It's that time of year again, ladies and gentlemen. When we look back on the past year and review some of the ups and downs and make a few educated guesses about what the next 12 months will hold for Downtown real estate in San Francisco.
2008 was the year that the bubble started to slowly deflate downtown with sellers of both new and resale condominiums starting to reduce prices. Unfortunately for both, the investment banks fell en mass in September and it was too late. The majority of well qualified buyers found it difficult if not impossible to get a loan while banks ducked, covered and held on to their bailout money with hands clenched tight. Some developments did manage to post solid sales numbers in November by aggressively lowering their prices while most condominiums on the resale market sat alone at the dance in a corner while their corsages wilted.
Buyers in 2008 had an equally challenging year. It started out looking pretty optimistic with sales prices and values holding steady but quickly turned uncertain once Bear Stearns went under in March. After that all bets were off and you only bought if you absolutely had to or were getting a reasonable deal. If you were looking at new construction the developers didn't seem to get that the market was changing and they held firm on price. If you were shopping resales you encountered sellers that were listing their homes thinking that the days of double digit quarter on quarter price increases were still with us. By the time November rolled around sellers had either pulled their homes off the market and decided to rent or reduced their prices, only to discover that buyers were now too scared to jump in.
That brings us to today. Reflecting on what we have just discussed, let me posit some predictions for the market in 2009, yet to be born and full of hope:
Sellers will continue to encounter low consumer confidence in the face of corporate layoffs in the first quarter. Although the presidential inauguration and subsequent announcement of stimulus packages will help, its going to be tough out there. Sellers will have to be decisive in pricing to garner the most attention when they first hit the market. This also means their property will need to have it's game face on (staged decor or aggressively edited). Otherwise, buyers will go elsewhere. Homes priced and presented to sell will do just that.
Record low interest rates and banks compelled by the Fed to make loans will allow buyers who have been sitting on the sidelines to jump in. With resale inventory relatively high and some new developments going on their third year of sales, this could turn out to be the best year to buy in San Francisco in a decade. There is little new construction in the pipeline which should keep values stable throughout the year and give buyers the confidence they need to write a check.
Peace and Prosperity to you and yours. I look forward to your business and referrals in 2009.
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