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My Home Didn’t Sell! Now What?

When it comes to listing their home, most home sellers want three things: 1) to make a lot of money, 2) to put in minimal time and effort, and 3) to sell quickly. But the reality is, selling a home is rarely that simple. And homeowners who try to do it themselves—or receive bad advice—can end up stuck (months later) with a property that hasn’t sold.

If that’s you, don’t panic! We’ve outlined the top five reasons a home doesn’t sell—and action steps you can take to overcome each of these issues.

Not sure why your property didn’t sell? If you’re not already working with an agent or your listing has expired or been withdrawn, give us a call! We’d be happy to offer a free, no-obligation assessment and create an action plan to get your home SOLD.

This marketing piece is not intended as a solicitation for properties currently in an exclusive agreement with another Broker.

 

1. BAD TIMING

If your home didn’t sell after several months on the market, timing could’ve been a factor. Markets are driven by the law of supply and demand, and real estate is no exception.

When there are a lot of people who want to buy homes (demand) and a shortage of inventory (supply), it’s considered a seller’s market. During a seller’s market, listings tend to get snapped up quickly. In a buyer’s market, however, there are more homes for sale than active buyers. This can cause homes to sell for less money and to sit on the market for a longer period of time before receiving an offer.

What causes the shift between a seller’s market and a buyer’s market? Economic factors like interest rates, affordability, domestic growth, and the unemployment rate can all impact buyer demand. Over the past year, for example, higher mortgage rates have not only made it harder for some borrowers to qualify for a home loan, they have also sharply pushed up homebuyers’ anticipated monthly payments.1 So even if a buyer was interested in your home, they may have passed on it if they couldn’t qualify for a mortgage at your asking price.

Seasonal factors like weather, holidays, and school schedules can also increase or dampen the activity and motivation of buyers. Additionally, unexpected events, such as a natural disaster or a stock market crash, can cause some buyers to put their purchasing plans on hold until conditions normalize.

Now What?
If timing does appear to be a factor, it may be advisable to delay relisting your property. Of course, that’s not feasible (or desirable) for every seller.

In most cases, buyers can be motivated to act with a combination of improvements, incentives, and pricing. Where there’s a will to sell, there’s usually a way. Fortunately for sellers, people will always need a place to live, and there will be a percentage of the population that is motivated to buy quickly.

If you suspect timing played a role in your inability to sell, consult with a knowledgeable real estate agent. We’re in the field every day and have access to the latest market data. We can estimate how long a home like yours should take to sell given current market conditions and help ensure that your asking price is competitive.

 

2. INEFFECTIVE MARKETING

Did your home get a steady stream of showings when it was on the market? If not, you may need to try a new promotional strategy.

Take a look at the listing description. Did it entice buyers to visit your property? A well-written description should be clear and compelling while highlighting your home’s most desirable features. Additionally, it should have utilized best practices for search engine optimization (SEO) to ensure that it was found by buyers who were looking for homes online.

And how well did the listing photos showcase your property? Many buyers use photos of a home to decide whether or not to visit it in person. In fact, 85% of buyers who browse online find photos “very useful” in their home search.2 Poor quality or a low quantity of listing photos could have kept potential buyers from stepping through your door.

Another factor to consider is whether your listing reached the right audience. This can be especially important if you have a unique or highly-customized home. The Multiple Listing Service is a great place to start, but some properties require a more robust marketing approach.

Now What?
If you suspect ineffective marketing, consider turning to a skilled professional with a proven approach. We employ a strategic Property Marketing Plan that uses the latest technologies to seed the marketplace, optimize for search engine placement, and position your home for the best possible impression right out of the gate.

For example, we know what buyers in this market want and can craft a persuasive description to pique their interest. And since good listing photos are so crucial, we work with the top local photographers to ensure each shot is staged to your home’s advantage.

We also know how to get your listing in front of the right audience—one that will appreciate its unique features. By utilizing online and social marketing platforms to connect with consumers and offline channels to connect with local real estate agents, your property gets maximum exposure to your target market.

Want to learn more about our multi-step marketing strategy? Reach out for a copy of our complete Property Marketing Plan.

 

3. POOR IMPRESSION

If your property received a lot of foot traffic but no offers, you may need to examine the impression you made on buyers who visited your property.

Start with your home’s structure and systems. Are there large cracks in the foundation? How about doors and windows that don’t properly close? Are there water stains on the walls or ceiling that could signal a leak? These can be major “red flags” that scare away buyers.

Next, examine your curb appeal. Does the yard need mowing or do the hedges need trimming? Are there oil stains on the driveway? Any peeling paint or rotted siding? If your home’s exterior looks neglected, buyers may assume the entire house has been poorly maintained.

