AI Money Hits the Market

The story of the month is AI.  San Francisco is the center of the world for Artificial Intelligence companies and we are seeing it penetrate our market with many new millionaires looking to diversify their equity positions into real estate.  We have very little inventory, currently with 34% fewer houses and condos on the market compared to the same time last year.  Low inventory and high demand equates to higher prices, and we are seeing the effects with multiple offers and properties selling more than a million over asking.  Condos are a bit of a different story, but those too are seeing greater interest than recent years, and depending on the neighborhood, are also receiving multiple offers in less than a week.  It really is the wild wild West! 

Inventories Continue to Lag Last Year's Numbers
by More than 30%

Inventory issues have been plaguing San Francisco for several years, as the number of active listings slowly dwindles. Unfortunately, nothing changed this month, as single-family home inventories are down 33.65% on a year-over-year basis, and condo inventories are down by 32.22% on a year-over-year basis. This was driven by the fact that fewer new listings are hitting the market, with 7.61% fewer new condo listings and 11.26% fewer new single-family home listings, and compounded by the fact that there were 51.82% more condos and 19.33% more single-family homes sold.

The Condo Market Creeps Closer to Becoming a Seller's Market

When determining whether a market is a buyers’ market or a sellers’ market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a seller’s market, whereas markets with more than three months of MSI are considered buyers’ markets.

While the single-family home market has been a heavily entrenched seller's market for quite some time (and it still is, with just 1.5 months of inventory on the market), the condo market has traditionally been more buyer-friendly. However, it’s been creeping closer toward being a seller's market as of late, with the condo market reporting just 3.2 months' worth of active inventory on the market in September.