May 12, 2023
SF: May 2023 Market Stats
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.
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