Source: Flickr user El Frito
If you’re considering buying in San Francisco, you might want to rethink your plan. Fog City is facing what we at Movoto Real Estate like to call one huge friggin’ housing bubble, with numbers falling across the board for potential home buyers. (A similar thing is also happening in nearby San Jose.)
The bubble’s presence translates to a number of things–none of them good for buyers–for the San Francisco real estate market:
- a steady drop in total inventory
- increases in the median price per square foot
- and the continued decline of available foreclosures and short sales
Your best bet is to hunker down and wait for the imminent burst, unless you’re looking to sell. In that case we’d advise you to take advantage of the bubble.
Where Did All the Homes Go?
Total inventory in San Francisco is down 72 percent from two years ago, with 2,075 homes on the market in 2010 compared to only 578 homes today.
Inventory has also affected the median days on market, which dropped 52 percent in the past year. The average number of days a home spends on market rests at 30, while exactly a year ago that number was 63 days on market.
Understandably, homes are selling more quickly nowadays because there are fewer homes to go around.
Slim Pickings for the 99 Percent
The market percentage of distressed properties is by far the largest problem for anyone trying to move to the city–the number has dropped so ominously low that it’s becoming impossible to find an affordable home in the city.
Whereas two years ago distressed properties were at 14 percent, short sales and foreclosures now make up only 2 percent of the total market. That’s an 85 percent decrease since 2010.
In other words, there are virtually no properties in the city for people with the average income to buy. The best option–really the only one at the moment–is to rent if you want to relocate.
San Francisco, the Rich Man’s City
The median listing price is one of the few housing market numbers on the rise, and risen it has. The latest data shows that the median list price for San Francisco homes is currently at $819,000–an increase of more than $200,000 since last year.
The median price per square foot is at $585, up 13 percent from a year ago when it was $499 per square foot. The gap between the increase in list price and price per square foot means that current market inventory falls in the “luxury” category.
The $800,000-plus price tag for a home seems all the more absurd considering the median household income in SF County is only around $70,000, according to the U.S. Census Bureau.
So unless you happen to be a billionaire, you should probably steer clear of shopping for a new home in the city. Even then it would be an unfortunate way to spend your piles of money.
The Movoto blog is a service of Movoto Real Estate. If you’re looking for a new home, keep us in mind. We have up-to-date real estate listings and local agents throughout the country. When you want to take a break from browsing homes, you can keep coming back to read awesome blog posts like this one.
