Northern VA homes sales are slow so some resort to renting. Is this happening in San Francisco?

Asked by Kathy, Clifton, VA Thu Oct 4, 2007

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Alexander, , 94123
Fri Oct 12, 2007
The answer is yes and no. San Francisco is a special market in that it is difficult to build new housing so there is a shortage of available housing to begin with (the vacancy rate is hovering around 2.5%). Add to that the local economy has come back from the dot com bust and is growing for a change which is increasing demand for housing. This has pushed the rental prices upwards of 20% in the last year or so. Now to your question are people renting out their homes due to a slow market. The answer is it depends on what their equity position is. Although rents have jumped recently, newer owners will find it difficult to get the numbers to work if they have high loan/equity ratios. This is less so in most other places in the country where pricing and rents are closer to being in-line. In San Francisco potential buyers are faced with higher rents but a buyers market which is narrowing the gap between renting and buying. This is an opportunity for buyers that have strong credit and a long-term view on real estate investment. On the other hand sellers that are not satisfied with the price the market will bear are keeping their properties off the market. Based on recent inventory of 4 months, San Francisco is the healthiest and most balanced market in the Bay Area at this point.
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Mario Pinedo,…, Agent, Cupertino, CA
Fri Oct 5, 2007
Unfortunately for buyers in San Francisco, this is not the case. San Francisco is one of the most healthy cities in the Bay Area. Jobs are increasing, rents are up, companies are expanding, international money is flowing into the city due to the depressed $ exchange. Also, the reshaping of South Beach/China Basin is adding a new neighborhood to consider. There may be some softness due to the financing issues - take this as an opportunity to buy in what will always be an expensive and in-demand city.
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Jed Lane, Agent, Petaluma, CA
Thu Oct 4, 2007
We have, as of Oct 1, 1,448 properties on the market with 588 in contract and 308 were sold in the last month. 753 of the active listings are priced between 600K and 1 million. Remember that our average price here is 850K.
Our situation is that there are fewer jumbo loans available and all of our homes require jumbo loans. This has reduced the number of buyers. Yet we are in a buyer’s market for the first time in many years.
We are still seeing multiple offers and competitive bidding for homes that are marketed correctly and priced aggressively.
If you need to sell due to a life change then choose an agent that knows the market and go for it. Don’t rent out the house unless you have no equity and are prepared for a negative cash flow and possible degradation of your property.
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Jim Rudoff, , San Francisco, CA
Thu Oct 4, 2007
The number of transactions in San Francisco is way down, so I'd have to say that sellers are definitely holding back from putting their homes on the market. It's not clear from your question whether you're asking from the perspective of the buyer or seller, so I'll try to answer both ways.

In working with buyers, I can tell you that my clients are nervous. There's a lot of competition for the relatively small selection of homes, so yes, I'd say that potential buyers are either continuing to rent or choosing to live in their current homes until the market is in a more stable position.

In San Francisco, the rental market is very strong right now, but we also have strong rent control and pro-tenant laws that are deterrents to many owners who might consider becoming landlords in other markets. Therefore, I'd say that owners that might prefer to sell but don't have to would most likely not choose to rent instead.
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