Almost every time Matt and I sit down with new clients — either buyers or sellers — the question comes up: “Is every property selling over the asking price? Are we back to that market?”
That market — the overheated market that came to a rather unceremonious end with the financial implosion of 2008 — saw double-digit price increases from one month to the next. Yes, some neighborhoods saw values go up 10% from one month to the next. The market saw many buyers writing offers with no contingencies at all, not even for inspections.
But that was then and this is now, and in between, some things shifted quite dramatically. Fast forward from September 2008 to September 2010, when the average ratio of the selling price to the original listing price in San Francisco was 95.4%. This statistic was drawn from MLS records of sales citywide of condos and single-family homes, not including TICs or unit buildings. Walk forward a few more months, to January 2011, when this ratio was down to 93.3%.
To say the least, these numbers were not very San Francisco-like, considering the relative strength of our real estate market over the decade prior to the 2008 financial market drama. Throughout 2009 and 2010, the market in San Francisco shuffled along with many homes selling under asking, inventory shrinking as owners who had the option of waiting to sell keeping their homes off the market, and buyers looking for great bargains.
But look what started to happen in 2011:
There were a few blips along the way, but the ratio of the selling price to the original listing price has steadily climbed through September 2012. As of September 30, the ratio is 102.8%, the highest it has been in years.
There are a number of factors at play here, some anecdotal and some measurable. First, anecdotally, after a few years of buyers not being sure that they would have a job in the coming months, buyers now seem to be much more confident overall about their financial situation and their job security. The measurable stuff comes into play, as well: the stock market is up, interest rates are lower than they’ve ever been and contrary to some beliefs, it’s very possible to secure a loan to buy a new home.
2012 has seen a very robust real estate market in our beautiful city. I hope the ratio doesn’t go up so much that we find ourselves in an overheated market again. What this says to me is that it’s a better time than it’s been in years to sell a property. Buyers might be faced with a more competitive landscape, depending on preferences about property types and neighborhoods, but with money being as cheap as it is, it’s still a good time to be a buyer in San Francisco.