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San Francisco Real Estate Market Predictions for 2022

After a landmark year for San Francisco real estate in 2021, we predict many of last year’s hot market conditions to stick around in 2022, with some exceptions we’ll get into below.

Whether “more of the same” is great news or not likely depends on your goals. San Francisco homebuyers have faced stiff competition for the past 18 months, while home sellers have enjoyed faster closings and rising sale prices (notably in the more “residential” parts of town, but the market improved all over).

We enter 2022 with the real estate landscape largely unchanged, defined by high buyer demand and not much for sale at any given time. More SF home sales are happening outside of the busy spring and fall seasons, and trendy home amenities like a home office remain in-demand.

Still, there are a few developments that might temper the rise of real estate prices in SF and potentially provide more options for buyers. Read on to learn about it all in our SF real estate market predictions for 2022!

Watch: San Francisco Real Estate 2022 Predictions

Want a quick intro or don’t have time to read the whole article on SF real estate in 2022? Watch our brief summary below—and sign up for the Vivre Real Estate newsletter to stay up to date on all the latest.

On Predicting the Market

Before we dive in, we’d be remiss not to remind you that no one has a crystal ball (magic 8 ball?) to perfectly predict the market. San Francisco real estate can change on a dime due to factors way outside our scope (see: 2020 and COVID). Rather than trying to time the market just right, the best time to sell and/or buy a home is when it is right for you. Your plans, goals, family and finances are priority one. 

After 20 years helping San Francisco home sellers and home buyers as top San Francisco real estate agents, we’ve found this to be the winning formula time and time again. Buy the best home you can afford, in the best location you can, as soon as you can. Then, let the magic of San Francisco real estate do its thing for you over time. 

Assuming no big surprises this year, we’ll share our best, informed San Francisco real estate predictions for the 2022 market based on key market indicators from 2021 and our boots-on-the-ground perspective as top SF Realtors for over 20 years.

San Francisco Real Estate 2022 Market Forecast

Demand for Listings Will Continue to Outpace Supply

The biggest underlying trend in SF real estate last year was high buyer demand met with low supply of listings. We expect that to continue in 2022.

In 2021, homebuyer demand was through the roof in San Francisco. This was due in large part to historically low interest rates around 3% (or even lower), making buying a particularly attractive proposition. It was also due to shifting buyer preferences towards different homes and amenities since the start of the pandemic, which made competition even hotter for certain properties and San Francisco communities

Altogether, SF home sales and sales volume increased greatly year-over-year.

Key San Francisco Home Sales Stats for 2021

  • Homes sold increased 42%, from 5,357 in 2020 to 7,619 in 2021
  • Sales volume increased 54%, from $8.78B in 2020 to $13.55B in 2021

Yet, while demand for homes in San Francisco was rising, the number of homes for sale at any given time was falling.

Key San Francisco Listing Inventory Stats for 2021

  • Active listings available to buy at any given time was down 53% in 2021, on average
  • By the end of 2021, there were 991 active listings on the market, and new listings decreased by 2.6% to finish the year at 8,737

(All market data sourced from the San Francisco Association of REALTORS® MLS via InfoSparks.) 

When demand and competition are high, new listings are quickly snatched up. 

The resulting lack of listing supply ends up affecting home sellers too, uncertain about where they might end up next if they were to sell their current home. 

We know there are more would-be sellers out there who want to move but are afraid they won’t find anything to buy. (Pro tip: this is probably hard to believe, but it tends to work out if you’re truly ready: emotionally, psychologically and financially. You gotta take the leap of faith and go for it!) 

This cycle of increasingly fewer homes available to buy made it even more important to work with an experienced San Francisco real estate agent who can help you bridge the gap from your current home to your next one. This will continue to be the case in 2022. 

We’d love to discuss your situation and how best to approach achieving your goals as a buyer, seller or both. 

Year-Round Sales Will Continue in 2022

January is typically a slow month in real estate, as the market continues to wake from its holiday slumber. Conventional wisdom says that sellers should wait to list until after the Superbowl (around the start of February), to enter the market for the busy spring selling season.

Last year turned that conventional wisdom on its head. In January of 2021, twice as many homes were sold than in January 2020 or 2019. As competition increases for a limited supply of listings, buyers get creative and extend their home search outside of the “busy seasons”. 

Pro tip: SF has always been a unique market. People move in and out of the city year-round. Strategic pricing and proper presentation is more important than timing the market to any particular month or week. 

Nonetheless, the bulk of SF homes sales will still occur in the spring and fall this year, because more homes will be on the market. Spring and fall are often the timeframe preferred by sellers to list their home due to school schedules, holidays, vacations, etc. But many buyers will look to buy whenever they can in the San Francisco real estate market of 2022, if the listings are available.

Pro tip: Sadly, we now have what some have penned “smoke season” adding another unpredictable factor to the autumn market.  

Demand Will Continue for COVID-Era Amenities

Before 2020, no one had heard of a “Zoom room.” It wasn’t a thing… until suddenly it was.

The last 18+ months of shelter-in-place, social distancing and other public health measures have made a big impact on our lives. If you would love to have a bigger yard, a better kitchen, or extra space for an office or gym, you would certainly not be alone.

