San Francisco Market Focus – March 2014

San Francisco Market Focus – March 2014

Inventory Crunch is Causing Higher Prices Econ 101, Supply and Demand: When demand outstrips supply prices go up.  The more demand the faster prices climb.  That is what we are experiencing in San Francisco and there is no end in sight. New Listings were down 16.1 percent for single family homes and 28.9 percent for Condo/TIC/Coop properties. Pending Sales increased 6.3 percent for single family homes but decreased 5.6 percent for Condo/TIC/Coop properties. Read Full...

Interest Rates Are Rising

Don’t Be Scared of Those Rising Interest Rates – They’re Actually Good for Housing! Here in San Francisco, we are beginning to see two interesting trends in the real estate market.  The first trend pertains to the method of payment in transactions: cash. During the first half of 2013, 35% of the transactions were cash.  This tendency toward cash could be due to an increasing difficulty in getting a loan or it could be that the seller wants to close fast and is not willing to wait for financing if a cash offer also comes in. Cash transactions have another added benefit: the guarantee. In my two decades of experience in real estate here in the Bay Area, I know that a small but meaningful percentage of transactions with financing will fail. Many of my sellers tell me they prefer cash deals, even if the sales price is lower. The second interesting trend is that rising rates are beginning to cause lenders to offer a wider variety of products and underwriting practices are getting back to pre-recession “normal”—no more having to use you’re first born as collateral! How these two are changes a good thing?  Two reasons: one, with easier financing sellers have started to realize that waiting a few extra days for someone to get a loan is worth getting a higher price, and two, higher rates do take a few buyers out of the market and this will have a gentle cooling impact on the market as a whole.  With a reported 25% increase from May 2012 to May 2013, the market needs to cool a bit....