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Pumpkin Spice Market Update - Yum!

November 02 2018
November 02 2018

Now that the holiday season is officially here, I thought I'd send you a pumpkin-spice flavored real estate update. If you've been on the fence about changing your housing situation, you'll want to read this.

Let's serve it up:

1. Mortgage rates have hit a 7-year high.

Several weeks ago, the 30-year fixed mortgage rate broke through the 5% mark, the highest level since May 2011. Today rates are around 5% for a 30 year fixed, according to Mortgage Banker, Phillip Cannon, VP of Mortgage Lending at Guaranteed Rate.

This has some buyers spooked as mortgage applications are down about 15% compared to Oct 2017, according to the Mortgage Bankers Association.

Phillip prefers pumpkin spice in his chai tea latte, something not all mortgage bankers agree with. 

2. Bay Area housing affordability is at crisis levels.

When you look up Califorinia Housing Shortage in the encyclopedia (aka Wikipedia), you see pictures of Oakland and San Francisco. Literally. To afford the median home price in the Bay Area ($1.035M), you need to make $219k; in San Francisco where the median home price is over $1.6M, you need to gross over $340k, per theCalifornia Association of Realtors Q2 Housing Affordability Report.

The real median family income for San Francisco in 2016 was $112k, which is nearly 60% higher than the national figures, but only 1/3 of what it takes to buy a house.  According to CurbedSF, only 12% of households can afford a median house in the city.

There are a lot of ideas on how to fix this (none of which are quick or easy), but in the short term, we have fewer and fewer folks who can afford to buy here.

3. More homes are not selling.

As unsurprising as someone calling you “Basic” under their breath while you carelessly enjoy your delicious PSL, the combination of sustained high prices, increasing mortgage rates, and fewer folks being able to pay market prices, we are starting to feel the impact on the real estate market.

The months of supply in SF (meaning how many months it would take to sell everything on the market today at the current pace of sales) has risen nearly 68% this year (from 1.9 months on hand in January 2018 to 2.8 months on hand in October).

Interestingly, the number of Days on Market (meaning how many days from when the property is publicly listed on the MLS until it goes to pending status), has decreased from 22 days in Jan to 16 days in October.
This means that homes are still selling – and they’re selling for good prices, but NOT ALL homes are selling. Buyers are getting pickier about what they are willing to buy and investors who may have bought the terrible dog properties a few years ago are less likely to scoop the poop because they expect them to be harder to sell. This makes it even more important, dare I say essential, that you work with an agent that has the marketing, negotiation and sales skills to get the job done.

What does this all mean for you?

If you've been thinking of selling your home, what in the heck are you waiting for?!  There are a ton of eager and willing buyers in the market looking now and despite some near term pessimism, prices remain near all-time highs.

We can help you sell your property and get out while the gettin’s good.  The market will shift, just as pumpkin spice will disappear after the holidays.  You can time the return of PSL with a high degree of confidence, but you can’t time the real estate market.

If you are renting or need more space, now is ALWAYS the best time to buy. Even if the market shifts, you will be paying your own mortgage instead of your landlords, which by definition, increases your equity.  If you need more space, you need more space.  Kids don’t shrink so that problem’s not going away, regardless of what happens in the market.

If you’re considering an investment property, it may make sense to increase your cash position to seize on some good deals that will inevitably pop up, or sell lower performing assets for more secure ones.

Either Way, Let’s Talk.

We’re here to help.  Our team is based in San Francisco, and we can help you in the city, as well as Marin, Oakland and the Peninsula.  If you’re not sure what to do, give us a call and let’s talk thru it. We are a no-pressure team – we’re ready to move when you’re ready to move.
If you are considering selling, enter your street address here to find out what your home is worth

And once you are ready to get the process rolling (so you can take advantage of this opportune moment), give me a call at 415-606-2625.


Michael Minson
PS:  be sure to check out our Pumpkin Spice Condo at 408 Boardwalk Ave in San Bruno. This 1BR, 1BA garden level condo is a Grande Bargain at $479k.


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Isla Halse

November 06, 2018 11:47 AM

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Jeremy Goldie

November 12, 2018 8:52 AM

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