Seeking to rationalize the recent drops in recorded home sales in San Francisco, a lack of inventory, seasonality and changes in the mortgage market which shifted sales at the end of 2015 have all been invoked to explain it away with the wave of a hand. So let’s take a harder look at the data.
Comparing three months of sales data, spanning November to January, should eliminate the impact of any shift in sales from November to December. And by comparing the three-month period, year-over-year, we’ll account for seasonality.
From November 2015 to January 2016, roughly 1,500 homes traded hands in San Francisco. And from November 2016 to January 2017, the total was closer to 1,400, down 7 percent on a year-over-year basis.
At the same time, both listed and unlisted inventory levels were running between 40 and 70 percent higher, so it’s not a lack of homes or choice which is to blame.
And with respect to the argument that it’s a systemic shift in the mortgage market which has led to a drop in local sales? Well, on the same quarter-over-quarter basis, total sales in the eight Bay Area Counties surrounding San Francisco ticked up 3 percent versus San Francisco’s 7 percent decline.
If we isolate the sales in the high-cost Silicon Valley counties of San Mateo and Santa Clara, transaction volume still ticked up 2 percent on a quarter-over-quarter basis versus San Francisco’s decline. And sales were up 5 percent across the lower-cost East Bay counties of Alameda, Contra Costa and Solano, the performance of which is helping to drive the performance of the Case-Shiller Index for San Francisco.
It was basically a push (down less than a percent) for the northern counties of Marin, Napa and Sonoma.