I thought that is would be useful to share this question and my answer to a client. If you have any questions please e-mail me.
Do you agree that home sales in SF are ballooning as recently reported? If so, do you have any idea why? Have prices firmed as well? I am just curious. We are still happy to be out from under our mortgage.
To answer your questions, an increase in real estate activity has been noticed in various parts of the city in the last three weeks by the tracking services. That activity is manifesting itself in the form of opened escrows as opposed to completed sales, but still these are good signs of activity. I think that it is inconclusive as to whether real estate is “ballooning” and I believe that the next several months (through the end of June) will better determine where the market is going.
In regard to prices stabilizing; as real estate pricing is generally set on past 6 months sales, the activity from the last six months is now providing the basis for current real estate prices. Each new sale likewise will become on “comp”, so if property prices in the next few months increase in an area, they will raise the value for the future. At the moment, I would say that agents are pricing conservatively i.e. based on the comps. Buyers are looking for deals and are on average offering 3-6% below even well priced properties.
In terms of activity, I am receiving calls from Sellers who are considering putting their properties on the market mostly for financial reasons. In the buying side, I also just closed a buying deal where we were able to negotiate a purchase price of $1,050,000 ror a property that was listed for $1,300,000. The Sellers jumped at the all cash offer. (financing is still the biggest issue for buyers).
I hope I’ve answered your questions. Bottom line my opinion is that the jury is still out.