SF MARKET REPORT
SEPTEMBER 2021

While we did see a summer slowdown in July and August, it was relative. We were at 2019 Spring inventory numbers (and buyers were out buying up the inventory).

Typically September is the biggest month for new listings. For my buyers, this week after labor day has given them a lot of options. Very likely this will be a huge month for inventory. Time to hit the open houses!

SF median HOUSE prices are now up 13%, CONDO prices are flat, and RENTS down 17%.

After the pandemic hit, supply and demand shifted dramatically. However, the rebound has been close to parallel (see slides below).

Is this the new normal or will there be a re-balancing with condos and rents in the future as people return to SF? I love to hear opinions about this!

Abnormally high household movement occurred due to pandemic-related, population-density reasons, housing and living
costs, family and quality of life issues, and new wealth – moves greatly enabled by work-from-home. There was a
considerable increase in the number of buyers for first homes, larger homes and luxury homes. Since Covid and its
population density issues, house prices are well up, condo prices are flat (after initially plunging after the pandemic hit), and
rents well down. (Rental units make up the majority of SF housing.)

New wealth: Federal and state governments shoveled trillions of dollars to businesses and households, many of which were
in no financial distress. Financial markets soared, dramatically increasing the personal wealth of middle class and more
affluent households. And house values climbed. These factors contributed to the sense of being wealthier than ever, which
helped supercharge the housing market. The households which did suffer financial hardship were generally less affluent, and
more likely to be tenants than homeowners or homebuyers: Their misfortunes and the work-from-home policies of high-tech
companies deeply impacted the SF rental market, though it too began to recover since the rollout of vaccines.

Interest rates: The Fed implemented policies that brought mortgage interest rates down to historic lows, significantly
lowering housing costs, and motivating prospective homebuyers to buy sooner than later. (The risk is that if interest rates
jump, perhaps due to inflationary pressures – and we are not saying they will – it could have pronounced cooling effect on
the market, as it did in mid-late 2018.)

Optimism boosts housing and financial markets: Markets typically move in cycles characterized by pervasive economic
optimism, uncertainty or pessimism, and today, optimism generally prevails among those with financial resources. Because
there are so many economic, political and ecological factors at play at any given time, it is extremely difficult to predict the
timing, duration or magnitude of market cycles up or down.

Demographic shifts: According to census data, many more less-affluent/less-educated residents left CA than have arrived in
the 10 years through 2019, but more higher-income/more-educated residents arrived than departed. Out-migration
accelerated in San Francisco since Covid hit, especially of less affluent residents – unemployment hit lower-wage jobs the
hardest – though departures by affluent households seeking less densely populated locations also occurred. However, SF saw
heightened demand for houses (with their yards and decks) by affluent and very affluent buyers competing for an inadequate
supply of listings for sale. The condo market began a very dramatic rebound with the rollout
of vaccines in 2021, hitting new highs is sales volume.

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