Everyone is asking what is happening with the real estate market. When the market changes, it changes on a dime. Sellers have finally realized (perhaps a bit late) that the market has reached its peak. More properties have come on the market this fall giving buyers a much better selection of homes; they can be more picky now. Some overly exuberant sellers have priced their properties too high, thinking that the market would keep going up and now they are having to reduce their prices. At our sales meeting this week, it was noted that an average of 23% of properties in the Bay Area are having price reductions. Nationally, the housing market has slowed as prices outpace wages.
Two clients of mine – a seller and a buyer – have experienced this market change. My first time buyer had been looking over the past year for a one bedroom condo in the city for up to $700,000. This was very challenging because she could find few in San Francisco at this price point. (Anyone reading this outside of California will only roll their eyes considering what a nice home one can buy for $700,000 in most other areas!) She got discouraged and stopped looking. However, in the past month, a number of one bedroom condos have come on the market within her price point and now she is back in the market and excited to look and finally fulfill her dreams of home ownership in the city.
I recently listed a lovely, spacious converted loft condo for a client of mine in SOMA. It has views looking southwest toward Twin Peaks. Since it was built in 2002, its finishes were not as current as some new construction buildings located nearby. The first weekend we had 4 buyer groups through on Saturday and on Sunday and the following Sunday, we had 6 buyer groups through. No agents came through on the Broker Tour. This was a very low turnout even though the unit showed extremely well. At our sales meeting, my colleagues’ experiences at their open houses mirrored mine. In the spring this year, it was not unusual to have 40 groups through an open house. Fortunately for my client, a buyer came through the first weekend who really liked it; she came back the second weekend and now she is in contract.
However, many properties are not moving and the market, particularly in SOMA is slow. A colleague who has a listing in Russian Hill told me that market is very slow but her listing is over $2.5M; the luxury market in San Francisco overall has slowed.
The buyers finally have their turn after quite a long run up. But don’t be worried that the market will go down anytime soon. Predictions that the market will stay strong through 2020 are forecast by Selma Hepp, Pacific Union’s chief economist, and other economists. According to her, the interest rate hike has just about run its course, 5.1% through mid-2019. Job vacancies are at their record high with good job and income growth. There are some bargains out there now and you can negotiate. So jump in and hold on!