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Quarterly Real Estate Report Q1 2016
Steven M. Gothelf
Broker Associate
THE MARKET IN UNDER A MINUTE
San Francisco
Q1 Market Pulse Video
Get a high-level look at what’s happening and what to expect in this insightful report into the San Francisco real estate market.
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San Francisco: Q1 Results
While the San Francisco real estate market remains tilted in favor of sellers, conditions continued to normalize in the first quarter of 2016. Condominiums, for instance, received fewer multiple offers than in quarters past, particularly those at the high end of the market. We also noticed that buyers were entering negotiations with higher expectations; a home not priced properly or one that needed extensive repairs was likely to sit on the market for a while before selling.

Attractive single-family homes priced less than $2 million, however, sold rapidly, while sales in the $2 million to $3 million range began to cool as the quarter wound down. Although a lack of inventory still plagues San Francisco, we did see some relief in the form of more condominium listings. Young, affluent tech workers competing for limited housing continued to push prices up, particularly for entry-level condos.

Looking Forward: Home stagers and inspectors were almost fully booked by the end of the first quarter, a sure sign that sellers are preparing to list their properties in the traditionally busy spring season. We expect that a strong local economy and historically low interest rates will combine for a healthy 2016 for San Francisco's real estate market.
Median Sales Price
The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price.
Single-Family Homes — Median Sales Price
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Condominiums — Median Sales Price
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Months’ Supply of Inventory
The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market.
Single-Family Homes — Months’ Supply of Inventory
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Condominiums — Months’ Supply of Inventory
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Average Days on the Market
Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close.
Single-Family Homes — Average Days on the Market
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Condominiums — Average Days on the Market
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Percentage of Properties Under Contract
Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.
Single-Family Homes — Percentage of Properties Under Contract
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Condominiums — Percentage of Properties Under Contract
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Sales Price as a Percentage of Original Price
Measuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region.
Single-Family Homes — Sales Price as a Percentage of Original Price
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Condominiums — Sales Price as a Percentage of Original Price
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Delving into San Francisco’s Districts
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FEATURE STORY
Beyond the Clouds: Economic Sun Rays Continue to Keep the Bay Area Warm
By Selma Hepp, Pacific Union Chief Economist and Vice President of Business Intelligence
The U.S. Economy Is Solidly Marching Forward
To say that we live in the age of information overload is an understatement. If you are not entrenched in economic data, it may be difficult to see the forest from the trees by reading daily news stories. However, after a shaky start to this year, we can now say with some level of certainty that we are on the other side of the tumultuous tunnel and that the economic prospects for 2016 are looking up.

The encouraging signs are both national and international. Nationally, it’s all about jobs. Job growth continues at an exceptional pace; according to the latest U.S. Labor Department survey on new jobs and turnovers, more people — 5.4 million — got a new job in February than in any month since before the recession. Also, we are finally seeing broader improvements in wages, which drive consumption and the service sector. Consequently, industries and companies relying on domestic consumers are doing well.

Businesses affected by a strong dollar and weaker international demand are not doing as well. Internationally, however, the storm has finally subsided. Better news is coming from U.S. trading partners, and oil prices seem to have stabilized. Emerging markets appeared to have weathered the storm, and capital volatility seems to be settling down.
The Bay Area Is the Job Dynamo
The Bay Area has been the shining star in the nation's economic recovery. The region's economic strength originates from the exceptional job growth over the last four years, and the Bay Area still outperforms the rest of the country. Over the past year, some 120,000 jobs were created locally, most in technology and other high-income sectors. An important advantage to tech-sector jobs is that they have a high multiplier rate, meaning that their economic spillover to local economies is higher than most other types of jobs. Job growth has also been the impetus for the remarkable housing-market recovery and the ensuing home price appreciation that we have seen across the region.

Jobs are critical to Bay Area housing markets, and growth is still happening. In fact, 2015 was the strongest year of regional job growth since the recovery started. And while 2016 started slower, it still may be the second-best post-recession year if hiring continues at its current pace.
Click here to read the full column on Pacific Union's blog.
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Steven M. Gothelf
Broker Associate
415.345.3063
sgothelf@pacunion.com
www.SteveGothelf.com
1699 Van Ness Avenue
San Francisco, CA 94109
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