Beyond the Numbers: Decoding San Francisco's Condominium Market Dynamics
The Efficiency-Price Paradox
While prices peaked in 2021, the market was actually most efficient in 2015, when the sale-to-list price ratio hit an extraordinary 107.90%. This disconnect suggests that market momentum – not absolute price levels – drives competitive bidding. In practical terms, rapidly appreciating markets create more urgency among buyers than steadily high-priced ones.
A Historic Inflection Point
The 2023 dip to 99.21% in the sale-to-list price ratio marked a profound shift – the first time in our decade of data that San Francisco condominiums sold below asking price on average. The modest recovery to 100.23% in 2024 points to market stabilization rather than a return to the frenzied conditions of previous years.
Segment Divergence Signals
The widening gap between median and average prices during 2021-2022 reveals increased activity in luxury segments. This price divergence suggests a "two-speed market" where high-end properties behave differently than entry-level units – a pattern that continues in the current market.
The 30-Day Sale Percentage as Early Warning System
The data shows that the percentage of properties sold within 30 days consistently functions as a leading indicator, with significant drops preceding price adjustments by 12-24 months. The drop from 67% in 2018 to 50% in 2020 foreshadowed the 2023 price correction, making this metric worth watching closely.
Post-Pandemic Volume Anomaly
The 2021 surge to 3,986 sales (versus a typical 2,500) represents a unique market anomaly. Curiously, this dramatic volume increase didn't align with the highest sale-to-list price ratios or lowest days on market. This suggests the surge wasn't driven by scarcity-based competition but rather by buyers rushing to "lock in" historically low interest rates.
Barbell Distribution Forming
The relationship between average days on market and percentage sold in 30 days reveals a growing bimodal distribution. When we see days on market increasing while the percentage selling quickly only modestly decreases (as in 2023-2024), it indicates a market splitting into "hot" properties that sell immediately and challenged properties that linger much longer.
Price Per Square Foot as Quality Indicator
The price per square foot metric peaked in 2019 at $1,143, earlier than the absolute price peak in 2021. This divergence suggests a shift in the composition of units selling – potentially toward larger units as buyers prioritized space during the pandemic – rather than simple appreciation or depreciation.
The Soft Landing Hypothesis
Unlike previous corrections in San Francisco's real estate market, current data points to a "soft landing" scenario assuming mortgage rates stabilize or decrease from here. The measured pace of adjustment in 2023-2024 (small price drops, modest extensions in market time) suggests a controlled rebalancing rather than the steep corrections seen in previous cycles.
Supply-Side Constraints Remain
Despite interest rate headwinds, price resilience in 2024 suggests persistent supply constraints in San Francisco's condominium market. The continued lack of significant new development, combined with construction cost inflation, creates a floor for prices even amid higher rates.
Market Equilibrium Reset
The 2024 data indicates the market is finding a new equilibrium, but at levels different from the pre-pandemic period. Specifically, the "new normal" appears to be around 100% sale-to-list price ratio and 30-35 days on market – more balanced than the extreme seller's market of 2015-2019 but still relatively efficient by historical standards.
This recalibration represents not a simple return to pre-pandemic conditions, but rather a fundamental reset reflecting changed buyer preferences, remote work flexibility, and the evolving role of urban living in the post-pandemic landscape.
