For the past two quarters sellers have had their pick of buyers due to inventory shortages and homes in high demand. Things seemed to have changed at the end of the third quarter and it looks like we might be entering a buyer’s market.
Home sales in San Francisco usually rise in August, but this year it’s running 16.8 percent lower than previous years. At the same time, inventory for single-family homes and condos combined is relatively higher compared to earlier this year, 2015.
Inventory for condos, new-construction and resale, is on the rise as expected. There are 15% more condos for sale than there were last year and 80% more new condos available, in sales offices of new developments, than there were at this time in the previous year. Even more interesting is that there are more condos available on the market in San Francisco than there have been at any time in the last two years (410).
While Inventory for condos is higher than last year, supply for single-family homes is equal to that of last year. So, inventory is higher than earlier this year but not huge gains year-over-year. What is remarkable about the inventory for single-family homes is the number of sub-million dollar homes on the market, which has risen to 120, the most seen in 2015.
Despite the increase in inventory, sales prices still remain high but are increasing at a slower pace – plateauing out. Median sales prices of homes sold in San Francisco increased to $1.105 million in August, which was a 2.8% increase over $1.075 million in July. However, sales prices remain 3.9% below the $1.15 million mark set in May. Buyers are fatigued from last years frenzy and sellers are receiving less overbids.
If the increase in inventory is any indication of what’s to come in quarter four, this could cool the highly competitive, low inventory “seller’s market” we’ve seen the past couple of years. Seller’s may need to re-evaluate their pricing strategies as they may not get as many bids over asking. For buyers, quarter four sounds very promising and a great time to get into contract while supply is still relatively high.