It’s been a busy first half of 2013 for buyers and sellers of San Francisco real estate—and the rapid pace hasn’t been without its headaches for the buyers who were hoping to purchase a home by now. Inventory remained low, prices escalated, interest rates hit record lows (but have been on the rise as of late). Most sellers achieved multiple offers on their homes, regardless of neighborhood, and cash buyers seemed to pop up in every extreme multiple-offer situation. New construction returned to the city at a frenzied pace, with new condo developments breaking ground in transit-rich, central neighborhoods, as well as in more remote areas that could certainly use more residential units.
So what’s on tap for the second half of 2013? Here are my predictions:
More sellers will materialize. This summer will be no different, with July and August seeing somewhat of a slowdown in the number of sellers who decide to put their homes on the market. However, September-November will go gangbusters, with homeowners finally deciding to take the leap as they try to follow in the footsteps of their neighbors who received generous prices on their properties after selling in the first half of 2013.
Off-market sales will continue. Though they’re difficult to track, off-market sales have been happening on a regular basis. These are sales that occur without the benefit of the property being listed in the MLS. Some sellers like off-market sales because they don’t have to incur staging costs, have open houses, or be pressured to make a decision immediately. Expect to see a spike in properties being offered outside of the MLS, particularly by homeowners who may not exactly be committed to selling. Perhaps they don’t know where they want to go next or how they’ll get there, and they’re pretty daunted themselves about the concept of being a buyer in the current market. But if they could get even more than their neighbors next door did for the same type of property, they’ll gladly sell—all without incurring staging expenses or feeling the clock ticking in the MLS.
Some buyers will decide to postpone their search. After slogging through the year being outbid numerous times, or simply not finding homes that are in their price ranges, some buyers will hang it up. Maybe they’ll see how things go in 2014, but at least for now, they’ll come to terms with not being able to compete on price or by waiving key contingencies.
Sellers will get greedy. We’ve seen steady increases in values across all neighborhoods up to this point, so why shouldn’t that pattern continue? Some sellers will get a little overconfident in their homes and will start really stretching it where list prices and intended sales prices are concerned. I’m starting to see signs of this already. The result will be more properties sitting on the market a little longer, and perhaps more “as they come” offer situations.
Interest rates won’t get any lower. The market will adjust to the increase in 30-year fixed-rate loans, which will cut buyers’ purchasing power and contribute to those aforementioned homes sitting on the market longer.
New construction won’t be a bargain. Condos in new developments will continue to fetch $1,000-$1,200/sq ft, particularly in popular neighborhoods such as Russian Hill, Hayes Valley, SoMa, and the Castro. And qualified buyers attracted to shiny, new and centrally located will snap up these units.