Statistical Tables | | Fed Stands Pat, Rates Dip
| Trends at a Glance | |||
| (Single-family Homes) | |||
| Aug 20 | Jul 20 | Aug 19 | |
| Home Sales: | 214 | 210 | 168 |
| Median Price: | $ 1,663,000 | $ 1,665,000 | $ 1,602,500 |
| Average Price: | $ 2,041,162 | $ 2,086,053 | $ 1,872,478 |
| SP/LP: | 104.3% | 103.8% | 110.9% |
| Days on Market: | 24 | 26 | 25 |
| (Lofts/Townhomes/TIC) | |||
| Aug 20 | Jul 20 | Aug 19 | |
| Condo Sales: | 236 | 256 | 207 |
| Median Price: | $ 1,244,500 | $ 1,268,200 | $ 1,281,250 |
| Average Price: | $ 1,358,295 | $ 1,414,347 | $ 1,386,736 |
| SP/LP: | 99.9% | 100.4% | 104.8% |
| Days on Market: | 39 | 38 | 33 |
Sales of single-family, re-sale homes jumped in August, rising 27.4% year-over-year. They were up 1.9% from July. There were 214 homes sold in San Francisco last month. The average since 2000 is 214.
Year-to-date, home sales are down 18.8%. Condo sales are down 26%.
The average sales price for homes rose 9% year-over-year.
The median sales price for single-family, re-sale homes gained 3.8% year-over-year.
The median sales price for condos/lofts was down 2.9% year-over-year.
The average sales price was down 2.1% year-over-year.
Sales of condos/lofts rose 14% year-over-year. They were down 7.8% compared to July. There were 236 condos/lofts sold last month.
The sales price to list price ratio, or what buyers are paying over what sellers are asking, rose from 103.8% to 104.3 % for homes. The ratio for condos/townhomes fell to 99.9% from 100.4%.
Average days on market, or the time from when a property is listed to when it goes into contract, was 24 for homes and 39 for condos/lofts.
for single-family homes rose 0.1 of a point to +3.5. Pricing momentum for condos/lofts fell 0.6 of a point to +3.8.
Our momentum statistics are based on 12-month moving averages to eliminate monthly and seasonal variations.
momentum by using a 12-month moving average to eliminate seasonality. By comparing this year's 12-month moving average to last year's, we get a percentage showing market momentum.
the blue area shows momentum for home sales while the red line shows momentum for pending sales of single-family, re-sale homes. The purple line shows momentum for the average price.
As you can see, pricing momentum has an inverse relationship to sales momentum.
The graph below shows the median and average prices plus unit sales for homes.
Remember, the real estate market is a matter of neighborhoods and houses. No two are the same. For complete information on a particular neighborhood or property, call me.
P.S. The FHA requires all condo projects to be re-certified before they will make a loan. To find out if the condo project you're interested in is eligible, go here: https://entp.hud.gov/idapp/html/condlook.cfm.
The graph below shows the median and average prices plus unit sales for condos/lofts.
The real estate market is very hard to generalize. It is a market made up of many micro markets. For complete information on a particular neighborhood or property, call me.
If I can help you devise a strategy, call or click the buying or selling link in the menu to the left.
Complete monthly sales statistics for San Francisco are below. Monthly graphs are available for each area in the city.
