The Spring Market Continues to Recover

The specifics for San Francisco will be covered in great detail within this report. But looking at the overall Bay Area, buyer demand has continued to rebound from its late-2022 nadir. Though mortgage applications are still well down year over year, many buyers have accepted higher interest rates as the new normal and decided to move forward – and, in the last 2 months, rates have been trending downward. A significant minority of buyers are paying all-cash. Open houses are seeing increased traffic, more listings are selling, and selling more quickly with multiple offers. Median sales prices have generally been ticking back up in 2023, though still down across the Bay Area from the market peak last spring. San Francisco was more negatively affected by the pandemic – with lower rates of appreciation during the pandemic boom – and due to its specific economic circumstances has typically seen somewhat larger price declines since the market shifted in mid-2022.

Even with the increase in demand, sales activity remains far below last spring due to a number of economic and supply constraints. While increasing from mid-winter lows – with some very big sales occurring – luxury home sales volumes have generally seen larger declines as compared to the peak of the pandemic boom, when luxury sales often hit spectacular new highs.

The number of new listings has also dropped from historic norms. This is mostly ascribed to the "mortgage lock-in effect," i.e. owners with very low, long-term, fixed-rate mortgages are reluctant to sell to then buy at much higher prevailing rates. This decline in new listings has major ramifications for supply and demand dynamics, and increases pressure on prices even in a reduced activity environment.

Some uncertainty clearly continues with inflation, interest rates, stock markets, bank crises, high-tech layoffs, and now, as of early May, federal debt-limit negotiations. But, so far, the 2023 housing market has mostly been moving in a positive direction.

Regarding Market Cycles

Over the past 40 years alone, the San Francisco Bay Area has seen 4 major upcycles or housing booms. In each, there have been enthusiasts who argued that this time the boom times would never end – but each ended, typically after hitting a final peak of what economists call “irrational exuberance.” Upcycles were followed by market corrections or down-cycles, during which many predicted (often gleefully) that the Bay Area was on an endless downward spiral – but recoveries followed. Housing and financial markets have always run in cycles, both economic and psychological, but, so far, since the days of the Gold Rush, despite all its booms and busts, the Bay Area has always rebounded once more.

The Bay Area is one of the world’s great metropolitan areas – as a financial and cultural center; in the spectacular beauty of its setting and surrounding open space; as a hothouse of innovation; in its diversity, openness and opportunity – and despite its current round of challenges, we expect it will continue to be so for a long time to come.

San Francisco House Price Trends since 1990

Monthly Median House Sales Prices, 3-Month Rolling

Year over year, the 3-month rolling, median house sales price in April 2023, $1,600,000, was down about 20%, but has started to tick back up in recent months.

Median sales price is that price at which half the sales occurred for more and half for less. It is a very general statistic, disguising an enormous range of sales prices in the underlying sales. It is often affected by other factors besides changes in fair market value. Monthly and seasonal fluctuations are common, which explain many of the regular ups and downs in this chart. Longer-term trends are much more meaningful than short-term changes.

San Francisco HOUSE Price Appreciation

Percentage Change, 3-Month-Rolling Median House Sales Price*

Comparing the 3-month-rolling median house sales price in April 2023 with the same period of 2022, 2020, 2016 and 2013 to calculate the short-term (year-over-year), as well as longer-term appreciation rates. As you can see, while prices are down since last year, they are significantly higher in the long term, up 81% since 2013. As a point of comparison, the national median house price is up 69% since 2013.

Median sales prices can be affected by a variety of factors other than changes in fair market value, as can year-over-year appreciation rates. How these rates apply to any particular property is unknown without a specific comparative market analysis.

San Francisco Condo Price Trends since 2005

3-Month Rolling, Median Condo Sales Price

Median sales price is that price at which half the sales occurred for more and half for less. It is a very general statistic, often affected by other factors besides changes in fair market value. Monthly and seasonal fluctuations are common, and longer-term trends are more meaningful than short-term changes.

Year over year, the 3-month rolling, SF median condo sales price in April 2023, $1,175,000, was down about 10%, but has been climbing in recent months.

San Francisco CONDO Price Appreciation

Percentage Change, 3-Month-Rolling Median Condo Sales Price*

Comparing the 3-month-rolling median condo sales price in April 2023 with the same period of 2022, 2020, 2016 and 2013 to calculate the short-term (year-over-year), as well as longer-term appreciation rates. The SF condo market has not seen the longer-term appreciation rates of the house market, but is still up 40% over the last 10 years.

Median sales prices can be affected by a variety of factors other than changes in fair market value, as can year-over-year appreciation rates. How these rates apply to any particular property is unknown without a specific comparative market analysis.

The San Francisco Downtown Condo District

3-Month Rolling, Median Condo Sales Price, January 2017 to April 2023

The greater “Downtown/SoMa/CivicCenter” district of San Francisco, dominated by large, newer condo buildings, has recently been more negatively affected by economic and social factors than other city districts, and its median condo sales price is about the same as it was in early 2017 (though ticking up in early 2023). For buyers who believe SF’s downtown will rebound, current market conditions offer significant opportunities to buy units in high-quality (often luxury quality) buildings at the best prices in years.

