How Is Inflation Affecting The San Francisco Housing Market?

In the real estate world, spring is a time to act, whether it’s to put a home on the market, or start seeking out that dream home to buy. With rising inflation, and the cost of everything from a loaf of bread to gas going up, would-be buyers and sellers in San Francisco are wondering what economic shifts might mean for their next real estate deal. While the price of most goods and services is going up across the United States, in San Francisco, the price of homes is going down. 

Zillow reports that the average home price in San Francisco declined by 12.9 percent during the last year. That decline is due in part to the Federal Reserve raising interest rates as well as many families opting to move out of San Francisco seeking more affordable homes, and also seeking more space as a result of the pandemic, whether in nearby suburbs, or even out of state.

With those declining sales figures, sellers may be worried. Taking a look at the real estate market in the West can provide some insights about what to expect when planning for a major move, and whether it makes sense to wait or act now. 

Buyers and sellers are finding their balance

The real estate experts at HomeLight in a poll of more than 800 real estate agents across the United States set out to understand trends to help advise buyers, sellers, and agents. In the Pacific region, which includes Alaska, California, Hawaii, Oregon, and Washington, a majority of agents surveyed (39 percent) reported a balanced market, putting buyers and sellers at an equal advantage. 

Some sellers are concerned

With declining home prices in San Francisco, agents in the Pacific region report that sellers are less confident about their ability to secure a favorable price for their homes and an ideal timeline in 2023. In the HomeLight survey, 38 percent of agents in the Pacific market reported that sellers are a bit less confident about their ability to sell a home quickly and for a good price. 

Buyers might prefer to wait and see

Real estate agents across the United States saw buyers and sellers staying put in their current homes in 2022 as interest rates rose. Those buyers who could wait, decided it was better to relax than to forge ahead and sellers in some cases were faced with having to lower their prices or offer concessions. In 2023, the majority of buyers in the Pacific region are still waiting, as 58 percent of agents reported. However, with 48 percent of San Francisco homes selling for under the list price according to Zillow, there is still a pool of buyers who see now as the best time to act. 

Expect concessions 

With the market down, some sellers will do anything to attract buyers. That includes concessions, such as a credit for repairs and closing cost reductions. Agents in the HomeLight survey reported that 50 percent of transactions would likely involve a sellers’ concession in 2023.   

With the real estate market constantly in flux, the best strategy for buyers or sellers is to work with a trusted real estate agent and watch the market closely for shifts.