Here are just some of the home amenities in higher demand these days:

  • Home offices, schoolrooms and “Zoom rooms”
  • Exterior space, a deck, yard or garden 
  • Slow Street addresses (what started as a social experiment is now a hot feature for some homebuyers)
  • Chef’s kitchens with more space, upgraded appliances and fixtures
  • Air purifiers, air conditioning, better windows, ventilation and light
  • Home gyms

As a boutique team of full-time San Francisco real estate agents, we’ve seen firsthand on both the buying and selling side how these amenities have increased a listing’s stock throughout the COVID era.

Fingers crossed, the pandemic will fade to endemic in 2022, and we can get back to relatively normal life. When that happens, perhaps demand will fade for these in-home luxuries… though we kinda doubt that. For the foreseeable future of San Francisco real estate in 2022, homes with these features will sell for a premium.

Pro tip: As local residents and working professionals, you have an inside scoop on the local market by looking at your own barometer of where things stand. How do you, your colleagues and friends feel about the local economy, the tech sector, employment opportunities, local sentiment and so forth? 

What Will Be Different in 2022 Real Estate

Now that we’ve covered the major market factors that will likely carry over from 2021, let’s look at what could change this year.

Interest Rates Will Rise in 2022

While we do expect continued high home buyer demand and rising home prices this year, higher mortgage interest rates are expected and something to keep an eye on.

Faced with rising inflation and falling unemployment, the Federal Reserve has signaled a monetary pullback. Financial institutions predicted up to 4 interest rate hikes this year, to the tune of around 100 basis points (or 1%). However, you may have noticed that the Fed left rates unchanged at near zero at their last meeting. Yet, most economists forecast the Fed stepping in soon to help manage inflation. As bond rates improve, real estate investments may be a bit less attractive. Even so, 4% mortgage rates would still be historically low for consumers—rates were twice as high 20 years ago—and supply/demand remain the dominant market forces. 

Keep in mind that the threat of rising interest rates may spur buyers to act sooner. The yield on 10-year Treasury Notes (closely tied to mortgage lending rates) is already on the rise, as markets preemptively price-in predicted rate hikes by the Fed. Of course, as things progress, the Fed may change their tune. 

If you are on the fence about selling your home, now is an excellent time to consider your options with a trusted real estate advisor. Rates are still quite low, around 3.5% at this time of writing, and we have yet to see a dent in homebuyer demand.

Pro tip: San Francisco real estate is already expensive—requiring significant assets and income to afford—so incremental interest rate hikes, on their own, are unlikely to have much of an impact on the overall market. 

Keeping An Eye on Buyer Burnout

In cities like Boise, where home values rose 24% last year, buyers are at extreme risk of being priced out of the market. This is less pronounced in San Francisco, where the biggest price jump occurred in the southwestern MLS District 3 (+13%), and prices barely budged in some Districts—but it’s on our radar since the lack of housing affordability has been an issue here as long as we can remember. 

The National Housing Survey and Home Purchase Sentiment Index (HPSI) from Fannie Mae tracks how homebuyers across the country are feeling. The numbers aren’t rosy in their latest national report. According to the HPSI, a record-low 26% of consumers say it’s a good time to buy a home, whereas 76% say it’s a good time to sell. Per Fannie Mae’s Chief Economist, “Even though demand remains strong, a majority of consumers clearly have reservations about purchasing a home at current prices.”

That said, the Fannie Mae report covers the whole country. In San Francisco proper, home sale prices rose about 4% overall in 2021 per the SFARMLS. Nothing to sneeze at, but it’s a far cry from the huge price jumps in places like aforementioned Boise, ID (+24%); Belleview, WA (+18%); and Scottsdale, AZ (+19%).

So, homebuyers’ wallets will likely be squeezed from both sides in 2022, with higher home prices and higher interest rates. But San Francisco should be somewhat insulated given that our market never reached the same fever pitch as other parts of the country.

Pro tip: When analyzing market conditions and likely appreciation, play the long game. Generally speaking, it’s recommended that you buy a home to live in for at least 3-5 years. Very few buyers and sellers time the market perfectly… and then, they only did so in retrospect (i.e. looking back on it). 

Considering these factors, we expect the market to continue at a brisk pace with sales prices continuing to rise, but less dramatically than in 2021.

Finding Extra Value in Condos

Historically, San Francisco condos have sold for a higher price per square foot ($/sq ft) than their single-family home counterparts. (This is a surprising statistic, isn’t it? One clue is to consider where in San Francisco the luxury condos are vs the bulk of single family homes.) 

However, as some homebuyers’ tastes have recently shifted towards houses rather than condos (see above), the square foot price delta has been shrinking.

San Francisco Price $/Sq Ft in the Past 5 Years

YearSF House $/sq ftSF Condo $/sq ftCondo Premium
2017$911$1,049$138/sq ft
2018$975$1,119$144/sq ft
2019$999$1,145$146/sq ft
2020$1,006$1,084$78/sq ft
2021$1,088$1,120$32/sq ft

While SF condo $/sq ft has remained relatively flat in the past 5 years, single-family houses $/sq ft has been on the rise. If this trend keeps up, San Francisco homebuyers may find great hidden value in condos.

The Right Time for You

We hope these San Francisco real estate market predictions for 2022 help to inform and inspire your plans this year. As always, the right time to buy, sell or both is when it’s right for you!

Our top San Francisco real estate agent team has helped hundreds of SF homebuyers and sellers to successfully navigate the market. We specialize in providing honest, reliable guidance tailored specifically to your goals. If you have a question, please contact us any time. We are here to serve and would love to help you buy or sell your next home!

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