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August 2019
 
 
 
 
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The Market Conditions Paradox

 

 

 

Is it a good time to buy, sell, neither or both?

 

A paradox is often presented when real estate market trends provide more favorable conditions for one side of the homeownership equation.  We often hear terms such as “it’s a Seller’s market” or “It’s a Buyer’s market”.  When conditions favor home sellers, are home buyers at a disadvantage and vice-versa?

If conditions are favorable to Sellers, Buyers might think it is not a good time to buy.  Conversely, if conditions are favorable to Buyers, Sellers might think it’s not the right time to sell.  When should one buy or sell?  Only when market conditions favor no one and are basically neutral on all fronts? 

Given the healthy flow of residential real estate transactions over the past 6-7 years (as we came out of the recession) amid the mostly highs and sometimes lows of market trends, we see that real estate doesn’t wait.  Why is that and how are home buyers and sellers affected by market trends?  Let’s explore the dynamics behind a couple of these trends, favoring one side or the other, and see why one-sided market advantages haven’t hampered the Bay Area real estate market.  

INVENTORY
We all know inventory, units available for sale, has been highly constrained over the past year or two (even three).  So constrained that we have been at “record lows” on available homes for sale.  The trend has been about 1 to 1.5 months of inventory available – the amount of time, according to general buying trends, it would take to drain the market of current inventory – versus a balanced market of 6 months.  This has favored home sellers and significantly contributed to home value appreciation.

Buyers, on the other hand, aren’t stagnated by this.  Housing in the Bay Area is so high in demand that those seeking to get into homeownership know that:  1) inventory doesn’t look like it’s going to spike anytime soon; 2) if you don’t buy someone else will; and  3) why not become a homeowner and partake in that appreciation gain?

Thus, while inventory levels pose favorable conditions to home sellers, home buyers aren’t sitting idly by waiting for this trend to pass by.  They are actively jumping in and keeping the market flowing.  

SUMMER SLOWDOWN
The traditional vacations, breaks, and laissez-faire attitude of the summer months has always caused a slight pause in the flurry of real estate activity.  There are less buyers looking for a home which makes for less competition for what’s on the market.  That’s certainly helpful to Buyers in the market, and seemingly not the most favorable situation for Sellers.  

It’s important to note, though, that fewer home sales don’t equate to a loss in value.  While there may be fewer buyers involved in a multiple offer situation, we still have multiple offers or single offers on the high end of fair market value (sometimes beyond).  And Buyers who are in the market at a potentially slower time of the year are gung-ho ready to buy whether out of necessity or just pure preference.  

With homeownership a high priority amongst Millennials and Gen Yers, and the Bay Area maintaining its title as one of the most desirable places to live in the entire U.S., fewer Buyers at any given time still equates to a healthy number of Buyers.  For Sellers, therefore, a slower market still provides strong opportunity.  

We see that real estate is alive and well, which is borne out by market statistics continually rising for average sales price and cost per square feet.  If you would like detailed market statistics for a city and/or property type, let me know.  I have excellent data and reports across a variety of our Bay Area markets and would be happy to provide you with detailed sales data at your request.

Cheers!

Marla 

 
 
 
 

Q2 2019 Market Stats Update

 


The Bay Area’s housing market remained strong during the second quarter of the year, with the combined average sales price for the five counties that we serve (SF, Marin, San Mateo, Alameda and Contra Costa) reaching $1.498 million in Q2 2019, up 1.5 percent year-over-year. As inventory levels continued to stay low across all five counties, the region’s overall sales volume fell by 4.1 percent from where it stood just a year prior.


San Francisco experienced the largest dip in sales volume, with the 577 single-family homes sold in Q2 down 7.8 percent year-over-year. Followed by San Mateo County (1,533 homes sold) and Marin County (800 homes sold), down 5.7 percent and 5.1 percent, respectively. While San Francisco’s condo market was the only segment to not experience a decline, it still remained flat as the 783 units sold this quarter was less than 1 percent above what it was in Q2 2018.

The average Bay Area home sold after spending 47 days on market (DOM) during the second quarter. While the average price per square foot for the region remained in line with where it stood exactly a year ago at $1,027. In San Francisco, the average sales price of a single-family home was $2.103 million, rising 7.7 percent year-over-year. Average price per square foot for a San Francisco home was $1,045. The city also saw a rise in condo prices, with its $1.389 million average up slightly from the previous year and equating to $1,172 in average price per square foot.

At $1.917 million, the average sales price in San Mateo County rose 4.7 percent this quarter, while the average price per square foot came in at $1,005. Second quarter figures were also on the rise in Contra Costa County, where the average sales price for a property was $824,000 and $421 per square foot. Alameda County and Marin County were the only two markets where the average sales price decreased from the previous year, down 2.3 percent and 4.3 percent, respectively. In Alameda County, the average home sold for $983,000 this quarter, while the average sales price for Marin County came in at $1.501 million.

McGuire’s quarterly market data includes average sales price, price per square foot, and DOM for all four regions of the Bay Area. Click on the following links to view data for San Francisco Homes + Condos by District 1-10; San Mateo County; Marin County; and Alameda + Contra Costa County. If you’re interested in market data for a specific city and/or neighborhood in your area, please feel free to contact me directly.

 
 
 
 

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2

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Marla Moresi-Valdes

Marla Moresi-Valdes

#1 Agent Company-Wide & Partner

415.296.2193

DRE# 01320998

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McGuire Real Estate

2001 Lombard Street, San Francisco, CA 94123

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