Dear Clients, Colleagues and Friends!

It is hard to believe we are already almost halfway through February! The holidays flew by and we are firmly into the new year, and what feels like a new and improving market.

The stock market is soaring, employment is still high, rates have come down a little, and the economy is chugging along… from a “boots on the ground” perspective, we have been seeing sales pick up at all price points, all over town. We are hearing about more downtown condos going into contract at luxury buildings, and we will be relaunching our beautiful penthouse listing at One Steuart Lane (unit #1401) soon if you know anyone who wants a stunning view pad. This week alone, we put three of our buyers into contract, and put one of our upcoming listings into contract for over asking before it even hit the market!

Other than keeping us busy, what this tells us is that buyers are on the hunt and are becoming more active once again. The drop in rates we saw in January, along with the promise of eventual rate drops this summer, has buyers eager to secure properties before prices rise and rates fall. If a buyer is not highly rate-sensitive and is able to stomach the current rates for a couple of years, there are still incredible opportunities to be had at great prices. The percentage of all cash purchases ran at a 9-year high in 2023 because of the higher rates, and while we expect that percentage to drop slightly, we anticipate that cash will continue to be king this year.

We are encouraging sellers to go on the market sooner rather than later, as we have no idea what the rest of the spring and summer will bring, what with global uncertainty with two wars, oil prices, inflation not yet at the 2% target, and an upcoming election cycle next fall. We are, however, feeling good about current conditions. This moment in the market is looking like a peak time to sell when compared to the last 14+ months of sluggish sales, with a combination of low inventory and an active buyer market. All of our insider information (speaking with stagers, photographers, inspectors, and the like) points to more inventory in the late spring, which isn’t always a good thing for sellers.

Our comparables and market data have yet to fully catch up with this more anecdotal market feedback though, as many closings haven’t happened yet. We are seeing a big inventory increase on the condominium side, but not yet on the single-family home market. Already new listings are up about 13% year over year, and listings going into contract were up 30% from January 2023. The number of home sales in January was flat as compared to January 2023, and house prices and condo prices thus far have remained fairly stable (with a slight uptick) from the data, but that reflects mostly listings going into contract in December ’23, when the market was still sluggish overall, and closing last month. For single-family homes, the monthly supply of inventory is 1.6 months, and the average days on market is 31 days. Homes are, on average, selling for 5% over list price and 63% of homes are selling for above asking price — but of course, these statistics are dependent on how agents are pricing, and currently we are seeing a trend towards pricing lower for homes. Condos are taking an average of 58 days on the market to sell and selling for, on average, just under list price (97.5%), with only 33% of percent of sales over asking. We are seeing more condos with transparent/realistic pricing. The values of condos have risen, with the median condo price now reaching 2017 levels. We expect this number to increase further as spring progresses. (Last year, condos were at 2016 or below-2016 levels.

In the luxury market, home sales above $3M and above $5M have seen a significant increase from last year at this time. Above $10M, the number of home sales in 2023 remained similar to 2022 (though nowhere near 2021) but obviously, prices were down significantly. We are also seeing a surprising number of homes priced at or above $7M in Noe Valley that have just hit the market or are coming down the pipeline, where inventory is usually tight.  The increase in luxury home sales makes sense from a rates perspective, as the affordability of luxury homes is hugely affected by a mortgage at 8% vs. 6-6.5%. As well, stocks have peaked to 2021 levels, particularly in the technology sector, which tends to affect a great deal of our clients in San Francisco.

As we get through the rainy season, we are keeping busy prepping new properties across town for the market. In February, we will be launching 1015 Carolina, a sleek and modern home in Potrero Hill for $1.995M, and 1043 Francisco, a gorgeous property in Russian Hill with stunning views asking $10M, and we still have two great condo listings available: 55 Child #2, a Telegraph Hill view condominium asking $2.595M, and 2919 Pacific #5, a fabulously located 2 bedroom condo for $1.549M. We also have an off-market opportunity for $8M for a remodeled home in Cow Hollow with a spectacular yard. Coming up in March we have condominiums in Pacific Heights and Hayes Valley, adorable homes in Glen Park and Noe Valley, a designer-renovated home in Eureka Valley, and a multi-unit apartment building in Pacific Heights. Keep in touch to learn more about coming listings that pique your interest.

Our incredibly creative team member, Paul Hatvany Kitchen, has designed custom, stylish Team Hatvany umbrellas to help our clients weather the winter storms. With First Republic umbrellas a thing of the past, we saw a gap in the market for good quality umbrellas! If we haven’t seen you lately at a showing or open house and you want one, please get in touch and we will drop a Team Hatvany umbrella to you personally!

As always, we are available to chat about all things real estate 24/7. And if you need a good vendor recommendation or spring an unexpected leak, we are at your service!

Here is the link to the newsletter/data slides: FEB 2024 NEWSLETTER