Median sales price is that price at which half the sales occurred for more and half for less. It is a very general statistic, often affected by other factors besides changes in fair market value. Monthly and seasonal fluctuations are common, and longer-term trends are more meaningful than short-term changes.

San Francisco Median Home Sales Prices

2023 YTD, A Sampling of SF’s 70+ Neighborhoods*

Neighborhoods with at least 10 sales of the designated property type within the period* Home sizes and other factors vary widely within and between neighborhoods.

The greater Parkside district had the highest number of house sales (46), followed by Bernal Heights (40), the Sunset district (32), the Richmond district (30), and Noe Valley (25). South Beach had the highest number of condo sales (53), followed by Pacific Heights (38), Van Ness/Civic Ctr (35), SoMa (33), Mission Bay (30), and Inner Mission (22).

*2023 sales reported to NorCal MLS Alliance through late April. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers approximate, and may change with late-reported sales.

San Francisco Highest Home Sales Prices

In Selected Neighborhoods, by Property Type, 2023 YTD*

*2023 sales reported to NorCal MLS Alliance through late April. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers approximate, and may change with late-reported sales. New sales are reported every day. Does not include new-project condo sales unreported to MLS.

San Francisco Median House Sizes

Median HOUSE Square Footage – Selected Neighborhoods*

Comparing median sales prices between neighborhoods is not apples to apples, since the median sizes of homes vary so widely. Generally speaking, the most expensive neighborhoods have both the largest homes and the highest dollar per square foot values.

Square footage is based upon interior living space and doesn’t include garages, attics, basements, rooms built without permit, decks, patios or lot size.

New Listings Coming on Market

San Francisco Market Dynamics & Seasonality

April columns highlighted for year-over-year comparisons

Year over year, the new-listing volume in April 2023 was down 43%.

San Francisco Homes Market

Active & Coming-Soon Listings on 1st of Month*

Of the listings for sale on May 1, 32%were houses, and 68% were condos, co-ops, TICs & townhouses.*

The # of active listings on a given day is affected by 1) the # of new listings coming on market, 2) how quickly buyers put them into contract, 3) the sustained heat of the market over time, 4) sellers pulling their homes off the market without selling.

Active Listings on Market – Longer-Term Trends

San Francisco Market Dynamics & Seasonality

This is a snapshot measure of how many active listings can be expected on any given day of the specified month. April columns highlighted for year-over-year comparisons.

The number of active listings on a given day is affected by 1) how many new listings come on market, 2) how quickly buyers snap them up, 3) the sustained heat of the market over time, and 4) how many sellers pull their homes off the market without selling. The number typically ebbs and flows by season.

Listings Pending Sale (in Contract, Offer Accepted)

San Francisco Market Dynamics & Seasonality

This is a snapshot measure of how many pending listings can be expected on any given day of the specified month. April columns highlighted for year-over-year comparisons.

Monthly Sales Volume

San Francisco Market Dynamics & Seasonality

Sales in one month mostly reflect accepted-offer activity in the previous month. April columns highlighted for year-over-year comparisons

Year over year, April 2023 sales volume was down about 38%.

San Francisco Higher-Price Home Sales

Homes Selling for $3 Million+ — Houses, condos, co-ops, townhouses, TICs

April columns highlighted for year-over-year comparisons Year over year, $3m+ sales were down about 43% in April 2023.

The number of higher-price sales typically ebbs and flows dramatically by season, with spring usually the biggest selling season, and mid-winter the slowest. Sales usually follow the time of offers being accepted by 3 to 5 weeks.

Ultra-Luxury Home Sales, $5 Million+*

Bay Area Luxury Home Market since January 2021

Sales in one month mostly reflect accepted offers in the previous month. Year over year, Bay Area sales of homes selling for $5,000,000+ were down 50% in April 2023.

Luxury home sales usually ebb and flow dramatically according to seasonal market trends, peaking in spring and hitting their low point in mid-winter.

Price Reductions on Active Listings

San Francisco Market Dynamics & Seasonality

The number of price reductions typically ebbs and flows by season, but can also be affected by specific events in the economy and the market. It’s not unusual for price reductions to peak in October before the mid-winter holiday slowdown begins in mid-November.

The number of price reductions has been climbing and higher on a year over year basis going back to April 2018.

Overbidding List Prices in San Francisco

Percentage of Home Sales Closing over List Price, since 2018

By property type, the % selling over list price in April 2023 for houses was 61%, and for condos, co-ops and TICs, 34%.

Sales in 1 month mostly reflect market dynamics in the previous month. Seasonal ebbs and flows are typical.

Average Sales Price to Original List Price Percentage

San Francisco Over/Under Bidding: Market Dynamics & Seasonality

Houses have higher average, sales price to list price percentages than condos. Both are much lower than last spring, but have generally climbed in recent months. This statistic fluctuates by season, and is a lagging indicator of market activity 3-6 weeks earlier.

Average Days on Market

San Francisco Market Dynamics & Seasonality

Measuring how long it takes for sold listings to accept offers. Houses have significantly lower average days-on-market readings than condos, but both are much lower than in mid-winter.

This statistic ebbs and flows seasonally, and is a lagging indicator of market conditions.

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.