The San Francisco residential income market has seen a number of new challenges in recent years pertaining to rent and eviction control, and the process for selling buildings of 3+ units. Now, the coronavirus is having an exponentially greater, negative effect on the economy, employment, rental income, evictions and sales. We do not know how the crisis will ultimately play out, depending as it does on so many, rapidly changing, socio-economic and political factors, however some analysts believe the San Francisco and California residential and commercial markets will be affected less than other regions – which isn’t really of much comfort now in these extremely difficult times. Please let us know if you think we can be of any assistance.
The first thing to remember regarding the statistics in this report is that there is a time lag – usually 4 to 8+ weeks – between a new listing coming on market, an offer being negotiated and accepted, and when the transaction actually closes sale. This means that almost all the sales data we have, as of the first week of April, still reflects the market BEFORE the crisis hit. We are in a similar position regarding rental income and rent payment issues. However, we do have a limited amount of weekly supply and demand data illustrating the plunge in market activity.
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Median Quarterly Values – SF 2-Unit Buildings
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Only the market for 2-unit buildings sees enough sales on a quarterly basis to be meaningful for value trend analysis. These 2 charts reflect the strong market that prevailed before the crisis hit.
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The Coronavirus Effect on Market Activity
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Across all segments of the real estate market, activity has plunged over the past 4 weeks.
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Normal Market Seasonality Trends
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The second quarter is typically a very active selling season. The effects of the crisis began to show up in Q1 numbers.
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Population Growth, Employment and Rent Trends
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After years of steady growth, the population of San Francisco has been leveling off, while employment figures remained extraordinarily strong (up until the virus hit). How badly the crisis will affect employment and possibly population numbers, and how those 2 huge factors will affect rent rates is yet unknown. These next 3 charts give some historical perspective.
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The following table and chart reflects 2019 values and sales. There were not enough Q1 sales for reliable analysis, and, in any case, the first quarter did not see substantial changes in market conditions before the crisis hit.
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Source: Compass
It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.
Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.