Rosen Consulting Group Forecasts Overall Positive Year for San Francisco Housing Market
(Editor’s Note: Appearing below is the press release accompanying the Association’s Market Focus report for June. The report can be viewed by clicking on the link below the press release. A report is issued each month jointly by Rosen Consulting Group and the Association. The reports are intended to provide the media and REALTOR® members of the Association with monthly analyses of the state of the local economy and the housing and mortgage markets.
The reports are issued ahead of reports from CAR and NAR and, hopefully, will go a long way to dispelling the notion that the San Francisco residential real estate market is little different than other markets in the country experiencing stagnation and significant price declines.
Rosen Consulting Group is an economic and real estate consulting firm providing clients with high-level strategic consulting services. Founded in 1990 by Dr. Kenneth T. Rosen, he and Arthur Margon are currently the firm’s partners and active managers. Rosen Consulting Group consists of 20 research professionals based in Berkeley, CA and New York.)
“We are confident that the housing market in San Francisco is in the early stages of recovery and expect a sustainable but modest rise in San Francisco home prices for the balance of 2010,” says the most recent Market Focus report issued by the Rosen Consulting Group of Berkeley, California, and published by the San Francisco Association of REALTORS®.
Rising affordability levels, aided by already reduced housing prices and low mortgage rates are given credit for the growing demand for housing units in the city, particularly at the low and middle ends of the market.
The report says that the growing demand has had the effect of tightening market conditions in the city during the past 12 months and has caused prices to stabilize for more moderately priced homes, and for the luxury segment of the market to gain traction. These developments have contributed to home sales becoming more evenly distributed across price segments and for the median sales price to trend upward.
John Lee, president of the San Francisco Association of REALTORS®, agrees with the conclusions of the Rosen Consulting Group, saying that, “The overall underlying trend of the housing market in San Francisco should remain positive, resulting in price appreciation and a further tightening of market conditions into year-end 2010.”
The report states that the median single-family home sales price in San Francisco rose 4.6%, year-over-year, in June 2010 to $800,000 (Figure 1). And, while completed single-family home sales through the first half of 2010 showed a 24% increase for the same period in 2009, they showed a 14% decline in comparison to the last six months of 2009 (Figure 2).
Of the 219 completed single-family homes sales in June 2010, approximately 35% were homes priced at $700,000 or less in comparison to January 2009, when this proportion of the market accounted for more than 65% of all sales.
The number of single-family homes on the market, in comparison to the same period last year, remained unchanged. For-sale inventory stood at 707 homes in June, matching the number of homes for sale in June 2009. Coinciding with the steady level of for-sale inventory, at the current monthly contract sales rate, the months supply of single-family homes remained at 3.1 months, also unchanged from June 2009 (Figure 3).
Lee noted that, “Rising housing affordability resulting from attractive pricing and low mortgage rates has strengthened the demand for condominium units, particularly among first-time home buyers.”
The median condominium sales price in June 2010 increased 8.7% from June 2009 to $690,000. Completed sales totaled 230 units, an increase of more than 20% during this time.
Through the first half of 2010, condominium sales totaled 1,164 units, a 48% increase from total condominium sales during the same period in 2009. Despite the jump in sales in comparison to the trough of the market in the first half of 2009, condominium sales slipped 13% in comparison to total sales during the last six months of the year.
While cautioning that the eventual full recovery of San Francisco’s housing market is dependent on improvements to the job market, the Rosen Consulting Group forecasts an overall positive year: “While the elimination of government incentives, as well as stricter availability of credit will test the market during the second half of this year, the anticipated rebound in job creation into the end of this year and the resulting rise in demand combined with the pent-up demand for affordable, for-sale units in the market should result in an overall positive year for the San Francisco housing market.”