Click here for San Francisco Real Estate Featured Homes.
Search the San Francisco MLS for your home.
SFResidence now offers International Investment Property opportunities.

August
San Francisco Real Estate Market Update for
July 2005

The San Francisco Real Estate Market for July was better than expected! Although this is the time when buyers, sellers and agents typically go on vacation, sales were still strong. Although the number of homes sold decreased slightly for all three categories we track, the typical summer lull has not happened yet. Selling prices were once again at least 107% of listing prices in all categories and over 110% for single family homes. Multiple offer situations are becoming less common. Compare the average selling prices this year to the same time last year! Since most people do not own their homes outright, the cash on cash return would make the numbers even better! This is an incredible opportunity for SELLERS. And from the "Nothing New" file, we have included a November 2003 article from San Francisco Magazine about the real estate bubble.

Avram Goldman, President and COO of Coldwell Banker, SF Bay Area reported for the last week of July, "The best way to describe the current market is a 'mixed bag'. The entry level properties in each geographic market are still seeing brisk activity... Water found its own level in the upper end price levels of the SF/Bay Area markets. This is especially true for properties over the $2-3 mil. price range.

"For the most part open houses are well attended. The number of offers in multiple presentations is decreasing and we are seeing some multiple offers generating the asking price or a little less. Buyers are being more thoughtful in their decisions and we are beginning to see seller reality set in with more price reductions. The market is finding equilibrium, it always does. Sales have eased back in a few more markets. It no longer has the appearance of frenzy... San Francisco, inventories are actually decreasing. The pattern is difficult to determine whether this is a trend or just apart of our summer selling season with buyers and agents on vacation. It is most likely a combination. The picture will not become clear until September. For now the market is still moving along nicely."

The number of Single Family Homes sold for July was down slightly from June. The average listing price dropped almost 15% from the previous month, however, the sales price was over 110% of the listing price. Compare this month's statistics to the same time last year, and you will see San Francisco homes (on average) have appreciated over 13.6% from one year ago!

The number of Condominiums sold in July was down from June. Even so, the average listing price increased over 7% from last month, and the average selling price was over 108% of the listing price! Compare this month's statistics to the same time last year, and you will see San Francisco condominiums (on average) have appreciated over 12.5% from one year ago!

The number of Overall Sales for July were down by almost 100 sales from last month. The average listing price dropped from the previous month, yet the average selling price was over 108% of the listing price. Compare this month's statistics to the same time last year, and you will see how much San Francisco properties overall (on average) have appreciated over 10.6% from one year ago!

Our trusted mortgage consultant, Jay Bransfield of All California Mortgage said of Interest Rates in his August 1, 2005 update:

I’m hearing a lot of concern about why housing prices are so crazy and why some increases in interest rates haven’t really impacted the California market place. Consider the effects of supply and demand on the market place. Over the last 15 years, demand for existing homes has grown by 114 percent and supply has fallen by 4 percent. For new homes over that period, demand has grown by 143 percent and supply has grown by 23 percent.

This past month of July has not been the best for interest rates. There is an inverse relationship between Federally Backed Mortgage Security Bonds (FNMA) and interest rates. There were several factors that drove bond prices down and rates up. Recent jobs report the granddaddy of all economic reports showed an increase of 207,000 jobs on an expectation of 180,000. Other factors were no signs of inflation and the Chinese devaluing their Yuan from the US dollar. Does that mean that interest rates have gone way up? No! In fact rates are roughly where they were a year ago. Rates are still very good. Take a look at the FNMA bond chart today as compared to a year ago.

I’m expecting in the next 2 weeks that Federal Chairman Greenspan will signal a further increase in the prime lending rate from 6.25% to 6.5%. If this happens it will be the 10th increase in a little over a year. On eight of the previous nine days where the Fed increased the prime rate, long term rates went down. I don’t expect the long term rates to jump this time either. Want to know why? Read more. It’s still a great time to buy.

27% of all new purchase mortgages originated in 2005 have been interest-only loans. This figure is up from a year ago of approximately 10%. Additionally consider that there is a relatively flat yield curve. What does that mean for you as a real estate consumer? It means that the interest rate difference between a 5/1 (Fixed for 5 years, variable for 25) and a 30 year fixed is a fairly small gap. You should be looking at that gap when locking into a loan.

Lastly - BY THE NUMBERS -

REAL ESTATE is the winner - The median sales price of existing homes has increased by +14.7% over the first 6 months of 2005. Over the same period the S&P 500 lost 0.8% (total return) and the 10-year Treasury note gained +4.3% (total return). Inflation over the 6 months was up +1.5% (source: NAR, BTN Research, DOL).

DÉJÀ VU - The NASDAQ closed last Thursday (7/28/05) at 2198, its highest level since 6/08/01. The NASDAQ first reached 2198 on 1/04/99 or more than 6 ½ years ago (source: BTN Research).

ESTATE TAXES - The Senate has scheduled a vote for September 2005 regarding the fate of federal estate taxes. Republicans support raising the exemption amount from its current level of $1.5 million to an amount between $4-10 million while at the same time lowering the maximum marginal rate from 47% to 15%. The House passed a proposal on 4/13/05 which would repeal the federal estate tax. Estate and gift taxes paid brought in $25 billion in fiscal year 2004 or 1.3% of our nation’s total receipts (source: www.senate.gov, Treasury Department).

GOVERNMENT MONEY for your retirement? - House Democrats announced a plan last Tuesday (7/26/05) for changes in the way middle-class Americans save for retirement. The proposal is called AmeriSave and includes a government match of the first $1,000 invested into an IRA or 401(k) plan (source: www.house.gov).

FED CHANGES coming - The 7-member Fed Board of Governors is expected to have 2 vacancies by the end of August 2005 when Fed governor Edward Gramlich retires. Previously Fed Governor Ben Bernanke left and became the chairman of the Council of Economic Advisors on 6/21/05 . Bernanke is on the media’s short list of possible replacements for Fed Chairman Alan Greenspan when he retires on 1/31/06 (source: Federal Reserve).

"I've used Janis Stone as my Trusted Advisor when I've bought and sold real estate in San Francisco and I'm honored to be a part of her Trusted Advisor Team" - Jay Bransfield

Don't miss out on your opportunity to buy or sell! San Francisco Real Estate continues to be a great investment!

July 2005 **

June 2005 **

July 2004 **

* Includes Single Family Homes, Condo/Coop/TIC and Loft, 2-4 Units, and 5+ Units.
** Figures subject to change as Multiple Listing Service is updated.

Realtor.com is the official site of the National Association of Realtors® (NAR) and is a search engine for real estate nationwide. Realtor.com has all of San Francisco's listed homes and condominiums.