Fall selling season is here
John M. Lee
In San Francisco, we have two main real estate selling seasons – the spring and the fall,
right after Labor Day!
Most people have the misconception that the summer months are the busiest because
families plan for schools and are out buying at that time.
However, in San Francisco that is not the case for several reasons. We do not have a large
population of children, as compared to the rest of the country, and school assignments
are already done when summer arrives. Many people take vacations, which means
buyers, sellers and agents are out of town, thus delaying the buying or selling decision
until they get back. As well, there are many weekend events during the summer that
take the focus off real estate.
Now that people are back from their vacations and the weather is getting better,
homeowners are putting their properties on the market. Buyers are circling, so we
should see a strong fall market.
So far this year, prices have risen but not as much as the last few years. The economy is
looking strong, the stock market has been hitting all-time highs, mortgage rates have
hovered at historical lows (between 3.5-4.5 percent) and the unemployment
rate remains low. This, combined with a lack of inventory, continues to fuel the market to
The July “Market Focus,” published by the SF Association of Realtors, reports that for the
past year, median sales prices are up 4.6 percent for single-family homes; new listings
are down 9.5 percent; sales are up 1.5 percent, and marketing time is down 6.7 percent.
These factors still point to a strong seller’s market but suggest a market in transition as
the rate of appreciation has decreased from the double digit increases we saw the last
few years. On the flip side, interest rates are still at historical lows, but are poised to go
up, thus making homes less affordable; construction activity has increased and more
luxury condos are on the market, soaking up some of the demand; and the
stock market, which is a leading economic indicator, appears to be peaking.
As a student of the real estate market, I have seen this type of market and as surely as the
sun will set in the west, the market will level out and eventually decline. The only
questions is when?
Real estate cycles in San Francisco span 10 to 11 years, peak to peak and valley to valley.
We bottomed out in 2009 and normally go up for six or seven years before reaching the
peak. So, based on this history and our economic indicators, we have had a longer than
normal appreciation cycle.
What does this mean for the consumer? The best advice is to work with a real estate
professional to provide you with the insights necessary to fulfill your goals in this
For sellers, there has not been a better time to sell in the last five years. With a shortage
of inventory and strong buyer demand, if priced correctly, you should receive multiple
offers and get the highest possible price. During any real estate cycle, there are a couple
of years of strong appreciation and then the rate of increase slows down. You could be
positioned perfectly to reap the benefits.
For buyers, I recommend proceeding with caution. There were plenty of opportunities to
get into the market the last few years. Currently, prices have increased but interest rates
have stayed steady, with historically low interest rates still there. In the near future, even
if prices come down, interest rates will go up, which might equalize any financial
differences. I urge buyers to consider all factors before purchasing.
For people who are looking to trade up, this market is presenting an opportunity to
reposition your real estate portfolio for the long-term as you can lock in on
a low interest rate now and pay it back with tomorrow’s inflated dollars.
All of the economic signals we have been discussing the last few years are currently
aligned and we are excited to see what this fall selling season brings.
John M. Lee graduated with an MBA from UCLA and specializes in the Richmond and
Sunset districts. If you have any real estate questions, call (415) 447-6231.