From Compass Chief Economist Selma Hepp – July 12, 2019
Amid many expectations of what the pipeline of IPO activity is going to mean for the San Francisco housing market, second quarter home sales continued to trend below last year, though sales of homes priced above $2 million and especially above $3 million picked up speed in recent months. Homes priced above $3 million were in higher demand in other neighboring regions, such as San Mateo and Alameda counties.
However, availability of inventory continued falling in the second quarter with the number of for-sale homes declining by double digit rates since the beginning of the year. The rate of decline increased in the second quarter.
Buyers remained more enthusiastic than elsewhere in the Bay Area and bidding wars continued to characterize the market. About 7 in 10 homes sold over the asking price, the highest in the Bay Area region, with the average premium at 16 percent, only slightly below last year’s 17 percent average.
As a result, home prices recovered from the winter lulls and the median home price accelerated 4 percent in June compared to last year. Together with San Mateo, San Francisco is the only region that saw median prices accelerate in June.
Looking Forward: Although summer usually leads to a lull in home buying activity, when buyers return from vacations, positive home buying conditions including lower interest rates, strong local employment, and a pick up in home price appreciation should lure potential home buyers back in the market.