| August Sales Statistics | |||||||||||
| (Single-family Homes) | |||||||||||
| Prices | Unit | Yearly Change | Monthly Change | ||||||||
| Median | Average | Sales | DOM | SP/LP | Median | Average | Sales | Median | Average | Sales | |
| San Francisco | $1,663,000 | $2,041,162 | 214 | 24 | 104.3% | 3.8% | 9.0% | 27.4% | -0.1% | -2.2% | 1.9% |
| D1: Northwest | $2,258,000 | $2,367,440 | 25 | 16 | 103.7% | 5.0% | 0.3% | 212.5% | -1.8% | -0.3% | 19.0% |
| D2: Central West | $1,526,500 | $1,679,178 | 32 | 19 | 110.7% | -3.5% | 0.5% | 0.0% | 3.5% | 3.9% | 14.3% |
| D3: Southwest | $1,100,000 | $1,184,231 | 13 | 26 | 109.5% | -10.6% | -14.4% | -13.3% | -4.8% | -2.0% | 8.3% |
| D4: Twin Peaks | $1,810,000 | $2,003,048 | 21 | 21 | 103.1% | 11.4% | 13.0% | 10.5% | 7.1% | 6.1% | -16.0% |
| D5: Central | $2,512,500 | $2,812,333 | 30 | 43 | 100.8% | -1.5% | 13.9% | 25.0% | 4.9% | 11.9% | -33.3% |
| D6: Central North | $2,922,500 | $3,117,500 | 4 | 27 | 99.3% | 1.7% | -3.8% | 33.3% | 12.4% | 16.5% | -20.0% |
| D7: North | $4,200,000 | $5,543,333 | 9 | 34 | 96.6% | 15.1% | 36.0% | 80.0% | -1.6% | 5.2% | -18.2% |
| D8: Northeast | $2,300,000 | $2,333,333 | 3 | 42 | 104.7% | -31.9% | -30.9% | 50.0% | -45.4% | -44.6% | 50.0% |
| D9: Central East | $1,675,000 | $1,756,864 | 33 | 15 | 107.0% | 4.4% | -0.8% | 73.7% | -2.2% | -1.1% | 37.5% |
| D10: Southeast | $1,243,900 | $1,279,591 | 33 | 17 | 112.0% | 1.1% | 2.5% | -15.4% | 3.7% | 6.9% | 6.5% |
| August Sales Statistics | |||||||||||
| (Condos/TICs/Co-ops/Lofts) | |||||||||||
| Prices | Unit | Yearly Change | Monthly Change | ||||||||
| Median | Average | Sales | DOM | SP/LP | Median | Average | Sales | Median | Average | Sales | |
| San Francisco | $1,244,500 | $1,358,295 | 236 | 39 | 99.9% | -2.9% | -2.1% | 14.0% | -1.9% | -4.0% | -7.8% |
| D1: Northwest | $1,450,000 | $1,356,182 | 11 | 33 | 99.7% | 0.0% | -9.0% | -15.4% | 13.7% | 2.0% | -42.1% |
| D2: Central West | $1,480,000 | $1,496,250 | 4 | 33 | 100.7% | 64.4% | 72.5% | -20.0% | 9.0% | 8.7% | -33.3% |
| D3: Southwest | $1,200,000 | $1,191,333 | 3 | 34 | 104.1% | -9.5% | -1.1% | 0.0% | 23.4% | 22.5% | 50.0% |
| D4: Twin Peaks | $1,710,000 | $1,396,667 | 3 | 16 | 110.5% | 53.4% | 26.7% | -25.0% | 153.3% | 63.5% | -40.0% |
| D5: Central | $1,497,500 | $1,475,709 | 50 | 30 | 102.0% | 3.0% | -7.4% | 92.3% | 1.5% | 0.1% | 6.4% |
| D6: Central North | $1,227,000 | $1,478,667 | 21 | 23 | 100.4% | -4.5% | 10.1% | -4.5% | 3.5% | 22.0% | -4.5% |
| D7: North | $1,476,250 | $1,764,235 | 34 | 28 | 99.6% | -19.1% | -9.0% | 25.9% | -13.2% | -10.3% | 9.7% |
| D8: Northeast | $915,000 | $966,969 | 32 | 49 | 97.9% | -29.6% | -38.1% | 52.4% | -24.8% | -35.4% | -15.8% |
| D9: Central East | $1,162,000 | $1,276,593 | 72 | 50 | 98.6% | 8.3% | 4.6% | 7.5% | 3.8% | -0.2% | -11.1% |
| D10: Southeast | $737,000 | $701,917 | 6 | 89 | 0.0% | 0.4% | 0.2% | 0.0% | -24.3% | -27.8% | 20.0% |
August 28, 2020 -- After several years reviewing and considering how it shapes monetary policy, the Fed this week formally abandoned a rigid inflation target in favor of an average level of inflation over time. For a long stretch of years, the Fed used an implicit inflation target, and starting in 2012 an explicit inflation target, where it would not allow core Personal Consumption Expenditure (PCE) inflation to surpass the two percent mark.
