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Jessica Branson's Real Estate Newsletter

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Welcome to my newsletter where I give you an insider’s take on real estate — with a special emphasis on where I sell: lovely San Francisco. Here we just made history, yet again, with the swearing in of our first black, female, mayor London Breed.

Short Term Thinking

The US economy continues on the upward trajectory it has been following for almost a decade since the official end of The Great Recession in Q2 2009. By all accounts today the economy is strong and we're currently seeing a higher than expected rate of growth. This, despite concerns over Trump's China tariffs, the growing trade war, Trump’s new tax laws, and all of his other mishegas. The Fed continues to show its confidence in the economy's resilience as it hikes prime interest rates quarter after quarter (against Trump's protests).

It seems pretty unbelievable, with all the swirling political issues, that the economy wouldn't be a bit more wobbly. But the tax cuts are likely fueling some short term growth — an article last week by Bloomberg pointed out "Without the tax cut, bank earnings growth in the second quarter (of 2018) would have been pretty close to zilch. Instead, the nation’s six biggest banks are set to report a 14 percent improvement in earnings in the April-to-June period. Nine of every 10 dollars of that increase is thanks to the tax cut. Just one dollar came from an actual improvement in operations."

Doesn't sound very healthy or sustainable. But the economy keeps chugging ahead anyway. I have a feeling this tension will be with us for the next few years.

The Storm Before the Calm?

Here in SF, we had thought the new income and property tax laws impacting California, and the general political uncertainty at the end of 2017 would make for a rough start to the 2018 real estate market. Not so. Buyers came at the market more aggressively and eagerly than ever before. The sentiment seemed to be — "it's now or never."

Interest rates were rising, inventory was low. The amount of days a home spent on the market (DOM) in the most competitive neighborhoods went down from already record lows. In Noe Valley, for instance, in Q2 2017 a home spent an average of 26 DOM, and a condo spent 28. In Q2 2018 in Noe homes spent an average of just 20 DOM and condos only 14. Homes in Noe sold for an average of 6% over asking in 2017. That's nearly doubled in 2018, with Noe homes on average fetching 11% over asking. The increase was an unexpected windfall for sellers, who had thought the market was set to level off. Buyers in the first half of this year had to move quickly and aggressively to get an offer accepted in such a competitive climate.

In the first half of 2018, I accepted offers on dozens of listings. As an example of the type of market we were in in the first half of the year, one of my listings received 17 offers, 7 of which were all cash over $2M. We saw a lot of cash offers — more than usual — in the first two quarters. And all of my 2018 listings sold in multiple offers, (unless the seller accepted a strong preemptive offer), and all sold for well over the asking price. My listings so far have averaged 9 days on the market, 26% over asking, and more than $1200/foot. This is well over the SF average, which was already striking.

In summary, our already hot market continued to rise in the first half of 2018. See my SF sales stats below for even more details.

Change is Gonna Come

In May, I started to notice the market getting quieter. Less people at open houses. Less disclosure requests. I advised my May sellers to accept strong preemptive offers when applicable, as the market appeared to be softening — changing on a dime.

Are we entering the typical but early summer doldrums, where buyers and sellers go on vacation to escape SF's summer fog? Or is this a signal of the market shifting downward? I've heard phrases like "buyer fatigue" and "agent fatigue" a lot lately.

Admittedly the first half of 2018 was an incredibly frustrating time for buyers — always competing, always wondering if they were overpaying or if someone would outbid them. Mostly after making it in to contract in competitive situations my buying clients were very grateful and relieved. In the past few years this was especially true, as it seems home equity was created almost instantaneously. Still, I advise buyers in this market to factor in holding a property for 7-10 years, as this instant equity cannot last.

Even deep into the summer, some properties sell swiftly, with multiple offers, and for well over asking. But this is happening in the popular $1.2M-$1.8M price points especially, and the property still must be well priced and well prepared. I am also seeing more properties sit on the market, get withdrawn from the market, or offer price reductions. Buyer's agents are advising their clients not to bother to write on properties they know will sell for outside of their range. And buyers are becoming more realistic too — sitting out more on the homes that they think they will not be able to compete for. The amount of buyer interest in a home was one of the key factors driving up prices over the last few years. It will be interesting to see if the high prices can be sustained with less overall activity per listing.

Interest rates for purchases remain historically low. The Fed's rate hikes have primarily impacted prime rates (home equity lines, etc). So we're seeing jumbo loans hovering in the 4% range.

Thank YOU!

After the first half of 2018 I am among the top 10 realtors in the city, and the top 5 of all SF listing agents. I continue to be the #1 Agent at Alain Pinel Realtors San Francisco — thanks to all of my amazing friends, family, and clients who support and continue to recommend, my services. Know that I will always work my hardest to exceed your expectations.

Hope you are enjoying summer!



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