2018 started off like a shot and while prices are strong, the number of offers are down. Buyers got educated quickly and are ‘selectively aggressive’-electing not to pursue properties that they think they won’t have a chance at. Interestingly, this has caused a few properties to not get offers on offer day. Note: buyers need to be encouraged and sellers need to not expect more than the market will bear.
For West Portal/Inner Parkside we saw:
- In the second quarter of 2018, there were 16 sold properties, with 13 receiving multiple offers; 15 of the offers sold over asking. The amount of over bids ranged from as little as $251,000 to as much as $725,000. Compare that to the second quarter of 2017, where the amount of over bids ranged from as little as $101,000 to as much as $630,000. I think the difference in overbids between 2017 and 2018 has a lot to do with list prices coming down to generate interest.
- Also of note, everything that was listed, sold.
- The one property that sold below asking this quarter, sold $98,000 under it’s reduced list price. This property is a good example of how overpricing will affect your sales price. It was smart for the seller to do their price reduction quickly, or it would have gone even lower. Smart buyers won’t pay more than the market will bear.
- Last year, I noted that less than perfect properties were continuing to get snapped up at the same pace as more done properties. We are starting to see this shift in the marketplace. Buyers are getting more critical since they are spending so much more on a property than they originally intended. I’m seeing this more citywide than at the West Portal/Inner Parkside Neighborhood level at this point.
- 5 of the 16 sales were reported as all cash (31%), up from the second quarter of 2017 at 10%.
- Pre-emptive offers (offers taken early before the offer date) and all cash offers are a way of getting buyers a better chance for desirable properties. Two of the over asking offers this quarter took advantage of that opportunity.
- I like to watch for ‘apples’, or properties that have sold recently and are now being resold. There were several. The most notable were two that sold in 2010, at roughly the bottom of the market during the last correction. Both enjoyed 100% appreciation over the eight year period. This is the best example I can point to as to why you should buy in a down market.
- Interest rates have come up almost a whole percentage point in the last year. Buyers are starting to gravitate toward adjustable interest rates, instead of fixed.
- Quarter to quarter and year-to-year, for a typical 2/1 and 2/1s with rooms down, values stayed even. For two story homes in prime West Portal that wasn’t the case, having appreciation of as much as 30% year to year and for homes North of Ulloa, appreciation was between 13 and 19% for the year. I’ll make a guess as to why appreciation isn’t across the board. Two story homes are more expensive generally and a different buyer pool; there is a financial ceiling for many buyers in the marketplace and I think it’s reflected here. As for North of Ulloa, I can speculate that this area is ‘getting found.’ Given the choice, buyers would stay closer to neighborhood and transportation hubs; as housing gets more expensive, they expand their horizons to areas they wouldn’t have considered before. The prices North of Ulloa are getting closer to West Portal and Inner Parkside prices; historically they were not.
- The jury is still out on whether the market is slowing. It feels like it, but data doesn’t show it. There is pressure from both a lack of affordability and supply and demand. The most price sensitive buyers either give up or move away and that’s what we are seeing. There are, at this point, enough buyers to fill in that void.
- Is a market change coming? Sure, it always does, but there is a built in demand in West Portal/Inner Parkside that will keep it desirable even in down times.
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.