Real Estate

Real Estate: John M. Lee

As 2021 comes to an end, we have had an amazing year in the real estate market. The question being asked at the end of the year is always, “Where is the real estate market headed?” 

After the initial impact of  COVID-19, our local economy started to come back to the Bay Area. Besides COVID, crime, homelessness, scandals and affordable housing have also dominated the news this year. 

Following is a short recap of what happened in our local San Francisco market in 2021.

 The market remained steady throughout the year with mortgage interest rates hovering around 3% at the end of the year. This is in the all-time historically low territory and has been for quite some time now, which contributes greatly to the strength and breadth of this market.

 We ended 2019 with a decrease of 4.1% in the number of sales from 2018 and a median price increase of approximately 1.6%. We ended 2020 with another 4.3% decrease in the number of sales from 2019 and a price increase of 0.4%. In 2021, our projected numbers of sales are about 10% above last year and about a 5.3% increase in the median price. So, since the introduction of the COVID vaccine, our real estate market has performed pretty well. 

 What does this mean? Will this upward trend continue? Will prices continue to rise? How much of this is due to COVID and what will happen as we transition back to a more normal post-COVID market? 

In a normal market for goods, when sales decrease or level out, prices tend to drop because of lower demand. And if the demand is there – meaning higher sales – prices often go up with a limited supply. But the real estate market is more complicated than simple economic theory because there are many other factors that can affect it. We often witness a lack of inventory and underestimate the buyer’s appetite to own a piece of San Francisco which impacts the market in a positive direction.

 The readers of my columns know that our market bottomed out in 2009 and we have been in a strong recovery mode ever since, resulting in large double-digit appreciation from 2012-2015. The next few years came with a slower or normal rate of appreciation. In 2020, COVID hit and we had a stoppage in the market for a couple of months before sales came roaring back. 

 In 2021, however, we had a very robust market because people were thinking through their housing needs and executing on their plans. Our market here on the west side did very well as the trend of moving from high-density to low-density locations was evident throughout the year and created great demand in the Richmond and Sunset districts. Prices increased here more than in other parts of the City. We will have a more comprehensive statistic review of these areas in the January issue of this newspaper.

 So, what can affect this market? 

At the end of this year, I am starting to see some foreclosures on the horizon. The foreclosure moratorium has expired and lenders are free to foreclose. These properties tend to be in poorer condition and sell at lower prices. Inflation is the highest it has been for years. We have all seen gasoline prices go up and know that restaurants and groceries, along with just about everything else all cost more now. The Feds have already signaled that they will be increasing interest rates. When that trickles down to mortgage rates, it will affect the buyer’s purchasing power and hurt our market.

 So, where is the market heading in 2022? 

I believe that we have peaked in our prices and next year we will see a relatively flat market. We are fortunate in San Francisco that despite the problems we have, we are still a desirable place to live. Even when prices decrease, it does not drop too much. Over time, it has always come back strong! So, if you are a seller, your window of opportunity to take advantage of these high prices is limited. If you are a buyer, I would recommend proceeding with caution as price appreciation, if any, will not be high in the next few years. If you are a real estate investor, now is a good time to evaluate and perhaps reposition your portfolio for the future. Many more are looking at income rather than appreciation.

 I enjoyed speaking and exchanging emails with you this past year. Many of you had some great questions and insights about our market and the Richmond and Sunset districts. I wish you a safe holiday season and a prosperous 2022!

Sunset Homes Sold in November*
AddressBedBathSq. Ft.Price
1336 38th Ave.211,270$1,265,000
1958 30th Ave.221,5121,500,000
1883 33rd Ave.211,2251,600,000
1319 41st Ave.31.51,3001,680,000
1923 Funston Ave.421,9291,785,000
1359 41st Ave.321,9911,860,000
1555 43rd Ave.32.52,3921,950,000
2063 20th Ave.421,7522,100,000
1261 31st Ave.32.51,8902,200,000
2539 16th Ave.322,3582,525,000
1241 26th Ave.542,5062,675,000
*Partial listing. Source: M.L.S.
Richmond Homes Sold in November*
AddressBedBathSq. Ft.Price
622 41st Ave.311,540$1,700,000
618 27th Ave.422,2001,825,000
454 32nd Ave.43.52,0162,150,000
4333 Cabrillo St.442,0632,450,000
457 38th Ave.31.53,5302,615,000
764 24th Ave.53.52,5302,900,000
583 19th Ave.53.53,0473,100,000
752 24th Ave.43.53,1253,500,000
283 28th Ave.43.52,7953,545,000
425 El Camino D. M.433,1004,995,000
104 Funston Ave.54.53,9654,995,000
20 McLaren Ave.464,1355,500,000
*Partial listing. Source: M.L.S.

 John M. Lee is a broker with Compass specializing in the Richmond and Sunset districts. If you have any real estate questions, call him at (415) 465-0505 or email at

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