San Francisco real estate market update

Charts, Data, Trends

Last week I received a few calls, emails, and curbside conversations regarding my first time ever calling our market a "(soft) buyer's market" (on sfnewsletter), and what exactly that means. Let me clarify. It does not mean the market has tanked. It does not mean every property is to be had below asking. It does not mean when you find the home of your dreams you will be the only person interested in it. Not at all. It really means that buyers should be feeling much more confident with your negotiating power and not as panicked about missing opportunities. Things have slowed considerably, but are by no means dead. This is a really good market to be in. Sellers can still sell their homes for great prices, and there are tons of buyers out there that can, and are willing to, buy them, but only after they negotiate the price, terms, and do their due diligence (inspections), which is something we hadn't seen for quite some time. This is a good thing!

On a different note, I hear a lot about median price drops anywhere from 2-3% year over year for San Francisco, and it doesn't really concern me. Most home buyers don't buy and move in a year, and most people selling now bought long enough ago that a 2-3% drop in median (check out Missionite's explanation of median), doesn't affect them. It's not a big concern at this moment. And like "Missionite" points out, volume and average are what matter most. Volume is indeed off, but off from historic levels, so that too does not cause me to panic. But it does indicate that you, as a buyer, have much more leverage and "power" than you did last year. In addition, because many sellers feel the market could still slide further, they're more likely to take any offer they get fearing it might be the last one they see for quite some time. (Bird in hand theory.) You might buy now and still see values drop, but if you're in it for the long haul, those values will likely come back, and you'll have a place to call home. And if things turn gang-busters again (like it will when people realize the bottom has been reached), you'll already be in the game and one step ahead.

There are a lot of buyers sitting on the fence trying to time the complete and utter bottom, but nobody knows when that will be. For all we know, we may have already reached it. So the moral to this long winded report is that it is indeed (IMO) a buyer's market, and if you're planning on buying and staying put for at least 5-10 years, now might be the time to pull the trigger. Take advantage of everyone else's mob mentality and fear of plunging in and get it while the getting is good.


Source: my weekly sfnewsletter
Topics: san francisco real estate