Why aren’t Sellers selling in San Francisco?

by sfishome on March 22, 2012

Where is all the housing inventory that normally starts flooding the market this time of year in San Francisco? It is late March, and March and April tend to be the most popular months for Sellers to put their homes on the market in San Francisco. Typically you might see anywhere from 800 homes on the low end, to 1400 homes at the upper range. This is inclusive of Single Family Homes, Condos, Lofts, TIC’s and Co-ops throughout the City and County of San Francisco. Three days ago I checked the MLS and it was 612 homes. Yesterday 682. Today 666. Ouch, I don’t like the number or the omen.

Three days doesn’t make a trend, but when I list a new property for-sale on the San Francisco MLS I like to enter them on Wednesday or Thursday. The reason is that gives me just enough time to market my first Sunday open house, but minimizes the Days on Market count. It is also the day after Tuesday tour, and on Tuesday tour most agents are too busy to notice new listings (you have to enter a home on the MLS by Friday at Noon to make it onto the Tour list). So that’s a long way of saying…. “where are the new listings this week?” We got a bump up from Tuesday to Wednesday, but we’re back down again today. But overall, we’re 20% to 50% of normal inventory.

So now we’re ready to answer the question in the title of this post “Why aren’t Sellers selling in San Francisco?”

The stock market is up. Tech jobs and jobs in general are back. The Facebook IPO is the talk of the town. America’s Cup is around the corner. All great news. All reasons prices could start to go up from here. But right now, prices have remained relatively flat. In fact they haven’t much budged since the late 2008, early 2009, price drop of roughly 10% to 15% city-wide. We’ve had some hot months, and some cold months, but the net result is prices are about where they were after that drop. Most people I talk to are very optimistic about the future (some will talk about their economic fears, but seem to ignore that when talking about home prices). They just assume that prices are going to start moving up any day now. So why list and sell your San Francisco home today, if tomorrow might bring a higher price? And that is the crux of it. Inventory in San Francisco is far below normal while the economy is significantly better than it was a couple of years ago. If that trend continues, then potential sellers may be right.

So what is a Buyer to do, and what is a Seller to do?
If I’m a buyer I’d have two thoughts in mind. First, those who are listing now probably need to sell, so there are still some “deals” out there. Second, even if I can’t snap up a grand bargain, if the sellers are right, I’m buying into an uptrend and will see some immediate appreciation, so in general any purchase may prove to be a bargain.

If I’m a potential Seller of a San Francisco home I’d look at the lack of competition as a reason to test the market right now. If you think prices are going up, why not list at the price you want, rather than the price the “comps” say it is worth today. Now I don’t think you can take this to an extreme, but let’s take a $1 million Marina condo, and list it at $1.1 million. Buyers show up, demand to buy it at $1 million, and you hold your ground. What’s a buyer to do? There’s nothing else on the market. So they blink first, or you blink first. One word on this Mr. or Ms. Seller – be sure to have your home sparkling. Despite inventory being at record lows, there are still homes to look at. If you’re home is the highest priced, but also the best looking, you’re much more likely to snap up that extra $100,000 in this example.

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