annual, quarterly and monthly data. Because of the large shifts in the market that occurred between the 1st and 2nd halves of the year, annual data will often disguise these changes, blending as it does heated, peak-market data with data in which very different conditions prevailed.

Mortgage rate data per FHLMC. Stock market data per Marketwatch.com. Consumer Price Index, all urban consumers, per Federal Reserve Bank of St. Louis. Market statistics per sales reported to NorCal MLS Alliance, per Infosparks or Broker Metrics, or the CA Association of Realtors. Statistics are very general indicators. All numbers are approximate. Market statistics from data available in early January 2023 and may change with late-reported sales. How this data applies to any particular property is unknown without a specific comparative market analysis.

San Francisco House Price Appreciation

Median House Sales Price by Year, 1993 – Present

Year over year, the 2022 median house sales price was down about 1% from 2021.

Median prices are generalities, most useful to discern broad market trends. They can be affected by other factors besides changes in fair market value. The county contains neighborhoods of widely varying values.

Annual data can disguise significant changes that occurred within the calendar year. Those changes are illustrated in the quarterly chart.

San Francisco House Price Trends

Median House Sales Prices, 2012 – Present, by Quarter

Year over year, the Q4 2022 median house sales price was down about 13.5% from Q4 2021.

Median sales price is that price where half the homes sold for more and half for less. It is a very general statistic that disguises a wide range of prices in the underlying sales.

Seasonal fluctuations are common, and it’s not unusual for median sales prices to peak for the year in spring (Q2). Longer-term trends are more meaningful than short-term changes.

San Francisco Home Price Appreciation

Median Condo Sales Price by Year, 1993 – Present

Year over year, the 2022 median condo sales price was down about 2% from 2021.

Median prices are generalities, most useful to discern broad market trends. They can be affected by other factors besides changes in fair market value. The city contains condo projects and neighborhoods of widely varying values. Annual data can disguise significant changes that occur within the calendar year.

San Francisco Condo Price Appreciation

Median Condo Sales Prices, 2012 – Present, by Quarter

Year over year, the Q4 2022 median condo sales price was down about 12.5% from Q4 2021.

Seasonal fluctuations are common. Longer-term trends are more meaningful than short-term changes. Different city districts often see varying median sales price trends.

San Francisco Home Value Appreciation

Median Dollar per Square Foot Values – 3 Month Rolling, Since 2012

Unlike other local counties, in San Francisco, the median$/sq.ft. value for condos (white line) typically ran higher than that for houses (gold line), but values have converged since the pandemic hit.

On a year-over-year basis, Q4 2022 median $/sq.ft. values were down about 8.5% for houses, and 9.3% for condos.

Home Sales Volumes, Longer-Term Trends

San Francisco, 12-Month Rolling Sales Data since 2004

2021 saw the highest 12-month sales volume in at least 18 years. 2022 sales were down approximately 26% from 2021 (though the decline accelerated in the second half of the year).

12-month rolling data delivers broad, clear, long-term trend lines, but may disguise and lag shorter term changes. The December readings reflect the total sales volumes for each calendar year.

Monthly Sales Volume – Longer-Term Trends

San Francisco Market Dynamics & Seasonality

Spring 2021 had the highest sales volume in over 16 years.

As illustrated, sales volume usually ebbs and flows by season: Up in spring, down in summer, back up in fall, and way down in mid-winter.

San Francisco Higher-Price Home Sales since 2018

Houses - $3 Million+, Condos - $2 Million+, by Quarter

Q4 2021 to Q4 2022, sales volume of these higher-priced homes declined by approximately 58%. Sales typically peak in Q2 (spring).

San Francisco Residential Sales

2022 Approximate Sales Volumes by Property Type*

• Condo Sales: 3265 (49%)

• House Sales: 2426 (37%)

• 2-4 Unit Buildings: 478 (7%)

• Tenancies-in-Common (TICs): 329 (5%)

• Stock Co-ops: 62 (1%)

• Townhouses: 47 (1%)

San Francisco is the only county in the Bay Area in which condo sales outnumber house sales.

Annual Median HOUSE Sales Prices since 2012

San Francisco Median Sales Prices in Selected Realtor Districts

Percentage of Listings Accepting Offers (Absorption Rate)

San Francisco Market Dynamics & Seasonality, by Quarter

Absorption Rate: The higher the percentage of listings accepting offers (going into contract), the stronger the buyer demand as compared to the supply of listings for sale.

Percentage of Sales Selling Over List Price

San Francisco Market Dynamics since 2018, by Quarter

The significant drop in percentage of sales selling over list price in the latter part of 2022 is a strong indicator of a cooling market.

Avg. Sales Price to Original List Price Percentage (SP/LP %)

San Francisco Market Dynamics since 2018, by Quarter

100% signifies an average sales price at original list price. Overbidding percentages plunged after Q2 2022, though houses outperformed condos.

Average Days on Market by Quarter

San Francisco Market Dynamics since 2019

Generally speaking, the lower the average days on market, the stronger the buyer demand. Days on market have climbed rapidly since spring, but houses sold much faster than condos.

Mortgage Interest Rates, Long-Term Trends since 1976

30-Year Conforming Fixed-Rate Loans, Weekly Average Readings

Per Freddie Mac (FHLMC), in 2022 the weekly, average, 30-year interest rate climbed from 3.11% to 6.42% (but down from 7.08% in November). The 1/5/2023 reading ticked up to 6.48%.

January 5, 2023 Weekly Average Rates

30-Year Fixed: 6.48%

15-Year Fixed: 5.73%

S&P 500 Stock Index, since 1994*

January Opening Values except as specified

January opening values, except as specified. Market fluctuations between illustrated data points were common and sometimes very dramatic.

From the opening to the closing bell in 2022, the S&P 500 Index fell about 19.4%.

Nasdaq Composite Index

January 1995 – December 30, 2022

From opening to closing bell in 2022, the Nasdaq Composite Index fell about 33.5%.

Inflation: Consumer Price Index, 1982 – 2022*

3-Month-Rolling Average, Year-over-Year % Change

The monthly reading for November 2022 fell to 7.1%, down from 9% in June. The 3-month-rolling average – illustrated on this chart – is currently 7.7%. (The December 2022 reading should become available in the 2nd week of January 2023.)

San Francisco Bay Area Unemployment Rates

Selected Bay Area Counties, 2019 – 2022 YTD

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis.

Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.