I'm looking to buy in the Castro. Is now a bad time?

Asked by Adam Singer, Fri Aug 16, 2013

I'm not in a huge hurry to buy, but would ideally like to move within six months or so. I've been looking at the charts for average sale price, and price per square foot, and it looks like there's been a huge spike in the last month or so. Is now a really bad time to buy, or are Castro prices likely to continue rising at this pace?

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Eric Castong…, Agent, San Francisco, CA
Fri Aug 16, 2013
BEST ANSWER
Hi Adam

It sounds cliche, but you should buy when you find the property you like. Now is a competitive time and no one knows how long it will last. If you wait and it continues up, you have lost more purchasing power. If it goes down, you've scored, but timing that is impossible.

If you have purchased the home you like, you are more likely to be comfortable there longer. If you haven't already talked to a mortgage broker, you should, so that you can get a sense of your purchasing power. There may be some gem that fits exactly what you want, or you may find that there are other areas in the city that could work too.

All the best
Eric

Eric Castongia
Zephyr Real Estate
BRE No. 01188380
Eric@SFHotBuy.com
Web Reference:  http://SFHotBuy.com
1 vote
Alexander Gr…, Agent, San Jose, CA
Fri Aug 16, 2013
Well the first thing to do would be to get pre-approved for a loan so that you know exactly how much you can afford when you are out house hunting. If you want to get pre-approved, I can certainly help you out now. You can call me at 408-352-5147 or email me at AGreer@themortgageoutlet.com. You can check us out at http://www.TheMortgageOutlet.com. I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
1 vote
, ,
Mon Aug 19, 2013
No one knows what will happen,

Here is the reason to think prices might go up,

Being that we have had a huge price reduction over the last few years it may be a good time to buy.

There are some possible downward pressures.

1. Interest rates are higher now, this is huge and may mean lower prices
2. Sorry Obama fans Obamacare once fully implemented can cause more unemployment and further depress the market.

Of course there is more to it than that. The fact is the more it looks like a good time to buy the more it most likely is not, and the more it looks like a bad time to buy the more it most likely is a very good time to buy.
0 votes
Bellings Bro…, , San Francisco, CA
Fri Aug 16, 2013
Adam,

While no one can truly predict the market, we're starting to see home prices back to their 2008 levels. Typically when a recession hits, or a drop in the market, when it does return it will surpass the previous point in which home prices peaked. What that means for you (and other potential buyers) is that everyday that goes by is the new lowest point of the market for the foreseeable future.

That being said, I would look into buying sooner rather than later as home prices are steadily continuing to climb. If you're in the financial situation to be able to purchase in the next 6 months, I would consider buying before then for the reasons above. So to answer your question, yes, now is a great time to buy in the Castro or any other neighborhood in the city really. After labor day you will see an increase in inventory as well, marking the start of the big end-of-year push for the real estate market here in the Bay Area.

I hope this answer helped, and if you need any help getting in touch with trusted lenders, viewing properties, or simply have any questions in general I am always happy to assist you, or anyone you may know who is looking to purchase as well. If you have any questions regarding real estate please don’t hesitate to reach out. I’m always happy to be a trusted resource for all things real estate in San Francisco and the Bay Area.

All the best and good luck with your search!

Aaron Bellings
Realtor, Vanguard Properties
Aaron@vanguardsf.com
BRE #01915431
415-601-3000
0 votes
Lizete Santos, Agent, San Francisco, CA
Fri Aug 16, 2013
Adam,

No, and since rates are treading upwards now is the ideal time as waiting will certainly cost you in financing the property.

Here is a glimpse at the stats for July and you can see that the increase yoy for condos in District 5
( which encompasses the Castro ) is up 22.9%.
http://library.constantcontact.com/download/get/file/1110808…

The dearth of inventory throughout SF has definitely played an integral part in this increase and all indication is that this will not change in the short term.
As my colleagues have mentioned when you do find the right property you should move swiftly and work expeditiously to close as quickly as possible.

All the best.
Lizete
Web Reference:  http://www.LizeteSantos.com
0 votes
J Mario Preza, Agent, Burlingame, CA
Fri Aug 16, 2013
Hey Adam, interesting question, the answer to which will vary depending on the definition the originated the same. In other words, good or bad is in the eye of the beholder (as would be beauty, in another context. The reason being that if you look at the interest rates, they are creeping up, but they're still low in comparison to a few years back; prices have definitely spiked, and where they'll wind up (up being the operative word), is anyone's guess, but "up" they will go. And as for when is a good time (implied), there's never been a better time than now, the present, to "invest" in the home/condo you plan to live in (as opposed to paying rent to live in a comparable place, which, by the way, will probably wind up costing you as much, more or less, without the corresponding tax benefits, sort or long term.

Be prepared, however, to be in competition to many others, who, like you, will want to buy and may bid higher than the next guy (including you), and in some cases pay ALL CASH, which is definitely more attractive to the seller when they evaluate the multiple offers that many attractive properties are garnering these days.

