Robust Pending Sales Activity Presages a Stronger Housing Market for San Francisco
Posted on December 19, 2010
SAN FRANCISCO–Pending sales activity in the San Francisco housing market jumped 22 percent from November 2009 to 2010, according to the latest Market Focus report, published jointly by the Rosen Consulting Group and the San Francisco Association of REALTORS®.
“Robust pending sales activity should lead to a rebound in closed sales activity in the coming months in San Francisco”
Of these sales, 48.1 percent were single-family homes priced at less than $700,000—a significant increase when compared with November 2007, when 26.7 percent of pending home sales were in this price segment.
“Robust pending sales activity should lead to a rebound in closed sales activity in the coming months in San Francisco,” says John Lee, president of the San Francisco Association of REALTORS®.
Despite this harbinger of a strong housing market ahead, the report points out that a decline in closed sales during recent months has caused housing inventory levels to rise, with 684 single-family homes on the market at the end of November 2010—a 21.1 percent rise from November 2009. Median sale prices, however, have remained stable.
Stronger confidence among both home buyers and sellers could be the reason for rising pending sales. But, the Rosen Consulting Group believes that ongoing concerns regarding job security, the pace of the economic recovery and stringent lending practices, could cause many qualified buyers to delay home purchases.
Regardless, Lee believes that growing optimism fueled by increasingly positive economic data, the Federal Reserve’s monetary stimulus and the income tax cut extension is likely to drive buyers back into the market—and may have already done so as evidenced by the recent increase in pending sales.
The report blames the expiration of housing tax credit as the likely reason for a 32.9 percent drop in closed condominium sales in November 2010 in comparison to November 2009. But despite of this precipitous decline, it is noted that the median condominium sales price increased by 6.1 percent year-over-year to $679,000. While closed sales remained weak, pending sales activity for condominiums rose by 9.1 percent during this time, following the same pattern as single-family homes.
While Lee concedes that there is volatility in San Francisco’s housing market, he says, “Decade-high housing affordability rates and the historically low interest-rate environment still make it an ideal time for financially-stable households with a long-term perspective on the market to enter the for-sale market. Despite the housing market’s weak performance through the second half of the year, 2010 will be a positive year for the market and a stepping stone to a more robust recovery in 2011.”
Real estate data in Market Focus is provided by Terradatum. Market Focus is written by the Rosen Consulting Group. For additional information on the real estate market or Market Focus.
Source: San Francisco Business Today