Clients, friends, and colleagues:
Why is the market so hot in San Francisco? And w're barely in February? There's multiple factors we'll get into in this report (inflation, rising interest rates, inventory, COVID-19, bay area wealth, and more), but let's start with simple supply & demand:
There were 298 listings in January of 2022 in San Francisco, representing a decline of 34.5% from one year prior. 2021 was more/less a year of seasonal anomalies, so let's compare to pre-pandemic metrics:
New listings (pre-pandemic)
So realistically, our inventory figures to start the year have only been ~10% lower than pre-pandemic years. The biggest factor in SF's housing market has been the increase in hungry, motivated buyers.
I've written offers on several properties this year (multi-unit buildings, single-family homes, boutique condos, and highrises), where the outcome exceeded all parties' expectations. Sellers are enjoying low inventory and a higher than anticipated wave of demand*.
Key feedback from buyers I'm working with is motivation to lock-in low interest rates, hedge against inflation, and move their from a volatile stock market.
*Note this is not to say that every listing is a bidding war and going way over-asking; it's segmented (as it always is in real estate), and I'm happy to help you understand the nuances if you'd like to inquire further.
As us agents all started to feel this heavy competition in mid-January, you could sense it was only a matter of time before it spilled over to our downtown condo and loft scene. There are still great deals to be made for the district 9 condo buyer (with discounts off pre-pandemic prices), but the demand is rising. I was a part of a couple recent, competitive offer situations for 1-bedroom condos in South Beach (both had patios), and I've witnessed several properties get into contract quickly after failing to find a buyer all of last fall/winter. I've also been given the great news that one of my highrise buyers who got in contract in the first week of 2022, has already gained about $100k in equity due to a recent sale right below him!
I have plenty more thoughts about the market, but I'll let you go for now! Feel free to reach out with any questions.
Best,
Ron
