Fall selling season is here
by John M. Lee
In San Francisco, we have two main real estate selling seasons – in the spring and the fall, right after Labor Day.
Most people have the misconception that the summer months are our best 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 finished when summer arrives. As well, many people take vacations, which means many buyers, sellers and agents are out of town; thus delaying buying or selling decisions until they get back, and there are many weekend events during the summer that takes the focus off real estate.
Now that people are back from their vacations and the weather is getting better, homeowners will be putting their properties on the market. With buyers circling, we should be seeing a strong fall market.
So far this year, real estate prices have risen. The economy is still strong, the stock market is up 4-15 percent, depending on the index you are following, mortgage rates have hovered in an historical low range, between 4-4.5 percent, and the unemployment rate remains low. These factors, with a lack of housing inventory, continues to fuel the market to record highs.
The July “Market Focus,” published by the San Francisco Association of Realtors, reports median sales prices are up 17.9 percent for single-family homes year over year; new listings are down 14.2 percent; sales are down 10.5 percent and marketing time is down 12.5 percent. These factors still point to a strong seller’s market but suggests a market in transition.
Some of the factors that led to the last housing cool down are also evident. While wages are up, they are unable to match the price appreciation of real estate. On the flip side, interest rates are still at historical lows but are poised to go up, making homes even less affordable.
Construction activity has been up and more luxury condos are on the market, soaking up some of the demand. The stock market, which is a leading economic indicator, appears to be peaking and searching for direction at the time this article is being written.
As a student of the real estate market, I have seen this type of market and as surely as the sun sets in the west, this 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 a peak. So, based on this and our economic indicators, we have had a longer than normal appreciation cycle.
For buyers, the best advice is to work with a real estate professional to provide you with the insights necessary to fulfill your goals in this changing marketplace.
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 couple of years of strong appreciation and the rate of increase slows down. This appreciation cycle is slowing and you are 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 and interest rates are still low, but that may change in the near future. Even if prices come down, higher interest rates might neutralize 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 a real estate portfolio for the long-term as a low-interest rate can be obtained now, and paid back with tomorrow’s inflated dollars.
All of the economic signals we have been discussing the last few years are currently aligned and agents are excited to see what this fall selling season will bring.
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 or email email@example.com.
Categories: Real Estate