Now move on to the interior of your home. Is it clean? Is there a noticeable odor? Have you taken the time to depersonalize and declutter each room? Buyers need to be able to picture their items in your home, but that’s difficult to do amongst your family photos and personal collections. And oversized furniture and packed closets can make a space seem small and cramped.

Now What?
When we take on a new listing, we always walk through it with the homeowner and point out any repairs, updates, or decluttering that should be done to maximize its sales potential. We also share tips on how to prep the property before each showing.

In some cases, we will recommend that you utilize staging techniques to highlight your home’s best features and help buyers envision themselves living in the space. Home staging is one of the hottest trends in real estate—because it works! According to the Real Estate Staging Association, professionally-staged homes sell, on average, 9 days faster and for $40,000 over list price.3 In addition, the National Association of Realtors suggests that staging can help push up your final sale price by as much as 20%.4

Some sellers choose to hire a professional home stager, while others opt to do it themselves, using guidance from their agent. We can help you determine the appropriate budget and effort required to get your home sold.

 

4. PRICE IS TOO HIGH

Many homeowners are reluctant to drop their listing price. But the reality is, buyers may not seriously consider your property if they think your home is overpriced.

Attitudes have changed since the Federal Reserve started hiking interest rates. Many of today’s homebuyers are no longer willing or able to pay as high a price on a new home as they might have when borrowing costs were lower.5 If your home’s original asking price was set using sales data from the market’s peak, then you may need to rethink your pricing strategy.

Economic factors aren’t the only reasons, though, why a home’s asking price might not match its market value. Pricing a home can be tricky, regardless of the economic climate, because so many factors can impact how much buyers are willing to pay. For example, unique, highly customized, and luxury properties are particularly difficult to price because there aren’t a lot of comparable homes with which to compare them.

Regardless, if your home sat on the market for months without an offer, then chances are good that your asking price needs to be reevaluated.

Now What?
If you aren’t in a rush to sell your home, adjustments to timing or marketing may bring in a new pool of potential buyers. And repairs, upgrades, and staging can increase the perceived value of your home, which may be enough to bring a buyer to the table at your original list price.

However, if you need to sell quickly, or you’ve already exhausted those options, a price reduction may be necessary to get your home the attention it needs to sell. We are local market experts and have access to the latest market data and comparable sales in your neighborhood. We can help you determine a realistic asking price for your home given today’s market conditions. Just reach out for a free home value assessment!

 

5. YOU HIRED THE WRONG AGENT (OR WORSE, NO AGENT AT ALL)

If you suspect that your previous real estate agent didn’t do enough—or used the wrong approach—to sell your home, you’re not alone. Many sellers whose listings languish until they expire or are withdrawn feel this way.

While most agents have the best of intentions, not all of them have the skills, experience, instincts, or local market expertise to devise a winning sales strategy in this challenging market.

Or, perhaps you chose not to hire a listing agent at all and have been trying to sell your home yourself. This can be an equally frustrating endeavor.

Although selling your home independently can help cut some costs, it can also be extremely risky and may even lose you money in the long run. For example, research by the National Association of Realtors suggests that For Sale By Owner (or FSBO) homes tend to sell for less than homes represented by a professional. In 2021, for example, the average FSBO home sold for $105,000 less than the average home sold with the assistance of an agent.6

Now What?
If either of those scenarios sounds familiar, you need to ask yourself: “Would I still be interested in selling my home if I could get the right offer?”

If so, we should talk. We understand how frustrating it can be when you’ve put a lot of time, money, and effort into prepping your property for the market and it doesn’t sell. We also empathize with how disruptive a delayed home sale can be to your life.

By now, don’t you owe yourself more than the status quo when it comes to your real estate representation? Our multi-step Property Marketing Plan can help you sell your home for the most money possible, and in the process reconnect you with the excitement you originally felt upon first listing. It’s time for a new agent, new marketing, new buyers, and most of all… new possibilities.

 

READY TO MAKE A MOVE?

Let’s talk. We can help you figure out why your home didn’t sell and how to revise your sales strategy and set your home up for success.

The housing market has experienced a shift and the waters may be choppier than usual for a while. But there’s still plenty of opportunity in the current market: You just need a guide who knows where to look and how to find it.

