Real Estate: John M. Lee
Richmond year in review
As predicted, the real estate market was bouncing at the bottom of the real estate cycle in 2011. But, we are seeing some encouraging economic signs of recovery.
The results in the Richmond District for 2011 are encouraging, showing about the same amount of homes sold with only a slight decrease in the median price. The Richmond Home Sales Comparison table shows the results as compared with prior years.
The data was gathered from the SF Association of Realtors' Multiple Listing Service and consists of single-family home sales in the Richmond, Presidio Heights, Jordan Park, Laurel Heights, Lone Mountain, Sea Cliff and Lake Street areas.
In 2011, there were 188 sales versus the same for 2010 and 135 for 2009, a large increase of 39.3 percent from 2009. This is the highest number of sales in the Richmond District since 2005. This indicates that buyers are realizing good values and discovering the district once again.
The amount of marketing time to sell a home decreased to 62 days in 2011 from 66 days in 2010, versus 69 days in 2009, a decrease of 4 days, or 6 percent, from 2010 and an increase of 7 days, or 10.1 percent, from 2009. This indicates a slightly higher amount of activity in this area.
The annual median price comparison shows a 5.5 percent decrease over last year as compared to a 1.5 percent decrease from 2009 to 2010. This is a result of the conforming loan limit decreasing from $729,000 to $625,000 on Sept. 30, which directly impacted the Richmond market as many loans for purchases are in this range. Thus, loans were more difficult to obtain and the interest rates were higher; leading to lower purchase prices. The good news is that Congress passed and President Barak Obama approved increasing the loan conforming limit for FHA loans back to $729,950 in November, allowing for more affordable loans in this segment of the market, which will bode well moving forward. However, Fannie Mae and Freddie Mac limits stayed at the $625,000 mark, but we are hoping that they will change in the upcoming year.
During 2011, the consumer confidence index rose, fell and then rose again toward the end of the year. The stock market also went up and down throughout the year. The good news lies in that our unemployment rate has been decreasing throughout the year and is now hovering at 8.2 percent, a level we have not seen since 2009. The interest rate also decreased to the 4 percent range for a 30-year fixed mortgage. In addition, the early indication from holiday retail sales appear to be doing well, signaling that consumers are spending money, which will drive up the economy. So, with the mixed signals we are seeing throughout the year, no wonder the real estate market is doing the same.
As I mentioned many times in the past, the real estate market lags the general economy, meaning that it will follow the other markets up. As the economy improves, more people will have jobs and receive higher wages, making them feel more comfortable about getting into long-term commitments, like mortgages to purchase homes, thus fueling the real estate market and starting our next up cycle!
Locally, the demand in San Francisco and the Richmond District will continue to be good. As I learned throughout my career, San Francisco real estate is desirable and our market tends to rebound very strongly once negative variables are removed. At the end of 2011 our prices were back to 2003-2004 levels, our inventory numbers were very low due to seasonality and many owners were reluctant to sell at the current price level, which bodes well for the upcoming year.
Thus, my prediction for 2012 is that we will have a balanced real estate market, where the negotiating power will be fairly even between buyers and sellers, a continuing shortage of good inventory, and level to slightly up prices. If you are contemplating buying a property for the long-term, or trading up, this will be an ideal year to do so.
John M. Lee is a top-selling broker at Pacific Union and specializes in the Richmond and Sunset districts. If you have any questions regarding real estate, call him at (415) 447-6231 or send an e-mail to email@example.com.