With Q1 2013 recently coming to a close, we wanted to take a moment to discuss where the market has been and where we are headed. As many of you know, the current real estate market has been CRAZY!
Historically, San Francisco has always been a strong and swift market, with escalating values, but lately we are seeing trends reminiscent of the 2007/2008 market (the height), a time where wild bidding wars were the new norm.
Let’s take a look back on when this all started:
There was a shift at the end of 2011, and by Q1/Q2 2012, we were definitely in what appeared to be a seller’s market. Since that time, and now more then ever in Q1 2013, due to historically low levels of inventory and continued low interest rates, sellers have been in the driver’s seat of the market.
Why are inventory levels so low?
Some of this has to do with sellers holding back. If they sell now, there are not a lot of options for them to replace their current properties. Other sellers feel that they do not have enough equity in their homes yet.
Once inventory levels rise the market will be forced to correct itself, but until that happens, we don’t see the real estate market changing.
Here’s a snapshot of just how low our housing inventory levels are:
Q1 started off 2013 with the lowest housing inventory level San Francisco had seen in the past seven years! 5,344 homes (SFR and condos) were listed for sale at the start of Q1. Though it is typical that the fall/winter months have lower inventory levels than spring/summer months, there was certainly nothing normal about January’s numbers.
To put this into perspective, here’s a little number comparison:
Q1 2013 represented the lowest housing level seen in SF, with only 5,344 homes available. Rewind five years back to Q2 2008, and there were 29,478 homes listed for sale!
What’s happening in Q2 for housing inventory levels?
Q2 is off to a better start regarding housing inventory levels. As of last week, 6,786 homes were listed for sale in San Francisco, While this shows slight improvement year/year, we are still down -43.1% for home listings/inventory level, but our median home price is up +41.3% year/year.
Now, with such limited inventory, buyers are facing incredible competition trying to successfully get into contract on a property. It’s reminiscent of the stress an 18-year-old faces during college admissions, when they are trying to secure the last spot at a coveted university.
2013 has been already proven to be a very fast-paced real estate market. With the demand so great, listings are often marketed for less than a week before offers are due. Real estate markets are cyclic and there is no doubt that these current market conditions will not last forever, which makes it an excellent time to sell. The buying pool is large and highly qualified, and there is a limited amount of inventory to compete with.
If you are looking to buy in this escalating market, really think about whether buying in this market is right for your real estate goals. If it is, then the value of representation is more important then ever.
If you or someone you know have any questions about the market, or about the buying/selling process, please do not hesitate to contact us.