When is a good time to buy a loft/condo in San Francisco in the next 18 months?

Asked by Pete, San Francisco, CA Sat Jul 7, 2007

I was talking with a friend earlier this week who wanted to buy a loft or condo in the SOMA/S.beach area and was trying to figure out the best time to buy. She is in no rush, but was considering the overall market and all the new developments that are coming up and being finished. Would be really useful to get estimated times, not "always a good time to buy in San Francisco", I know that, THANKS!

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Michelle Car…, Agent, Coppertino, AL
Sat Jul 7, 2007
For Buyers, the best time (mostly likely time to get the best price) will always be when there's heavy inventory. Generally, that's the summertime. However, it's good to look out for homes that come on within a 30-60 days of property/income taxes being due--if someone's having financial trouble, they may go on then, hoping to sell before the tax is due.
2 votes
Chris Cole, Agent, San Francisco, CA
Fri Nov 16, 2007
I think I can give a unique perspective.
My place went on the market in August. All the brokers said it was "priced right" or "priced to sell" and that it would be gobbled up. I spent way to much money on very hight end remodeling even though the loft is only a few years old. Very unique, because it has a 500 sqft back patio deeded to the until which is a garden with trees, bbq, furniture, and it gets full sun all day long. Nothing by air, sky sun back there.
Well long story short it's allmost thanksgiving.
It's still on the market. Even lowered the price once. It's on the market for $50K less than what it appraised for only 9 months ago.
The good news is, i don't have to sell and with the rental market out of control I don't see the benefit of doing so anyway. So yea it's a great time to buy....
1 vote
Jim Walker, Agent, Carmichael, CA
Sat Jul 21, 2007
The presidential election on November 4th 2008 will provide the catalyst for a lot of fence sitters to finally get into or back into the market. I don't expect overall prices in Northern California to rise considerably till then, but I am 90 miles east of you Our markets are close but not the same. Good SF site copied below.
Web Reference:  http://www.socketsite.com/
1 vote
Cranky, Home Buyer, Oklahoma City, OK
Sat Jul 21, 2007
it looks like agents always say "Now is a great time to buy!" I've talked to a lot of htem over the past few yeras and they always say it's a great time to buy. What's the value of advice like this when the answer is always the same, even when the markt reached a ridicuolous alltime high in 2005??!?
1 vote
Lawrence, , San Francisco, CA
Mon Jul 9, 2007
If you're looking at a SOMA/S. Beach high-rise condo, it seems to me that it would be a good idea to hold off for a while until the majority of the new construction is done. Buying in this area now puts you in a position where you are going to have a large number of similar-but-slightly-newer units flooding the market in the next few years. It seems that if you're in the market for its investment potential, this would not be the best spot to be in.
1 vote
Blake Carrin…, , Mountain View, CA
Mon Jul 9, 2007
Of course the real estate agents all say "Buy Now!" But the truth is, the market really does slow down in the fall. Even bad weather slows down would be buyers. When the government releases home sales data they often site good or bad weather as a reason for sales to be good. This is more true for places where families with kids move because the school thing. If you have time to wait for a deal, I would watch the market and try to find a place where they didn't stage it well and if it sits on the market for a few weeks, move in with a low offer.

