Last year when people asked me about the real estate market, I told them it was a great time to buy. You don’t often see a buyer’s market in San Francisco but last year was it. Condo prices were down, particularly in elevator buildings in South of Market, and homes, while holding their value, were not appreciating like they had in the past. Some people told me they would wait until next year as they thought the market would continue to go down. I told them that you can’t time the market.
Flash forward and things have changed – even from December. Properties that didn’t sell or get showings last year are going into contract or getting an increase in showings. This is true for my two listings, a Nob Hill 2 bedroom unit and a Central Richmond mixed use property.
Buyers are out there and they are motivated with the extremely low interest rates for mortgages that we currently have right now. When I got into the business in 2002, interest rates were at 6% and realtors couldn’t believe how low they were and couldn’t imagine them going down any further. Now, interest rates are as low as 2.75% for a 30 year fixed mortgage.
Recently, I represented a couple who are first time buyers looking for a 2 bedroom condo in the Inner Mission and NOPA, among other neighborhoods. Their first offer was at list price for a 2 bedroom condo in NOPA, but the seller really wanted almost $200,000 more than the list price and so she didn’t bother countering. My clients were very disappointed – at the time.
The second offer they made was for a 2 bedroom condo in the Inner Mission which received 18 offers, even with a with a brick foundation that would require structural work!! My client’s offer, which was $300,000 over the unrealistically low list price, came in second. They went into back-up which means that in the unlikely case that the first offer fell through, they would be in position to take their place. They were disappointed – again.
Shortly after that, I saw an off-market property that was a beautiful, newly renovated 2-bedroom TIC (Tenants-In-Common property, see my blog post here) in the Inner Mission in a 2-unit building which was on fast-track for condo conversion. They made an offer at the list price and are now in contract. The place is perfect, with higher quality finishes and a better location than the last home they missed out on. They are thrilled.
I tell you all of this because I could see that the market was heating up and I was afraid my clients would lose the opportunity to buy a nicely done 2 bedroom condo as they lost offers and the prices started to rise. For 2-3 bedroom condos in smaller buildings that have nice finishes, the buyer competition is getting steep.
If you are looking to buy a condo in this competitive market, don’t hesitate to give me a call!