What Stories Do the Data Tell?

Every market has its own rules, customs and practices. In San Francisco, agents had tended to price property listings less than what properties were worth. Right or wrong it’s the way it was done here since the economy recovered after the 2012 low point in the market.

Now, with the pandemic, rarer instances of when agents would practice ‘transparent’  are becoming more common. But still, for every listing that is ‘transparently’ priced we can show you at least 3 more that are radically underpriced … on purpose.

The rationale behind this tactic is to attract interest and attention that would yield multiple offers that would go to drive a property’s final sale price — much like an auction boosts sale prices when people get caught up in the competitive moment let their emotions dictate their bids.

There have been housing crunches and booms since the very beginning. Crises, pandemics, crashes and bubbles ever since gold was found up north in 1849. But apart from that gold, San Francisco has always been a destination and aspirational city to be a part of.  There are the big attractions  that draw people here:  a temperate climate, the pervasive entrepreneurial spirit, the diversity of people from all over the country and world, the area’s natural beauty, cuisine, proximity to nature, its universities, and, of course, the engines of the tech and data economy are based here among more.

Real estate is at the very heart of many of the tourist attractions here — the Painted Ladies on Alamo Square are, after all, a row of Victorian houses with one of them seller as a fixer in 2020 for more than $3.5 million and Lombard Street is a, well, street.

San Francisco has drawn entrepreneurs and innovators alike as it has done so since its founding. Population booms and housing crunches (and crises) have been as much a part of San Francisco as the fog has been. Because it’s been a boom town, it has attracted folks from far and wide seeking opportunity which has led to diverse architecture, housing patterns and market patterns as a result.

Combine the above draws with the fact that we’ve run out of room to build anything (not to mention the cost) the Bay Area’s real estate market has been impact by a lot of policy-driven factors that make land a scarce commodity. Some of those policies relate to strong historic protections, property tax and capital gains tax policies that favor long-term ownership, rent control laws and heavily regulated building regulations that make construction contentious and difficult many times, all combine to make the place even more valuable than it would otherwise be.

There are various reasons as to why so few homes come up for sale. Even during the height of the Pandemic we were edging towards a buyer’s market (which means there would be enough months’ supply to satisfy demand) but we never got there. Here are some of the reasons why: 

• Geographic: we’re locked in by water
• Human-made: rent control and eviction control laws promote long tenancies 
• Human-made 2: stringent planning and zoning requirements that allow a lot of community involvement cand drag on for years before permits for new construction or remodeling are approved 
• Financial: taxes — property tax locks and long-term capital gains are two of the most common impediments to selling 
• Affinity populations/destination setting: San Francisco means so many things for so many types of people. From a mild climate, an accepting climate, a climate of rich cultural traditions to a climate where people can get rich through the tech and biotech sectors among more, it’s a sought-after place to live in

THREE-BEDROOMS

CAN YOU PREDICT IT? 

Growth in San Francisco has been around ever since it was nothing more than an adobe building. But when the prices are going up and when they decline to when they go up again is something that is a bit more unpredictable.