Marina Times – Buyer beware of pent-up demand

After an incredibly hot start to spring, the San Francisco real estate market may be cooling off a bit. But only a little.

“Anecdotally, we’re hearing that some buyers are turning their backs on their search due to a combination of rate hikes and exhaustion from property competition and losers,” said Annie Williams of Sotheby’s International Realty.

“Also, some tech guys have lost up to a third of the value of their stock portfolios this year. Along with other buyers who have down payments in stocks, they’re certainly more cautious than before,” Williams said.

MARKET STATUS

The median selling price for all property types in San Francisco hit an all-time high of $1.6 million in April, driven by a decrease in available inventory compared to March.

Condos shot to an all-time median high of $1.38 million in April, according to the San Francisco Association of Realtors. Median single-family home prices peaked at $2.2 million in March, but were still $2.1 million in April.

The average selling price to list price ratio for single-family homes was at an all-time high of 123.7 percent in April. The number of single-family homes available continued the decline that began in November 2020, reaching a four-year low in April with around 300 homes on the market.

Both March and April this year saw the lowest average days on the market ever – just 15 days. The median was low but not a record low, suggesting some of the properties that had been on the market for a long time have finally sold.

Obviously the market was incredibly hot in March and April. Nevertheless, Ashley Fahey is there business hours wrote in mid-May that with mortgage rates rising and house prices continuing to rise, there may finally be enough forces to slow the country’s pandemic-driven booming housing market.

She says Jeff Tucker, senior economist at Zillow, thinks it’s possible shoppers will start seeing some bargains in the fall or winter. He believes expensive West Coast markets like Seattle, San Francisco and San Jose, and Mountain West markets like Boise and Coeur d’Alene in Idaho could be the first markets to experience a slowdown.

There’s still some catching up to do in the market, of course, but buyers seem more cautious these days. This is especially true at the lower end of the market. In contrast, those who buy in the $2 million and above range may not be as sensitive to rising interest rates.

According to that BusinessTimes Ted Andersen, in January and February no homes were sold in San Francisco worth over $10 million. And then in March there were just like eight sales of such houses.

The situation is somewhat different for cheaper homes, where demand seems to be falling. Buyers in this category tend to be more price conscious. Market and exchange rate fluctuations have a greater impact.

BARGAIN TIME?

Consider this: Less than half of the homes sold in the United States are affordable for America’s middle class. Only 48.7 percent of homes sold could be characterized as being within the financial reach of middle-class families, according to realtor.com, citing the National Association of Home Builders/Wells Fargo Housing Opportunity Index as a source.

That number is probably even lower today; it was calculated using home prices from the first quarter of the year and mortgage rates from late April. Both have since risen, and mortgage rates are expected to continue rising.

The most expensive real estate markets in the country, both large and small, are in California. The state is notoriously expensive, with an average list price of $750,000. The realtor.com survey ranked San Francisco the third-lowest market in the state and country, behind Los Angeles and Anaheim. For comparison, Stockton was ranked as the fifth-worst market in this survey.

So it’s no wonder that people who aren’t very wealthy are a bit more cautious when buying their own home.

Of course, this can be devastating for sellers who hear it’s a hot market – expecting multiple overbids in no time – and realize they can’t sell their homes.

According to Janet Siroto in a realtor.com article titled “The Secret Shame of Owning a Home That Just Won’t Sell,” there is a time waiting for her realtor to get good news via text or call,” Siroto writes .

It turns out that selling a home can sometimes be just as emotionally draining as buying a home.

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