SF’s Housing Market Continues to Strengthen

Good news, home sales in San Francisco has risen 18% from January 2009 for Single Family homes. The findings from the local market report I get each month issued jointly by the Rosen Consulting Group and the San Francisco Association of REALTORs also noted that “Sales at the high end of the market continued to be dominated by all cash or large down payment transactions.”

I can attest that I’ve come across a number of all cash buyers at the low end of the spectrum in both the East Bay and within entry level Studio/1 bedroom condos in the city, but hearing that the high end of the market is also experiencing this trend is surprising, and I wouldn’t expect to see this trend continue much longer.

High down payment buyers understand that is the “safest” way in order to make your monthly mortgage payments easy on their pockets and won’t allow them to get into the foreclosure situation so many people have been a part of the past two years.

They also found that “at the current sales rate, the months of supply inventory for single-family homes dropped to 3.5 months from 5.8 months while the months of supply inventory for condominiums show a more substantial decline during this time, dropping to 4.1 months from 9.5 months in January 2009. Rosen Consulting Group believes this to be another positive sign in the market.”

New Market Reports Out (4Q 2009)

Despite a dwindling supply of bank REOs and the ongoing presence of cash-rich investors willing to bid up prices, first-time home buyers motivated by an $8,000 federal tax credit available to those who purchased before December 1 dominated the San Francisco Bay Area existing-home market in the fourth quarter, according to an analysis of MLS data issued by the research division of Prudential California Realty.

Across the nine-county Bay Area, home buyers purchased 13,288 existing single-family detached homes during the fourth quarter, down 9 percent from 14,662 homes sold in the third quarter but up 3 percent from 12,918 homes sold in the fourth quarter of 2008.With fewer homes to choose from and increased competition among buyers, the median price of a Bay Area home jumped 14 percent from $495,327 in the third quarter to $562,775 in the fourth period – a 15 percent improvement over the fourth-quarter 2008 median price of $488,684.

For the third consecutive quarter, Contra Costa County led the pace of sales with 2,980 closed transactions, followed by Santa Clara County (2,892 sales) and Alameda County (2,583 sales).

Marin, Napa and Solano counties reported both quarter over- quarter and year-over-year increases,while Santa Clara, San Francisco and San Mateo showed higher sales on an annualized basis. In a further sign the market is stabilizing, the average number of days a home was on the market before sale declined from 66 days in the third quarter and 63 days a year ago to 60 days in the fourth quarter of 2009.

Homes sold in Alameda County registered the fewest days on the market for the quarter at 39 days,while Marin reported an average of 90 days on the market before sale. Among Bay Area counties, the median price of a resale home rose from the third to the fourth quarter in Alameda, Contra Costa, Napa, San Francisco, Santa Clara, Solano and Sonoma.

With the exception of Napa, the same counties also experienced year-over-year price increases, led by Santa Clara (+14%), San Mateo (+12%) and Sonoma (+11%). Observers attributed the improvement in median sales prices to an increase in multiple offers on short sale, REO and other entry-level and investment-grade properties and a modest improvement in prices in moderate- and higher-priced pockets inmost counties.

Looking ahead, buyers expecting rock-bottom prices on bank foreclosures may find those in shorter supply in the months to come absent a flood of new properties. Increasingly, lenders are agreeing to short sale transactions, but buyers will face competition in the form of multiple buyers with size able down payments or all-cash.

First-time buyers will continue to be a force in the market thanks to an extension through April 30, 2010, of the $8,000 federal income tax credit. They will be joined by existing homeowners,who can qualify for a $6,500 federal tax credit if they trade up before the same deadline.

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