February / March 2022 Real Estate Market Report

Greetings Artemis Advisor fans - welcome to the latest edition! Before we begin, it should be stated that talking about markets is always from a position of luck and privilege. There are many places in the world where people are dealing with getting their basic needs met, and war-torn Ukraine is our most recent example. Our hearts go out to those who are in the midst of crisis— it’s a gut-wrenching time. 

Last month we wrote about anticipated headwinds headed towards real estate markets, which have enjoyed strong tailwinds over the last year or two. But the question remained… what would happen when the two forces met?

Real estate is a slow-moving beast— a big, heavy train that reacts to market forces last and enjoys the most momentum (for better or for worse). Financial markets are more like sports cars— quick, agile, and can turn on a dime based on something they see up ahead. Crypto markets are like crotch-rocket motorcycles— blazingly fast but also offer the least protection. These relationships are relevant because we can often tell where real estate may be headed by paying attention to these other markets. At the moment, real estate is the safe haven of the bunch— as financial and crypto markets have been battered— but does that mean things are about to turn? To find out more, continue below to the Monthly Prediction.

For the moment, though, all roads lead home. Pandemic-proofing your future? Need a better house. Living in a world with war? Need a better house. Working and/or schooling from home? Need a better house. A place to get away from it all? Need a better house (or a vacation house!)

Our latest activity mirrors this trend. 2199 Divisadero, the "London vibe" Pacific Heights home we advertised off-market sold immediately for $5,900,000. We closed on 2130 Filbert for $4,775,000, which was $780,000 above our asking price, a couple of weeks ago. 1 Channing Way, our recent Sausalito listing (listed for $3,195,000), received 8 offers (3 all-cash) and will be closing soon for an incredible price. We’ll share more in our next newsletter. 2141 Lake in San Francisco is now under contract with another great result for our sellers (# of offers and price confidential), and 331 Magee in Mill Valley received 11 offers (3 all-cash) and will close for a big price. 350 Alabama #20, the urban-dweller’s dream loft, received multiple offers and will close over asking, and 885 Masonic just closed for $1,600,000, which was $205,000 over asking. There are more but we won’t bore you with the details. Suffice it to say, spring has sprung, and we’re happy to report we've now surpassed $1 billion in total career sales. It’s been a wild ride!

Monthly Prediction: A gradual shift to blue-chip properties 

Warren Buffet once remarked that interest rates are to asset prices as gravity is to matter. And with rate hikes on the horizon, the crypto and financial markets were first to react— especially the high-growth/tech sector. What some are dubbing the “tech wreck” has already begun and there could be more pain ahead. San Francisco-based DocuSign (DOCU), a hugely successful IPO and darling amongst the real estate community, has fallen 77% from its 52-week high and is one of many companies suffering a similar fate. The tech-heavy NASDAQ is down 20% in 2022 and $5 trillion in value has been wiped out just since November. These are massive numbers. But why do we care?

San Francisco real estate and the greater Bay Area has an outsized interest in the tech sector, and what happens in tech can trickle down to our real estate markets in due time. If these conditions persist (and that’s the big “IF” we're following), then our Monthly Prediction could come true. In a softening environment, there will still be demand for housing (the tailwinds we mentioned before are still substantial), but a lot of that focus will shift to “blue-chip properties”. That is, homes that people fight over no matter the market condition. In this environment, the blue chips perform better, hold their value longer, and garner more attention than the others. Underpricing listings will be mandatory (and arguably already is) and aspirational pricing will be death by a thousand price reductions. Having the right counsel in times like these is invaluable.

These are mega forces at play and we’re in the trenches every day watching it play out in real-time. Simple things like gauging traffic trends while running open houses week after week can be telling, as are conversations with stagers about how many homes they’re working on. It’s a time of great change, so keep up with (and share) our newsletter for the latest!

Click here to read the San Francisco market report.

Click here to read the North Bay market report.

That's it for this edition. Stay safe out there and please get in touch if we can help any of your friends and family, or if you have any questions about the market, trends, or your home's value.