2022 Market Predictions
EVERYONE IS WATCHING INTEREST RATES Interest rates are going up, it’s just a matter of when. Rate increases historically create a sense of urgency in the market. Home buyers are already starting to feel the pressure even though we don’t know when a rate increase is going to happen and how high the rates will go. Even if rates reach 4%-5%, that’s still historically low, especially for an area with as much wealth as the Bay Area. RENT WILL GO UP San Francisco and the Bay Area are some of the only places in the country where rent prices have yet to creep back up to pre- pandemic levels. During the pandemic San Francisco was de-throned as the most expensive rental market as New York City re- gained the crown. We expect this to change as the Bay Area’s renowned entertainment venues continue to re-open and expand offerings adding to the dynamics of the San Francisco economy. Those craving a diverse lifestyle will move back to the City absorbing long vacant properties driving rent prices back up. I am looking forward to seeing what new trends come from a post-pandemic life! SEASONALITY HAS DISAPPEARED Usually the market waits until spring, but this year the market started early and kept right on going. Some sense of seasonality is out the window. Depending on the type of home you are selling, the market can be very rewarding, even in December, though I think we can all use a break over the holidays and the December market can be less predictable. FOREIGN BUYERS Before the pandemic, foreign buyers spent $267 billion on U.S. real estate in 2018 and $183 billion in 2019, according to the National Association of Realtors. In 2021, that spending dropped to $107 billion, which may suggest pent-up demand since buyers weren’t able to visit properties until international restrictions were lifted in November. Expect to see a resurgence of foreign investments in the Bay Area.
IT’S STILL GOING TO BE A SELLER’S MARKET
Even as interest rates are projected to increase, the demand for homes will still be greater than inventory, especially for single-family homes. Demand is from buyers who were starting to look in 2021 and are continuing to look for a new home. The amount of quality, single family homes on the market is usually low in the city, but those houses are now in particularly short supply. For sellers, that means the time is now. My advice is to move quickly if you want to be in the driver’s seat when it comes to selling your home. Another buyer segment to watch: many first- time homebuyers who saved up money for a down payment during the pandemic are returning to town, which will also add to the competition. SPACE IS STILL A MUST “Zoom rooms” and exercise spaces became must-haves during the pandemic and that is not going away anytime soon. The desire for home offices or gyms has become an essential amenity. We’ve also seen another new amenity emerge: homes located on or near a Slow Street, which limits through traffic and enables them to be used as shared spaces, are just as appealing as a home proximity to a local park. Outdoor space is still crucial for most clients and sellers are getting creative when it comes to upgrading that outdoor space. We’ve also seen a trend in upgrading a backyard shed that can be used as a multipurpose space. REOPENING OF OFFICES As the effects of the Omicron variant recede, the economy will continue to rebound. We will see a demand for offices to re-open, building upon the strengths of what makes the Bay Area such a world-class destination: entertainment, culture, sports, dining, theater and so much more. The Bay Area in general has always been eager to embrace remote work and this was reinforced amid the pandemic. However, offices won’t stay closed forever and workers will be coming back to the office where teamwork and community thrive. One thing likely not to change is the increased flexibility to work from home.
“We recently sold a classic Victorian home with Brendon and the experience was tremendous. Brendon has a rare ability to be both outstanding at sales/marketing/communication, but always excels at getting down into the weeds and making sure that i’s are dotted and t’s are crossed. Brendon was also just an easy person to work with. I always enjoyed talking to him and anytime something came up (which it did), he always went above and beyond to make sure it was taken care of. Highly recommend working with him!”
DAVE F.
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