Real estate markets are cyclical and seasonal though how true this is varies from market to market.
Clients - buyers and sellers - often ask us about market conditions at various times a year and whether there are any patterns. Usually, we argue that the best time to buy a home or list one for sale is subjective and personal. There may be a strategic plan that runs contrary to popular belief. And the truth is that there is usually very little inventory in San Francisco, regardless of the season. *
This Summer has been particularly brutal for San Francisco home buyers in terms of low listing inventory and increased buyer competition. How many of you tried to buy a home recently, thinking you made a really strong, over-asking bid, only to be out-maneuvered by some even more aggressive buyer (who had, most likely, already lost out a couple of times before!)? Having survived both boom and bust, we have a nose for how to write a winning offer and most of our clients do get their first choice of home. But, it's been especially tough and not always fruitful this Summer.
For example, extremely well-qualified buyer clients of ours found their dream home - a sweet mid-century modern home perched above the Castro - and made an offer that was 20% above the list price and contingent only on final loan approval. There were over 15 offers for this property and after a counteroffer round to the top bids, we ended up in 3rd place with an offer that was 30% above asking! At some point, we had to question what the heck was going on. In this situation, what was going on was a property listed with a price considerably under market value and that created an auction effect.
The low inventory of this Summer leads me back to the title: Labor Day & Real Estate. It is traditional San Francisco real estate wisdom that the market picks up after Labor Day. Many real estate agents will tell the prospective sellers that they meet over the Summer to wait until September. The reasons for this include a "back to school" mentality and a mirroring of the stock market which tends to be sleepy in August. (Feel free to correct me on this, all our stock broker readers!) The agents and sellers feel that there will be more ready, willing, and able buyers post-Labor Day.
We'd argue that this is not a hard & fast rule. As stated above, this Summer has been super active and competitive. Instead of waiting until the Fall, we counseled a few sellers this past July and August to get on the market and sell, baby, sell. In years past, we might have suggested that they wait until September, but in this business, you gotta be flexible and pay attention to the tea leaves (or stock ticker, your choice). Since Spring, there has been a severe lack of homes for sale in San Francisco.
So, this post-Labor Day, we are asking for a lot of new listings (and no, not just ours)! But just how much inventory will hit the market this September is anyone's guess. But let's hope for enough to help satisfy the currently intense demand.
It's just plain wishful thinking to expect that at some point in the year, we'll be flooded with inventory and you, as the buyer, will have the pick of the litter. Real estate inventory is supposed to soar during a real estate downturn. Ours didn't. We had low inventory throughout the Great Recession...more than we do now, but relative to other markets, it remained very low. So, focus on when the timing works best for you - whether as a seller or buyer - and create a winning strategy around your timeline.
