San Francisco condo buyers are holding out for units that meet all their criteria and location preferences, or they’ll wait for the “perfect” place to come along that they can afford—even if it’s at the top of their budget. This approach is not helping to sell the 600 condos currently for sale, which are averaging 93 days on the market.
It’s old news that mortgage interest rates are significantly higher now than what many current condo sellers secured when they bought their properties. Sellers want to get a fair price for their condos, but buyers (many of whom are first-time purchasers) are struggling with the reality of high mortgage payments with their 20% down payments. Adding to the financial strain are homeowners association dues (HOA), which can easily approach $1,000 per month or more in larger buildings.
This disconnect between buyers and sellers finds our San Francisco condo market hitting a wall.
And buyers are not exactly in a hurry. They’re willing to hold out for what they truly want, biding their time until interest rates drop a bit, by the way.
I’m also noting that buyers aren’t even making offers significantly below the asking price. They prefer to wait for a price reduction or for a new unit to come on the market that’s within their price range.
I believe the market will loosen up when interest rates start to drop. However, this could also lead to increased competition among buyers. My advice to condo buyers heading into August is to focus on a unit they genuinely like and negotiate with the seller to reach an agreement.