 

This marketing piece is not intended as a solicitation for properties currently in an exclusive agreement with another Broker. The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

 

Sources:
1. New York Times –
https://www.nytimes.com/2022/12/30/realestate/housing-market-prices-interest-rates.html
2. National Association of Realtors –
https://store.realtor/2022-nar-profile-of-home-buyers-and-sellers-download/
3. Real Estate Staging Association –
https://www.realestatestagingassociation.com/content.aspx?page_id=22&club_id=304550&module_id=164548
4. National Association of Realtors –
https://www.nar.realtor/blogs/styled-staged-sold/why-staging-matters-even-in-a-sellers-market
5. Marketplace –
https://www.marketplace.org/2023/01/26/housing-slump-may-have-bottomed-out/
6. National Association of Realtors –
https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics

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Top 6 Home Design Trends To Watch in 2023

Over the past few years, many of us have spent extra time at home—and that means we appreciate the personal design touches that make a house cozy and comfortable more than ever. Some of us have adapted our dwellings in new ways, from creating functional home offices to upgrading the appliances we use most.

But while it’s important to make your home your own, it’s also smart to think about the long-term impact your renovations could have on its value. Choosing highly-personalized fixtures and finishes can make it harder for future homebuyers to envision themselves in the space. Even if you don’t plan to sell your home soon, investing in popular design choices that are likely to stand the test of time will make things easier down the road.

And if you’re in the market for a new home, it’s wise to keep an eye out for features that might need to be updated soon so you can factor renovation costs into your budget.

We’ve rounded up six trends that we think will influence interior design in 2023, as well as ideas for how you might incorporate them in your own home. Remember, before taking action, it’s always wise to consult with a real estate professional to understand how specific updates and upgrades will affect your property’s value in your local market.

 

1. Separate Kitchen, Dining and Living Areas

For years, home design has been dominated by open-concept floor plans, particularly for kitchen, dining, and living areas. However, as the pandemic forced families to work and study from home, many struggled to find the privacy and separation they needed. As a result, designers report that more families are choosing to bring back kitchen and dining room walls to break up the space and create quieter areas.1

That doesn’t mean that we’re returning to an era of dark and cramped spaces, however. Even as walls make a return, it’s important to take care to retain a sense of flow and openness within the home and to prioritize natural light.

If you’re buying or building a new home, consider how you will use the space and whether or not an open floor plan will suit your needs. If you already live in a home with an open floor plan and it isn’t working for you, try rearranging furniture and strategically placing pieces like bookshelves, room dividers, or rugs to create distinct areas within the home and reduce noise.

 

2. Nature-Inspired Design

In the past few years, we’ve seen the “biophilia” trend explode, and there are no signs that it will be any less popular in 2023.2 This trend is all about bringing the outside in by adding natural touches throughout your home.

This year, design experts predict that natural, sustainable materials like bamboo, cork, and live-edge wood will lend character without being overwhelming. Wooden kitchen cabinets and islands will become more common in 2023, with white oak and walnut among the most popular choices.3,4 Wood will also appear in bathroom vanities and shelving and furniture throughout the home.

Colors inspired by nature (think mossy greens and desert tones) will also play into this trend and will blend seamlessly with wood tones. We’re also seeing a return to natural stone countertop materials like quartzite, marble, dark leathered granite, and soapstone.4,5

If you’re planning to add new shelving or redo your kitchen, consider turning to these materials to embrace the biophilic look. Or, incorporate elements of the trend by choosing nature-inspired paint colors and adding to your houseplant collection.

 

3. Lighting as a Design Feature

Spending more time at home has shown us the importance of having the right lighting for specific tasks and times of the day. As a result, many homeowners are reconsidering the ways they light their homes and using light fixtures to change the usability and mood of their spaces.5

In particular, homeowners are rejecting bright, flat overhead lighting and replacing it with lamps and task-specific options. A layered approach to lighting—such as using a combination of under-cabinet, task, and ambient lighting in a kitchen—enables homeowners to tweak the level of light they’re using based on the time of day and what they are doing.

In 2023, we expect to see more statement chandeliers, pendants, and wall sconces in a variety of shapes and materials.6 Thinking about switching up the lighting in your home? Start by adding floor or table lamps and swapping out fixtures before you invest in rewiring your space. Take note of what works and what doesn’t and watch how the light in your home changes throughout the day. You can then use that information to make lighting decisions that require a bigger investment.

 

4. More Vibrant Color Palettes

After the long dominance of whites and grays, more vibrant colors are coming back as a way to add character and dimension to homes.

This year, warm and earthy neutrals, jewel tones, and shades of red and pink are particularly popular.7,8 If your style tends toward the subtle, consider options like light, calming greens, blues, and pastels.

Major paint brands have responded to these homeowner preferences with their newest releases. Benjamin Moore’s 2023 color of the year, Raspberry Blush, is a lively shade of pinkish coral, while Sherwin William is embracing warm neutrals with Redend Point, a blushing beige.9,10 Behr’s choice of the year, Blank Canvas, is a creamy off-white that’s a warmer version of the stark whites that have been trending over the past few years.11

If you’re planning to put your home on the market soon, it’s better to play on the safer side and avoid extremely bold or bright color choices when it comes to paint or fixed finishes like tile and countertops. Instead, try incorporating pops of color through throw pillows, art, and accessories.

