On September 18th, the Federal Reserve Bank dropped its benchmark rate for the first time since 2020 – a very positive development for housing markets – and many analysts expect one or more additional cuts before the end of the year. In their latest readings, inflation fell to its lowest point in 3½ years and consumer confidence improved for the 4th month running. Stock markets have been volatile since mid-July, but remain close to all-time highs.

As of early October, mortgage rates were the lowest since February 2023, but then an unexpectedly strong jobs report caused them to spike back up, perhaps just a short-term fluctuation amid the major downward trend of recent months. It has been very challenging in recent years to predict changes in interest rates, as there are many unpredictable national & international economic and political factors at play, but the consensus opinion is that rates will (probably) continue to decline in Q4.

Though sales activity increased in September, the recent drop in interest rates did not precipitate as substantial a rebound in buyer demand as many had expected. It may be that expectations of further declines are keeping some buyers on the sidelines as they wait for that to occur. September did see a very substantial jump in the number of new listings coming on market – it was by far the highest monthly count of the year – so buyers currently have the widest choice of homes for sale since late 2023.

Market-heat indicators (and median sales prices) usually peak in spring (Q2), then cool significantly in Q3, and that was broadly the case this year. October is the heart of the autumn selling season before activity typically begins to plunge heading into the mid-winter holidays. It is also a period that often sees a high number of price reductions as sellers attempt to get unsold homes into escrow before that big slowdown occurs.

Report created in good faith using data from sources deemed reliable but may contain errors and subject to revision. Last period figures sometimes labeled preliminary. Economic indicators can be volatile even in the short term. All numbers approximate, and may change with late-reported activity.

Federal Funds Interest Rate since 1981

& Economic Interventions by Federal Reserve Bank*

After 11 increases from March 2022, the Federal Reserve Bank kept the benchmark federal-funds rate unchanged from August 2023 to August 2024. On September 18, 2024, the Fed reduced the rate by a half point, its first reduction since 2020.

Timeline:

• Early 1980’s: Fed aggressively raises fed funds target rate to lower inflation rate

• Early 1990’s recession: Fed drops target interest rate 18 times, 1990-92

• Dotcom crash, 9/11 attack: Fed drops fed fund rate 12 times, 2001-02

• Subprime crash: Fed drops rate 10 times to effectively zero in 2007-08

• 2019, 2020, 2021: The Fed drops rate to effectively zero

• 2022/2023/2024: Acting to counter inflation, Fed increases target rate 11 times, then pauses 8/23 – 8/24

Median House Sales Prices, 2012 – Present, by Quarter

San Francisco House Price Trends

The median house sales price dropped from Q2 – a typical seasonal trend – but year over year, it was up a little more than 2% in Q3.

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 Q2. Sales prices lag changes in market conditions by 3 to 6 weeks.

Median Condo Sales Prices, 2012 – Present, by Quarter

San Francisco Condo Price Appreciation

Year over year, the Q3 2024 median condo sales price was up about 4%.

Seasonal fluctuations are common. It is not unusual for median sales prices to peak for the calendar year in Q2. Sales prices lag changes in market conditions by 3 to 6 weeks. Different city districts have seen varying median price trends.

San Francisco CONDO vs. TIC Prices

6-Month-Rolling, Median 2-Bedroom Sales Prices since 2005*

Because of the relatively low number of sales, TICs see more fluctuation in median sales price than condos, but generally speaking, over the longer term, 2-BR TICs sell for a median sales price approximately 20% below 2-BR condos.

San Francisco Home Sales Breakdown

# of Sales, Median Size & Sales Price by Property Type*

Breakdown by bedroom count and median size:

• 5-BR Houses / Median 3044 sq.ft.: 105

• 4-BR House Sales / Median 2331 sq.ft.: 303

• 3-BR House Sales / Median 1655 sq.ft: 451

• 2-BR House Sales / Median 1200 sq.ft.: 287

• 3-BR Condo Sales / Median 1670 sq.ft.: 227

• 2-BR Condo Sales / Median 1184 sq.ft.: 530

• 1-BR Condo Sales / Median 763 sq.ft.: 301

• 2-Unit Building Sales / Median 2646 sq.ft.: 117

Median Sales Prices

• 5-BR Houses - $3,300,000

• 4-BR Houses - $2,230,000

• 3-BR Houses - $1,650,000

• 2-BR Houses - $1,300,000

• 3-BR Condos - $1,750,000

• 2-BR Condos - $1,232,500

• 1-BR Condos - $725,000

• 2-Unit Bldgs - $1,750,000

There were also 130 TICs and 44 co-ops, of various BR counts, and 35 studio condos sold during the 6-month period.

