Anyone who is familiar with the San Francisco Bay Area real estate market knows that it’s consistently one of the hottest in the United States. High prices, cash offers, and competition are the norm. But with the price of everything going up due to inflation, is San Francisco real estate still booming? While across most of the country, home prices went up in the last year, in San Francisco, prices went down 20 percent from November last year, according to the California Association of Realtors. The average price of a single-family home is still among the highest in the US at over $1.4 million. But is inflation affecting the San Francisco real estate market, and what will it do to the market in the coming months?
Get ready for the housing bust
If you’ve noticed that your grocery or electricity bill seems higher, you are not alone. As the price of goods and services goes up due to inflation you might expect the same for San Francisco real estate. However, real estate experts are talking about a housing bust in the Bay Area with prices dropping and sales collapsing. With high mortgage rates and workers leaving tech jobs, office spaces and the value of other real estate is on the decline.
Buyers’ best inflation strategies
Declining real estate values can be good news for buyers — especially first-time home buyers who may have felt that the Bay Area market was outside of their budgets. With mortgage rates on the rise, the price of homes could go down even more, meaning good news for buyers. Partnering with a real estate agent can help buyers ensure that they are going in when the price is right. However, while prices may be lower, buyers should also keep in mind the other costs associated with owning a home, as inflation may still make these prices go up. Mortgage rates, utilities, and insurance are still likely to go up.
Sellers’ best moves during inflation
Sellers who are now familiar with the real estate bust may be wondering what to do. Sell a house now, fast, before prices go down even more, or wait out the bust and sell later? Real estate agents recommend that if you want to sell, it could be a good idea to sell soon. Prices could rise in the spring, which is the typical peak real estate selling season, but there is no guarantee that will happen. Sellers may need to work harder to get buyers’ attention in a real estate bust, and that can contribute to the cost of putting a home on the market.
Will the inflation rate continue to rise?
Experts talk about the real estate bust and inflation, but there’s no way to really know how much inflation will go up. According to some economists, inflation will go down at a rate of 2 percent by 2024. Buyers may find that the current San Francisco real estate market is beneficial for them, while sellers may want to take a wait-and-see approach.
Buyers and sellers should work with a trusted real estate agent who can help them navigate the market.