As of March 29th, San Francisco-Oakland-Fremont The Capital Region was the fourth-hottest housing market in the country. According to Bay Area Metro, the 90-day average Market Activity Index score was 61.19. data from Altos Research. By comparison, the top-ranked metropolitan areas of Seattle, Tacoma and Bellevue had a score of 64.53. Altos believes that anything with a Market Action Index above 30 is a seller’s market.
The housing markets in San Francisco, Oakland and Fremont may be booming, but local real estate agents feel they could be even hotter.
“We’ve had a bit of a downturn, but things were a little more frothy earlier this year,” he said. andrea gordonbased in Auckland compass needle Agent. ” weather conditions The situation is not ideal: consumer confidence in the real estate market is low, interest rates are an issue, and inventory is tight. ”
Other local agents agree that interest rates and inventory are two major challenges to overcome, although they say the market is far from in a lull.
“When interest rates were rising, we saw a decline in inventory and buyers because sellers were afraid to put their homes on the market because they didn’t think there would be a big pool of buyers, and buyers wanted to wait. ‘Get the 4% interest rate your friends were boasting about,’ says Nicole Wilhelm, one half of Compass Brokers. wilhelm steam, Said. “But we’re starting to see people starting to come back into the market, both on the seller and buyer sides, because they’ve realized that interest rates may not come down.”
The local agent federal reserve When interest rates are lowered later this year, there will be more market activity. Regardless of the Fed’s decision, Nicole Wilhelm believes 2024 is still a good time for buyers to enter the housing market.
“I love election years when interest rates are high,” Nicole Wilhelm said. “I think now is the best time for buyers to get a deal. There are fewer buyers looking because everyone is scared and we don’t know what’s going to happen and everyone is buying because there’s so much competition.” I never want to end up in a scenario where the cost is too high. If you’re not sure, buy it now. You can always refinance later. ”
Nicole Wilhelm feels now may be a good time to buy, but rising interest rates will keep many potential sellers on the sidelines, further straining an already tight inventory market.
“Many sellers in our area refinanced their homes when they could get financing rates in the 2.75% range,” Gordon said. “If they want to stay in the Bay Area, it doesn’t make economic sense to move across town and end up with a 7% mortgage rate.”
As of March 29, the 90-day average for single-family listings in the San Francisco-Oakland-Fremont metropolitan area was 1,643 active listings, down from an all-time low of 1,229 listings in early March 2019, according to Altos data. The number is increasing from active properties. 2022, but still below the 1,894 active listings reported a year ago and the pre-pandemic level of 2,083 active listings.
Additionally, only 370 new single-family listings came on the market in the metropolitan area during the week ending March 29th. That’s up from 319 cases a year ago, but down from 466 at the start of the coronavirus pandemic. While the agency appreciates the additional inventory coming to market, it doesn’t believe it will be enough to keep up with demand.
“Even if we were to get three or four more homes every week, there would be very little reduction in demand,” said Amanda Jones of the San Francisco-based Compass agency.
As a result, Jones said it’s not unusual to see multiple offers on properties throughout the metro area.
“It’s pretty competitive, but there’s a little bit of whiplash right now,” Jones said. “On the other hand, you might write an offer on a property in South Beach or SoMa and get the only offer, but then you go write an offer on a house on the west side of the city and you might get 16 offers. “property. You navigate these realities every day with buyers, but some sellers are in a situation where they expect us to give up everything. ”
Agents say buyer demand remains strong, but some are dissatisfied.
“Being a buyer in this market can be difficult because inventory levels are so low and there are multiple offers.” Shalini Saddabased in San Francisco urban real estate A broker official said. “If you’re a buyer and you’re not in a position to make a competitive offer, you may become exhausted. That’s why we’re seeing buyer fatigue, especially in certain areas.”
Real estate agents say the Bay Area’s common practice of pricing homes below market value also contributes to the high number of multiple offer situations in some parts of the city.
“Historically, we know that there are some neighborhoods in San Francisco that have adopted low-price strategies, but now there are areas that have adopted low-price strategies because they don’t want to undercut sellers’ prices. It’s increasing more and more,” Sada said. “You want to be able to get the highest price, so you don’t want to sell at a price that you think will definitely sell, especially if you don’t have a competition.”
According to local agents, this strategy allows the market to decide how much a particular property can sell for and allows agents to set an offer deadline, giving them control over how long a home stays on the market. It is said that it will be possible. However, there are some drawbacks, especially for buyers who are not familiar with this practice.
“Some customers may be able to afford to go to any height in the stratosphere, but they need to know and understand what the parameters are,” Gordon says. “There are a few agents who are pricing everything at $899,000 or $1,299,000 and hoping to get offers 10% to 30% above that, but it’s very difficult for buyers to determine that. And it’s not fair to force them to spend their time and energy looking at homes that they probably won’t be able to buy in the end. ”
High demand and low inventory in metropolitan areas, combined with this pricing strategy, led to rapid increases in median list prices. The average 90-day median list price for single-family homes as of March 29 was $1.3 million, compared to $1.2 million a year ago and $990,000 just before the start of the coronavirus pandemic, according to Altos Research data. That’s up from $9,888.
Despite the challenges facing agents and their clients, agents are optimistic about the upcoming spring housing market.
“The level of demand is slowly increasing and properties are starting to come on the market as well,” Michael Wilhelm said. “The spring market typically sees a large influx of inventory, but this time around the pace has slowed as sellers wait for when bidding wars will occur again.”