San Francisco Real Estate Market Update – October 2024
Affordability improved dramatically in Q3 2024 with the monthly mortgage payment for a 30-year loan down 10%. Prices are contracting slightly, which is the seasonal norm.
In September, the average 30-year mortgage rate declined for the third month to 6.08%, a 1.14% drop from the 2024 high reached in early May. The Fed also cut rates in September and will likely continue cutting them over the next six months.
Sales declined 2.5% month over month, falling to the lowest level in modern history, while inventory rose to its highest level since 2020. Better affordability hasn’t yet translated to higher sales.
Enough data has been released to suggest that home prices peaked nationally in June 2024, and won’t peak again this year. Of course, there will be deviations in local markets, but the larger trend is clear: home prices are returning to a more normal growth and contraction cycle in which prices increase from January to June and contract from June to January. Sales have trended lower for nearly three years now, and that sales slowdown has allowed inventory to build to the highest level since 2020.
Different regions and individual houses vary from the broad national trends, so we’ve included a Local Lowdown below to provide you with in-depth coverage for your area. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.
The median single-family home price rose 7.2% month over month, while condo prices increased 11.6%. We expect price contraction for the rest of the year, which is the seasonal norm.
Total inventory rose 37.1% month over month, as new listings spiked, which is actually common in September for San Francisco. We expect inventory to decline and the overall market to slow in the fourth quarter.
Months of Supply Inventory declined significantly from May to August, a sign that the market is improving for sellers, but rose in September. Currently, MSI remains under three months of supply for single-family homes, indicating it’s still a sellers’ market, while condo MSI continues to indicate a buyers’ market.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
In San Francisco, home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from April 2022 to August 2022. Since August 2022, the median single-family home and condo prices have hovered around $1.6 million and $1.1 million, respectively. Year over year, the median price was up 3% for single-family homes and 8% for condos. Prices are more likely to rise if more sellers come to the market, which happened in September. Inventory is so low that rising supply only increases prices as buyers are better able to find the best match. More homes must come to the market to get anything close to a healthy market.
High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates near 6% much more than around 7%. Now that rates are declining, sales could get a little boost, but the housing market typically slows in the fourth quarter of any year.
In September, sales fell, while new listings surged, nearly doubling month over month, which is actually normal for this time of year. In San Francisco, a significant amount of new listings tend to hit the market in January and September in any given year. Compared to this time last year, new listings are even and inventory is down 10%. Year over year, sales are up 1% for single-family homes, but are down 13% for condos. San Francisco is somewhat unique in that mortgage rates really have brought prices down, so the typical supply-and-demand dynamics don’t really present as well in terms of price in recent history. Single-family home prices peaked at $2.05 million in April 2022 as mortgage rates were rising rapidly; $2 million homes are simply far more affordable with a 4-5% mortgage than a 6-7% mortgage. Because of the relatively high prices of homes in San Francisco, prices had to come down to keep buyers in the market.
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The San Francisco housing market tends to favor sellers, which is reflected in its low MSI, especially for single-family homes. MSI has been below three months since October 2023 for single-family homes. From May to August, MSI declined meaningfully. In September, however, MSI jumped significantly higher as new listings spiked. Recently, condo MSI indicated a buyers’ market in September, while single-family home MSI still implied a sellers’ market.
Stay up to date on the latest real estate trends.
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