Low Home Inventory Hikes Home Prices Upward

San Francisco is like an island in so many ways, exempt from many problems that afflict the rest of the state, and our real estate market is no exception.

While much of California is dealing with a slight year-to-year decline in median home prices fueled by a glut of homes on the market, here in San Francisco our inherent exclusivity is driving prices up. A lack of inventory means that our overall sales numbers will be lower these coming months, but those reports won’t reflect the reality that well-maintained and realistically priced homes in our area will continue to sell.

Comparatively low levels of new construction as well as the geographic limitations on growth have contributed to the City’s low property inventory. In addition, many sellers still seem reluctant to enter the market due to reports of a slowdown, despite indications that little has changed here in San Francisco. Economic growth, a mild spring, and overall quality of life continue to attract homebuyers.

In the meantime, the Mortgage Bankers Association recently reported that despite media-spun tales of woe resulting from rising foreclosure rates and exotic loans, the mortgage market is “fundamentally sound and working efficiently.” It expects adjustable-rate mortgage rates to hold steady throughout the year. As the U.S. economy grows – albeit slowly – more buyers will enter the market.

California’s average DOM (days on market) for February was 70; here in San Francisco it was just 48. The Oakland Tribune also reports that in February, Bay Area homesellers made a median $290,000 profit. The bottom line? You still can’t miss with San Francisco real estate.