People have been talking about bubble burst in different real estate areas including New York, Seattle, San Diego, San Francisco and Chicago. It seems like that San Francisco is standing on the edge of the next bubble burst.
The booming market of San Francisco has enjoyed high sales in past 16 months. The residents may feel they are living in heaven, but living costs in San Francisco have increased exponentially.The cost of renting a 1-bed apartment is around $4,000. An average meal costs more than $9, and so does the other facilities of life.
San Francisco is one of the most over-valued housing markets in the USA. However, the current value of San Francisco homes is still 4% less than the peak value.
The market conditions reflect the previous tech boom since the 1990s. From 2002-2007, housing has become 57% more expensive in San Francisco. The market price went down by 27% in next three years. The housing market came to life in 2012. According to Paragon Real Estate Group, approximate house value has seen a 45% increment from 2012-2015.
According to Bizjournal reports, prices are not going to decline in the Bay area. High-paying jobs and luxury lifestyle are primary attractions of San Francisco. Every person in the coffee room dreams of starting a new company and many startups have been successful in the Bay area. The steady increase in prices is not going to drop immediately, although we may witness a balance in living costs.
Future is never certain, but statistics say, “Yes”. Take a walk around the area and you’ll see re-development projects everywhere. Luxury apartments have replaced parking lots and grounds.
Because of such high prices, investments, and development projects; the market will not face an immediate crash, but we must know that the hottest market is cooling now. If you are serious about selling your home, you shouldn’t be waiting. Put your home on the listing and sell it as soon as you receive an attractive offer.
On an average, each listing receives 3-5 offers. The prices will decrease if the house sits on the market for longer than three months. So far, we do not see this happening because Bay area attracts enough customers, but experts do agree that a dark time is coming. It is best to sell your home in 2016 and get your money out of the market. If you made a purchase in early 2000s or 2010s, then you have already gained a 50% profit on your investment and more if you have rented the property.
When a real estate bubble starts, the demand curve moves to the right side showing an increase in customer demand. That’s the time when demand fuels price increments. Because of rising prices, fewer people plan to become home owners in 2016. According to a survey hosted by zillow.com, 74% participants believe that 2016 is the right time to sell your home.
On the negative side, the bubble burst enforces sellers to reduce prices to find customers. It happens when the supply curve shifts to the right direction and demand curve shifts to the left side.
Contact us below if you are serious about selling your home. You will get the best deal at the best price!