September 2022: San Francisco Real Estate Insider
Hello and I hope you had an enjoyable Labor Day Holiday. As we head into one of the most active (real estate) seasons of the year, I am expecting the market to continue the uptick in activity we’ve seen from the past six weeks. If you recall, last month I said buyers were starting to flow back into the market after being absent for a couple months. Inventory should climb in the coming months and I expect to see a lot of activity at open houses. The bigger question is whether buyers will be making offers (or just kicking tires). I expect any single family home in move in condition under $4M to get a lot of activity; especially in more popular locations. Turn-key condos in smaller buildings – again in popular neighborhoods will also get a lot of activity.
House and condo price trends are on a three month decline. As this is hyper-related to interest rates, I like to remind buyers that are trading up that I’d gladly sell for $200k less if I can buy my replacement property for $200k less.
Here are the data points on price trends.
Two of the primary data points (that I use and watch) that help reflect market activity are (1) price reductions and (2) days on the market. Obviously the longer the property sits on the market: the more likely it is to sell for less than the asking price. Likewise, the longer a home sits on the market, the more likely it is overpriced and will receive a price reduction. Here are the data points on both.
So what is happening in the higher priced property segment? Volume is down from a historical perspective and I do not expect this to change by year end. But, this segment is hyper-sensitive to location; more specifically micro-location (within a neighborhood). You can slice up Pacific Heights (and other neighborhoods) into several highly different micro areas in terms of desirability, value and demand. One side of a block (vs. the other) can make or break a sale in the higher priced segment.
Considering life outside of San Francisco (or moving back to San Francisco)? The chart below will give you a good perspective on what you will have to pay in various Bay Area counties for a similar size property.