It’s been an interesting year so far to say the least for San Francisco’s residential real estate market! The spring market which is usually the most vibrant time of the year for sales was sluggish this spring. Most think this resulted from the uncertainty posed by the tariffs. As you can see below, mortgage rates that had been starting to decline ratcheted up past 7% but have recently started to come down to a more palatable level for buyers, now at a 6.5% interest rate for 30 year fixed mortgages. However, Compass Chief Economist, Mike Simonsen, has said, that rates will probably need to get down closer to 6% to cause a significant boost in buyer demand.
What is the impact of interest rates on a purchase? If someone takes out a million dollar interest only mortgage on a home, the difference in the mortgage payment between a 6% interest rate and a 7% interest rate is about $833 a month and more if the property is costlier. This increase in payment can certainly result in some buyers pausing their search.
A few stats:
Homes
The median sales price for a SF single family home now is $1,710,000, down from the peak of 2022 (tail end of Covid) when the median sales price was $2,000,000. Prices for homes are moving back up again. Single family homes were on the market for an average of 27 days in July before they sold. Homes sold an average of 11% over the list price in the past 7 months.
Condos
The median sales price for an SF condo now is slightly above $1.2M down from a peak in 2022 when the median price was $1.3M. Condos have had some steep declines since 2022 but are now back up and selling for what they sold for in January of 2018; prices are moving back up again. Condos were on the market for an average of 62 days in July before they sold. Condos sold an average of almost 3% under the list price in the past 7 months.
Condos haven’t seen the appreciation rate that single family homes have seen. The most negatively impacted area of the city for condos has been SOMA and downtown which have had condos stay on the market much longer and some selling for substantially less than they sold for six or seven years ago. Nonetheless, 48% of all sales involve overbidding – 70% involve single family homes and 30% involve condos.
I asked agents at my morning meeting how they would rate the August market and their expectations for the fall market. According to the agents, the August market is “hot” because inventory is low, mortgage rates have come down and the stock market has hit some new highs in recent weeks. Their hope is that the fall market will be a big improvement over the sluggish spring market. With the AI boom coming, more people moving back into the city and more money pouring into the city because SF is ground zero for AI, the SF market is poised to take off again, possibly by the fall and it could be crazy.
Thanks to Patrick Carlisle the Compass stat guru who compiles all the statistics for a report like this.
