Just as in other markets such as the stock market, real estate market trends go through cycles as well as boom and bust periods. Real estate market trends also reflect a myriad of influences, such as housing inventory, job growth, infrastructure (concerns), public policy, housing finance, consumer access to money, interest rates, and the overall economy. This list is only a partial list but easily serves to provide a succinct glimpse into real estate market trends, how to read them, how to stay ahead of the trend, and some of the impacts they may have.
In the San Francisco Bay Area real estate values have consistently been going up over time when viewed through the ‘real estate as a long-term investment’ lens with a minimum holding/owning time of anywhere between 5 and 7 years. But within the general property value appreciation over time there definitely are pockets of decline (down markets), pockets of flat value lines (flat markets), and pockets of appreciation (up markets). These cycles regularly repeat.
The 5-7 year cycle also coincides with how long up trends and markets generally last, while down trends and down markets generally last about 4 years. Note that there are some exceptions to the length of the cycles, notably San Francisco’s DotCom Bubble which lasted roughly a decade. Still, overall these cycles are surprisingly consistent.
The recent price appreciation and up trend in San Francisco began in 2012. Most recently, real estate market activity and the up market trend in San Francisco has been flattening out, though that is the overall trend. San Francisco consists of a number of different micro-markets which have their own market dynamics within the overall trend.
San Francisco’s real estate market as well as its rental market have been red-hot and led the nation in that regard; now both are cooling off. I detailed a number of reasons for this in several previous articles.
For sellers the question of the best time to sell and for buyers the question of the best time to buy are ever-present questions. No one wants to leave money on the table. In order to assess the best way to proceed, the smartest sellers and buyers understand the dynamics of the real estate market and weigh them with their ultimate goal. Doing so usually requires a savvy real estate professional.
If you are considering selling property in San Francisco, click to get your free preliminary market analysis.