Real Estate Column - Waiting for the Right Time to Buy

By Tim Gullicksen

The word is out - It’s a great time to buy!

While the rest of the country was wrestling with the Great Recession we in San Francisco remained relatively immune to such troubles for a time. Like many bygone days life in the city by the bay was blissful and carefree. Then, in September of 2008, Lehman Brothers failed and our home values went into a deep, downward spiral. Yes indeed it could, and did, happen here.

In the first six months of 2009 it was difficult for Buyers to know how low they should bid on a property. As a responsible agent I would run the comparable sales to see what similar properties had sold for in the past few months, but in a declining market we had to write for under those recent past sales. Needless to say Sellers aren’t exactly used to such negotiations here. Meanwhile, many Buyers sat on the sidelines waiting to see just how low the market would go.

By the summer of ‘09 it became clear that market values had plateaued. Condos continue to stay flat, and single family homes have actually edged up in value every so slightly. TICs remain the one category of housing that is soft, which has mostly to do with the higher cost of financing them these days.

But back to houses and condominiums; which is what most people buy. They are not sinking in value anymore, and after reports of the same were repeated in the media in August, September and October of last year the reality started to sink in for those buyers on the fence. Prices aren’t likely to get any lower, and interest rates aren’t either. Tah-dah! Conclusion drawn: it might be a good time to buy.

So here’s what I’m seeing out there on the front lines of real estate. There are a lot of buyers out there and not nearly enough properties for them to look at. In days gone by this would have meant multiple offers and bidding wars, but luckily that irrational exuberance is a thing of the past. Yes, it’s true that a well-priced property will probably sell in a week or two, and it may even sell over the asking price with multiple offers. The cautious psychology of the market is such that “multiple offers” usually means two or three, and “over-asking” might mean just $5,000 or $10,000 over the asking price.

Buyers in the city are a savvy bunch. If a property isn’t priced at the correct and current market value, it will sit on the market gathering dust and cobwebs. Even a cursory glance at the real estate market these days reveals that the average number of days it takes to sell a property in San Francisco has gone way up from the hallowed days gone by. The best analogy I can think of is that old game you may have played in your high school parking lot - chicken. A certain percentage of sellers are putting their properties up for sale for what they want or “need” instead of what the market currently dictates. Those properties tend to sit and if they sell, eventually, it will be for under their asking prices.

The other sellers are pricing their properties realistically given the current economic climate so their places sell for at, or maybe even a little over, their asking prices. What’s the bottom line here? Same as it ever was - do your homework. Better yet, retain the services of a realtor who can do that homework for you. There are opportunities out there to acquire properties at the best prices in the past few years, at mortgage interest rates that will be hard to beat in our lifetimes.

Tim Gullicksen is a Realtor with Zephyr Real Estate, the city’s largest independent real estate firm. He also lives in the Castro. You can reach him at 415-370-5277 or timgullicksen@aol.com.

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