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Mission Local Talks Real Estate During Corona

Kevin gets quoted and sounds a bit more upbeat and nuanced than all those other agents. 

The real estate market in the Mission District and San Francisco appears to be on its way to recovering from the shutdown in March, according to several real estate agents ... 

— Originally published July 9, 2020 on missionlocal.org/2020/07/real-estate-market-in-the-mission-appears-to-recover-for-now/

Real estate market in the Mission appears to recover, for now

The real estate market in the Mission District and San Francisco appears to be on its way to recovering from the shutdown in March, according to several real estate agents, although some parts of the market remain sluggish.

“The market is holding up pretty strong, but it depends on the segment,” said real estate agent Ruth Krishnan. “Condos and high-rise buildings are the softest. I would say people aren’t super stoked about getting in an elevator. And people have decided that they really, really value outdoor space and greenery.”

Krishnan said her agency recently sold a condo in the Mission District on Shotwell Street.

“It did very well, but it had this beautiful private garden,” she said. “With condos, definitely the ones that are doing the best, selling the quickest, and selling for the highest prices have outdoor space. That’s a big thing for people right now.”

“Most of the stuff sitting right now, it just doesn’t have any yard space,” she added.

Krishnan said that, typically, March is the busiest month for real estate in San Francisco, but this year all listings were pulled when the shelter-in-place order was announced. That didn’t keep things down for long, though. The city added real estate to the list of essential businesses on March 31, and Krishnan immediately started seeing business pick up.

“I was shocked. Right coming out of [March], people were already writing very aggressive offers. I was like, ‘Wait, what? Really? Right now?’” she said.

The monthly median house sale price in San Francisco set a new record of $1.8 million in June, according to the monthly report from the Compass real estate brokerage. “But it’s just a single month,” added Patrick Carlisle, chief market analyst for Compass.

“I never would have guessed that we would see this sort of rebound around the Bay Area, in the midst of one of the greatest health and economic crises in U.S. history,” Carlisle said.

Although the rebound in San Francisco is dramatic, it’s the smallest of the Bay Area, he said. Other counties — including more rural areas like Sonoma, Napa, Monterey, and Santa Cruz counties — have all seen spikes that “may be higher than at any time in history, in terms of offers being accepted.”

The rebound in San Francisco might not be as pronounced, perhaps, because the city has stricter shelter-in-place rules, Carlisle said, or perhaps because it’s the most densely populated region of the Bay Area.

“The Mission remains popular and strong,” said real estate agent Jennifer Rosdail. “The shutdown slowed it down at first, but people have figured out how to get their transactions done, and it’s accelerating a little bit.”

Since April, Rosdail said sales started coming back and have improved each month. “I’ve seen that in every segment I’ve checked — except for the luxury homes over, like, $2.5 million,” she said.

There aren’t many of those more expensive single-family homes in the Mission, but in a neighborhood like Noe Valley, the pattern is striking, Rosdail said. Single-family homes priced lower than $2.5 million there are moving much more quickly than those above $2.5 million, and more appear to be entering the market than are being sold.

“I think that dichotomy is interesting. I see a deceleration in the luxury homes” in Noe Valley, Rosdail said.

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"All the talk of exodus — that’s the headline-grabbing news — but the real news is that a lot of buyers have a little more affordability. And a little more balance to the market allows them to own a piece of San Francisco." — Kevin Ho

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Taking the city as a whole, Carlisle’s analysis shows luxury single-family homes priced above $3 million are increasing in price — but that’s based on properties that have accepted offers, while Rosdail is also examining the growing supply of inventory in Noe Valley.

By and large, Carlisle said he prefers not to look at individual neighborhoods.

“When you look at a specific neighborhood, the sales numbers are so low, it’s hard for the data to be statistically reliable,” he said. “I generally try to look at them only on an annual basis.”

But, even with small sample sizes, it remains the only tool we have.

Crunching the numbers for the Mission, Rosdail said things were picking up in terms of volume and price — but that didn’t mean losses had been fully recovered, especially for condos. Comparing the median price of a two-bedroom condo that sold in May this year with the same time period last year, the price had dropped from $1.25 million to $1.05 million — or about 16 percent less. But, again, prices have gone up since then.

“April was a terrible month to sell your home. May wasn’t so bad. June was pretty good,” Rosdail said. “I don’t think we’re going to experience a summer slowdown this year; I think we already had it in April. People are just going to keep charging forward.”

The pandemic has also shifted what many people normally think of as in-demand neighborhoods.

“Outer Richmond is hot right now. The Sunset is doing great, because people want more space, they want to be away from each other,” Rosdail said.  Meanwhile, condos in SoMa haven’t been moving as quickly.

“A lot of renters have become buyers,” observed real estate agent Kevin Ho. “All the talk of exodus — that’s the headline-grabbing news — but the real news is that a lot of buyers have a little more affordability. And a little more balance to the market allows them to own a piece of San Francisco.”

Ho said more of the buyers right now seem to be people who want to live in the home they’re purchasing, rather than using it as an investment. He said some of the recent changes to the law around tenant protections and rent forgiveness might be having an impact, and investors “don’t necessarily want to assume that risk.”

In San Francisco, the market for apartment buildings has also changed. For buildings with six or more apartments, Ho said the market had “quieted down, with not much movement.”

“For four units or under, we’re seeing good activity, because it’s more manageable,” he said. “Bigger buildings with multiple units, we’re seeing that market kind of take a pause as they wait and see how this pans out, because of all those changes” to rental laws.

Not all real estate agents Mission Local spoke to were convinced prices would continue to climb. An agent familiar with the Mission District, but who did not wish to be quoted by name, conveyed skepticism that the rush the city had seen over the past few months would be sustainable. Buyers may become choosier before submitting an offer on a less-desirable property, they argued, which could lead to more houses than buyers.

Analyzing numbers can tell us how the market has performed so far, but predicting the future remains as elusive as ever.