Source: SFAR MLS
By: Kevin K. Ho, ESQ., Vanguard Properties
Originally appearing in the September 2015 edition of the Hatchbeat, a San Francisco neighborhood newsletter serving Alamo Square, NoPa, Hayes Valley, the Haight and more.
In many other parts of the country summer is the busy time for real estate. By the time fall comes, real estate quiets down. Not so in San Francisco. Real estate transactions pick up in the fall here; we suppose it’s because everyone is back from vacation or because the weather is nicer. Anyway, recent global and financial events may make the upcoming autumn more eventful than in years past.
Not really/Maybe. A few of our buyers asked us if recent stock market corrections would allow them to get a discount on homes they each wanted. We said we doubted it. Nevertheless, these buyers thought they were being tactical when they chose to discount their offer bid amounts. Both those buyers lost out to higher (multiple) offers. Each would have won the property in question if they made a correctly priced offer. In other words, there shouldn’t be any price relief for buyers.
More people may see real estate as a useful hedge against market risk… again. We said this a lot during the Great Recession, but it bears repeating: real estate is a great hedge against market turbulence as everyone needs a place to live and there are not only financial benefits from home ownership but you could also potentially earn rent off of your property. This may have the impact of increasing demand for real estate, which could drive prices up somewhat.
Act now… while you still have the chance. Everyone expects interest rates for mortgages to rise before too long. Recent market fluctuations may push that increase off until December which gives buyers a chance to lock-in extremely low mortgage rates for the next 30 years. This has the impact of potentially locking down a property for years to come. But in the short term, this may mean there will be more activity this fall with buyers pushing their budgets higher. Why? Here’s the logic: buyer purchase power is still strong today so financing a larger purchase price at a lower interest rate is viewed as being better than financing a lower-priced offer at a higher interest rate in the future as you’ll be paying more principal with a lower interest rate than a higher one.
Every property is different, which makes having a professional more vital than ever. As alluded to above us realtors really take our clients’ interests to heart. Many of our clients benefit from our advice about property value. One couple closed on a downtown condominium recently and we found out that the backup offer behind us (which came in too late) was $100,000 above ours and was all-cash. Needless to say, our buyers were happy as they have instant equity. On the other hand, we had potential sellers ignore our specific prep and marketing plan by entrusting vital design choices to their contractor. That property now has four shades of clashing white paint in just one room. There’s also clashing crown molding painted sea-foam green and white kitchen countertops with embedded reflective confetti bits. These poor choices have harmed the property’s value by $200,000-$400,000 we believe. The property now presents a good opportunity for a buyer to get a steal of a deal.
How far does a dollar go these days? If you’re looking for new construction these days the most obvious choice is the big new development at 555 Fulton Street where 1-bedroom condo units without parking are selling for about $700,000 a piece depending on views. But if new construction isn’t your cup of tea, take a look at what’s selling in the neighborhood and in the City generally.