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If the San Francisco housing market is on your mind, whether you are a potential buyer or a seller, then you’ve probably heard that the market is shifting a lot. Over the last year, Zillow reports that the average price of home in San Francisco declined by 12.9 percent, however month by month, the price of homes is now rising as of March 2023. With these mixed numbers, combined with the news of a recession expected in July 2023, anyone thinking of making a move may be wondering what’s really happening in the San Francisco real estate market.
Navigating a Recession: What it Means for Your Home in San Francisco
Inventory May Stay Low
Across the United States and California real estate inventory is low. Across the United States, the average inventory supply was at 1.9 months in March 2023 according to US News and World Report. The San Francisco Bay Area housing inventory is also considered low, with a two-month supply reported in March 2023. However, for a balanced market, a four to six month supply is ideal. This creates a situation where there are potentially not enough homes to keep up with the demand, leading to higher home prices. However, if we add a recession, potential buyers may not be as willing to compete for their dream home.
Budgets May Need to be Flexible
When a recession is pending and inflation is on the rise, people start to adjust their budgets. Buying or selling a home is no exception. A buyer who may have imagined a home with two bathrooms and a large yard a year ago, may need to adjust their expectations as they see their monthly expenses rising. Buyers may also need to factor in a cushion to be competitive and offer more than the asking price.
A Professional Real Estate Agent is Important Now More than Ever
The average San Francisco home takes only 17 days to reach pending status according to Zillow as of April 2023, and those buyers who don’t act quickly may be left behind. That makes hiring a professional real estate agent crucial, especially facing a potential recession. There are more than 8,000 real estate agents in San Francisco according to HomeLight, and the key is to find those agents who know your market including your target neighborhood and the type of home you are looking for.
Homes May Continue to Sell for Under the List Price
While buyers may have to contend with having less of a budget to work with, sellers may also have to face this issue when buying their next home. San Francisco’s declining real estate prices are due in part to an exodus of people leaving the city for more affordable suburbs and even moving out of state, and as long as the trend continues prices could continue to drop.
With the average price of a San Francisco home hovering at a little over $1.2 million there’s no doubt that buying is an investment. Sellers however, may need to weigh if now is the best time to move.