Market Dynamics by Price Segment/Property Type

San Francisco Residential Market

Market indicators can change dramatically from period to period, due to both economic conditions and seasonal trends.

*Active/Coming-Soon Listings & Listings in Contract posted to MLS as of 9/30/24. **Statistics per last 6 months of sales: Statistics often rise and fall according to seasonal trends. ***Months Supply of Inventory measures approx. time required to sell listings for sale at estimated rate of sale: Lower readings signify higher demand compared to supply. The market often accelerates in September as the fall selling season begins.

Data reported to NorCal MLS Alliance and Infosparks, may contain errors and subject to revision. Not all activity is reported to MLS. All numbers approximate. Statistics based on past activity may not apply to future trends and can be distorted by outlier data (especially in low sales volume segments). Numbers change constantly.

New Listings Coming on Market

San Francisco Market Dynamics & Seasonality

New-listing activity is fiercely seasonal: It soared in September to its highest monthly count of 2024 YTD, but was lower than in September of recent years.

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

San Francisco Homes Market

The number of active/coming-soon listings on October 1, 2024 jumped from September 1st, but was down year-over-year. Of the listings for sale, 30% were houses, and 70% 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, and 4) sellers pulling their homes off the market without selling.

Listings Accepting Offers (Going into Contract)

San Francisco Market Dynamics & Seasonality

As is the typical seasonal trend, September 2024 saw a rebound in the number of listings going into contract fueled by the big jump in new listings coming on market.

Price Reductions on Active Listings

San Francisco Market Dynamics & Seasonality

The number of price reductions in September 2024 was up from August, but well down from September 2023. 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 typically ebbs and flows by season, but can also be affected by specific events in the economy and the market.

Monthly Home Sales Volume

San Francisco Market Dynamics & Seasonality

September 2024 closed sales reflect the slow market of August. We should see an increase in sales in October reflecting the beginning of the fall selling season with its large influx of new listings.

In September, 50% of SF sales were houses, and 50% were condos, co-ops, TICs and townhouses.

Sales in one month mostly reflect accepted offers in the previous month.

San Francisco Luxury House Sales*

Houses Selling for $5 Million+ since 2018

Spring is usually the period of highest sales volume for luxury houses, though autumn often sees a substantial spike up in activity after the typical summer slowdown. Generally speaking, in 2024, higher-price home sales have been outperforming the general market.

San Francisco Luxury Condo & Co-op Sales*

Units Selling for $2.5 Million+ since 2018

Percentage of Listings Accepting Offers

San Francisco Market Dynamics by Quarter

Absorption Rate: The higher the percentage of listings going into contract, the stronger the buyer demand as compared to the supply of listings for sale. The house market (green columns) has had much higher absorption rates than condos.

Percentage of Sales Over List Price

San Francisco Market Dynamics by Quarter

In Q3 2024, 74% of house sales and 34% of condo sales sold for over the list price. This chart illustrates the % for all home sales.

Higher overbidding percentages signify a higher level of competition for new listings.

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. Sales Price to List Price percentages for houses remain much higher than that for condos, but this metric can be distorted by underpricing strategies.

Average Days on Market – Speed of Sale

San Francisco Market Dynamics by Quarter

Generally speaking, the lower the average days on market to acceptance of offer, the stronger the buyer demand. House listings (white line) typically sell much more quickly than condos, co-ops & TICs (blue columns).

Percentage of Buyers Having Difficulties Obtaining Insurance

State of California, in 2023 & 2024 by Property Location*

The ability to find comprehensive, affordable homeowner’s insurance continues to be an increasingly serious issue for buyers (and homeowners). In 2024, over 13% of agents had a transaction terminate due to an inability to do so, vs. 7% in 2023.

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.

Photo use under the Creative Commons License: https://creativecommons.org/licenses/by-sa/2.0/

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.