Also, don't let your agent convince you to over spend, or get caught up in a bidding war. Remember that your agent only gets paid when you buy a place, so they have all the incentive in the world to see you buy something. They won't tell you that it's better to wait, better to not bid higher or better to hold out for the seller to lower the price
1 vote
Trulia Roger, Home Buyer, Alameda, CA
Mon Jul 9, 2007
One strategy that might work in this market is to wait for the high selling season (Spring and Summer) to pass and then scoop up a property from a desperate seller who wasn't able to unload their place in the Spring. I'm planning to do some serious looking around November 2007-January 2008 just for that reason. I might wind up with no inventory to pick from though :)
1 vote
Bruce Lynn, Agent, Coppell, TX
Mon Jul 9, 2007
You've asked the impossible question. Like what will interest rates be in 18months. When's the best time to buy Bank of America stock in the next 18 months. If anyone could answer that question accurately, they probably wouldn't be online answering questions. Money is loose for developers right now, so you'll probably see more projects announced over the next year or two, but does it pay to wait? Interest rates could rise for buyers and credit could continue to tighten, so if she finds someplace to buy now then the time is right. Some things for her to consider are:
Timing to conincide with current lease end.
How long she will stay in the area.
Where exactly she wants to live and what amenities she wants in the development.
As a general rule I say don't wait. Buy now if you find what you like. The longer you wait to find the right deal, the right view, the right location, just never comes, you just loose on appreciation and life enjoyment the longer you wait. As for time of year I like October, November, and December. There's typically less inventory, but also generally less activity. Seller's tend to be more desperate or developers want to move more inventory before year end. Hope some of this helps you.
Web Reference:  http://www.teamlynn.com
1 vote
Joh, , San Francisco, CA
Wed Aug 19, 2009
I sure hope you didn't listen to the advice given by the majority of agents/cheerleaders who responded to your question. To them, it's always a good time to buy. Perhaps that's the motto they teach at real estate agent school.

The poster Cole lost money on his property, and is now saying they are great deals, and how it's a great time to buy at '05 prices. Heh. You can probably wait a bit and get something at '02 or ''03 prices.

There is a wave of foreclosures in the queue, which will drive prices down further. Many overspent in the SOMA area in the past 6 years, and many are now unemployed or underemployed.

I sure hope your friend didn't buy anything yet. I've been eyeing the market, and have seen so many price reductions. The market is pretty chaotic right now with listing prices all over the map. It'll be a little while before things stabilize.

As for interest rates, sure, it's great to get a mortgage when interest rates are low. However, higher rates will drive down home prices further.

My advice is to avoid any real estate agent who tells you that it's a great time to buy. Right now, your friend has the luxury of not rushing into a purchase.
0 votes
James Testa, Agent, San Francisco, CA
Wed Aug 19, 2009
Hi Pete,

Its no surprise that the end 2008 and beginning of 2009 changed the real estate marketplace in San Francisco. Many of the cyclical norms when out the window and we are still in that period of market correction. SOMA and South Beach are two neighborhoods that have a large amount of inventory which is great for the commodity shopper.

My advice is to base your decision on mortgage rates rather than supply and demand of condos/lofts. As rates continue to be held low - take your time and continue to look for the right place.

Please feel free to contact me if I may provide more information.

Best of luck!


James Testa
Paragon Real Estate Group
0 votes
Michael Young, Agent, San Francisco, CA
Sun Aug 16, 2009
San Francisco has enjoyed a relative cushion from the down market, even here in the Bay Area. While other areas have had a 20-30% drop in the past year alone, overall SF prices have only been down about 9% overall. Demand is still down, so some developers are offering great deals on new condos and lofts. With some projects being cancelled or delayed, the number of new properties coming to the market will dwindle once the current supply is sold out. At the risk of sounding like a salesperson, now is a very good time for new condo purchases.
0 votes
Sun Aug 16, 2009
As Tom mentioned, when you find the right deal. Do not try and time the market, just find the best deal.

Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
Web Reference:  http://www.gregorygarver.com
0 votes
Tom Carlson, , San Francisco, CA
Sat Jul 25, 2009
The best time to buy is when you find a great deal. In SF, right now, there are good deals out there and some bad deals. Distinguishing between the the good and the bad takes experience and market knowledge. Most buyers need the help of an experienced Realtor to find and negotiate the best deals. Of course, there is an alternative...and that is to continue renting.
Web Reference:  http://www.SFlisting.com
0 votes
Chris Cole, Agent, San Francisco, CA
Fri Jul 24, 2009
I responded to this question on November 16th of 2007 originally.

It's July of 2009, my loft just sold.... well I sign documents at the title company this morning, so keep your fingers crossed for me.