 

5. Curved Furniture and Architectural Accents

Goodbye, sharp corners. In 2023, arches and curves lend a sleek feel that draws on classical design and retro trends while remaining modern.5,8 Rounded corners feel more relaxed and natural than sharp edges, lending more of a sense of flow and comfort to a home.

If you want to incorporate the trend into your new build or remodeling plans, curved kitchen islands and bars and arched alcoves are all good options—or you can take it a step further with arched windows and doorways. You can also carry this trend through to your light fixtures by incorporating a bubble chandelier or globe pendants.

It’s easy to embrace this look without renovations, too. Look for a softer feel in furniture, with sofas, chairs, and tables that showcase curved edges. Or, break up your space with an arched folding screen and a circular rug.

 

6. Art Deco Revival

Art Deco, the architecture and design style that took hold in the 1920s and ’30s, is enjoying a resurgence.12

As a style, Art Deco is marked by bold geometry, textures, and colors, as well as an emphasis on art. But the 2023 interpretation of this style is likely to be a bit less splashy than its historical roots. Designers predict that instead of incorporating all of the elements of the style, which could feel overwhelming, homeowners will pick bursts of color or bold accessories to bring some whimsy to their space.

Keep an eye out for vintage mirrors, lamps, or vases that bring a touch of Art Deco glam to your home, or embrace bold colors and fabrics like velvet. Choose pillows and throw blankets in bright colors and geometric patterns to nod to the look without diving in all the way.

 

DESIGNED TO SELL

Are you thinking about remodeling or making significant design changes to your home? Wondering how those changes might impact your future resale value?

Buyer preferences vary significantly based on your home’s neighborhood and price range. We’re happy to share our insights on the upgrades that will make it easier (or more difficult!) to sell your home. Give us a call for a free consultation!

 

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

 

Sources:

1. US News and World Report –
https://realestate.usnews.com/real-estate/slideshows/interior-design-trends-for-2023?slide=2
2. Architectural Digest –
https://www.architecturaldigest.com/story/design-trends-in-2023
3. Insider –
https://www.insider.com/popular-home-decor-trends-for-2023-according-to-experts-2022-
4. Houzz –
https://www.houzz.com/magazine/35-home-design-trends-on-the-rise-in-2023-stsetivw-vs~164032473
5. The Spruce –
https://www.thespruce.com/2023-design-trends-6743803
6. The Spruce –
https://www.thespruce.com/2023-lighting-trends-6891412
7. The Spruce –
https://www.thespruce.com/2023-color-trends-6751137
8. Good Housekeeping –
https://www.goodhousekeeping.com/home/decorating-ideas/g42084756/interior-design-trends-2023/
9. Benjamin Moore –
https://www.benjaminmoore.com/en-us/paint-colors/color/2008-30/raspberry-blush
10. Sherwin Williams –
https://www.sherwin-williams.com/content/colorforecast/colormix-2023/color-of-the-year-2023
11. Behr –
https://www.behr.com/consumer/inspiration/2023-coty/
12. The Spruce –
https://www.thespruce.com/art-deco-trend-for-2023-7092174

