The Psychology of Uncertainty: SF Market Update
In a world where the stock market dances, with dramatic dips and twirls, San Francisco real estate continues its journey into previously uncharted territory.
The Price Ceiling
The median sales price (MSP) for single family homes hit its highest point in February, at $1,700,000. It then slipped down to $1,650,000 in April. Condos followed a similar trajectory, with their MSP peaking at $1,268,000 in March and then dropping a little to $1,242,500 in April.
In the ultra-high-end market, the ceiling is around $7,000,000. After that the number of sales drop off precipitously. For buyers in this price range, the good news is that there is not a lot of competition. There is, however, a supply problem in this market since there are very few homes to choose from.
So, what’s with the MSP surge?
The steep climb between December and February cannot be attributed to one single cause. Certainly, the number of new listings continues to decline every year, and demand has not let up. Pending sales devour practically every new listing the moment it hits the market, and, with a 117.9% average of list price received, the competition to outbid other buyers is fierce.
This supply and demand problem is not new. However, the untamed stock market, rising bond prices, and climbing interests rates create a new pressure. While mortgage rates are still within the historically low range, there is no guarantee that this will last. Doubt often drives buyers into the market with a sense of urgency. Thus, the psychology of uncertainty may have driven the MSP surge in January more than any tangible market factors.