Across the Bay Area, Q3 median sales prices retreated dramatically from their spring peaks, and SF was hit harder than most area markets. Part of this was due to seasonal trends – median sales prices often peak for the calendar year in Q2, then drop in summer – but part of the decline was clearly due to changing market conditions prompted by shifts in interest rates, inflation, stock markets, and consumer confidence.
The TWO Pandemic Boom Markets
There are two kinds of booming housing markets that emerged during the pandemic years:
1. The Transitory Boom Markets.
2. The Longterm Boom Markets.
They are different. Let’s explore both.
1. The Transitory Boom Markets
When COVID hit hard, many people re-evaluated – often hastily – where and how they wanted to live. Some of these people were highly reactionary expecting the very worst and an extended global meltdown. Many immediately surmised that viral infection and death rates would be far higher in urban centers where the concentration of people was higher. This theory proved to be inaccurate. Some surmised that they could only live forever on a farm or a beach cottage or mountain hut without ever having explored that lifestyle. Many of these reactionaries have since realized their thoughts and aspirations were out of touch with their reality and they are re-visiting where they wish to live yet again. Some markets that experienced this insurgence of a new audience were unprepared and under-supplied and home prices surged at levels few thought sustainable. Some of these areas will erode some or most of these gains of the past 2 years.
2. The Longterm Boom Markets
COVID also triggered something that had been missing in the markets: the urgency to accelerate plans that had been mulled over but not acted on for some time: retirement, a move to the suburbs, a move to a city, or smaller city, a move for political reasons, a move for lower state taxation, a move to a warmer or cooler climate, etc. These moves, while accelerated, causing exaggerated home price spikes, are less susceptible to big price declines. I’d suspect this arena re-balances, but with much less vigor than other markets and it’s possible these areas may continue to see price appreciation, mostly fueled by under-supply, but equally by continued, growing demand.
I experienced a number of clients who were in the longterm boom market. Many traded smaller properties for larger and newly constructed homes.
ROBYN’S 2022 TRADE TRANSACTIONS
MY CLIENTS BOUGHT …
It appears that after the big drop in post pandemic demand, conditions have mostly stabilized. When looking at recent market changes, it is important to remember how overheated the market was in 2021 and early 2022 – quarter-to-quarter and year-over-year comparisons were distorted by the unusual pandemic boom market conditions that prevailed then. It is also wise not to jump to definitive conclusions based upon a single quarter’s data. The economy and real estate market are still in a period of adjustment.
San Francisco Luxury House Market Number of Sales in 2022, So Far
San Francisco Luxury Condo, Co-op, Townhouse & TIC Market
For a custom market analysis for your home, feel free to reach out!