Many prospective home buyers and real estate market watchers have been waiting for San Francisco prices to plunge ever since our shelter-in-place went into effect on March 17th. After all, people are reportedly leaving the city in droves, and there’s such a lack of interest in urban dwellings that homeowners will take any price just to get out from under a property that’s steadily falling in value—right?
Wrong. Volume may be down in 2020, but prices certainly aren’t plunging. The single-family home remains the holy grail, very much in demand. And condos are holding steady, especially units in smaller buildings with outdoor space.
Even the softer condo market segments haven’t lost significant value. For example, here’s how some have fared from June-September in 2020 vs 2019:
Avge 2020 price: $1,118,000 | 2019: $1,130,000 (-1%)
Avge 2020 price per sq ft: $874 | 2019: $944 (-7%)
2020: $902,721 | 2019: $943,140 (-4.28%)
2020: $1,115 | 2019: $1,167 (-4.45%)
Two-Bedroom Condos, 20+ Unit Buildings
2020: $1,364,928 | 2019: $1,400,000 (-2.5%)
2020: $1,124 | 2019: $1,146 (-2.5%)
So why aren’t corona and a challenging economy causing prices to dramatically plummet? Where are all the “deals” many buyers are envisioning as they consistently lob unsuccessful lowball offers at condo sellers?
The reality is that San Francisco condo homeowners aren’t being wildly flexible on negotiating prices, because they don’t have to. There’s not really any urgency because they’ll just hold off on selling if they don’t get a reasonable price.
Contrary to the 2008 financial crisis, condo owners are not reeling toward foreclosure. Those who may have lost jobs are requesting loan forbearance with their lender. And those who own investment condos are able to tolerate giving tenants rent breaks or re-renting units at slightly lower prices because, for example, getting $3,000-$3,200 a month is still pretty good for a one-bedroom unit that may have been renting at $3,500-$3,900/month before corona hit.
The window is closing for qualified buyers who want to purchase a new home or investment property in 2020. Word on the street is that San Francisco is still desirable, and that its real estate will continue benefitting from low interest rates and a strong job market. You may not be able to scoop up that three-bedroom, two-bath condo with parking in a great location for twenty percent less than what it was worth in 2019, but you may have less competition—and maybe a little wiggle room on the price.