Without going too deep into the trends that defined San Francisco’s real estate market in 2022, it suffices to say the year was a pivotal one. Despite major increases in the number of listings receiving price reductions and withdrawn without sale, and a 40+ percent year-over-year drop in properties sold in Q4, the Median Sales Price of Single-Family and Condo/TIC/Coop homes managed to eke out a 0.8 percent rise from 2021. Now, as the winter doldrums pass and benchmark mortgage interest rates dip to a 4-month low, everybody wants to know: Has the market bottomed?

To be sure, any definitive answer to that question is pure speculation. Peaks and troughs are identifiable only in retrospect, and so much of what determines a tide change is a sort of self-fulfilling prophecy rooted in consumer sentiment. There are, however, indicators that seem to suggest the next market cycle is beginning.

› According to the Weekly Mortgage Applications Survey, purchase activity ticked up 24.65 percent in the week ending 26 January 2023.

› San Francisco employment jumped in December, ending the year with 23,000 more paycheck-earning residents than the year prior. The local unemployment rate stands at approximately 2.0 percent versus 13.0 percent reached during the pandemic.

› Home buyer enthusiasm appears on the mend as evidenced by increased open house traffic and listings going under contract relative to the past few months.

In an interview last week on CNBC’s Closing Bell, Compass CEO Robert Reffkin offered a couple more observations of the markets his firm tracks.

› In the last quarter of 2022, 42 percent of sellers were giving concessions to buyers at closing — a 10-year high.

› The number of pending sales were down 30+ percent at points in the fall but over the last few weeks it was nearly flat year-over-year in most markets.

Looking at which areas of San Francisco experienced the largest Median Sales Price changes in 2022 provides both data points for where the market stands as well as, perhaps, insight into the neighborhoods most likely to take an early lead in growth. Keeping in mind that unique property characteristics and specific timing of sales plays no insignificant part in the price any given listing achieves, let’s first turn to the three districts with the largest year-over-year change.

Biggest Value Gain

Bayview, Bayview Heights, Candlestick Point, Crocker Amazon, Excelsior, Hunters Point, Little Hollywood, Mission Terrance, Outer Mission, Portola, Silver Terrace, Visitacion Valley

First Runner Up

Buena Vista / Ashbury Heights, Clarendon Heights, Cole Valley / Parnassus Heights, Corona Heights, Duboce Triangle, Eureka Valley / Dolores Heights, Glen Park, Haight Ashbury, Mission Dolores, Noe Valley, Twin Peaks

Second Runner Up

Cow Hollow, Marina District, Pacific Heights, Presidio Heights

Biggest Value Loss

Ingleside, Ingleside Heights, Lake Shore, Lakeside, Merced Heights, Merced Manor, Pine Lake Park, Stonestown

First Runner Up

Balboa Terrace, Diamond Heights, Forest Hill, Forest Hill Extension, Forest Knolls, Ingleside Terrace, Midtown Terrace, Miraloma Park, Monterey Heights, Mount Davidson Manor, Sherwood Forest, St. Francis Wood, Sunnyside, West Portal, Westwood Highlands, Westwood Park

Second Runner Up

Central Richmond, Inner Richmond, Jordan Park / Laurel Heights, Lake Street, Lone Mountain, Outer Richmond, Sea Cliff

Ready To Make Your Move?

CONSULT WITH A LOCAL LENDER AND OBTAIN PRE-APPROVAL

› This is essential before making an offer, and can take anywhere from a few days to a week or more. Consider speaking with more than one lender and making them compete for your business. Having your loan file already reviewed by the underwriter will allow you to make a stronger offer. If you plan to stay put in your new home for only a few years, choosing an adjustable-rate product will lower your interest payment. Contact us and we can point you in the right direction.

GET FAMILIAR WITH HOMES FOR SALE AND RECENTLY SOLD

› Homes today are more likely to sell at or near the asking price, but this is by no means a rule. Egregious underpricing is still a common strategy used by sellers and their agents to attract interest (and multiple offers). Be willing to compromise on your wants — if you wait to find the perfect home, you’ll be waiting forever. You can upgrade and personalize a property but you cannot change its location.

COMMIT TO ONE AGENT AND TOUR HOMES TOGETHER

› Let’s talk! There are dozens of off-market and coming soon listings in San Francisco which are not marketed to the public. Properties in San Francisco are not straightforward and value isn’t always obvious. Your agent should always see any property that you may consider purchasing. They should also obtain the seller’s disclosure documents, actually read them, and review them with you as part of your due diligence. Whether you make an offer or not, consider it education.

MAKE THAT OFFER, BABY!

› Buyers today have an opportunity to negotiate price and all sorts of terms. The worst that can happen is that the seller says no. If your offer is not accepted outright, you can try to find middle ground, agree to everything the seller wants, or choose to walk away. In San Francisco, buyers and sellers use a purchase agreement and other standard forms not used outside the city. Working with an experienced agent who knows them inside and out, respects the local customs, and presents a buttoned-up offer on your behalf will give you an advantage.