Real Estate

An up and down market

Better than January, worse than the market peak — the view of the city’s real estate depends on the context. Photo: carelbron0/Pixabay

Despite a relatively slow start to the year, San Francisco’s real estate market improved in February. A number of indicators hit low points in January, but then rebounded the next month.

“After a big spike in January, days on market fell to a more typical 15 days in February,” said Annie Williams with Sotheby’s International Realty. “The percentage of properties selling for more than their list price hit their lowest point in the last few years in January, but then returned to a rate that we have seen in other winter months, as in January 2020, of about 60 percent in February.”

She added that the average list-to-sale-price ratio also increased from January, reaching 102 percent in February. What’s more, there was a big jump in median price per square foot, which soared 16 percent, from $886 in January to $1,033 in February.

Still, home prices are down overall.

In fact, MarketWatch reported in March that as of January 2023, the share of homes in the United States that are worth at least $1 million fell to 7 percent, from an all-time high of 8.6 percent in June 2022.

In San Francisco, the share of homes worth a million dollars fell from 86.3 percent last year (January 2022) to just over 80 percent this past January. Of course, this is still well above the national norm.

Ted Andersen, with the Business Times, reported that San Francisco’s median home sales price in February stood at $1.5 million, down 14.5 percent year-over-year. However, monthly sales volume was up, as was the number of homes selling for more than $3 million. The signals are rather mixed, making it difficult to say what exactly is ahead for the city.


When looking at any numbers, Andersen points out that many comparisons are with the overheated conditions prevailing at the peak of a 10-year housing market surge. It may be too early for significant effects to show up in home prices.

Paul Centopani, with, recently wrote about buying a home in a cooling market. Should you buy a home when prices are falling? Is it risky? Certainly, these are questions worth asking at this point.

Being “underwater” as a borrower means you owe more on your mortgage than the property is worth. Centopani writes that while being underwater could be the first step on the road to foreclosure, it’s usually an innocuous, temporary status.

Although home prices may not rise every year, they do almost always go up over time. As long as you plan to keep your home long-term and continue paying your mortgage, a temporary price drop shouldn’t impact you. Eventual price gains will correct the temporary loss and put you back in a position of equity.

The exception would be if you plan on selling your home relatively quickly, in which case a short-term price drop could net you a financial loss.


Elsewhere in the San Francisco market, all-cash sales of homes dipped a bit last year compared to the year before and lagged well behind the national average.

According to Andy Medici, writing for the Business Journal, the percentage of all-cash home sales in the San Francisco metro area — which includes Oakland and Hayward — dropped in 2022 to 21.9 percent, down slightly from 22.6 percent in 2021. Nationally, all-cash purchases accounted for about 36.1 percent of total home sales in 2022. 

Many of the top markets for cash sales are located in the Sun Belt, in states like Georgia, South Carolina, Florida, and Arizona — states that are benefiting from migration trends and have been seeing significant investor activity.

In contrast, there is very little institutional investing going on in this city. For example, institutional investors bought just 1 percent of San Francisco metro area homes sold in 2020.

Annie Williams, the Sotheby’s agent, had one last item she wanted to
mention. “Something came up in our broker meeting the other day, and that is the difficulty buyers in San Francisco are having getting homeowner’s insurance.” 

It appears, even though the city is not a high fire risk, nor a flood-prone area, national insurers are feeling overexposed in California in general. 

“Even more troubling, some clients of mine with expensive homes have been dropped by their insurance companies, even though they have never made a claim,” Williams added. “At the broker meeting, we discussed the idea that the acquisition of insurance may need to be a new contingency added to the purchase contract.” 

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