Part Two – Wait and See or Get-in Now?

Tuesday, October 23rd, 2007 @ 9:05 am | Buyers, Market Trends, San Francisco, Sellers

This is a continuation of ??œPart Two-Wait and See or Get In Now????

In any real estate market and especially in San Francisco, the best properties sell first.?In fact, the best location in the best condition at the best price sell the fastest and that is why the new mantra ??œPrice, Condition, Location??? is king today.???

I may be preaching to the choir when I say in San Francisco no one can ever under-estimate our real estate market, after all some properties don????t come on the market for generations.? This especially is true in the neighborhoods of Noe Valley, Eureka Valley, Presidio Heights, Pacific?Heights, Russian Hill,?Nob Hill, Cow Hollow, the Marina and North Beach/Telegraph Hill.? If you are a serious buyer in these neighborhoods, some of these properties come on the market and off the market in a matter of days or hours.? When this happens condition and price become secondary.???

With that aside, in this San Francisco market?two things are emerging that Buyers that have been on the fence need to know?now: (1) Our inventory for sale is increasing steadily.?(2) We have just moved into a Buyers market for the first time all year.?

Both San Francisco????s Sngle Family Homes and Condo, Co-ops, and Lofts for sale inventory are mounting with the summer????s left over inventory and the seasonal new fall inventory are now outpacing the number of fall sales.?? For the first time in years, Buyers are able to pick and choose what they want to buy and ultimately negotiate the best possible price with more and more motivated Sellers with properties not selling.

?Current Number of Homes For Sale (Inventory) as of 10-20-2007, San Francisco, CA

The above chart illustrates how the number of Single Family Homes listed for sale have been growing (Year-to-October 20, 2007) in San Francisco.

Now see how the Condos, Co-ops, Lofts, and TICs combined have been steadily inching up throughout the year, as well.

2007-to-date Number of Condos, Co-ops, Lofts, & TICs for sale in San Francisco, CA?

The above chart illustrates how the number of Condos. Co-ops, Lofts, and T.I.Cs on the market have been increasing (Year to October 20, 2007) to give Buyers more selection of properties to buy in San Francisco.?

Now, a quick look at one way?to spot “the windows of opportunities” using the Market Action Index (MAI).?

The MAI charts illustrate the balance between supply and demand using a statistical function of the current rate of sales versus current inventory (similar to absorption rate).? A MAI value greater than 30 typically indicates a ??œSeller????s Market??? (A.K.A. as a ??œhot market???) because demand is high enough to quickly gobble up available supply. A ??œhot market in San Francisco??? will typically cause prices to rise and/or cause Buyers to anticipate multi-offer scenarios?and they will write their offers over asking thus giving Sellers’ their highest possible price. MAI values below 30 indicate a ??œBuyer????s Market??? (a.k.a ??œCold Market???) where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A ??œcold market in San Francisco??? will typically cause prices to fall and/or cause Buyers?to be?able to negotiate with motivated Sellers to get their best possible price at or below theSeller’s asking price.

Each of the MAI charts (below) are shown by?quartile to demonstrate how different price?points react to the MAI.? Each quartile is 25% of the properties on the market.? Most expensive 25% of?properties are in the?first quartile, the upper- middle 25% of properties are in the second quartile, the lower-middle 25% of properties are in the?third quartile and the least expensive 25% of properties are in the?fourth quartile.

?The Market Action Index by Quartile for Single Family Homes year-to-10/20/2007, San Francisco, CA

Both the?San Francisco Single Family Home?for sale inventory?(see chart above) and the Condo, Co-ops, Lofts, and TICs for sale inventory (see chart below) have been trending down into a Buyer????s Market (below 30 on the chart above) in the last several weeks that puts Buyers in the driver????s seat for the first time all year.??

The Market Action Index by Quartile for the Condo, Co-ops, Lofts, and TICs year-to-10/20/2007, San Francisco, CA

San Francisco Buyers are suddenly realizing that by sitting on the fence they will be missing out on this terrific “window of opportunity” to get into the San Francisco real estate market before the end of the year while interest rates remain at near-historic lows and finally, they can?be choosy and maybe even a bit more commanding (?).



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