As we begin 2022, we’re just now getting our first complete look at the 2021 San Francisco real estate market. The San Francisco Association of Realtors recently released some brand-new information and figures that lend even more credibility to some of the things we’ve been seeing across the San Francisco market over the past year.
The data supports some of the recent changes we’ve seen in the market, tied to the pandemic. Essentially, 2021 was a year of extremely high demand for single-family homes. While 2020 showed a drop in demand for condos in San Francisco, we began to see things pick up a bit in 2021, especially when offices and other businesses began opening back up themselves.
Like much of the rest of the country, though, inventory of homes for sale in 2021 stayed low. There just wasn’t enough activity from home sellers to meet all the demand. While I should probably point out there is a lot of building going on right now in San Francisco, most of it is affordable rental housing. Of course, that’s something the city still desperately needs, as San Francisco is far from affordable. In terms of new houses, San Francisco doesn’t really have a lot of extra land to build on. Supply remains pretty low for new houses.
Turning back to some of the newly released data, the 2021 annual update further strengthens some of what we experienced as real estate professionals over the past year. It was a strong seller’s market in 2020, and it became even more so in 2021 as prices were driven higher, thanks to low inventory and multiple offers on homes. In fact, the combination of higher demand and inventory shortages pushing up prices was a common theme across most real estate markets last year.
When comparing 2021 to 2020, pending sales and sold listings were up in San Francisco. Pending sales increased last year by more than 38-percent and sold listings were up by more than 42-percent. Like much of the rest of the country, inventory took a dive. The number of available homes in 2021 went down by more than 53-percent. New listings decreased by more than two percent to finish up the year.
Looking at home prices year-over-year, the overall median sales price in San Francisco for 2021 was $1.439 million, which was up nearly four percent. When just looking at single-family home prices, though, they were up nearly 12-percent. The median sales price last year in San Francisco for single-family homes was $1.8 million. To put that in perspective, it means San Francisco was actually less expensive than San Mateo County in terms of single-family homes last year.
Condo prices were up a little bit, but I’m predicting that condos will be hotter this year than they have been over the past couple of years, so we’ll have to wait and see. As for list price received, there are more evidence homes continue to go for way over asking price. On average last year, sellers received more than 108-percent of list price at sale.
Another interesting find from the new report took a closer look at data from 2017 through 2021. New listings dropped a bit in 2021 from the high of 2020. Pending sales in 2021, however, really took off! Sold listings shot up and active listings were down. In fact, when comparing those years, only 2017 had fewer active listings reported at the end of the year.
The real estate market was crazy hot in 2021. I think it would have been even hotter if some people hadn’t left San Francisco for the suburbs or for more affordable areas. As we continue on with 2022 it’s going to be interesting to watch and see what happens in the market. We’ll be keeping a close eye on interest rates, which will almost certainly rise. Of course, we have to remember when interest rates go up, purchasing power goes the other direction. It potentially means you could be paying hundreds of extra dollars each month in interest, so you won’t be able to afford as much house once rates go higher.
We’ll also want to keep an eye on supply. It just doesn’t look there will be enough homes built anytime soon. There are some factors like the number of aging homeowners to consider, but I don’t think we’ll see that affect supply enough to make a real difference in prices. Of course, high prices and a hot market can definitely work to your advantage if you’re thinking about selling.