The early 2020s have been a pivotal time for real estate. Big cities such as San Francisco have seen intense fluctuations in inventory, sale prices, and mortgage rates. Premier neighborhoods like Pacific Heights perennially appeal to aspiring homeowners and real estate investors. Still, today’s home sellers can get more from their homes by understanding where the market is and where it is headed. Consider the following market insights as you gear up to sell your home in Pacific Heights.
Background
Given the unusually fiery pace of capital appreciation from 2020 to 2022, it is unsurprising that experts predicted a market slowdown in 2023. However, with 2023 well underway, the market has been anything but predictable. While the market hasn’t come crashing down as some analysts expected, it has taken some unusual turns. In 2023, the Pacific Heights real estate market is characterized by high prices and low inventory amidst elevated interest rates and economic uncertainty.
Prices are still high
While prices peaked in 2022, they rebounded again in 2023, albeit not drastically. This may seem unusual to many market participants, given that buying has slowed down. However, based on the current situation with inventory in the real estate market, elevated prices appear here to stay. At the same time, in the absence of an uptick in homebuying, prices may lack the momentum to move significantly higher than the levels they have already reached. Still, if you’re seeking luxury properties in Pacific Heights, the market for these magnificent homes is more resilient than properties closer to the mean.
Inventory is relatively tight
After the past few years, real estate professionals are used to seeing tight inventory in high-end neighborhoods such as Pacific Heights and the U.S. housing market generally. In 2023, the inventory of for-sale homes is relatively low, making it challenging for buyers to find homes. However, inventory is not tight merely because people are buying lots of houses; it correlates more to the slowed pace of home sales. Nevertheless, inventory isn’t at critically low levels, and buyers should still be able to find homes in Pacific Heights.
Home sales are down
Despite low inventory in the real estate market, existing-home sales are down for 2023. According to the National Association of Realtors (NAR), existing-home sales are way down from last year all over the country, and the median sale price has only dipped slightly. As mentioned above, inventory is low mainly due to reduced activity in the market. Relative to previous years, fewer homeowners are listing, and fewer home buyers are going into the market.
Mortgage rates
Mortgage rates are a nationwide phenomenon, a macroeconomic factor throughout the U.S. They are driven by the federal funds rate, the benchmark the Federal Reserve sets to drive interest rates up or down nationwide. Changes in the federal funds rate move mortgage rates up or down across the country.
In recent years, the Fed has hiked rates in response to inflation, as raising rates helps reduce borrowing, thereby contracting the currency supply and — hopefully — driving inflation back to manageable levels. Following the dizzying pace of rate hikes in 2022, mortgage rates have been high in 2023. While U.S. inflation rates have stopped rising uncontrollably in 2023, inflation is not yet back to levels that can be considered normal. As such, market participants cannot expect a considerable pullback in the federal funds rate yet, which means that mortgage rates are not likely to come down significantly this year. However, in the absence of runaway inflation, mortgage rates are also not likely to come up much more.
What market conditions mean for your home sale
Today’s homebuyers are up against some challenges. Home prices are up, inventory is down, and mortgage rates are higher than they used to be. As a seller, you can think of these challenges as your opportunity because your home could be a buyer’s dream come true amid such a challenging market. The key is to get a reasonable price for your home while offering as many accommodations as possible to entice buyers to your home.
You can get a favorable price for your home in 2023 by making things as easy as possible for the buyer. Be willing to negotiate about inclusions, closing costs, repairs, and other details of your home sale contract. It may be well worth it for you to make repairs or offer other concessions to the buyer as needed.
Things to do no matter what
Regardless of the current conditions in the Pacific Heights real estate market, certain best practices will always give you an edge when selling your home as quickly and for as much money as possible. Thoroughly cleaning and decluttering a home before selling is a must. Staging is arguably the most potent tool for captivating the attention of buyers, and curb appeal is also a significant factor for most homes. Get advice from your realtor about how to effectively stage your home.
How to make the most of the market
The Pacific Heights real estate market is constantly in flux. Conditions always change, and homebuyers will never see the same market situation twice. In today’s challenging market environment, what you need for your home sale is to have an expert realtor in your corner.
Heidi Rossi is a San Francisco realtor who works closely with buyers and sellers in the best local neighborhoods, including the Pacific Heights real estate market. Whether you are a seller looking to get maximum value for your home or a buyer trying to find the best of the current market’s inventory, an experienced Pacific Heights realtor can make it happen. Reach out to Heidi Rossi when you’re ready to look at what’s in the Pacific Heights housing market.
*Header photo courtesy of Unsplash
