SF Market Absorption UpdateMarch 23, 2009
This morning we queried the MLS for a snapshot of our local marketplace in order to understand absorption. Property types in the query include single family homes, condos, TICs, lofts, co-ops, 2-4 unit buildings, 5+ unit buildings, and lots/acreage. It does not include new developments who leave their data out of the MLS. Here is the rundown:
- 518 properties have sold in San Francisco since January 1, 2009.
- There are currently 2,038 properties for sale in the MLS.
- 625 properties are currently in contract.
- That leaves 3.26 months of inventory* out there. Anything less than 6 months of inventory is considered a stable market.
*When we refer to “months of inventory”, it means that if new listings stopped hitting the market immediately, it would take X amount of time for the current inventory to completely sell off. This is also known as an “absorption rate” and it tells us how quickly demand is eating up supply. It is calculated by dividing the number of properties currently for sale by how many properties are currently in contract.
Now that we have the big view, lets break things down further into property types. For example, what absorption rates are we looking at with single family homes, condos, or TICs? Here are the results:
Single Family Homes
- 258 homes have sold since January 1, 2009.
- There are 626 homes for sale.
- 264 homes are currently in contract.
- That leaves 2.37 months of inventory.
- 161 condos have sold since January 1, 2009.
- There are 706 condos for sale in the MLS.
- 183 condos are currently in contract.
- That leaves 3.85 months of inventory.
- 41 TICs have sold since January 1, 2009.
- There are 258 TICs currently for sale.
- 77 TICs are currently in contract.
- That leaves 3.35 months of inventory.
- 13 lofts have sold since January 1, 2009.
- There are currently 69 lofts for sale.
- 13 lofts are currently in contract.
- That leaves 5.30 months of inventory.
- 6 Co-ops have sold since January 1, 2009.
- There are 30 co-ops for sale at this time.
- Only 1 is in contract.
- That leaves 30 months of inventory.
2-4 Unit Buildings
- 29 properties have sold since January 1, 2009.
- There are 255 2-4 unit buildings for sale at this time.
- 58 are currently in contract.
- That leaves 4.39 months of inventory.
Final Absorption Rate Rankings:
- Single Family Homes (2.37 months)
- TICs (3.35 months)
- Condos (3.85 months)
- 2-4 Unit Buildings (4.39 months)
- Lofts (5.30 months)
- Stock Cooperatives (30 months)
The fact that all property types (with the exception of Co-ops) are registering under 6 months absorption is a good sign for our local marketplace. It’s good in that our local marketplace is remarkably stable. Inventory levels in San Francisco remain tight and demand has seen a seasonal uptick with spring upon us. Stock cooperatives will see big changes in their absorption rates with just a couple of more units in contract, so we’d take that number with a grain of salt. Single family homes lead the pack. TICs surprised us with a 2nd place ranking, and condos come in number 3.
For more articles about San Francisco’s market as a whole, click HERE.