At last, the promised new inventory has arrived. While we generally see a spike in listings during one of our two selling seasons -- spring and fall -- the past several years have been dismal in terms of turning out new listings. Not so this year.
The question is: Will that translate into any relief for buyers?
My assistant Michael Basham and I recently attended a symposium on the state of housing in San Francisco. If you have a couple of hours to kill, you can find the entire panel discussion audio here. While I found the discussion fascinating (it is my job after all) there are a couple of stats that particularly caught my attention:
Since 2010, we’ve added 10,000 residents to San Francisco every year, increasing our population by 50,000
During that same time frame, 80,000 new jobs have been created and only 10,000 new housing units have been added, well over 70% of which are rentals
According to Ted Egan, San Francisco's Chief Economist, each year 70,000 people move into San Francisco (which means 60,000 move out)
Wholesale new construction costs are currently running $950-$1000/square-foot in San Francisco, which drops by only $50-$100/square-foot in Oakland; sale prices in the East Bay continue to garner significantly less than San Francisco
I have certainly spoken to more than one agent recently who had offer dates come and go, or only had one party come to the table. My personal take continues to be this: Fall is a really good window to buy, and I’m advising my sellers hold off until spring to list their property for sale (situation and replacement property depending). That said, I am actively looking to work with more buyers this fall -- If you know someone interested in buying please pass my name along. I’ll be happy to speak with them even if they’re not sure yet.
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September is historically the month San Francisco sees the greatest number of new listings come on the market, and this year it hasn't disappointed! Since the 1st of the month, more than 800 single-family homes and condos have hit the market, blowing last year's count out of the water. Further sweetening the situation for prospective home buyers, there are more condos for sale now than any time in the past two years and the most sub-million dollar single-family homes we've seen all year.
While median prices for both property types have remained consistently above $1,000,000 for the past seven months, the month-over-month rate of appreciation has cooled recently leading some economists to believe the market is leveling off. Still, there are plenty of buyers out there and the key to home values will continue to be the pace of job growth. On that note, employment is at a record high in San Francisco, and the East Bay (where many people priced out of SF are already putting increasing pressure on the housing market) is in for some major job growth in the coming months, years and decades.
Uber's recent purchase of the former Sears building in downtown Oakland could prove a huge boon for the city. Aside from the estimated 600 new residents it will bring to the East Bay, it could open the floodgates for startups to establish headquarters in the area. Additionally, Berkeley has a billion-dollar real estate pipeline -- one of the largest building booms in its 147-year history -- that'll bring jobs and residents to the area over the next 40 years. If conventional wisdom is correct, the real estate market in the East Bay will be heating up -- way up!
A recent study by rental website Zumper found that for every $1 billion in venture capital injected into a local economy, 1-bedroom rents will increase $69 per month, and 2-bedroom rents will increase $99 per month. In San Francisco, $1,069 or 33% of a median 1-bedroom rent can be attributed to this stimulation. As housing prices accelerate around the Bay Area, it should become increasing clear that the housing crunch is a regional issue rather than a strictly San Francisco one, and the solution to it will be best achieved in a coordinated effort.