SAN FRANCISCO (KPIX) – Two real estate headlines have sparked conversation in and around San Francisco City Hall. One about how tech IPOs will drive prices through the roof, the other about a slowdown in the market. Are these two competing ideas? Not necessarily.
“So, the number of transactions has gone down year-to-year from where were last year,” explains Carmen Chu, Assessor for the City of San Francisco. “We have about 700 fewer.”
San Francisco’s real estate market, at least measured by the number of sales, continues to slow. The assessor’s office reports parcel transfers down 10 percent from last year. Determining the cause is a bit more complicated.
“I think it’s hard to tell exactly what’s driving that number,” says Chu.
The real estate community is also trying to make sense of the numbers.
“If we were to say the market is slowing down a bit these days, that might be accurate. Whether it’s cooling off would be another story entirely,” says Tom Baumgartner with Redfin Real Estate.
Baumgartner says slower is not cooler, and the more important word might be ‘fewer’ – when it comes to the number of homes on the market.
“There are no less buyers on the market looking for the holy grail of housing, like a three-bedroom house in Noe Valley. Less houses on the market just means it’s more competition for those houses with the buyers that are out there looking.”
As for the IPO wealth expected to flood the city, that’s still not entirely quantifiable, at least not yet.
As Assessor Chu asks, “Even though something has gone IPO doesn’t mean that people cash out right away, or are in position to buy right away, or decide to live here?”
Baumgartner sees similar uncertainty.
“You know that might be part of the reason that we see a lessening in inventory,” he explains. “I’ve had several sellers say to me they want to wait until things pick up relative to the IPOs. They may be waiting forever for that to happen. Who knows what we can say.”
One last note from the assessor’s office, the slowdown in sales has not put much of a dent in transfer tax revenue because those funds come largely from massive commercial deals worth more than $25 million apiece.
Transfer taxes, of course, are dwarfed by what the city brings in with actual property taxes. As you might expect, that revenue stream is doing historically well. It is up 22% in just the past two years.