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November 2022 Market Report

Greetings!
This month I’ve switched to a Bay Area Market Update that will give you insight into not only San Francisco’s housing market but the North Bay, East Bay and South Bay as well.
I hope you like the switch but if you prefer my San Francisco Market Update, just let me know!
All the best,
– Susan Dakdduk, LIC #01714089
The Big Story
Mortgage rates hit a 20-year high, knocking potential buyers out of the market
Quick Take:
  • The average 30-year mortgage rate rose to a 20-year high, significantly dampening demand for homes.
  • Months of Supply Inventory, which quantifies the supply-demand relationship for homes, has remained the same for the past three months, indicating that supply and demand are declining more or less proportionally.
  • After 40 years of steadily declining mortgage rates, the housing market will need time to adjust to the new economic environment, as rates will likely go higher before they stabilize.
Note: You can find the charts & graphs for the Big Story at the end of the following section.
Is this another new normal?
The spike in inflation and movement away from COVID restrictions marked the beginning of the end of the white-hot housing market. At the end of 2021, inflation began to rise, and the economy became less reliant on the easy monetary policy the Fed implemented to incentivize spending. This time last year, interest rates were near all-time lows, so whether you were a company issuing debt or a homebuyer taking out a loan, the inflation-adjusted cost of financing was next to nothing. From 2000 to 2020, inflation averaged around 2.1% within a tight range. Even if you lived through the highest inflationary period in U.S. history during the1970s, it’s very unlikely that you can relate to that period now after decades of low inflation. Along with the day-to-day added costs of inflation, the stock market, which is often the largest store of liquid wealth, felt the pain of inflation and economic uncertainty in 2022, now down about 18% on the year as of the end of October.
From February 19, 2020 (the pre-pandemic S&P 500 peak), to January 3, 2022 (the current peak), the S&P 500 grew 42%. If you happened to be an exceptional (read: lucky) market timer and bought the S&P 500 during the early COVID dip on March 23, 2020, then your investment would have been up 114% through January 3, 2022. All this to say, the equity markets boomed in 2020 and 2021, which is a natural byproduct of having more money with less to spend it on. If you didn’t buy a house last year at a historically low interest rate or didn’t take some profits in your financial portfolio at the beginning of last year, you may be (or, at least, feel) less wealthy. The idea is pretty straightforward: When you feel richer, you spend more, and vice versa. People, in general, are not great at looking far into the future or the past, so when conditions quickly change, it’s noticeable. Because economic conditions are moving less favorably, the pain of what we lost out on is experienced more strongly. (This is something called “loss aversion bias.”)
Just about every economic indicator points to a slowdown in home sales, which is exactly what’s been happening. We can attribute the slowdown to three main factors: the Fed implementing tighter monetary policy (higher interest rates and no longer purchasing Mortgage Backed Securities), mean reversion, and seasonality.
The Fed doesn’t have many tools to fight inflation, so they’ve been using the one they have, which is raising the effective federal funds rate (EFFR), which indirectly affects the rest of the financial markets. The Fed has increased the EFFR 3% this year to 3.08% — its highest level since 2008 — in an effort to combat inflation. The average 30-year mortgage rate has more than doubled in 2022, moving from 3.11% to 7.08% by the end of October 2022, which marks a 20-year high. If you financed a home at any point last year and had good credit, your mortgage rate was probably around 3%, which means that if you had gotten the same loan at 7%, your monthly payment would be 58% more expensive. Said differently, if you could afford a $500,000 home last year, you can only afford a $350,000 home now.
Mean reversion, which is the idea that over the long term, prices will tend to converge around the mean (average), can also apply to home sales. Homes aren’t bought and sold over and over in short time frames. The number of sales in 2021 was nearly 800,000 higher than the 10-year average, so it stands to reason that sales in 2022 would drop by around that much, especially considering the less favorable market conditions. We can finally say that the market is cooling, but after the hottest two years since the mid-2000s, cooling indicates a healthier market.
Lastly, the housing market has seasonal trends during which home prices and inventory generally rise in the first half of the year and fall in the second half. We can ascribe some causality for the drop in inventory and prices to seasonality, even though other factors are at play.
The U.S. housing market has certainly shifted over the past several months, and although we hate to sound doom and gloom, we must recognize the current conditions homebuyers and sellers face. So is this the new normal? It’s looking very likely. Of course, different regions vary from the broad national trends. Take a look below at the Local Lowdown for in-depth coverage of your area. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.
Big Story Data
The Local Lowdown
Quick Take:
  • The Greater Bay Area housing market is experiencing a period of little to no growth, which is common after rapid gains like we saw in 2020 and 2021.
  • Sales and new listings are declining, a trend that will likely continue as we enter the holiday season.
  • Months of Supply Inventory indicates the market is shifting from a sellers’ market toward a balanced market for single-family homes and condos but remains a sellers’ market.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
Prices may contract further before reversing
We have enough data to show that the housing market in the Bay Area is cooling substantially after one of the hottest real estate markets in history. However, demand in the Bay Area is somewhat evergreen. People simply always want to live here. Of course, you don’t have to be a real estate expert to realize that when interest rates shoot up, fewer buyers will be in the market, which generally puts less upward pressure on prices. Single-family home and condo prices have declined from their peaks reached earlier this year with the exception of Contra Costa and Napa condo prices, which reached new all-time highs and are likely statistical outliers rather than the start of a new trend. Moving forward, prices will likely contract slightly more through the rest of the year, which is typical during the slower holiday season. Home prices in the Bay Area grew at an unsustainable rate, and a contraction is a normal response to that sort of growth. We are now entering a stage of slower longer-term growth — but still growth. In the short term, prices may come down a little more, however. Real estate has shown itself to be one of the best investments in recent history and is, on average, the largest store of wealth for an individual or family. Price appreciation will likely move to a more normal growth rate of around 5-6% in the coming years, which makes for a much healthier market than what occurred in 2020 and 2021.
New listings decline faster than sales, dropping inventory further
Single-family home and condo sales and new listings declined month-over-month, a trend that will likely continue through the rest of the year. The Bay Area, along with the rest of the country, has not returned to pre-pandemic inventory levels after the buying boom last year. Now that we’re through most of 2022, we can see just how significant sales were in 2021 by comparison, especially in the summer months. From May through September of last year, 35,511 single-family homes and condos sold. During the same period this year, 25,595 homes sold, a 28% decline. Far fewer new homes have come to market in 2022, and the rising rate environment has dropped demand as well. We can tie new listings not only to supply, but also to demand, because sellers are often buying, too. Softening demand has brought the market closer to balance despite declining inventory.
Months of Supply Inventory implies a balanced market
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI has trended higher (toward balance) since the spring due to the changing market environment. However, we are still in a sellers’ market for most of the Bay Area, as demand for homes has remained high relative to supply. Currently, MSI indicates a balanced market for Napa condos and a buyers’ market for Napa single-family homes and San Francisco condos.
Local Lowdown Data
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August 2022 Market Report






