Though the month of February was a short one, it provided some good news and interesting moves on the real estate front.
Still dominating the news, and dinner party conversations, is skyrocketing inflation and interest rates which continue to put pressure on the housing market. However, mortgage rates have been on a steady decline during the first 2 months of 2023 and many economists remain cautiously optimistic home prices will continue to decelerate throughout 2023—or even drop at all. (source Forbes)
Inflation and corresponding interest rates are fully intertwined and remain top of mind for San Francisco buyers and sellers, news from The Fed shows the time might be right to engage.
Inflation – IMP calculations predict lower headline inflation globally compared to 2022. The challenge, a global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023… then rise to 3.1% in 2024.
Interest Rates – While inflation reached a peak in June of last year at 9.1%, with its recent decline, interest rates are following suit at a measured pace. There have been programs as low as 5.25% on a 30-yr fixed for clients with an existing relationship at the lending institution. Lenders are getting creative with new products allowing buyers to refinance later at no charge, transfer interest rates upon sale, and single mortgage approvals.
Typical in San Francisco, even with tight inventory, there were deal surprises providing positive light for the spring market. Some properties are receiving multiple bids and moving quickly into contract, e.g. 2212 Lake St (-10 days); others are adding days on market and appear over positioned, e.g. 2009 Pacific Ave. (+85 days).
San Francisco always has a silver lining. We are seeing sellers and buyers moving away from ‘the wait-see mode’ and stepping back into the market. New listings have increased 28% over the last three weeks and buyers are acting quick when the right property presents itself. Springtime is always a robust time of year for San Francisco real estate, and with positive economic indicators we are looking forward to a strong market.