Last Year in Review

The Richmond District’s single-family median home prices took a dip for the second year in a row after rising for 10 years.

Median prices declined by 11.7% and the number of sales by 22.4% in 2023. Prices dropped steadily throughout the year as the Feds kept increasing interest rates. The Richmond Home Sales Comparison Table shows the results in 2023 as compared with prior years broken up by quarters.

The data were gathered from the San Francisco Association of Realtors’ Multiple Listing Service consists of single-family home sales in the Richmond, Lake, Presidio Heights, Jordan Park, Laurel Heights, Lone Mountain and Sea Cliff areas.

In 2023, there were 152 sales versus 196 for 2022 and 216 for 2021, a 22.4% decrease from 2022 and a 29.6% decrease from 2021. The annual median price comparison shows an 11.7% decrease year over year as compared to a decrease of 8.9% from 2021 to 2022. The amount of marketing time to sell a home increased to 20 days, or 53.8% longer.

If you analyze the adjacent chart, it shows that the prices dropped every quarter in step with rising interest rates. The 30-year fixed-mortgage rate increased from 6% at the beginning of the year to about 8% in November before dropping to about 7%. Prices drop as affordability decreases. Since I started collecting data 25 years ago, this is the lowest number of sales in the Richmond District, except for 2009 when we had only 135 sales.

In 2023, the major stock indexes did well, gaining about 12-41% at the writing of this article, with a strong upward trend toward the end of the year. The consumer confidence index is trending up. Our unemployment rate is hovering at 3% in San Francisco, which represents pretty much full employment. The 30-year mortgage interest rate has come down to about 7% and should come down a little more in 2024. Inflation has dropped from 8% to about 3.2%.

The economy appears to be trending upward. With the presidential election in 2024, you can be sure that President Joe Biden will do all he can to make sure the economy is heading in the right direction. Remember, real estate is a lagging economic indicator, meaning that it will follow the economy up, usually by about 6-12 month.

So, even though sales are pretty much at an all-time low and sale prices have come down, the signs are there for a market bottom. Sellers are finally realizing that prices are lower and interest rates really affect how buyers look at the market. Those who need to sell are making price adjustments and selling. However, many owners are making the decision to wait until the market gets better before selling, limiting our listing inventory and thus sales.

Locally, the demand in San Francisco and the Richmond District will continue to be OK. It is a desirable place to live and was voted one of the 40 coolest places in the world by Time Out magazine. Prices have dropped a little, which makes it more affordable.

My prediction for 2024 is that we will continue to have a slow real estate market but better than 2023. It will be a very balanced market with more negotiating power to buyers. Inventory will be pretty tight as owners who do not have to sell will continue to hold onto their properties until the market gets better.

Therefore, if you are contemplating buying into the real estate market, there will be opportunities. If you are planning on selling, keep in mind that the market is slow, but if priced and marketed correctly, you should still get a pretty good price. If you want to reposition your real estate portfolio, this is an excellent time to do it and take advantage of less competition as the investment market is very sluggish.

Wishing you all a Happy New Year and all the best in 2024!

John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at 415-465-0505 or email at johnlee@isellsf.com.