My place sold for $180K less then what I was in contract for back in October 2007 when the buyer pulled out in week 3.
The soma, southbeach, mission bay area is such a great opportunity for someone to buy in now at 2005 prices.
Let's face it, people will always want to live in this beautiful city, our economy will be the first to recover and your values should skyrocket. I know my crystal ball told me...
But seriously from someone who just had to sell for $15K more then what he paid for a loft 5 years ago and spent $90K remodeling.... there are some real deals out there!
0 votes
Dave Cunning…, Agent, San Francisco, CA
Fri Nov 16, 2007
Perhaps some facts and statistics would be helpful. I always tell buyers that they should plan on holding a home purchase for 3-5 years minimum to be sure they will appreciate. The last 7-8 years in the Bay Area saw such rapid appreciation that many people made alot of money by buying and "flipping" quickly. The current market is a more "normal" market and the news media has portrayed it as all gloom and doom. Mortgage rates are among the lowest in over 40 years; this means that as a buyer you will be able to afford far more today than you may be able to tomorrow should interest rates increase. According to the California Association of Realtors, the median price of a home in California has not declined since 1996 and the 37 year average rate of appreciation for homes in California is 7.75%. Some markets in the Bay Area have seen a 4% increase in median home prices; yes, the number of sales are down, but prices in some markets are up. (San Francisco's District 5 which includes Eureka and Noe Valley neighborhoods has seen a increase of 6% in single family homes and 11% in condos since this time last year). Many sellers are motivated right now. Come January, I can’t necessarily say the same will hold true. The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for buyers: mortgage rates remain low (certainly by historical standards), and there is a large selection of homes to choose from. Now is a fantastic time to buy. Many people who are buying and selling right now are move-up buyers who are using equity positioning to obtain better, more expensive housing.

As a seller, you may enjoy the benefit of years of high appreciation rates and, on the other side of the transaction, as a buyer you enjoy near historically low interest rates and a large selection of homes to choose from. I am holding open a condo this weekend in San Francisco that has had a $76,000 price reduction. If you would like to discuss this market and facts about it further, please get in contact with me and I would be delighted to answer your questions and help you make a financially responsible, well thought out decision. I have 8 years full-time experience in San Francisco Real Estate and this is the BEST buyers market I have ever worked in.
0 votes
Dave Cunning…, Agent, San Francisco, CA
Sat Jul 21, 2007
Now is a great time to buy! Interest rates are still fantastic, competition is lower than it has been in years and prices are better than they have been in the last couple of years! If you wait too long and try to "time" the market you will miss out because by the time you realize what is happening, prices will have jumped.
0 votes
Mario Pinedo,…, Agent, Cupertino, CA
Fri Jul 20, 2007
The Bay Area - especially SF, the Peninsula and the South Bay are doing really well. Companies are hiring and technologies are flourishing. The mortgage debacle will not hit the Bay Area because over 98% of homes are owner-occupied. In the markets that are vulnerable - large percentages of homes were purchased by investors - who will sell when things get tough. The window to buy a condo in SF is now. The summer is the trough of the real estate market. After mid September, the market will start back up. All the fundamentals are there to keep prices rising. Happy shopping.
0 votes
Heather Fern…, Home Owner, San Francisco, CA
Mon Jul 9, 2007
Hi Pete - I wonder the same thing with all the condo inventory in the south of market/potrero/mission areas. It's one thing when you have a sweet one of a kind victorian. It's another when every condo looks like another iteration on the same theme and they are popping up all over the place.

I have no answer for you, but I find the socketsite blog (URL below) really helpful in understanding what's happening in new development (inventory/actual glimpses inside each). You might want to pass it along to your friend.
Web Reference:  http://socketsite.com/
0 votes
Dave Cunning…, Agent, San Francisco, CA
Mon Jul 9, 2007
The short answer is now! Inventory in the South of Market neighborhoods is starting to be absorbed. Lofts and new construction on the SOMA area of San Francisco are a great buy right now. Incentives on new construction are not being offered as much now as a few weeks ago so that is a sign that their sales are doing better. There is alot to choose from and there are still "deals" to be had!
0 votes
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