In April, 47% of homes for sale in the US went under contract in less than a week. The squeeze is happening at various price points and in dozens of metro areas. A new report out from Zillow shows that homes in the U.S. are selling ridiculously fast, with nearly half going under contract in less than a week.
The report, published Friday, shows that in April 47 percent of home sellers accepted an offer on their property in less than seven days. By comparison, in April 2020 only 30 percent of homes went under contract in a week or less. The report additionally shows that 76 percent of homes went under contract within a month of hitting the market, compared to 60 percent last year.
“The already rushed pace of home buying in the face of limited supply and sky high demand that has characterized the market since last summer has only intensified with the onset of this year’s busy spring home shopping season,” the report adds. Broken down by price tier, Zillow further found that 50.5 percent of entry-level homes went under contract in less than a week, while 54.6 percent of middle-tier homes did the same. The report adds that “the squeeze is also being felt in a majority of large markets nationwide.”
“In 27 of the nation’s 50 largest metros, a majority of homes went under contract in less than a week in April,” the report adds. “In Columbus, Denver and Salt Lake City, a week was all it took for more than 70 percent of local listings to go pending.”
The report goes on to note that the current competitive market can be discouraging for consumers, but “does have some practical advantages at a (very) macro level.”
“One of the main reasons that inventory can keep falling as it has and sales overall continue to grow is precisely because of this faster market velocity,” the report continues. “And unlike previous periods when demand for homes was high and time on market short, notably the pre-2008 housing boom, the market this time around is driven by sound fundamentals unlikely to fade anytime soon.”
Home prices may be skyrocketing, but there doesn’t appear to be a bubble on the horizon, with dozens of economists indicating in a new report that an array of economic indicators should remain healthy for at least the next few years.
The report, out Tuesday from the Urban Land Institute, is based on a survey that solicited responses in late April and early May from 42 economists and analysts who work in real estate. Overall, the report paints an optimistic picture of the near future.
For example, the report indicates that single family housing starts should jump up from 990,500 in 2020 to 1.1 million in 2021. Housing starts should increase further to 1.2 million in both 2022 and 2023.
All of those numbers, including 2020’s, are higher than at any point in the last decade. That’s significant because economists have previously pointed to a decade-long building shortfall as a major contributor in the current inventory shortage.
In addition to more housing starts, the report additionally indicates that home prices should continue rising, though at a more moderate rate than 2020, when prices jumped a whopping 11.4 percent.
Specifically, in 2021 prices should rise 8.1 percent — which is still higher than at any point in the last decade — followed by 5 percent in 2022 and 4 percent in 2023. If these projections come true, it would actually mean that home prices will grow less in each of the next two years than they did during most years since 2012.
Bay Area housing market has buyers competing for the few homes available for sale. As compared to previous month, closed sales of existing home have grown by 51 percent. Inventory levels are very low. The months of supply of existing single-family homes has declined to 1.6 months as of March 2021. For first-time homebuyers (who didn’t lose a job) low-interest rates are making buying a home hard to resist. Homes are selling for the above list price as new home buyers are willing to pay more to win bids.
Only those who do not have enough money for a down payment are holding back. Nine out of ten Bay Area counties posted double-digit gains in sales as compared to last year except for Solano, where a -3.7% decline was seen. However, all the 9 counties tracked by C.A.R. posted massive double-digit gains in the sales of existing single-family homes as compared to previous month.
The median price of single-family homes in the Bay Area housing market has reached $1,225,000, an increase of 6.4% percent from the previous month. Buyers appear to be looking for extra space in homes, which is pushing up median home prices in suburban areas like Santa Clara, San Mateo, and Contra Costa counties.
Although home prices grew in all the counties these two counties posted annual growth of more than 20%. Contra Costa county topped the list with the price growth of 29.4% as compared to last year. It was followed by Napa County (21.6%). In San Francisco county, the median price of single-family homes has reached $1,755,000, up 6% YoY and down -1.8% MoM.
Sales Price to List Price Ratio in Bay Area was 106.9% in March signaling a very competitive market. Anything over 100% gives sellers an upper hand in price negotiations. The housing supply remains tight. The unsold inventory index now sits at 1.6 months, which means it would take less than eight weeks to squeeze away all the listings from the market at the current sales pace. Months of supply has seen a sharp decline from Frebruary when it was 2.1 months.
San Francisco (County) Housing Market Trends 2021
Tech hubs like San Francisco and San Jose have drawn substantial homebuyer demand over the years but San Francisco’s infamously hot real estate market saw an outward migration due to the pandemic. People were moving out of the city and the demand in suburbs increased. The suburban single-family homes are shooting up in value while the tech hubs have seen declines in rents and pricing.
