The bidding in San Francisco continues at a furious pace.
Buyers flock to the few nice properties available for sale in the city, and many have written offers well above the asking price--10%, 20% and higher! I've had clients compete in bids with 15+ offers, but the norm for us is often around 10 bidders per property. There are several reasons for the shortage of inventory that has created a huge imbalance in our local real estate market:
Strong economy with job growth: Large local technology companies continue to hire, and San Francisco remains a popular home to new startups.
Incredibly low interest rates: The cost of funds remains low, although in competitive situations, most sellers prefer cash offers because they perceive that the lending environment is still difficult.
Corporate shuttle busses*: The Google shuttle started with two busses to provide an option for San Francisco employees to leave their cars at home, and commute from their SF neighborhood to work. Since then, other penninsula-based companies have followed suit and dozens of busses run throughout the city every day. (Great idea, Cari Spivak! The private sector filled a huge need by providing good transportation, while getting thousands of cars off the road).
No place to expand: San Francisco, surrounded by water on three sides has a few remaining lots--but not too many. Buyers absorbed many of the thousands of condos built in 2000s. Developers compete for properties the fixers in nicer neighborhoods.
Sitting on the sidelines: Many homeowners who might sell their homes and condos are concerned that they might not have a place to move to--the rental market is tight, too. I was speaking with a mortgage broker this week who thinks that there are still people who have lost too much equity in their homes in recent years. If they sell, the lose their remaining equity to transaction costs. So they stay in their current homes, even if too large or in the wrong location.
New jobs in the city: Twitter and dozens of other companies moved into the mid-market area and have filled office space South of Market and Downtown.
*Here is another perspective on the corporate busses via The SF Chronicle and Rebecca Solnit who argues that the corporate busses are ruining San Francisco.