Is the Election Affecting the SF Housing Market?

The upcoming election has everyone talking and wondering about how the outcome could affect our economy and our local real estate market.  Clients have asked me what will happen and, while I don’t have a crystal ball, I can tell you that the data shows that our market is following a very predictable pattern of seasonality, and doesn’t seem to be overly affected by election fears and hesitation.

The Fall Market Pattern

The San Francisco real estate market has two distinct seasons:

Spring – A long season characterized by an increase in buyer demand (“I will buy a house this year!”) and lagging inventory (“I hope to get my house ready to sell this year!”) which quickens the pace of the market and puts upward pressure on prices.

Fall – A short season, normally characterized by a burst of available inventory in September, and a predictable drop in the number of sales as we approach the holidays.

You can see from the graph to the right that the number of sales sharply increases in the spring and retracts in the fall, with a smaller dip during the summer months.

We are tracking just ahead of last year in terms of number of sales. September 2015 saw 345 properties change hands, while September 2016 saw a healthy 398 sales.

Overall, the number of sales has consistently dropped over the last few years. As prices have risen, affordability has tightened, contributing to lower inventory and sales volume.

Prices are Normalizing and Following the Seasonal Trend

There is an equally predictable seasonal pattern in prices, which is a run up in the spring and a retraction in the fall, when buyers have more inventory from which to choose. The graphic to the right illustrates this trend over the last few years.

Appreciation is slowing, and overall, prices are normalizing. Some segments of the market have seen a correction in prices over the last 12-18 months – both the downtown condo market and the over 3MM segment have come down from their peak in 2015. But the majority of homes sold so far this fall have done so at prices on par with this time last year.

When we wake up from the distraction of this election, we will still have a housing market that has low inventory, healthy demand and stable prices. The data shows that, so far, the market is behaving normally, within predictable seasonal patterns that have been playing out for many years.

If you’d like more specific data for your neighborhood or price point, please contact me!