Navigating the San Francisco housing market is no small feat. In fact, it ranks up there with some of the world’s most competitive markets. Sales prices of single-family resales have been rising month over month, and in March, the average price climbed over $2 million. Add in the fact that major expected IPOs from companies such as Slack, Lyft, Uber, Pinterest, and Airbnb are likely to create 10,000 millionaires in a single night, and you’re looking at a market that has the potential to very quickly turn even more competitive.
If you’re still planning to buy in the San Francisco Bay Area, here are a few things you need to know:
Keep Calm And Be Realistic
If you’re looking for a three-story Victorian in Pacific Heights but have a limited amount of money to spend, understand that you will likely need to downshift your expectations. Try looking outside the city and considering markets that are less in demand. Accept that you may have to commute and almost certainly will have to compromise. That’s the name of the game here.
It May Not Be As Bad As You Think
Understand that not every startup employee will immediately rocket to millionaire status. You typically have to have been there at least four years to benefit. Further, many companies approaching IPO put limitations on how much stock an employee can sell, and when. It’s common for companies to prevent employees from cashing in on their stock for at least 90 days after IPO. By that time, stock prices often fall, making shares considerably less valuable. All of that is to say: just because someone works at a fancy tech company doesn’t mean they’ll be in the running to outbid you on that sweet little Craftsman.
More Starter Homes Could Be Available
According to recent data, Millennials are waiting longer to buy homes. Because they rent longer, buy later and save up money, they’re less likely to go for starter homes and more likely to purchase luxury homes. If a starter home is on your list, you might (and we really mean might) face less competition than you’re expecting. Also, many urban-focused Millennials are renting property in the city and buying vacation homes elsewhere. So it’s not guaranteed that these so-called instant millionaires will even buy Bay Area properties.
We’re not gonna lie – buying in this market is far from easy. However, if you take a deep breath, crunch the numbers, and try to see things as they really are, you may well feel a little better about your prospects in San Francisco.