That’s what usually happens in a correction. Starts from the perimeter and closing in towards the core. Now maybe SF will catch the cold in early 2018 or late 2017?
Signs of a declining trend. Zillow and Redfin estimates lag. So when prices are increasing, the estimates are lower than selling prices. The opposite happen when prices are decreasing, the estimates become higher.
A property manager from mission property management told me this morning, rental market has slowed significantly down, takes longer to rent, rent declines in sf, layoffs apparently and she thinks more people are buying homes and moving out of rental market. She alone manages 140 rentals and her company manages total 300 rentals.
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I am just reporting out what crosses my emails…i was initially getting postcards in the mail where all the Sunset realtors were saying over 1M easy (and I was skeptical too) for practically any Sunset home and so far it is really bearing out. Don’t shoot the messenger!!!
Bad news for landlords like me 
. Consistent with my experience of renting out two months ago, used to be tenants just pay what I ask, now they bargain hard… and ask for this and that to be done.
Fearless Leader,
I just perused The Front Steps’ Top Overbid list…guess how many of the highest overbids were in Sunset (Parkside mostly but Sunset)… SIX!!! You can argue that they were priced low but so what? At the end of the day, they all sold for well over 1M anyway. The local overall market may be dead, but certain neighborhoods are still doing well. Buyers don’t lie!!!
Just to add: She did not mention rental decreases other than sf( again it might be the few properties she dealt with and she said 3%, so not a big deal after all the run up in rates for last 6-7 years). So not all bad news. Just shared my conversation with her.
Rental market slowdown is real and it has been slow for at least a year. Maybe the job growth slowed and less new people are moving here.
SF has an oversupply of new apartment and condos.
Should we forego the rent increase this year?
Right, no sky is falling doom and gloom stuff. Some minor correction or market pausing as expected. It’s all good. I have no doubt it is the huge run-up we have had for awhile now that’s to blame. We’ve become spoiled and we expect the party to keep going. Not realistic.
Yes, I track AVB REIT which is mainly residential rental market and clearly showing the revenue reduction last 6-9 months, esp after last rate hike (dec 2015). It continues to go down.
I wonder what has changed to even induce a pause. Interest rate increase may be the most important factor as I see no noticeable decrease in tech hiring. Some new large publicly listed cloud companies predicting a slowing down growth for next quarters but these companies are clocking 30% growth right now. IPOs has slowed down but they havent stopped. Money is still coming to new tech startups.
The stock market is at all time high. Know its a lagging indicator but it shows no sign of going down.
Capital outflow controls in China? May be.
All in all no indicators for big correction unless something major happens in economy or tech. May be a stop to yoy appreciations. Its already come down from month to month appreciations that became a norm in 2013-2014.
On this related what could possibly make a perfect storm for bay area RE?
Rental market slowdown is obviously showing a weakness of demand. New Construciton is also coming to market, adding ice to cooling market.
I think tech hiring has slowed. Startup funding has slowed a lot.
Surpringly in the last week, I see a lot of houses pending and inventory is going down. Is Trump fever spreading to BA housing market? Or are people rushing to buy before mortgage rate rise further?
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Correct😄, buyers presume prices would stabilize or won’t decline on a rising mortgage rate.
No. slow and steady rent increases are best. Your tenants will ask you not to increase the rent if it’s really bothersome to them. If you are really worried, knock 2% off your increase. If your increase was 2%, you’re not increasing enough normally.
Lot of ups and downs take place in the market daily. So it is difficult to predict whether you will be in loss or profit while investing.
People probably trying to close before Christmas. But I’m not sure why people would want to buy before the mortgage rate rises. I’d rather have a low base price and high interest than the other way around.
I agree about interest rates but a lot of people I talk to think prices will keep going in the bay regardless of interest rates. I have my doubts. The company my husband works for is very dependent on local startups and tech companies and its revenue is noticeably down this year. I believe it is the beginning of a bay area slow down.
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I see the same trend, unusual competition to get into contract. People are convinced on two information.
- FED is consistently going to increase rate or hold it as it is until economy withstands the pressure. Mortgage rate may likely increase (if not at FED rate raise level, but eventually raise)
Rate hike introduced major mindset change with waiting people. 90 days before, I locked a 30 year fixed rate 3.625% overall cash out. Last week, I signed closing document and funding tomorrow. But Now, it is 4.40% and soon it will reach 4.5%. This is almost 2006-2007 level fixed rate.
Within last 90 days, the difference for my monthly payment is $375 by this mortgage rate hike.
If FED raises 3/4% by 2017, the difference for my monthly payment is $775.
If FED raises 1.5% by 2018, the difference for my monthly payment is $1150.
Such rate change impact is huge for buyers and their eligibility.
- Economy is going up, stocks will go up by Trump factor. Trump is behind (will not let it down next 4 years) Unconstrained financial systems, tax reduction, US employment and Change in Trade agreement to improve job opportunities.
If economy goes up, stocks goes up and home prices stay flat (by rate raise) or go up, but not go down.
Rate hikes introduces lessor eligibility for people, but not directly impacting the home price until foreclosure comes back
Now, low rate becomes history by repeated FED hikes coming soon.
Many feel “Let us get some home before rates are being hiked”.
If in case economy does not improve and fed rate hike introduces negative growth, home prices may go down. What is the probability for this situation?
It is all left with Trump now.
The supply vs demand dynamics look pretty similar now to every recent year that we had a jump in the spring. Of course you can say that demand is being brought forward earlier and perhaps we will fall flat in the spring, but there continues to be a lack of supply. For example, if you want to buy a SFH in the 94040 or 94041, you currently don’t have any real options. You have had minimal options over the last few months. Looking beyond the next quarter you have a good number of employers in the peninsula region that have significant expansion plans. Will they come to fruition? Lots of people think they should be making 6 figures. There’s chatter on the board about declining funding, but this should be a good thing that there isn’t excessive risk and lack of discipline.
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