Welcome to my newsletter where I give you an insider's take on Real Estate, with a special emphasis on where I sell — San Francisco. Here, we may not get those hot summer nights, but we excel at crisp, sunny early springs! This is my 30th anniversary living in this amazing city. It's not always perfect, but it's pretty darn good.

Sparkling SF
2024 started with a bang. The economy not only dodged a recession, but also the stock market hit new highs, inflation appeared under control, jobs numbers were amazing and talk was on the horizon of lowering interest rates very soon.

The February Economist article "How San Francisco staged a surprising comeback: Forget the controversy. America’s tech capital is building the future" seemed perfectly timed as our city was suddenly sparkling again. "According to Brookings Metro, a think-tank, last year San Francisco accounted for close to a tenth of generative-ai job postings in America, more than anywhere else. New York, with four times as many residents, was second," the article said. The piece provided a powerful response for all of our long distance friends and relatives constantly asking us "Is it really as bad as they're making it sound in SF?" Yes, we've had some more tech layoffs here, as companies position themselves to grow or generate AI business. But overall I would say the feeling in the market here is bullish.

And... Action!
My Q1 listings have been inundated with people, I gave away piles of disclosure packages, and received multiple offers and broke $/ft records. Behind the scenes, however, I could tell that there was more nuance to the story.

Reactions to and results for each listing, mine and others on the market, were very specific to the property. Homes with enticing list prices, highly desirable locations, parking, and updated finishes generated competition and flew off the shelf. Listings with any flaws and/or priced closer to the bone (likely because they were purchased more recently and didn't have a good deal of equity), sat and racked up days on the market. I am seeing a pattern in the market: properties bought within the last five years, condos (especially ones in big buildings - people are preferring homes to condos since the pandemic), homes with location challenges, homes with no parking, tend to sit for longer and often struggle to reach the seller's price goals.

The Hunt for Rare Gems
What everyone is looking for are those "rare gems" — homes with stellar locations, three or more bedrooms, parking, walk out garden, open floor plan or great renovations — sales of these homes are far exceeding expectations. One of my January listings went $400K over the list price. We may have expected $200K over, but $400K? That was well beyond what we thought achievable. Right now good inventory is so low that these "rare gems" are often breaking sales records. One home in a great location this quarter went for $700K over the list price even though it needed work. There are many buyers who will go above and beyond for a home that checks all (or nearly all) the boxes. A cosmetic fixer listing on the market now has 35 disclosure package requests, another with great views has 19. But if the listing has a major flaw, most buyers will opt to wait for more inventory to hit the market — something which, for now, isn't happening.

Know When to Hold 'Em?
Sellers are stubbornly holding, waiting for a strong sign that the market has changed, waiting for rates to go down, and hoping prices go back to where they were at our market high in the first half of 2022 — before rates went up. But they should note, those rare gems will do VERY well in this market, with no competition and the promise of lower rates on the horizon. That's proven by the data so far this year. Sales of many of these great homes are exceeding sellers' expectations.

Buyers want to stay in the driver's seat, of course, but there's nothing to drive. Successful buyers seem to be either highly discerning, or value hunting: discerning buyers will likely find themselves in competition and are willing to pay to play  — they want what they want, they know they will have to compete for it, and they do. Value buyers who can compromise on location or finishes, will win by targeting condos and homes that won't attract as much competition, which are at all-time low prices (tenant occupied, condos in big buildings/mid-city, homes with no garages and location challenges, etc). In both cases, when and if these buyers win, they should plan to hold for the long haul (7-10 years at least).

Look Into My Eyes
If I were a seller now and was looking for a moment to sell (and I had a lot of equity or a "rare gem", or both), I would list it: price my home attractively, stage it to evoke that certain emotionality (I always do!), and watch buyers compete. There is barely any "rare gem" inventory right now. The market is flooded with commoditized condos and homes with challenges and misguided listing prices. Once rates start actually going lower and/or some big announcement that spikes SF's economy happens (like an AI company IPO!), my guess is sellers will start to list their homes at once, and there will be a glut of inventory.

The Rate Race
And more buyers in the market too! As you might guess, that's what mortgage brokers are saying: It's a great time to buy. Buy now before you are competing with all the buyers who are waiting for rates to fall. Pay a little higher in rate now with the idea you will likely refinance later, or wait and risk paying more for the house later with more buyer competition. Most economists say that rates will more than likely be lower later this year and continue to fall in the next year. We are in an ARM cycle, not a 30 year fixed cycle. Knowledgeable mortgage bankers, like my go-to person, recommend buyers take the lowest rate now and look at different refinance programs later, and choose one that fits their personal situation and financial goals. It depends on your risk tolerance. Today's rates are bouncing around, but we should see rates for 30 year and ARMs in the low 5%'s to high 6%'s with relationship pricing. I understand that some people who bought 6 months ago are already refinancing...

Thank You & Utilize Me!
So many of you have recommended me to your friends and family this past year, and I really appreciate your trust in me. I closed 2023 among the top of all listing agents in the city, and hope to bring that deep experience in evaluating homes and negotiating offers to many of my buyer clients right now as they navigate this changing market. Sellers: you know I will go above and beyond for you, too, when you need me and are ready.

I have talked with many of you recently to advise on vacation purchases, renovation ideas, insurance debacles (need to go into more detail on this in my next missive), etc.  As always please don't hesitate to reach out with any question or need. I always look forward to hearing from you!

Jessica