San Francisco homes are still some of the priciest in the nation, but sales of those houses are showing significant weakness. September sales were down 19.5 percent in the city from a year ago, according to the California Association of Realtors.
"We're going through a kind of correction, as we have a lot of new developments being built right now. The supply is definitely on the rise," said Justin Fichelson, an agent at Climb Real Estate Group in San Francisco. "The market is not going to continue going up like we've seen in the past two years, because prices are already high."
The median price of a San Francisco home sold in September was $1.189 million, an 11.6 percent increase from a year ago. That is about five times the national median home price. While single-family homes in the most popular neighborhoods are still selling quickly at above asking price, other parts of the city are slowing, and more people are moving out to the wider Bay Area.
Sales in the Bay Area in September were up 6.9 percent from a year ago to the highest level since 2009, according to CoreLogic. That was when the homebuyer tax credit was in place.
"The 'spillover' effect continues in the San Francisco Bay area, with more people looking for affordable homes in the inland counties," said Andrew LePage, research analyst at CoreLogic. "The year-over-year gain in sales last month was greatest in three of the San Francisco Bay Area's most affordable, and also inland, counties: Contra Costa, Solano and Napa. Through the first nine months of this year, the combined sales for those three counties jumped about 15 percent — more than twice the year-over-year gain for the overall region."
The median price in the San Francisco Bay area in September 2015 was $650,000, far less than the city but still up 8.3 percent year over year. There is considerably more inventory in the wider Bay Area than there is in the city.
The development in San Francisco proper is mostly in condominiums. Single-family homes still go at a premium, but some will still sit. The average selling time is 22 days.
"The properties that are sitting on the market are those that have flaws. If it's in a great neighborhood and completely redone, you can still get over what it's technically worth," added Fichelson.