While 2018 started off like a shot, it cooled down just as quickly around July. Buyers burned out quicker and the ones who stayed in the market, got more selective. Mid-term elections, interest rates moving up and rumblings of a recession in the next year or two are also contributing to some buyers sitting on the sidelines. Here’s what happened in West Portal/Inner Parkside:
- At the end of the third quarter, there were five active and 14 sold properties; 12 of those properties received multiple offers and 13 sold over asking (one of them was a ‘pre-emptive’ offer). The amount of overbids ranged from as little as $21,000 to as much as $555,000. Contrast this with third quarter 2017 with 11 sales; all 11 received multiple offers and ten of those were over asking with overbids ranging from $180,000 to $382,000.
- We are seeing more financing and contractor contingencies than in recent years, so buyers, while moving aggressively, are doing so on their own terms.
- There were no reported as all cash (no loan) sales this quarter; there was one in the same quarter of 2017 and there were five in the Spring quarter.
- The market seems to be in its pre-holiday doldrums overall, with activity tapering off over the summer. Combine that with more and more sellers hanging on to their expectations of high sale prices, and you get a change in the market. I am hearing more and more stories of sellers who won’t sell unless they get a certain amount over asking, despite receiving multiple, over asking offers-with the ones they receive they don’t perceive as enough. If you’ve ever seen list prices going up on a property that’s been on the market for awhile, that’s what is going on.
- Many, but not all, properties are still selling with multiple offers and over asking, however the heyday of 10 offers and more than seller expectation seems to be, for the short term, on hold.
- The truly remarkable and notable properties are still in high demand; the ones that aren’t ‘perfect’ are not selling for as much as they once were.
- There were a few ‘apples’; properties that have sold and resold in a short period of time. One example is a property selling for $1.21m in 2011, with a subsequent interior remodel, selling recently for $2.22m (a 107 percent appreciation). Another, recently sold for $1.52m with an acquisition price of $1.35m in 2016 (a 13 percent appreciation).
- We’ve seen changes in value this quarter both up and down in varying housing types and sub-neighborhoods both quarter to quarter and year to year. It seems odd to me that that would happen-it’s usually consistent one way or the other.
- For West Portal and Inner Parkside proper, for typical area homes with rooms down, prices reflected a change in price down from 5 – 8 percent, quarter to quarter and year to year. For two story homes, it was down 12 percent year to year. It doesn’t make sense if you think about the big overbids I keep reporting, however, if the list prices come down and the overbid prices stay the same, the prices are still lower.
- The quandary for me was between West Portal/Inner Parkside proper and North of Ulloa. North of Ulloa has seen values increase both quarter to quarter and year to year from 3 to 6 percent. So I did a bit of digging, thinking perhaps it was the list prices being lower in one area than another could explain it, but that wasn’t it-they were similar. Perhaps it was perception of what the properties would sell for between the two areas; no concrete answer was apparent.
- The interesting thing to see will be what happens in February and March of 2019. In recent history, we have seen one immediate bump in activity and prices, which tapers off about four months later-like we are seeing now.
- There are rumblings about a possible recession in the next few years. After 24 years in the real estate business, I have seen them last six months and up to four years, so the challenges have more to do with depth and duration, not the fact that it happens. A six month recession may recover quickly, while a four year one, may take several years. Either way, Bay Area real estate is a good bet; the key is that time is your friend. Every recovery I have seen so far has brought even higher appreciation than the previous.
Eric Castongia, Broker Associate at Zephyr Real Estate (BRE Lic. No. 01188380) provided this information. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service, the County Tax Record, the internet and Eric’s observations in the marketplace. Eric can be reached by e-mail at Eric@SFHotBuy.com, or via mobile phone at (415)307-1700.