Everyone is freaking out about the economy and the San Francisco real estate market, and I can’t blame them. I’m personally in Covid quarantine and my stock portfolio has taken a massive hit. It’s hard to be optimistic at the moment. We’re dealing with big interest rate increases, inflation, hiring freezes, the Ukraine war and yeah—a worldwide pandemic that’s surging again, and a bear stock market.
However, I’ve navigated rough markets before in the 20 years I’ve been in real estate here. Buyers, sellers and agents have to adjust their expectations and reset their strategies.
I’ve noticed signs of a softening market over the past month—lots of “transparent” pricing as an alternative to the classic list-low, sell-for-way-more practice. Listing agents encouraging early offers and not relying on offer dates. Offer dates coming and going without any offers transpiring. Price reductions. Developers at new construction condo projects slashing prices to be competitive and get buyers into contract. Lots of inventory hanging around, particularly in the downtown and South Beach areas and in the higher price ranges.
Nothing new, the market goes in cycles and you just need to know how to handle this particular one. I fortunately have some tips for buyers and sellers that I hope will help everyone navigate the market successfully:
Buyers: Stay the course and focus on what you can afford under the higher interest rates. It’s likely your purchasing power will not be as strong as was earlier this year. But there will definitely be room to move on pricing in summer and Fall. Yes, there will be sellers who won’t sell unless they can get a certain price. But you want the ones who will sell for what the market will bear. Don’t be afraid to include a contingency or two, because you may end up being the only offer and it’s always nice to have a safety net. There will be some good deals in your future, so don’t miss out because you’re sitting on the sidelines or trying to time the market.
Sellers: Make sure your property stands out with the proper prep work, and get those buyers to the open houses with a high-quality online presence. This is not the time to try to save money by skipping the painting, cleaning, refinishing floors, and staging. Buyers will be more critical and you will want to give them a reason to make an offer on your property. Be realistic on price and recognize that sales which occurred earlier in the year closed when interest rates were considerably lower. The list-low, sell-for-more strategy may not work in many cases, so you might want to price your home right around where it should sell. Be prepared to have a longer days on market, particularly if there’s a lot of inventory in your price range. You need that one qualified buyer, so set yourself up to compete against other similar properties.