The central bank's change in thinking encompasses two related components. To start, the Fed will no longer look to start raising interest rates simply because unemployment falls below some arbitrary level. For a long while, it was thought that unemployment below 5% would foster inflation... then 4.5%... then 4%... and the reality is that the Fed simply doesn't know what level might cause inflation, and so will stop preemptively raising the federal funds target rate to counter anticipated inflation, as it did back in 2015 through 2018. At the time, unemployment was about 5%; as it continued to decrease, the Fed began to accelerate its pace of rate increases, which slowed economic growth to a crawl by the end of 2018. Even then, the labor market remained very strong, and inflation still remained at bay.
So, the change in this component of policy essentially puts to bed the Phillips Curve model, and markets will no longer start to expect higher interest rates even if unemployment returns to 50 year lows or more at some point. With this in place, the Fed is less likely to tighten rates even in good economic times, and supports its mandate for "full employment".
The other component means a bit more for mortgages. The Fed will no longer target a specific inflation rate, but rather an average rate of inflation over some unknown time period. Following periods where inflation has run below its preferred 2% level, it will allow inflation to run above 2% for some length of time as a counterbalance. What's not clear yet (and may not be clear) is exactly how much higher inflation might be allowed to run, and for how long, before the Fed would feel compelled to act. For example, would three quarters of core PCE at 1.75% be allowed to be countered by three quarters at 2.25%? Alternately, is this tempered by the trajectory for inflation, with a quarter at 2.1%, then one at 2.5% a policy-triggering event? The Fed has provided no guidance in this way but may have to at some point, else it may risk a sudden policy adjustment for which the markets are unprepared. Of course, this "how long above target" isn't much of a problem today; getting core PCE inflation reliably back up to 2% (let alone beyond) has proven elusive and so this is more of a tomorrow's problem than today's.
But it does have implications for mortgage rates, or at least will eventually, when the Fed is no longer involved in the mortgage market directly, buying up MBS and long-dated Treasuries. When investors again drive rates in the marketplace, both current and expected levels of future inflation factor into decisions of what investments will be purchased, and at what required level of return. In this equation, there is a big difference between 1.75% inflation and 2.25% inflation, and if inflation will be tolerated by the Fed at higher levels, the compensation (yield) to the investor must also be higher to achieve an acceptable or desired "real" rate of return. Higher required yields on mortgage bonds ultimately mean higher mortgage rates for consumers.
Also of import to mortgage borrowers this week was the FHFA's decision not to implement it's new 0.5% fee on refinancing until December 1, three months later than announced just a couple of weeks ago. Although detailing an expected $6 billion hit for Fannie Mae and Freddie due to CARES Act forbearance costs, the FHFA nonetheless bowed to considerable industry and political pressure to hold off. The GSE regulator also took into account the impact on low and moderate-income borrowers hoping to refinance, and exempted loans below $125,000 from the fee altogether.
Last week, we saw that homebuilding continued a strong post-shutdown resurgence, and learned that the nation's homebuilders were ebullient. This week, we learned more about why they are so happy; sales of newly-constructed homes leapt by 13.9% in July to an annual 901,000 pace, besting forecasts by a wide margin and a returning to a sales pace last seen at the end of 2006. The surge in sales drew down supplies of homes available to buy, which declined to 4 months worth of built and ready to sell stock. At 299,000 actual units available, this is the thinnest stockpiles have been since March 2018 and will likely allow for a strong pace of homebuilding to continue, providing a key bit of support for the economy. As well, and although more expensive to start with than existing homes, prices for new homes were actually 2.7% lower in July than June; coupled with lower mortgage rates during the month, affordability of new homes was actually improved a bit, too.
Sales of existing homes have also been strong, if
tempered by surging prices and a lack of homes available to buy. The National
Association of Realtors advance Pending Home Sales Index climbed another 5.9% in
July, and so existing home sales should have some upward strength yet to be
seen, if perhaps less so than in recent months, as gains have been 44.3% in May,
15.8% in June and now 5.9% in July, a diminishing pattern of activity as we head
into the end of summer. That said, if the percentage increase for July over June
translates directly into sales for August, we could see existing home sales
crack the 6 million mark, something that hasn't happened in close to 15 years.
This page is copyrighted by http://rereport.com. All rights are reserved.