Something is changing a bit in the real estate market. I am seeing more price reductions, properties staying on the market longer, agents hesitating about having offer dates and properties coming back on the market. This is usually a sign that the market is changing. Of course, it is the summer and people are away on vacation so this sometimes slows things down a bit. I am also hearing that east coast markets have slowed as well as southern California markets.
Recently at our sales meeting there was a divergence of experience by agents who had listings in San Francisco. Some agents had listings that sold quickly while others had listings that were still on the market waiting for an offer. Earlier this year, I had a property in Glen Park that received more than 19 disclosure requests. However, my recent listing in the north end of the city had 1 disclosure request and those buyers made a pre-emptive offer, fortunately, and got it. A home in Noe Valley listed above $2.4M recently stayed on the market for almost 30 days before receiving an offer that was not a “low ball” when two months ago it would likely have been snapped up in the first week. Some agents are saying that we are seeing some buyer fatigue, which certainly makes sense considering how crazy the market has been.
However, some statistics point to a San Francisco market that is still quite strong with a median home price rising 9 percent year over year in June. Pacific Union’s Chief Economist, Selma Hepp, reports that San Francisco is the only Bay Area county that had lower inventory levels across all price ranges in June which usually accompanies a strong market by creating more competition among buyers. So the data appears to point to a market that is still strong while “on the ground” things feel a bit wonky. Selma may have the answer: “At the current rate of median price growth, everyone is asking themselves how much longer the appreciation is sustainable. To add color to that question, keep in mind that there are multiple segments of the market. Buyers who are budget constrained will feel the burden of increasing mortgage rates and growing prices. That segment of the market may consequently slow faster than for buyers who are less sensitive to mortgage-rate increases and higher home prices. As market activity in 2018 has shown, the higher end continues to grow despite higher mortgage rates and concerns over financial volatility and further economic growth.”