Kindred SF Homes – Market Update

August 2022

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

– Susan Dakdduk, LIC #01714089 |415.378.4985

See Your Home’s Value

The Big Story

July sees a huge mortgage rate drop and more inventory on the market

Quick Take:

  • In July, the average 30-year mortgage rate declined significantly, by 0.50%, positively affecting affordability. Economists predict that mortgage rates have already seen their peak this year, near 6%, and will stabilize around the current rate of about 5%.
  • Homebuyers had more inventory to choose from than this time last year, which indicates that the market is becoming healthier. 
  • The economy feels uneasy, but the housing market isn’t showing signs of a major reversal.

Note: You can find the charts & graphs for the Big Story at the end of the following section.

Home prices continue to reach new highs even as demand declines

Home prices generally stagnate this time of year, so it’s more challenging to ascribe causation for why price growth has decelerated nationally to economic factors — inflation, mortgage rates, supply shortages, and looming recession — when they coincide with long-term seasonal trends. Historically, prices increase in the first half of the year and flatten in the back half. Prices in 2020 bucked this trend, increasing through October before flattening in the last quarter of the year. Although prices rose much higher in 2021, the historical trend returned. This year has, of course, come with different economic and psychological drivers than 2020 and 2021, especially in the housing market. 

For many, if not most of us, the pandemic brought us largely inside our homes, increasing the desire for larger, nicer private spaces. The mass movement to remote work meant that proximity to an office, usually a primary selling point in major metro areas, mattered less or not at all. Many of us experienced our home spaces, work spaces, and communal spaces becoming one, and realized that the home we usually spent little time in would simply no longer work for us. This need for a bigger space, combined with extremely low-rate financing, a substantial increase in disposable income, and more time to look for a new home created a boom in demand in an already undersupplied housing market. As a result, the median sale price rose higher and faster than any other point in history, up 36% over the past two years according to data provided by the U.S. Department of Housing and Urban Development. For reference, in the eight years preceding 2020, the median home price rose a total of 38%. 

As we know, housing isn’t the only asset to rise since 2020. Nearly everything has become more expensive, and inflation (CPI)*, which has rarely ever risen above 5%, ticked above that mark in the summer of 2021 and has only increased since then. The Federal Reserve, which has a dual mandate of price stability and maximum employment, has one major tool: raising the federal funds rate†. By doing so, the Fed indirectly affects the debt markets, thereby increasing other interest rates, such as mortgage rates. 

In the first half of this year, the average 30-year mortgage rate rose nearly 3%. It’s hard to overstate how significantly that rate increase affects affordability. To hopefully simplify the explanation, we will use a $1 million home that is fully financed for illustrative purposes. For a $1 million home, a 3% increase in interest rates raises the monthly mortgage cost by 42%. It’s fairly safe to say that income hasn’t risen by 42% for most people, which means that many potential buyers are priced out of buying homes, softening demand. For those potential buyers waiting for a correction of the residential real estate market, home prices would have to decline by 30% for the monthly costs to be equivalent — that is, $700,000 at 6% is the equivalent monthly mortgage cost of $1 million at 3%. If the housing market experienced such a large correction, there would likely be much larger concerns in the global economy than home prices. Barring a collapse of the entire financial system, supply would simply be too low for a major correction. Luckily for potential homebuyers, mortgage rates dropped by 0.50% in July, and many economists predict that the mortgage rates will flatten out around 5% even as the Fed continues to raise the federal funds rate. This is partially because the market largely understands and has already accounted for the Fed’s rate hike path, which will continue until inflation begins to meaningfully decline and recession worries wane. 

The economy has felt a little uneasy lately — a classic “will they, won’t they?” when it comes to the recession — but for now, we aren’t technically in a recession because job numbers are too good. Demand for homes has clearly softened, which is fine in a severely unbalanced market. We will likely see less significant price appreciation in the second half of the year due to seasonal norms and higher mortgage rates. The market remains competitive and homes are selling quickly. However, buyers are seeing more inventory than last year, which is good for the market. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.

