Enjoy the Good Times While They Last

Enjoy the Good Times While They Last

I attended the annual First Republic Bank Realtor luncheon at the St. Francis Yacht Club yesterday. It was a nice opportunity to chat with colleagues, enjoy a great meal and listen to an update on the real estate market against the backdrop of the crashing surf.

We’re doing great now in San Francisco where the real estate market is concerned, says Alan Zafran, the Senior Managing Director and Portfolio Manager in the First Republic Investment Management group. But we need to be mindful that much of our our booming market is propped up by the tech sector. This is fine if tech stays strong, but there will most likely be a bit of future correction that will absolutely affect how much money some buyers throw at properties.

We also have a coming luxury residential supply glut, says Zafran, with 59,000 units in the pipeline. Again, if our tech economy falters, we could have a surplus of luxury condos hanging around.

Zafran says that all signs point to an inevitable interest rate hike, which hopefully will be moderate, maintaining job growth and reasonable inflation levels.

As I ate my seared salmon with red wine braised farro, broccolini, fingerling chips and tomato chive buerre blanc sauce, I couldn’t help but silently agree that our current real estate exuberance may have hit its peak earlier this year.

For example, second quarter averages for sold houses and condos citywide were $1,800,000 and $1,285,000, respectively. But they’ve dropped ever so slightly to $1,700,000 and $1,232,000 in the time period of October to present.

What this means to me is that there may be fewer buyers heading into 2016 who are willing to make sellers’ eyes pop with outlandish offer prices that soar above comparable sale range. And we may also be looking at the return of appraisal, loan and inspection contingencies as the market evens out.

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Get in touch:

Eileen Bermingham

Corcoran Global Living

415.823.4656

eileen@insidesfre.com

DRE# 01352627

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