March 2019 Real Estate Report
The Conversation about Tech IPO’s
If the big unicorn IPOs go forward as expected, and the market greets them enthusiastically, that could play a substantial role in demand as thousands of employees suddenly feel considerably more affluent. Some of the larger San Francisco tech companies that have been predicted to go public include Uber, Airbnb, and Lyft. The atmosphere in the marketplace now is that buyers are scrambling to buy something, anything… before these companies file for public trading. Since many of these companies are planning to go public later in the year, many sellers are holding off until the next wave of new money comes flowing through the city. With workers wanting to stay in San Francisco, the overall feeling is that many tech employees will want to stay in San Francisco.
Here is a great argument on the hype about tech IPO wealth in the Bay Area and a great analysis on the hype surrounding new millionaire potential. This financial advisor and wealth manager has provided a detailed breakdown about how the IPOs can actually a surplus of housing inventory that outpaces buyer demand, given a tech worker’s “intent to buy”, seller “FOMO” and other variables. Bottom line is, Challenge yourself to think differently than what mass media is projecting. Maybe selling earlier is better. Maybe don’t wait – gains are always highest as the market is going up and not at its highest point. In either case, if you plan to sell this year, let’s prepare a selling strategy for the best result.
The Spring Market Begins
The spring 2019 market has typically been the most active season of the year and is just getting started, amid a diverse set of economic indicators. Financial markets have, so far, recovered in 2019, and interest rates have dropped. As of now, San Francisco’s median condo price ticked up a little since last year (see above). Currently, the median price of a 2 bedroom condo in San Francisco is $1,375,000. The best indicator of market health is in the upcoming spring activity, when sales volumes are much higher.
The supply of listings available to purchase varies in different neighborhoods, which can be a simple reflection of market size and/or an indicator of supply and demand dynamics. If median LIST prices are well above 2018 median SALES prices, it is typically a sign that the balance in listings for sale is disproportionately weighted towards higher priced properties, where demand is softer – and/or a sign of overpricing beyond what buyers consider fair market value.
We will know much more soon, after the Spring time market has passed. Stay tuned for the next real estate review in April.
This analysis looks at those counties with the greatest number of people moving to and from SF. In many cases, there is a large exchange between 2 counties, with residents going in both directions. Often, but not always, the outward flow is greater to counties with more affordable home prices, but there are many factors – such as schools, employment and quality of life issues – at play. (Cook County is where Chicago is located.)