Advice for San Francisco Home Buyers and Sellers
Buyers. Since beginning my real estate career in 2002, my mantra has remained, “Buy the best home you can afford as soon as you can afford it!” Owning a home in San Francisco is, by far, the best investment I’ve ever made and almost all of my clients say the same. (Let’s separate those of you lucky enough to work in the right place at the right time…hello IPO!) Compare your 401k to real estate appreciation in San Francisco over the past 6 years and you’ll see my point. One of my mentors told me this real estate adage and it still rings true… Question: When is the best time to buy a home? Answer: 10 years ago Question: When is the 2nd best time to buy a home? Answer: TODAY
Sellers. The early bird gets the worm. After a slower fall market, Q1 is off to a brisk start with multiple offers the norm for most desirable listings. We had 30 requests for disclosures for my latest listing! It’s competitive out there bc inventory is LOW and demand remains HIGH. Prices have plateaued throughout most of San Francisco but they are also just about doubled since the recession….Sellers, let’s list and get you on the market…ASAP.
Major Trends in the 2017 San Francisco Housing Market
Here are more trends that will affect the San Francisco housing market in the coming year:
Mortgage Rates Are Going Up
Following the election in November, mortgage rates increased almost a quarter of a percentage point. The projection for 2017 is that mortgage rates will continue to rise and could reach 4.8 percent by the end of the year. This means that home buyers should proceed to lock in rates as soon as possible — meaning it is advantageous to buy earlier in the year instead of waiting until later.
An Increase in Housing Inventory
Higher interest rates typically result in an increase of housing inventory, since market conditions motivate home buyers and sellers to act. The dissatisfaction over high rental rates in San Francisco, the continued influx of the high-earning millennial tech workforce, and rising salaries are all factors that will continue to drive the San Francisco housing market in 2017. This is a trend that we already saw in 2016 — as noted by the NAR, 17% of buyers under 35 saved for a down payment for a home within a year, compared with 14% of all age groups, and 2017 should see an even greater increase in these numbers.
Trump’s Presidency Will Affect the 2017 San Francisco Housing Market
Many are predicting that Trump’s presidency will be good for the housing market — this is his core business after all. He is unlikely to directly affect negative change to real estate and is likely to lower taxes and deregulate, which could make more credit available to potential home buyers. Of course, his economic policies could backfire and trigger a recession or high inflation and we don’t yet know how his trade and immigration policy will affect the tech sector. Keep an eye on the local economy and interest rates and always remember that real estate is for the long term.
In 2017, Should You Rent or Buy?
Definitely buy. If mortgage rates do continue to rise and if the economy sees increased inflation, the cost of housing goes up. The San Francisco housing market has always, over any five to 10 year time period, risen and this trend is likely to continue. Owning a home in San Francisco is an amazing investment and you get to live here! While rental rates have decreased slightly in the past year, they are likely to remain somewhat stable given the overall high demand in our low supply marketplace. And given the boom in rental rates in recent years, even a lowered rate in 2017 is still a very high price to pay. Rather than sinking money into a rental unit that gives zero return on your financial investment, buy a home that uses “other people’s money” to leverage yourself into long-term financial security. And for many of our clients, their mortgage is less than they’d pay in rent!
What’s Hot: Location, Location, Location
Let’s take a closer peak at the micro-markets in San Francisco. Neighborhoods like Hayes Valley that have a majority of condos and are much more urban, saw a lower median sales price in 2016 and an increase in the number of listings than in neighborhoods like Noe Valley where there is a pretty even mix of single family homes and condos and where there is a much more residential feeling. However, neighborhoods like Noe Valley still see a higher number of listings overall. In 2015, Noe Valley and Eureka Valley had the largest number of homes for sale in the $2 million plus market, while traditional luxury markets like Pacific Heights still had the highest priced homes. In 2017, it is expected that this trend will continue as first time buyers opt to explore “new to them” but actually long-established residential areas.
We Are Number One
San Francisco continues to be a driving force of innovation and progressive, forward-thinking policy. This world-class city remains a hot destination for home buyers wanting to relocate to a place that is renowned for its culture, music, art, food, and tech industry. I believe that 2017 is indeed a great time to buy a new home in San Francisco. Whether you’re looking to buy a home in San Francisco in 2017 or sell a home in San Francisco in 2017, it is always important to work with an established real estate agent like myself and SFhotlist Team and Compass San Francisco. Our team of four full-time real estate agents has a combined 56+ years of experience with the San Francisco real estate market and the expertise to get you the best return on your real estate investment.
Please reach out and schedule a FREE consultation!