Marina Times – Context of today’s real estate news
Looking ahead, Zillow recently predicted a marked slowdown in the country’s annual home value growth from the current pace of 19.8% to 7.8% growth through June 2023. Expectations for the year were revised down from Zillow’s previous forecast for 9.7% growth in the year ending. May 2023.
The new forecast called for a steeper decline in appreciation before stabilizing at levels closer to pre-pandemic averages.
Zillow says the housing market is rapidly rebalancing from what was arguably the strongest sellers’ market in decades as inventory rises and competition for homes wanes amid major housing issues. affordability. Rebalancing is likely to continue given the current macroeconomic headwinds.
We recently asked Ron Sebahar, one of Compass’ top agents, to comment on the San Francisco real estate market. We found his words insightful.
“July definitely felt the effects of rising interest rates and a volatile stock market that caused a lot of talk of a recession,” Sebahar said. “It’s led to a pretty dramatic drop in sales volume, increased inventory, less overbidding, more price cuts, and lower appreciation rates.
“Yet buying and selling have continued, albeit at a slower pace: 5,200 home sales were reported at the Napa County MLS in Monterey in July 2022. This volume is down 38% from last July 2021.
“Meanwhile, the median home price in San Francisco fell year over year in July from $1,850,000 to $1,680,000. At the time, there seemed to be a rather negative sentiment and forecast among buyers and sellers.
“But things are changing quickly in the city, and the feeling seemed to improve in early August,” Sebahar continued. “This was likely due to mortgage rates for a 30-year fixed rate loan falling below 5% for the first time since April, a significant rebound in the stock market and news of 528,000 new jobs being created in July. “
When asked to comment on what he sees himself on the pitch, Sebahar was optimistic.
“Personally, I am currently working with twice as many qualified buyers as at the same time last year; at prices ranging from $1 million to $6 million for condos and homes throughout San Francisco.
“At three different meetings I attended recently, agents confirmed that buyer interest has started to rekindle. Their clients understand there has been less competition, less bidding wars and an increase in inventory.
IS THE RECESSION AFRAID OF REDUCING?
The fall typically sees a substantial spike in new listings and sales before the big mid-winter downturn. That’s what agents, buyers and sellers are focusing on now, according to Sebahar. The economy, at least at the time of this interview, seemed less of an issue.
“I’ve worked in real estate in the Bay Area since 1989, and the only times I’ve seen a sustained decline in property values is when buyers are scared of losing their jobs and worried about not being able to make their mortgage payments,” Sebahar said. “But I haven’t heard of any such concerns from buyers or agents yet.
“We just don’t see the layoffs and fears of job loss associated with the recession of the early 1990s, the post-9/11 and dotcom bust of 2001–02, and the Great Recession. from 2009–10. Even after these events, of course, the values eventually returned.
We asked Sebahar if he saw anything in the market that people weren’t really talking about. His answer shouldn’t come as a surprise, but he’s right: this phenomenon is a bit under the radar.
“I don’t hear people talking about the large sums of wealth transferred from baby boomers to their children and grandchildren to help them buy their first home. said Sebahar.
“Some pay cash for these properties; others provide the large down payments required in San Francisco, then ask the child or grandchild to pay the mortgage and property taxes.
We asked Sebahar to comment on a recent SFGate article that seemed to suggest renting might be a better bet in San Francisco, as the Bay Area has the biggest gap between renting and buying a home in the country. .
“Higher interest rates and lower rents in San Francisco are clearly improving the favorable rental economics. But tenants are missing out on the opportunity to create wealth through equity appreciation,” Sebahar said.
“There are also tax advantages. But the bottom line is, I’ve never heard a landlord tell me they regretted buying – but I’ve had many tenants tell me they wish they’d bought back when the houses were much less dear.
A few good things to think about.