Sounds a bit like a robust airport code, or two of them at least.  Although the city may have to ultimately build another airport if this accelerated wealth trajectory continues, as things are already 10x more crowded (and pricier) for just about any place or thing.  Waitlists at restaurants, traffic, longer lines everyone – it’s only going to continue.

Lots of talk about the big year of IPO’s hitting the San Francisco market this year – Uber, Lyft, Slack, Airbnb, Pinterest and Postmates all are due to splash the public markets. There is no question there will be impacts, socially and financially, to the city and its surrounding areas.  Just how much of an impact and whether all of it will be good/bad is where you get some different opinions.    Even on the conservative scale, there will be hundreds of millions of dollars flooding into the city and with that will be many more millionaires.  Most of them very young (under the age of 40) and many will be ready throw money around like a Biggie music video.

Food and beverage industry certainly stands to make out well, right?  Yes, of course.  Retail, in general, should continue to thrive here in the city, as well, with people ramping up shopping habits for luxury items like watches and shoes, to revamping their entire wardrobe of casual-but-overpriced-clothing (the new “suit” in the tech industry).  What about real estate?  Surely it floods the market with more buyers and frothy-mouthed sellers, right?  Most likely, in both cases.

Already there are plenty of sellers that have pulled unique properties off the market that maybe had a tougher time selling, with visions of selling them to a millennial that doesn’t mind that the home is not suited for a family, etc.  Some pulled them in hopes of bringing a higher offer price out of would-be buyers if they simply stay patient for another year.  As for buyers, they will be flush with cash and naive (in a good way) to real estate leverage and simply pay what they need to in order to get the place they want.   This equation means a real estate market that goes from being strong to even stronger.  Like, “steroids” stronger.

It is no forgone conclusion, though that every IPO hits it out of the park and has a subsequent ripple effect of economic and real estate euphoria.  Remember SNAP and Groupon?  Both hyped as public splashes that would go down in history, but they ended up doing so for the wrong reasons, with ultimately neither having any major impactful touch on the markets.    As well, one must consider the lock-up periods that shareholders of these companies are attached to.  With many of them for nearly half of a year, it comes down to the company continuing to post positive news, growth, and (dare I say it??) a PROFIT.  So, while going public is a great thing and is to be celebrated in the free market and for its ingenuity, it is not always a sure bet that it pans out.

Let’s watch and see this year, but there is no question that the market (real estate) is going to benefit, regardless of what happens.  It will just be a question of how much.


To figure out what you need to do as a potential buyer to get your piece of this market, get in touch with me to talk about what steps you should take.

Email me for more information.

Stock Market Jitters & How it Impacts SF Real Estate

The sky is falling!  Well, maybe not quite, but there has definitely been some buzz about the roller coaster this week that is the stock market.  The Dow fell more than 1800 points over two sessions (Friday and Monday).  The 4.6% tanking on Monday, alone, was the biggest since 2011’s Euro debt crisis and is rippling through all of the International markets at this point.  More importantly for you (as a consumer), was the impact to mortgage rates, which shot up to near 3 year highs and could very well continue the trajectory. As for the impact to the San Francisco area housing market?  Tough to say in a singular response, but first, we should review what exactly is causing the sell off in stocks.
First reason is that the stock market is likely just doing what is has been long expected to do – pull back or correct itself.  Stocks have been rising in a straight line UP since November 2016, which can often be dangerous.  The pace and intensity at which the market has been driving had many analysts predicting that the market was in line for 5-10% pullback.  Like the old saying, “what goes up must come down,” but that may not be the worst thing in the economy.  Cheaper stocks means they are more affordable and attractive to investors, more so now because companies are in healthy shape at this time, by and large.
Second reason is that there is wide concern that the Fed will raise rates more.  Stocks have been spiking since the election because the economy is in overall strong health.  Unemployment is at historic lows and hiring is opening up.  This leaves companies having to pay workers more so they can retain them, but also attract new ones.  Ultimately that causes companies to raise prices in some shape or form to afford the swell in payroll and that is what is defined as INFLATION.  To combat inflation, the central bank (or FED) will raise rates, which leads to the third reason for the stock market jitters.
When the FED raises rates, the cost to borrow money increases, which means that companies pay more for their loans.  At the end of the day, this cuts into corporate profits and that can scare investors into thinking that companies are not as healthy as they had presented themselves to be.  More expensive loans also mean that homeowners and aspiring home buyers pay more for mortgages.   Mortgage rates are affected by the bond market and mortgage backed securities.  US Treasury bond yields have been so low, in large part, because the central bank was purchasing so many of them to keep rates low during the economic recovery and through.  As well, stocks were offering a much more attractive return, despite being higher-risk investments.  So there wasn’t much appeal in the safe-haven of bonds as of late because of the tear that the stock market had been on.

