A Tale of Two Cities: Real estate in SF + LA since shelter-in-place

San Francisco and Los Angeles are both strong real estate markets - but their dynamics have varied over the past several months since shelter-in-place. We take a look below at these two markets in detail, but first let's contextualize against the broader economic environment.

1

The gap between the money supply and the fiscal deficit has widened dramatically since Q1

The gap graph

Ongoing stimulus efforts and economic slowdown will likely lead to currency debasement, keeping home prices high

Source: Bloomberg

2

The strength of the residential real estate market is fueling new construction across the country

National Association of Home Builders Market Index

Home builder sentiment is at an all-time high with privately owned housing starts annualizing at 1.41m

Source: National Association of Home Builders, US Census Bureau

3

In California, 22% of all recent home sales have been over $1 million

Demand for larger homes combined with price appreciation is pushing up the luxury segment of the market

Demand for larger homes combined with price appreciation is pushing up the luxury segment of the market

Source: California Association of Realtors

4

So how have SF and LA fared since the shutdown? Check the receipts.

With online sales flat in SF, signs point to a decline in occupancy. Meanwhile, LA spending has jumped 31%.

With online sales flat in SF, signs point to a decline in occupancy. Meanwhile, LA spending has jumped 31%.

Source: SF Office of the Controller

5

Inventory levels in SF are on a meteoric rise; LA remains more constrained

Year-over-year active listings (7 day rolling average)

Sellers in SF are motivated to capitalize on pent-up buyer demand while LA supply levels remain low

Source: MLS, Redfin, mikedp.com

6

On the demand side, LA has yet to fully recover from waning purchase volume driven by the shutdown

Year-over-year pending sales decline (7 day rolling average) by number of days since >5% decline

Even with inventory levels soaring in SF, buyer interest has rebounded 25% higher year-over-year

Source: MLS, Redfin, mikedp.com

7

The rental market in both cities has softened, with a 4x steeper decline in SF

Rental Market in both cities

While many SF residents seek more space, the geographical diversity of LA has been a hedge against outward migration.

Source: Apartment List, Realtor.com

8

1

Every vote counts, especially yours.

If one thing is true, it's that the markets will continue to change in the coming months. We'll report back in November, and will see you at the polls on November 3rd.

Latest Headlines

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SF Gate
A dramatic transformation
Once a simple, rustic home, 207 Beaumont Blvd. in Pacifica has been transformed into a contemporary two-story with a refined material palette and sweeping views of the Pacific Ocean.
10/22/2020
10/19/2020
San Francisco Chronicle
Bay Area home buyers scoop up shrinking inventory at furious pace
Agent Justin Palmer of Avenue 8 represented a family that is closing this week on a home in the Oakmore section of Oakland. It was listed at $1.2 million, attracted multiple offers and sold in less than two weeks for $1.45 million.
10/19/2020
9/1/2020
The 8
September Market Report: The residential rebound continues
As we head toward Q4, all signs point to a residential real estate market primed for continued growth. Let's take a look at what unfolded in August.
9/1/2020
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