San Francisco housing has cooled as some flee the city, but demand is still there

The inventory of available homes in San Francisco is the highest it’s been in six or seven years, said Patrick Carlisle, chief market analyst for the Bay Area at Compass, a venture-backed real estate brokerage company. Buyers have become more picky. Homes are getting two, three or four bids, instead of eight before the virus hit, said Robert Collett, an agent with Berkshire Hathaway HomeServices Drysdale Properties.

Part of the reason for the high inventory is because people held off from listing San Francisco homes in March and April — normally the spring home buying season — after Mayor London Breed announced the city’s shelter-in-place order. As a result, more homes than usual have come up for sale in the following months.

But there’s also a lifestyle shift, suggested by the red-hot market in the suburbs. Many of the things people love about the city, including its clubs and museums, are unavailable at the moment. Consequently, the densest parts of the Bay Area, typically the most in demand, are currently the softest, said Carlisle.

“More rural and suburban counties and markets have gone absolutely nuts — Sonoma, Monterey, Marin,” Carlisle said. “I’ve heard Tahoe is absolutely out of control.”

Lake Tahoe is a getaway spot several hours northeast of the city where people historically keep vacation homes. One broker there, Breck Overall, said he and his partner Jeff Hamilton did a year’s worth of transactions in two and a half months. Normally the busiest time of the year is the Fourth of July, when traffic from the town of Truckee to the lake is bumper to bumper.

“That’s what it’s like almost every day,” Overall said. “It’s not letting up.”

People are also moving to Marin County, which San Franciscans can reach by crossing the Golden Gate Bridge.

Rick and Victoria Dade, who had lived in the city for more than two decades, recently abandoned a newly constructed home in the Marina District for Marin. As playgrounds shuttered and parks limited occupancy across San Francisco, their living situation proved untenable for an elementary- and middle school-kid eager for open space. Rick owns a commercial general contracting company, called R3 Builders, that services San Francisco and other parts of the Bay Area, including Oakland. Victoria works for a video technology company, Sonic Foundry, based halfway across the country in Madison, Wisconsin.

While their children’s age was the primary driver behind the move, the Dades said their family was after a lifestyle change. 

“We had always thought that we would possibly move to Marin, and we just hadn’t been ready to do it,” Rick Dade said. “And, as you see reports about people leaving the city for the suburbs, it can almost become a self-fulfilling prophecy.”

CNBC spoke with several former San Francisco homeowners who have moved out of the city in recent months. Like the Dades, the majority did not cite the Covid-19 pandemic as a key factor in their decision-making, but rather pointed to the pandemic as an accelerating force. In other words, people who were already planning to move to the suburbs simply expedited their plans.

Those trends dovetail with recent data. In a survey of 1,350 people conducted between January and June by moving company Hire A Helper, only 15% said they had relocated because of Covid-19.

Andrew Miramontes, who works in sales for European wine importer Weygandt Metzler, had been renting in San Francisco since 2015. When the calendar turned to 2020, he and his wife Erin started looking for homes outside the city to better suit their family’s needs, including their young daughter’s quest for more room to walk. The Miramontes extolled the city’s arts and culinary scene, but said that once the pandemic hit, the city’s deteriorating infrastructure, coupled with shutdowns for the foreseeable future and an uncertain economic recovery, accelerated their plans.

“Unfortunately, San Francisco, and the space that we had, was not going to allow for what we saw for ourselves,” Miramontes said. “We were forced to put eyeballs outside of the city.”

A few months after San Francisco enacted its shelter-in-place order, Miramontes and his wife honed their search, focusing on Marin and Sonoma counties. In five days they met with a realtor, viewed five homes, and submitted an offer on the home they would eventually buy in Novato — about 30 miles north of San Francisco in Marin County.

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