In conclusion, buy now, if, of course, you can afford it, but do it right.

J. Mario Preza
home4less@hotmail.com
0 votes
Rob Regan &…, Agent, San Francisco, CA
Fri Aug 16, 2013
If you're looking at charts that show a spike in prices in only the past month, I assume you're referring to year-over-year prices, and possibly older Case-Shiller reports which is data that tends to be 3 months old. So literally you're looking at changes that have occurred over the past 15 months. Prices in the City, including the Castro, have been on the rise for at least a year and a half. The market has been on fire for that long.

There are four main reasons this has happened and if you can predict where these four things will be in the future you'll have an idea where home prices might be.

They are 1) jobs - San Francisco has been adding far more jobs than new housing inventory, and many of these are high paying tech jobs. We're closing in on the jobs peak hit during the height of the dot-com market.

2) the stock market is WAY up over these past 4 years with both the Dow and S&P past their previous peaks. This is important since many people pull their down payments from the stock market - and sometime pull enough for all cash purchases - and they can afford a LOT more than they could even a year ago

3) interest rates, while up from 2 months ago, remain at historical lows. This allows buyers who need loans to afford far more than they used to.

4) there is no inventory. In the Castro there are 6 total residential properties for sale (homes, condos, TIC's) right now. In the past 6 months only 86 have sold, or 7 per month.

So imagine a lot more people with high paying jobs, with far more cash thanks to the stock market, able to afford larger loans due to interest rates - ALL chasing 6 homes in the Castro.

So for now, I expect prices to rise until there are significant changes in 2, 3 or all 4 of the above. Two have had a bit of a change - interest rates are up, and the stock market is sputtering a bit, but neither have changed enough to overcome record low inventory being chased by numerous well healed buyers.

Since you mentioned wanting to buy in 6 months, I'd start today just by looking and getting pre-approved for a loan if you need one, and hoping for at least a little spike in inventory in Sept/Oct which will be your best chance to find something until after January.

You're welcome to start here if you like http://www.SF-MLS-Search.com
Web Reference:  http://www.SF-MLS-Search.com
0 votes
Paul Neal, , San Francisco, CA
Fri Aug 16, 2013
It is always a good time to buy real estate. Are you a first time buyer? In the very competitive market in desirable areas like the Castro, buyers need to be prepared to compete and to succeed. Knowing your price limit through the loan pre-approval process is the first step. To paraphrase Dirty Harry, a man has to know his limits. And the key question you need to ask your Realtor when you find a property you want and can afford is,"What will it take for me to get this property?" The answer ought to be your game plan to a successful purchase.
0 votes
Gabriel Rojas, Agent, San Francisco, CA
Fri Aug 16, 2013
Adam,

This is a great question and subject to several individual factors.

The bottom line is that San Francisco has one of the hottest and most competitive markets in America, period. The time is only right if it makes the most sense for you and your goals in purchasing real estate. That being said, we have seen an increase in inventory, albeit a small increase, over the last few months. Keeping in mind that you can never "time the market", I would said that as the year progresses, you may see more options and less competition. Again, there are no guarantees regarding what will be available in the future.

My firm has great activity in the Castro and I would be happy to share some of our recent experiences working in that area if you feel inclined to contact me.

Good luck!

Gabriel
0 votes
Jeff Gray, Agent, San Francisco, CA
Fri Aug 16, 2013
In the United States, normally Summer is a big month for inventory and real estate. For San Francisco it is traditionally a slower time and then picks up in the Fall. However, this Summer has been crazy with activity. There has been a lot of inventory and buyers. In the Fall their might be more houses for sale, but more people will be looking as well. I would start your search now and see what is out there and where exactly you want to live in the Castro. Having lived their for 12 years, and knowing the area well, there are a lot of micro neighborhoods you might want to focus on. For the past 12 month prices have been continuing to rise with residential real estate. When the loan percentage with banks went up 1-1 1/2%, there was a little blip, but it is continuing to increase. I am available to help you with you search if interested and my email address is jeff@jefferygray.com. In any case, good luck with your search!
0 votes
Jonathan Ric…, Agent, San Francisco, CA
Fri Aug 16, 2013
Hi Adam,

Spring and early summer are the highest spike in real estate prices in San Francisco's economic cycle. By August, the market tends to slow a little. In a place like the Castro, you don't really see any downturn in prices unless there's a big market crash like we just came out of.

Prices in the Castro right now have returned to where they were at the height of the market before the recession. I expect them to continue to rise over the next few years, barring any unexpected downturns.

If you are looking to buy, there should be a small spike in inventory during mid-September from people in a hurry to list their properties before the holidays (America doesn't do business between Turkey-day and the Superbowl), but there won't be a whole lot going on until early next year. January and February are great months to buy.

Let me know if I can be of any further help!

All the best,

Jon Richards

Park North Real Estate Group
(415) 275-0744
Jon@ParkNorth.com
Lic: 01925522
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