Welcome to our February newsletter. This month, we cover the state of employment in the United States and the likelihood of meaningful stimulus.
According to the ADP private payrolls, the U.S. lost 123,000 jobs in December 2020, marking the first contraction since April. Economists predicted an increase of around 60,000 jobs in December. However, they did not anticipate larger companies, especially in leisure and hospitality, laying off employees due to reimplementation of stricter COVID-19 restrictions.
Housing Market Updates for San Francisco
The median single-family home and condo prices fell month-over-month, which is typical for the winter season. Year-over-year, single-family home prices increased considerably, up 10%, while condos were down 8%. Inventory has continued to decline as fewer homes have come to market and sales have remained high. Inventory for condos is almost twice as high relative to last year, which has been the primary driver of price decreases.
Single-family home sales have climbed since the initial months of the pandemic (March through May). Generally, buyers and sellers left the market in April and May, causing pent-up demand. Since May, sales have increased and were still near their highest levels in 2020 for single-family homes. Usually, we expect sales to decline in the autumn and winter months, but the 2020 summer selling season was delayed and seems to be spilling well into the autumn/winter season. Single-family home inventory dropped precipitously over the last two months due to unusually high sales numbers, and it is likely to decline further as we make our way through the winter months.
The number of condos on the market declined significantly in December. New condos coming to market outpaced sales every month in 2020 except for November and December, when sales were far greater than new supply. In December, condo inventory was still 75% higher than it was last year, but we are pleased to see a reduction in some of the excess inventory.
In summary, inventory for single-family homes and condos will likely decline further into the new year, and fewer sellers will likely come to market, potentially lifting prices higher. The condo market is still experiencing an oversupply, but is trending lower. Overall, the housing market has shown its resilience through the pandemic and remains one of the safest asset classes. The data show that housing has remained consistently strong through this period.