San Francisco is seeing a boom in real estate, with many homes selling for over $1 million in March. Sales were low in January and February due to inclement weather, but have been increasing throughout March. Lower mortgage rates and an improving job market have contributed to the increase in sales, causing market experts to be cautiously optimistic.
While people are buying homes, sellers are more careful. A healthy housing market is considered to have six months of supply. Currently, the market has just under five months’ worth of listings. Because of the low supply, costs are rising. Over the past year, median home prices have risen 7.8%.
In March, luxury home sales in San Francisco hit a record high. Defined as homes that sell for at least $2 million, luxury homes hit their highest-ever monthly sales levels in March. In fact, March 2015 saw more than double the number of sales of luxury homes as March 2014, with 89 units sold compared to last year’s 42. In the past year, 617 luxury homes were sold at $2 million or higher.
“Builders in the Midwest are also starting to see more activity,” says Brad Whitsell, CFO of Stencil Homes. “As the economy continues to improve we see more and more people who want to build the house of their dreams. The amount they are willing to spend is also ticking upwards.”
While there have been an additional 3.1 million jobs added over the past year, wages have only increased 2.1% in the same amount of time. The failure of wage increases to keep up with the cost of housing has made it difficult for many buyers to find the house of their dreams. First-time buyers are slowly moving back into the market, accounting for 30% of all home sales in March, a 1% increase from the previous month.
While San Francisco luxury homes account for a great improvement in the housing market, the most dramatic increase was seen in the Midwest and Northeastern United States, due to delayed sales caused by the harsh winter weather.