The housing recovery continues to sweep across California. In major cities like Los Angeles, San Francisco and San Diego, inventories are returning to healthy levels and home prices are rising.
But the most dramatic real estate changes seem to be occurring in the San Francisco Bay Area.
San Francisco home buyers entering the market in 2013 will find a market that is completely different from a few years ago. In just three or four years, the city has transformed from a stagnant buyers’ market to a bustling sellers’ market.
The 7 Biggest Trends in San Francisco Real Estate, 2012 – 2013
We scoured the housing headlines of the last few weeks to come up with this list. Here’s what is currently happening in the San Francisco housing market, and what we expect for the rest of 2013.
1. Housing supply will remain tight in 2013.
RE/MAX recently published a report that listed cities with the lowest housing supply, going into 2013. They measured the number of months worth of supply in December 2012 and ranked the cities accordingly.
Several California cities made the list. San Francisco took the #1 spot, with only a 1.1-month housing supply in December 2012. That was well below the national average of 4.4 months of supply.
This will be one of the biggest obstacles for San Francisco home buyers in 2013. Buyers will need to be aggressive when shopping for a property in this market. They should also be prepared for bidding wars. Sellers, on the other hand, can enjoy being in one of the hottest markets in the country. A well-staged, reasonably priced house should sell quickly in this market.
2. San Francisco has one of the healthiest housing markets, according to economist.
Jed Kolko, chief economist for the real estate website Trulia, recently published a list of the healthiest housing markets in 2013. He based his rankings on a number of factors, including vacancy rates, job growth, foreclosure trends and more. The San Francisco real estate market ranked among the top three cities.
Kolko pointed out that San Francisco has one of the fastest-growing job markets in the country right now you. Additionally, foreclosure filings and default notices have both declined across the metro area, over the last few years. All of these trends bode well for the local housing market.
3. Significant price gains have been reported by Case-Shiller.
The S&P/Case-Shiller home price index for January was released a few days ago. It included pricing data through the end of November 2012. According to that report, house prices in San Francisco have increased by a healthy 12.7% (from November 2011 to November 2012).
4. San Francisco’s median list price rose by 25%.
Each month, Realtor.com publishes a housing summary with data on 146 of the largest metropolitan areas in the country. It includes monthly and yearly changes to the median list price for each metro. According to their latest report, which included data through December 2012, the median list price in San Francisco has risen 25% over the last year or so.
In this context, the “list” price is the amount sellers are asking for when they list their homes for sale. This makes it different from the median sales price, which is the actual amount paid. But that number has also risen over the last year (see below).
5. Median sales price rose by 32% across the Bay Area, 21% in San Francisco.
According to San Diego-based DataQuick, the median sales price for the nine-county Bay Area rose by a whopping 32% from December 2011 December 2012. Inside San Francisco proper, the median sales price rose by 21.1% during the same 12-month reporting period.
This is one area where all of the experts and data agree. Whether you look at the list prices on Realtor.com, home prices in the Case-Shiller Index, or the median sales price reported by DataQuick — they all show a clear trend of appreciation. We expect this trend to continue through 2013, though the gains will likely be more modest.
6. Default notices have dropped by 42%.
This is something I touched on earlier. Default notices (one of the first steps in the foreclosure process) have dropped by more than 40% over the last year or so. This is according to a recent report from DataQuick. From the fourth quarter of 2011 to the same period in 2012, default notices in the San Francisco metro area dropped by 42.3%
This should improve the health of San Francisco’s real estate market even more, going forward. The dramatic decline in default notices suggests a return to normalcy. It also means there will be fewer distressed properties on the market down the road — the kinds of properties that erode home values.
7. Trustee deeds are down by 51.2%.
During the foreclosure process, a trustee deed is typically issued whenever a house is actually foreclosed upon. So another way to state this statistic is to say that home foreclosures have dropped by more than half. From the Q4 2011 to Q4 2012, trustee deeds in the San Francisco area fell by 51.2%.
Many housing markets across the country are rebounding. But few are experiencing the kinds of dramatic changes that we are seeing in San Francisco’s real estate market.