Last Year in Review

The Sunset District single-family median home prices took a dip for the second year in a row after rising for 10 years with median prices declining by 11.6% and the number of sales by 25.2% in 2023. Prices dropped steadily throughout the year as the Feds kept increasing interest rates. The Sunset Home Sales Comparison table shows the results in 2023 as compared with prior years broken down by quarters.

The data were gathered from the San Francisco Association of Realtors’ Multiple Listing Service and consists of single-family home sales in the Sunset, Parkside and Golden Gate Heights areas.

In 2023, there were 344 sales versus 460 for 2022 and 515 for 2021, a decrease of 25.2% year over year and a decrease of 33.2% compared to 2021. The median sale prices decreased 11.6% to $1,502,000 from 2022 to 2023 while it went down .3% from 2021 to 2022. The amount of marketing time to sell a home was about 11-14 days for 2021, 2022 and 2023, all indicating good demand for the Sunset.

If you analyze the attached chart, it shows that prices drop 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 down 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 Sunset District!

In 2023, the major stock indexes did well, gaining about 12-41% at the writing of this article, with a strong upward trend towards 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 currently about 3.2%.

The economy appears to be trending in the right direction and 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 that real estate is a lagging economic indicator, meaning that it will follow the economy up, usually by about 6-12 months.

So, even though the sales are pretty much at an all-time low and sales prices have come down, the signs are there for a market bottom. Sellers are finally realizing 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, thus limiting our listing inventory and thus sales.

Locally, the demand in San Francisco and the Sunset District will continue to be OK. It is a desirable place to live and one of the safer neighborhoods with the lowest single-family home prices.

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 balance market with more negotiating power to the 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 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.