The recent market trends show that the market is bouncing back and it will likley heat up again in the coming spring season. In March, the existing single-family home sales growth was the strongest in SF county. The closed sales were up by 81% from the previuos month and 56% from the previous year.
The median price for a single-family home in San Francisco County was $1,755,000 in March, down 1.8% MTM and up 6% YTY. Earlier in August, the number of active listings in San Francisco reached the highest point in at least four years. The median listing price of a San Francisco home in August, at below $1.4 million, was the lowest since February 2019. Many agents feel that the San Francisco housing market has cooled even though the demand is still there in suburban neighborhoods.
The pandemic has accelerated migration out of large cities, and it seems like most of the movement is going to be a permanent one. In California, San Francisco and Los Angeles are the top markets for outward migration, for both permanent and temporary moves during the pandemic. San Franciso has also seen significant rent declines (down nearly 23% from last year).
Most experts agree that rents and condominium prices will remain lower through 2021, while prices for single-family homes will be less impacted. Less popular neighborhoods with more space such as the Richmond, the Sunset, and West Portal, are becoming more highly sought after.
Rents were falling in many major cities across the country due to the pandemic, but the drop was most pronounced in San Francisco, one of the nation's priciest housing markets. Housing markets like San Francisco, Santa Clara, Boston, Seattle, and others, have seen rents decline by double digits since the onset of the pandemic. Studio rents have been falling on a year-over-year basis since March when the pandemic led to lockdowns but it took until May for rents to begin falling for one and two-bedroom units.
Apartment dwellers are seeking rent reductions, according to data collected by the San Francisco Apartment Association, which works on behalf of landlords. The data shows that rents for downtown apartments near office buildings have been completely decimated. Renters and landlords have been hit hard by coronavirus lockdowns. It has impacted the ability to make payments amid business shutdowns.
The residential areas have been comparably stable but rents are still declining in double-digits. Rent declines in the expensive high-tech hubs remain the norm. San Jose and San Francisco are seeing the largest declines in rents. The main reason being cited is that San Franciso has a lot of workers who are working remotely now.
If you’re in the market for a condo/townhome in San Francisco, that means you could get a great deal. According to Realtor.com, renters in San Francisco would save $4,500 per year if they locking in today’s rental rates for the next 12 months. At today’s rental rates, that’s almost the equivalent of 2 months free.
As of April 25, 2021, the average rent for a 1-bedroom apartment in San Francisco, CA is $2,600. This is a 26% decrease compared to the previous year.
- The average rent for a studio apartment in San Francisco, CA is currently $1,895. This is a 27% decrease compared to the previous year.
- The average rent for a 2-bedroom apartment in San Francisco, CA is currently $3,500. This is a 22% decrease compared to the previous year.
- The average rent for a 3-bedroom apartment in San Francisco, CA is currently $4,400. This is a 20% decrease compared to the previous year.
- The average rent for a 4-bedroom apartment in San Francisco, CA is currently $5,195. This is a 31% decrease compared to the previous year.
If you’re in the market for a condo/townhome in San Francisco, that means you could get a great deal. In March, the median rent in San Francisco-Oakland-Hayward, Calif. was down 10 percent to $2,626 year-over-year, according to Realtor.com. As rent prices fall, they are going to benefit those workers who cannot afford the city’s housing market. Tech hubs like SF are still seeing substantial declines.
The high inventory levels for condos and townhomes in San Francisco county have made it favorable for condo buyers. The current unsold cond inventory index is 2 months and the sustained oversupply is finally lowering median prices of condos. People simply no longer wish to live in densely populated areas, especially apartment buildings where they have to share common areas. They want enough space for a home office or two and their own outdoor space as well.
Condo inventory in San Francisco is the highest it’s been in 15 years, which has driven down resale prices by 10% since the pandemic hit. The current median price for a San Francisco condo is $1,216,500, which is 4.6% less than March of last year. The good thing for SF condos is that lower prices are driving more sales. Condo sales in the county have increased by 137.6% as compared to March of last year.
A massive annual growth shows that condo sales are going extremely strong. There is a consistent demand for condos as the month-to-month sales growth is also doing great with a growth 86.1%. Higher levels of inventory, following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs. In San Francisco, though, the softening is clear as sellers flood the market with their listings and buyers have not changed their pace to match.
San Francisco had an unusually low inventory relative to other large cities before the pandemic. You can expect more condo listings and prices could come down, even more in 2021. It could be an opportunity for those that have been wanting to buy a condo for a while and were previously priced out.