Impact on Local Real Estate

Knowing these catalysts to the stock market sell off, what is the impact on real estate here at home in the Bay Area?  More expensive mortgages could certainly affect affordability and buying power, but the middle ground is that this could temper demand and cause price increases to slow. How much remains unknown and time will tell since we are so early in this new reality of slightly higher rates, but at the end of the day, purchasing a home or taking out a mortgage are personal decisions and the macro market caveats discussed here don’t always rank high for a person when deciding what to about moving their family, settling down, or upgrading their living space.   To check your affordability or pre-qualify for a mortgage in this market, email me at arjun@lendclear.com.
More to come in the following weeks of the first quarter of 2018……

San Francisco – The Sellers Market

What makes a “seller’s” market?  Especially in the ultimate sellers market – the Bay Area.  Low inventory, high demand, and climbing prices are what constitute as a sellers market by definition.  While its great for sellers, it can be very difficult for buyers looking for their dream home that is affordable.  Buyers come to me from other lenders or from having heard from their friends that have been in the market stating that feels like a mismatched fight.  One where they feel the deck or odds are stacked against them.  

Finding the right property, nailing down your financing, and winning the fight of getting your offer accepted is absolutely possible. As a coach for the US TaeKwon-Do team, I always tell my athletes that its all about playing your strengths. So in preparing a buyer to get out there in the fight we refer to as the housing market, its important that we do the same for you and play your strengths.  

Currently the housing demand index is showing that prices and demand are at all time highs.  On top of that, supply is hitting an all time low, reflecting roughly a 3 month inventory of homes.  A healthy market balanced between buyers and sellers reflects a 6 month inventory.  Demand has increased these last few years sharply for a number of reasons.  The overall economy trending stronger is on catalyst.  Couple this with strong hiring, increasing incomes, and low interest rates.  Builders aren’t adding new inventory to the market fast enough, so the majority of these homes hitting the market are existing resales.  

So what is a buyer to do?  How do you prepare for all this and flip the odds in your favor, or at the very least – level the field?   Starting your search early is critical, and doing so with the right resources.  Agents I work with like to get their buyers set up on data websites like Real Scout which are interactive and very easy to use.  They help sift through the data of all that is out there, provide geometric data, and allow buyers to use some more refined filters in their ongoing search.  This step, along with partnering with the right agent who is an expert in your market is a great first step.  Your agent will know what caveats could sweeten a potential deal, such as being flexible on your moving dates/timeline to accommodate a seller that may need to rent back the hoe for 1-2 months.  Or connecting with the sellers on a personal level (kids attend the same school, other interests, etc) to pull on those heart strings when eventually making your offer.  

Most importantly, money talks in this equation.  Most lenders are “Pre-Approving” buyers now (takes pre-qualification a few steps further).  Few lenders are actually “pre-underwriting” buyers, which effectively takes a buyer through 60% of the actual loan process.  Ultimately this allows a buyer to use a much shorter contract period in their offer, as well as potentially enter the offer with no financing contingency.  In some cases, this can make a buyer nearly as competitive as a cash-buyer.  A fast closing timeline and bullet-proof financing are making sellers look closer at financing offers over just the popular cash-offers.  

Lastly, its important to manage your expectations.  Have a back-up plan with homes so that you are never dropping your emotional eggs into just one basket.  Come in expecting to make a few offers before yours might be accepted.  

I specialize in the pre-underwriting process and work to complete it within one week for buyers.  To learn more about this and being better able to compete in the ultimate sellers market of the Bay Area, email me anytime at arjun@lendclear.com.