Esteemed Bay area economist, Carol Rodoni spoke at the Vanguard Properties flagship office on Friday, December 4, 2015. Carole gave a very insightful update on the current state of local economics and the effects on San Francisco real estate. A few highlights from her talk and good news for home buyers and sellers in San Francisco for 2016.

 

High level summary is that we can expect a good year in real estate in 2016. While Carole does not predict another year of 15% year-over-year price increases like we saw in 2015, she does expect us to see a healthier level of growth – possibly in the 3-5% range.

 

Everyone expects the Fed to increase interest rates in December, and Carole is no exception. Expect a possible .25% rate hike in December which will put rates at about 3.93%. There will be a short adjustment period while buyers settle in to this new rate. But, ultimately nothing will change until rates hit 5%.

 

San Francisco and the Bay area are leading the “Structural Revolution” – energy, health care, biotech, financial, etc. There are disruptors in all sectors. This activity will continue to make the Bay Area one of the hottest real estate markets in the country.

 

Carole predicts that we are likely in the the middle of this economic cycle.

 

With regards to the current level of inventory – this is seasonal adjustment typical of any year. Although inventory has grown there is “less desirable” inventory. We have 2 markets – the more desirable inventory and the less desirable inventory.

 

We continue to see a staggering number of home transfers occur without the homes being listed on the MLS. Roughly 25% of sales are not on the MLS.

 

New Federal regulations will make close of escrows longer than we are used to in San Francisco. With he new TRID regulations we can expect to see 30 – 35 day close of escrow versus the typical 21 day close of escrow periods we have seen in 2015.

 

Buyer activity was very strong earlier in the year, but now buyers are just watching to see what happens. They are still ready and willing to purchase homes.

 

For 2016, Sellers should understand the profile of their target buyer, price the home to attract the buyer and understand market timing. These are the only 3 discussion points necessary. Appreciation in 2016/17 will be much more moderate. Get your ROI and move on.

 

The good news for Sellers – your home values will continue to remain strong and will continue to grow for the foreseeable future!

 

The good news for Buyers – interest rates are still historically low and will remain low. Home prices should not raise at the staggering rates we saw in 2015 – so now is a good time to purchase your new home!

 

About Carole Rodoni:
Carole Rodoni was formerly President of Fox and Carskadon Real Estate, Chief Operating Officer of Cornish and Carey Real Estate, and President of Alain Pinel Realtors®. She is a renowned speaker on the economy and real estate and is currently the President of her own consulting company — Bamboo Consulting.

 

Carole has served on the Board of Regents of Santa Clara University, is a Member of the Board of Directors of BayNet and CondoWorks, and has been a guest columnist for the San Francisco Examiner. She also is a frequent guest speaker on several radio and TV programs across the Bay Area.