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* The Bureau of Labor Statistics (BLS) collects the prices of approximately 94,000 items from a sample of goods and services to calculate the Consumer Price Index (CPI).
† The federal funds rate is the interest rate that banks get to borrow from the Federal Reserve. Also known as the Fed’s benchmark rate or the risk-free rate. 

Big Story Data











The Local Lowdown

Quick Take:

  • The median single-family home price in San Francisco declined sharply after a similarly rapid rise earlier this year.
  • Demand for homes is clearly softening, as sales declined substantially month-over-month.
  • New listings declined in July, which means that inventory in 2022 will likely peak at historically low levels.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

Is the market balancing? Tentatively, maybe!

The median single-family home and condo prices in San Francisco continued to decline from their peaks reached earlier this year. These movements are within the bounds of normal price variability, but after large price gains, it feels like any downward movement signals a market correction. These larger median price moves are partially a sampling issue in that as sales (the sample) have decreased, more outliers can rise to the surface. For example, the homes sold in July were much smaller than an average month, which dropped the median sale price more than we would’ve expected. But that’s not to say prices haven’t come down.

As mentioned in the Big Story, prices tend to stagnate or contract in the summer and fall months when inventory is at its highest, so we aren’t ringing the alarm bells quite yet. Homes over the past five years have become less affordable, yet demand boomed. With 30-year mortgage rates potentially settling around 5%, fewer potential buyers will participate in the market than they did last year when mortgage rates were at all-time lows. 

Supply is still historically low, which will protect prices from experiencing a major downturn. Prices will likely follow a similar trend as last year, holding relatively steady through the summer and fall months. If you’re following home prices closely, as we tend to do, you don’t need to worry about losing equity in your home, or softening demand, or even an official recession — so long as it doesn’t affect your job. The housing market remains strong in San Francisco.

Sales slowdown

San Francisco’s housing inventory has been in decline since March, which indicates that 2022 will likely have the lowest inventory on record. We entered 2022 with the lowest inventory in history, but the number of homes for sale rose over 50% from December 2021 to March 2022, only to trend back toward all-time lows. Over the past 20 months, inventory has trended lower and settled at a depressed level. The number of single-family homes on the market in July 2022 is 50% lower than in July 2020, with 33% fewer condos. San Francisco is particularly sensitive to rate hikes due to the high absolute dollar cost of housing. 

The substantial drop in sales and new listings, down 29% and 30%, respectively, from June to July 2022 indicates that demand is softening. We aren’t saying that demand is low, but it’s trending closer to balanced between buyers and sellers than we’ve seen in years.

Months of Supply Inventory for single-family homes and condos diverge

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Notably, single-family home MSI has trended slightly lower over the past four months, while condo MSI has risen slightly. Single-family homes are still experiencing a sellers’ market, while condo MSI indicates a more balanced market. 

Local Lowdown Data













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July 2022 Market Report







Kindred SF Homes – Market Update

July 2022



Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

– Susan Dakdduk, LIC #01714089

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The Big Story

To be, or not to be? That is the recession.

Quick Take:

  • The housing market strongly outperformed inflation and stocks in the first half of 2022 and shows no sign of reversing.
  • The Fed rate hikes are dampening demand, allowing much-needed inventory to rise, although inventory remains far from the pre-pandemic supply norms.
  • The economy is slowing, but a recession may not be guaranteed quite yet. Regardless, housing is poised to hold steady or increase in value.

Note: You can find the charts & graphs for the Big Story at the end of the following section.

Rising rates, rising prices, and economic slowdown, but homes still ahead

Economic outlooks seem to change month-to-month, and yet again, we find ourselves in a unique moment in time. The Fed rapidly switched from loose to contractionary monetary policy in March and recently increased the federal funds rate by 0.75% — the biggest increase since 1994. The effects have yet to curb inflation, which is still at a 40-year high (+8.5% CPI year-over-year). On a monthly basis, the Bureau of Labor Statistics (BLS) collects the prices of approximately 94,000 items from a sample of goods and services to calculate the Consumer Price Index (CPI). We didn’t look into everything in the BLS sample, but if you’re like us, it feels like everything we buy is closer to 50–100% higher than it was a year ago, or even several months ago. While prices are rising, the cost to borrow has also gotten more expensive, which is dampening demand. 

We are starting to see this play out in the housing market. We are noticing more inventory coming to market, coupled with fewer sales. We must, however, provide a caveat: The housing inventory is still historically low. As rates rise, especially as rapidly as they have this year, buyers can get priced out of the market quickly and must reconsider their budgets. 

