Home » Winter 2020 – 2021

Winter 2020 – 2021


Almost across the board in neighborhood, property type, and price categories within San Francisco, we’re seeing in the last 45 days a “solidification” of the sales market where prices are stabilizing, volume (both inventory and transactions) are (or was in early/mid-fall) picking up, and buyer confidence and seller rationale improving. That’s all good news, even if your property is in a segment that might not be doing as well as another, as it’s a sign of stabilization and normalization of the market. Normalization is what brings confidence to buyers and sellers, which then begets strength in the housing sector which further makes housing, homeownership, and property investment both fiscally and emotionally more rewarding and brings a more fluid marketplace, as opposed to one gripped with fear and uncertainty which we’ve had much of the year since mid-March. Just like the equities markets, housing benefits from confidence and more certainty especially in a high-priced, high demand market like San Francisco.

Anecdotally (but backed by data as well), buyers are now moving more quickly on property that fits their bill, comes ready to go (or close to ready with few to no improvements necessary), and is priced within reason. Even properties in the premium priced categories (those over $3,000,000 and up to around $5,000,000), primarily in the single-family home segment) are transacting with reasonable rapidity given their limited supply, high desirability, and sought after locations…much to the surprise of many who thought that segment was in for a long downturn during the perceived but short-lived “flight from San Francisco” earlier this year, which appeared to lose traction quickly with the rise of COVID in all counties, the fires in the North Bay and beyond, and in other regions, that brought a pall to all counties.


With a normalizing market, it is important to mention that we still have a very segmented and bifurcated market as it relates to sales volume and pricing.

The hardest hit segments, small multiple unit investment properties and premium priced condos in high-rise properties, still are fighting high inventory conditions and competition but are now showcasing some recent higher-end sales in properties that have strong characteristics (e.g., views, space, outdoor space, and good floorpans in tower properties…and good income, condition, and tenancy/vacancy profiles in multi-unit investment buildings), evidencing that there have been willing and capable buyers sitting on the sidelines who see the normalization as an upward trend and are willing to transact….all in an effort to get in before prices rise and volume decreases.

No surprise, the Financial District, Downtown, parts of South Beach, and SOMA have taken the largest hit and have the highest aggregate inventories currently (about nine months evidencing a strong buyer’s market), while areas surrounding Noe Valley, Eureka Valley, and Dolores Heights are sitting with inventories hovering around the three month mark, evidencing more of a balanced-seller market. Rarely do we see this type of discrepancy in San Francisco, but rarely do we have a pandemic, a contested presidential race/election, high unemployment, and a contrarian equities market to contend with, so it has not been a normal year to say the least.


There’s likely not a loan broker, agent, or economic advisor who would have projected 10 years ago that interest rates would have remained so low (and gone lower) for this length of time. In essence, they’ve become the new normal vs. the abnormality most thought they were when they were hovering in the high 3’s to low 4’s, not to mention the high 2’s to low 3’s where they are now. The Fed has shown a willingness to keep lending rates low or at near zero to keep interest rates low, which keeps the housing market humming, the investment and tax benefits (deductible mortgages) and the like attractive…and we’ve created (for good or bad or further discussion) a new normal.

Projections seem to be that we’ll have very low rates for the next two to three years and though that’s good, when (if) we return to more normal historically low rates in the 4% – 6% range, we’ll certainly see a market pullback as the public adjusts to the change. So, though low interest rates are helping keep the housing market and the economy humming in many ways, there’s a price to pay down the road, so expect them to rise sometime (likely slowly) in the coming one to four years. Essentially, “don’t take low interest rates for granted” but don’t make a move just for interest rate sake.


The reality is we’re now in a good spot of the market to transact if you need to or sit tight if you don’t. If you have both economic and personal reasons to buy or sell, you can begin to move more confidently knowing the market is in a normalization phase (remember though that does not mean it’s staying stable or guaranteed to move upward; it just means we’re in a less volatile market with more normalized ebbs and flows). If you’re in no rush to buy or sell or (for personal residences) you only have an economic or personal reason (but not both), you might want to let the market evolve for another two to three months, let the presidential transition proceed, wait for the COVID pandemic to get under more control (or not), and see how the equities markets respond in early 2021.

For a more detailed review of market specifics or to gain a perspective on your own property in this dynamic market, contact Rob at Rob@RobLevy.net or 415-385-8011