It is now official that three of the top five cities in the United States where homes sell the fastest are in the Bay Area. This was reported by CNBC yesterday in an article on the Zillow Home Value Index. San Jose was ranked second, San Francisco third and Santa Rosa fourth.
On the ground here in San Francisco this is no surprise to REALTORS®. There have certainly been bumps in the real estate road in the past few years, but as CNBC pointed out “some areas are doing decidedly better than others.”
This is important information for buyers. When shopping for a home in the Bay Area instead of expecting a buyers’ market, buyers need to shift gears and prepare themselves to make offers in a sellers’ market.
Traditionally, spring is the time when the greatest number of homes come on the market for sale. This year things are a bit different. Fewer new homes are on the market each week and combined with quicker sales that means there are fewer choices for buyers and not much room for negotiation on price.
A typical San Francisco style buyer has gone to college and has a job in the tech or financial industry. These buyers have accumulated bonuses and stock options and now are out shopping for their dream home. At the moment and for the foreseeable future there are more buyers than dream homes available.
In my experience there are two basic approaches to buying a home in San Francisco in a sellers’ market:
Buy the location and forget about two bathrooms, in-unit laundry or anything else that can be changed. Hey, remember you are in San Francisco. This means that you are luckier than almost all other humans on earth.
Add a step to your plan to buy a home. Go back to the old method of buying a smaller home to get a foot hold in the real estate market. Once you have equity in your home you will be ready up to move up to your dream home. Keep in mind your dream home will come. It will just be a few years off.
Successful buyers are not talking about getting a deal, finding a short sale or finding a home that meets all of their criteria. Successful buyers understand that owning a home in San Francisco is a good value and in order to do that they will think creatively and make compromises.