A year ago, the average 30-year mortgage rates hit their lowest levels in history and have more than doubled since then, to 5.81%. Let’s take a look at some numbers to see how assets have performed in the first half of 2022: The S&P 500 declined 21% (the worst first half of the year since 1970), the NASDAQ is down 30%, and Bitcoin and Ethereum have dropped 59% and 71%, respectively. At the same time, U.S. housing prices increased by 15% nationally. Home prices, simply, rarely go down. Even if you weren’t directly affected by the 2006 housing bubble, you likely knew someone who was. One lasting effect of the housing bubble is the perception that home prices decline much like other risk assets, which isn’t the case. Stocks, bonds, and cryptocurrency are fungible assets that allow for large, multiplayer markets. The housing market has only recently become more efficient because of technology, but too many factors play into a home’s value, preventing regular downturns in the market. Large declines in liquid assets do affect demand for homes, though, as people tend to reconsider buying when they feel (and objectively are) less wealthy during dips in those markets.

But what about the Fed’s intention to slow down the economy by decreasing demand through raising rates? Won’t that cause a recession and lower home prices? We’ve already seen some slowdown in the Q1 2022 Real Gross Domestic Product (GDP)* data. The Fed’s goal is to slacken growth enough to curb inflation, but not enough to send the U.S. into a recession, which is a challenging needle to thread. The National Bureau of Economic Research, which officially declares recessions, defines a recession as a significant decline in economic activity spread across the economy that lasts more than a few months and is normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. With unemployment near all-time lows and a surplus of job openings, we may end up avoiding an official recession, even if GDP decelerates for multiple quarters. U.S. GDP is expected to outpace China’s this year for the first time since 1976, which sounds positive but could be a clear sign of a major slowdown given our economic ties.

Home prices are highly likely to continue rising despite rising rates. If you were waiting for rates to drop, they won’t. The low but rising supply continues to make the market competitive and, as more homes come to market, could mark the early stages of market normalization. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.

*Real GDP is inflation-adjusted GDP, which is the broadest measure of goods and services produced. All references to GDP use Real GDP figures.

Big Story Data















The Local Lowdown

Quick Take:

  • Single-family home prices in San Francisco may be hitting a ceiling after three years of fairly stable and sustainable price growth. Condo prices haven’t appreciated like single-family homes but have shown strong price stability over the past three years.
  • Inventory in 2022 may have already peaked in March, the lowest peak on record. The new normal for San Francisco will include extremely low inventory in a city recognized for its low inventory before the drop. 
  • Home price appreciation is reaching a more sustainable growth rate: around 6–8% annually.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

Home prices hold steady in the face of rapidly rising rates

The median single-family home price declined month-over-month, moving further away from the March 2022 peak, while the median condo price rose, landing just below the all-time high it reached in April. After two years of sustainable price growth (+14 percent over the past two years for single-family homes based on price per square foot), it’s hard not to think that rate increases have caused prices to bump into a ceiling. Without the aid of super low financing options, fewer potential buyers will participate in the market. So far in 2022, the average 30-year mortgage rate has increased over 2.5%, which equates to an approximately 33% increase in monthly mortgage payments. In other words, the new mortgage rate adds $1,460 per month on a $1,000,000 30-year fixed mortgage, for example. 

Even with the rate hikes, which are only expected to continue this year, home prices aren’t dropping outside of normal month-to-month movements, nor would we expect them to. Supply is still historically low, and high demand in San Francisco is always present, which will protect prices from experiencing a major downturn. Prices will likely follow a similar trend to last year, with mild growth through the summer and fall months. But, as we mentioned earlier, as rates increase, the same price becomes more expensive, unless you are buying with cash. 

We can’t stress enough how important sustainable price growth is for the housing market, especially in one of the most affluent markets in the world. Because homes are not only living spaces but also investments, a steadier growth rate of 6–8% annually is still a great return.

Sales slowdown

San Francisco’s housing inventory continued to fall in June, bringing the already low inventory back toward all-time lows. Over the past 20 months, inventory has trended lower and settled at a depressed level. The number of single-family homes on the market in June 2022 is 39% lower than in June 2020, with 16% fewer condos. San Francisco is particularly sensitive to rate hikes due to the high absolute dollar cost of housing. Many homebuyers are also home sellers, moving from one home to another. Homeowners who bought or refinanced over the past two years locked in one of the lowest rates in history, making moving a more difficult financial decision. This is likely a large cause of fewer new listings coming to market and the June decline in sales. 

This isn’t to say demand is low, however, especially relative to supply. Sellers can expect multiple offers, and buyers should come with competitive offers.

Months of Supply Inventory indicates a sellers’ market for single-family homes

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Single-family home MSI has trended lower every month of 2022, and currently indicates a strong sellers’ market, while condo MSI implies a more balanced market.

Local Lowdown Data















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