San Francisco is a great place to live – having been here for nearly a decade myself, I can attest to that personally. That being said, it’s not an easy place to afford! Plenty of statistics and articles recently have labeled us as one of the most expensive places in the country, and one of the least affordable.
If you’re a home buyer in SF, all that is made even more frustrating by the real estate market today. Homes are regularly being listed at far below their value, when compared to recent sales in their neighborhoods, with the intention of getting the home bid way above asking. All of this hype and competition on homes makes the process of making an offer difficult. Buyers and their agents have to discern a best educated guess as to how many offers might come in on any given property, and how high over list the offers might go. I’ve seen clients make several offers on several homes before having one accepted, all because of this massive amount of competition.
Why is this all happening?
This is simply a matter of supply and demand, on a crazy scale!
The inventory in San Francisco is unusually low, and has been for quite some time. With few people leaving their homes, and even fewer leaving desirable neighborhoods, and more and more people interested in moving to the city, in part because of the tech boom we’re experience these days, the demand for real estate is high.
In short: less homes + more buyers = high competition.
Sellers and their agents have been taking advantage of this dynamic in our market by listing homes at lower prices and bring in large numbers of potential buyers for many multiple offer situations throughout the city. Some homes have sold for as much as $1.5 million over list!
How will this pan out?
Generally, when prices are high and demand is high, more people decided it’s a good time to move and put their houses on the market. Eventually the increase in inventory balances the scales, and the market will switch from a sellers market to a buyers market. In San Francisco, this doesn’t seem to be happening. In general, people who are here want to stay, and more people want to move in!
The only real solution to this problem, and the only way I can see to lower the demand for homes in the city, is to build more housing. Luckily, San Francisco is doing just that. New condo buildings are popping up all over the city. Eventually, if enough new units are built, the inventory will match the demand, and the housing market will balance out.
In the mean time, the market doesn’t look like it’s headed for a nose dive anytime soon. It’s a seller’s market, and I expect it will stay that way for a while longer.
