First Half, 2012
The market was so strong in the First Quarter of this year that there was not a moment to devote to summarizing what was happening while trying to ride the crest of a big wave. Consequently, this Report covers the entire First Half of 2012.
It began in mid-January when the City real estate market took off rapidly thanks to several factors coinciding – continued extreme shortage of inventory; continued low interest rates; a relatively quiet period in the economic upheaval in Europe; a rising stock market; and stronger economic indicators in the domestic economy. The greatest influence, however, on San Francisco values is clearly the tech sector. Recent IPOs and the then anticipated effect of the Facebook IPO were driving a buying fury everywhere in the City, but most notably in Noe Valley.
By the end of March, we were back to the practice of setting offer dates and receiving multiple offers on many properties (especially those that were underpriced). Single family houses, as is typical, outperformed condos/co-ops/TICs, yet even income properties rose in value. Prices finally rose above 2004-05 levels and those price increases have continued. On average property prices are up nearly 10% over Q4 2011.
Some of the factors driving the exceptional market in San Francisco during Q1 have taken a step back in June. The European fiscal crises are flaring again and our domestic economy is not following a constant course to recovery. The Facebook IPO results were disappointing as was their process. Yet, the multiple offer frenzy continues.
I rarely write specifically about our brokerage, Sotheby’s, but here’s an interesting stat: from May 2011 to May 2012 our company owned offices experienced a 44% increase in the number of closed transactions. This was the hottest May market since 2007.
What do you do if you have been contemplating selling? Sell! This is your market. That is, as long as you know where you’re going and the next step meets your life goals. Do not mistake that for a signal to price high – the winning strategy in this market is to under-price and let the market take it where it belongs. It will.
What do you do if you are a buyer? Buy now, as it is going to get worse for you – not acting may result in your being priced out of the market. Be prepared to step up, in most cases offer over asking and do not be discouraged by being outbid. Get 100% of your documentation into your lender’s underwriters so that you can avoid putting a finance contingency into your offer. If you are among the fortunate ones who can encumber their new property with a mortgage after close of escrow, consider doing it in that order to allow for a quick close to make your offer more attractive.
Once again, this is a time when market savvy and experience make all the difference in the world. Experience and knowledge can pay dividends to sellers and lack thereof can put buyers out in the cold. Having the personal advice and dedication of a well-informed Realtor® will make all the difference.
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