Recency bias is a real issue in real estate. Here at Kinoko, we always tell our clients to keep the big picture in mind. I’m sure many have heard recent national news stories about the real estate market slowing down. While a majority of the markets, the Bay Area included, have seen a slowdown, the demand for housing in the Bay has been so strong for the past 10 years that it is still a seller’s market. The peak frenzy we saw over the past few years has cooled some, and many people need to remember what the market was like before COVID.
If you are starting to ask yourself if you missed the opportunity to sell your property, the good news is that you haven’t. There are still motivated buyers in the market. However, the days of just throwing a property on the market and having multiple offers come in have mostly disappeared. An experienced agent will take the latest data and price your house right for the current market. There are many factors that influence pricing, and a seasoned listing agent will know which markers to watch in determining the right price to sell your home.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
It’s true buyer demand has slowed over the past few months as higher mortgage rates made it more expensive to buy a home. The result is fewer bidding wars and less competition among buyers (see visual below):
PLEASE REMEMBER, these stats compare the current market to the severely overheated market we saw over the past few years. According to the latest Confidence Index from NAR:
“. . . 39% of homes sold above list price, down from 51% a month ago and 50% a year ago.”
Kinoko Real Estate founder and broker Kevin Gueco has said in a recent video that your decisions need to be made with 5-year averages in mind. Have a look at the video here if you haven’t already.
Even though we’re at a slower pace than even one month ago, serious buyers remain in the market, actively searching for a home. However, now they’re buying homes that are priced right. As a matter of fact, the Confidence Index also notes the average home is selling in just 14 days in the whole United States.
Since many in the Bay Area markets are savvy enough to know that national real estate stats sometimes don’t reflect local trends, we can look at local San Francisco data from the San Francisco Association of Realtors.
Stats tell a story, and the San Francisco market is no different. Here is a look at Single Family Home (SFH) data going back to 2016 with stats for the month of July:
|SFH for July||2016||2017||2018||2019||2020||2021||2022|
|Days on Market||32||24||21||23||25||18||20|
|% of Properties Sold over list||76.2||81.4||85.4||82.6||64.7||83.5||77.9|
If you only compared July's sales data to 2021, Days on Market (DOM) are down 11% (properties stay on the market 11% longer), Active Listings are down 25%, and $ of Properties Sold Over List are down 6.7%. However, looking at the 5 year average from 2016-2021:
|SF Month of July SFH Sales||2016-2021 Averages||2022||% Change|
|% Properties Sold Over List||67.7||77.9||+15%|
So, for Single Family Homes, comparing the July 2022 data is telling us DOM is about average, there is an actual decrease in the number of Single Family Homes on the market (counter to the national narrative), and homes are still selling over list price at an increase of 15% compared to the previous 5 years.
It's a slightly different story than you may have seen on national news outlets.
So, if you’re aiming to sell your house, be sure you’re working with your agent to price it for today’s housing market. As buyer demand softens, it’s important to understand this isn’t the same market as last year. It’s not even the same market as just a few months ago. But it is still a sellers’ market, even in San Francisco.
If you’re ready to sell your house, the folks at Kinoko have years of experience and are writing offers every week. So, we know where current prices are by virtue of seeing which offers are winning the day.
In some cases, you’ll need to adjust your expectations accordingly to meet the market where it is today. Selma Hepp, Interim Lead, Deputy Chief Economist at CoreLogic, explains what’s happening and what it means when you sell:
“Signs of a broader slowdown in the housing market are evident, . . . This is in line with our previous expectations and given the notable cooling of buyer demand due to higher mortgage rates. . . . Nevertheless, buyers still remain interested, which is keeping the market competitive — particularly for attractive homes that are properly priced.”
In the End
Even though the national housing market has cooled from its overheated frenzy, for Single Family Homes, San Francisco is still a sellers’ market. Work with a Kinoko agent to understand current buyer demand and current home prices in the Bay Area as you prepare to sell your home and/or buy a home. Even if you’re just weighing your options, we are more than happy to keep you up to date on the market.