In San Francisco, Condos Buyers Emerge

During yesterday’s sales meetings, something unusual happened. After months of building inventory, we had our first week of more buyers than new listings. Here’s a little background and a look at what the most recent data is saying.

Understanding Months of Inventory

Months supply of inventory (MSI) is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. For example, if there are fifty homes on the market and ten homes sell each month, we have a five-month supply of homes for sale.

Seller’s Market vs Buyer’s Market

It’s generally considered a seller’s market if we have between one and four months’ supply of inventory. That describes relatively low supply, meaning sellers are in a position to set terms, raise prices, or in general, hold out for their price.

When months of inventory is between five and seven months, the market is considered balanced, with a healthy supply and a decent amount of Buyers. Once the MSI reaches eight months or more, we are officially in a buyer’s market, and buyers hold the majority of the power in most negotiations.


The chart above reports late August trends and shows the intricacies of different market segments versus an overall statement that inventory is building. Below, we see a snapshot from the end of August. By the first week of September, buyers started picking things up.

The chart below speaks to the perception that single family homes are a better investment than condos. In San Francisco, condos have held their value at a higher price per square foot than most single family homes.

The chart below shows that in some neighborhoods the month’s supply of inventory is even, while in others, it’s a full-blown buyer’s market. It’s important to note that the districts are San Francisco Association of Realtor districts and not political districts, which are different and cause a lot of confusion.

The Takeaway

I often say that the real value of charts comes in someone’s ability to interpret their data as it pertains to what you care about. If you’re ready to buy or sell in the San Francisco Bay area, and you need help navigating the path based on the ebb and flow of today’s market, let’s talk.

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