If you’ve been waiting to sell your home in San Francisco due to a bleak outlook, I would highly recommend revisiting your thought process. GOOD or even mildly decent single family home inventory is in short supply and there are a lot of buyers out there that are looking for a house at a fair price. Don’t wait for all the sellers to jump in at once. Take advantage of this unique opportunity where home buyers are more optimistic and motivated than they have been since last spring and there is nothing for them to buy.
In my last newsletter, I mentioned that I was JUST seeing signs of the market heating up and I wasn’t sure that would continue. Fast forward 30 days and single family home market still seems strong.
What’s making it strong?
1. Increased buyer confidence. Buyers have moved from being paralyzed and waiting for the bottom to a clear understanding that more than likely the bottom has come and gone.
2. Low inventory. Many sellers have rates below 4%, and in some cases below 3%, on their homes and many of them are waiting to sell, which is creating a supply issue. This is putting upward pressure on prices.
For more of my market insights watch and listen to my latest market update for more details and scroll down to see charts and market data.
After the acute decline in market activity occurring in the 2nd half of 2022, buyer demand rebounded dramatically and most market indicators turned positive in early 2023: Open house traffic, number of offers, and overbidding and absorption rates all saw substantial improvement.*
It is too early for significant effects to show up in home prices: Indeed, through February, 3-month-rolling median house sales prices saw year-over-year declines across all Bay Area counties. (These percentage declines should be regarded cautiously until substantiated over the longer term.) Even with the striking improvement in demand over late 2022, most year-over-year indicators remain depressed, but these comparisons are with the severely overheated conditions prevailing at the peak of a 10-year housing market upcycle. The market was still just waking up in February. March through May is typically the most active listing and sales period of the year, and should soon provide much more data on supply, demand and price trends. Over the last 3 years, spring markets were deeply affected, in very different and often surprising ways, by the onset of the pandemic (2020), the pandemic boom (2021), and soaring interest rates (2022).
As has been the case for the last 14 months, the biggest wildcard remains interest rates: After dropping considerably in January from a November peak, they climbed again in February, with big impacts on loan application rates. It has been very challenging to predict short-term interest rate changes. Another major factor is the substantial decrease in the number of new listings coming on market over the last year, a critical issue with wide ramifications if it continues.
*Sales in one month generally reflect deal-making in the previous month, and often pertain to listings that have already been on the market for months longer. Many real estate statistics are lagging indicators, and even dramatic
shifts in demand may show up only very gradually in their readings.