A: 2018 should be another robust year in the Bay Area for real estate. San Francisco will continue to experience a strong demand for single-family homes, especially on the north side of town where there is an extreme lack of inventory. State-of-the-art homes will continue to command top dollar and prices per square foot due to the cost of construction skyrocketing and the process for permitting moving at a sloth-like pace, especially if you are going outside the envelope (original footprint) of the home. We do not expect the new tax laws to affect activity or values of Bay Area real estate. If Interest rates take a big-leap, it could affect the entry level buyer.
New pockets of neighborhoods are developing all over the city and the Bay Area as prices continue to climb. Walkability and transportation are key factors adding to value. Both condominiums and single-family homes with great walk scores, close to coffee, restaurants, shopping, schools and transportation will see the strongest demand. San Francisco condominium buyers will have a wider range to select from due to many of the new condominium projects coming to market as reflected by the strong interest in Dog Patch as it becomes a destination neighborhood.
The Van Ness corridor is starting to develop micro-neighborhoods with new condominium projects being developed around the new CPMC complex and the Civic Center, these properties allow easy access to Polk, Union, and Chestnut streets as well as Hayes Valley. Sutro Heights and the Outer Sunset are drawing firsttime buyers who want a single-family home with a beach town feel and easy access to commercial areas.
Ana T. L. Dierkhising, Pacific Union Real Estate, (415) 264-6848, firstname.lastname@example.org; Val Steele, Pacific Union Real Estate, (415) 810-5234, email@example.com.
A: While it’s virtually impossible to predict what will happen in future housing and security markets, here’s a brief overview of what we know: According to the SP Case Schiller Price Index, since 1984, the San Francisco Bay Area housing market has experienced three full market cycles, with growth cycles averaging five to seven years: 1984-1990; 1995-2001; and 2002-2007.
Downturns averaged one to four years: 1991-1994, 2001, and 2008-2011. We are currently five years (2012-2017) into our fourth growth cycle since 1984. Our last downturn in 2008-2011 was the biggest downturn over the past 30 years, and our current price growth period is still below the price increases experienced during the 1984-1990 and 1995-2001 cycles. As we all know, during periods of expansion, the San Francisco market is driven by booming growth in the technology sector and the failure of housing supplies to keep up with seemingly insatiable demand.
My sense is that we will experience more moderate growth and price increases in 2018 when compared to 2017. The first half of 2018 will likely be driven by buyers in the market for homes below $3.5 million, acting aggressively to take advantage of still-low interest rates and attractive financing options. With tax reform driving substantial growth in the financial markets in early 2018, many analysts believe it’s likely that the Federal Reserve will ramp up rate increases in the second half of 2018. Although the San Francisco housing market is less sensitive to interest rate increases than most other markets, my sense is that this dynamic will slow price growth in San Francisco during the second half of 2018.
Dean Badessa, Sotheby’s International Realty, (415) 474-5140, firstname.lastname@example.org.
A: As we start 2018, many of my client conversations revolve around buyers concerns about rising interest rates and the new tax plan.
The expectation is that buyers will have to spend more to own a house, which in turn, will drive down home prices. I don’t expect that these factors will have as much of an impact on home prices here as they would in other markets.
In the East Bay, we are still seeing record prices. Lack of homes for sale and strong buyer demand could overshadow the new tax implications and rising interest rates, and keep home prices high.
Though we all have our opinions, no one can tell you what the future may hold. If you’re planning on buying a home and living there for the long-term, you won’t be able to guess what the market will do next. Decide where you want to live, what you can afford, and then go for it.
Marvin Gardens Berkeley,