Thinking About Selling?
May 2023 Update:
Why it might be the right time to list your home.
May has seen our market heat up in terms of more transactions. Although still far behind last year at this time (about 30% fewer), May has seen many more homes being sold compared to earlier in the year. In general, inventory still remains low. Compared to last year, the total number of homes on the market currently is down about 14%. This lack of new inventory keeps prices artificially higher than expected with higher interest rates, job layoffs, and the uncertainty of the debt ceiling. We see low inventory being the theme throughout the year, making a "bad time to sell", really not that bad.
Home prices are rising...although slowly
Inventory is once again driving the price appreciation that San Francisco is experiencing in 2023. Last year, home prices peaked in March and April as buyers rushed to lock in a lower mortgage rate. The Fed announced rate hikes at the end of 2021 that would swiftly affect rates in 2022. The average 30-year mortgage rate rose 2% in the first four months of 2022, crossing 5% for the first time since 2011. That 2% jump caused the monthly cost of financing to increase by 27%, so buyers rightly rushed to the market. As rates rose higher, the market cooled and home prices fell largely to accommodate the higher mortgage cost. Both supply and demand were lower than normal in the second half of 2022. However, in 2023, demand started to rise again despite elevated mortgage rates, but it wasn’t met with the typical number of new listings.
This year, the number of new listings has been fairly stagnant each month. Typically, inventory grows in the first half of the year as new listings significantly outpace sales. At this point, inventory growth in the rest of the second quarter can’t make up for the weak growth in the first four months of the year, keeping the supply of homes and, in turn, sales historically low for the rest of the year. As new inventory decreases in the summer, competition among buyers will climb with it peaking in August, raising home prices. While we don’t expect home prices to hit new record highs this year, we can expect prices to rise slowly until the fall.
Median Price Changes in San Francisco
San Francisco Inventory-Single-Family Homes
We continue to see a lack of inventory despite high demand. If you’ve thought about selling your home, this could be a great time to reconsider.
San Francisco Inventory-Condos
With a peak in inventory occurring in early 2022, this year has seen considerably fewer listings. We continue to see multiple offers, especially in homes that are move-in ready.
