"My house is better."
"My property is bigger."
"I like my home so much more. . . (as you should).
Followed by . . .
"If my neighbor's house got X, then mine should easily fetch Y!"
Maybe, maybe not.
Surprisingly, the last 16 months have presented a totally different picture than the one many of us in the industry expected when things began to turn sour. Given the fairly dire circumstances with respect to a global pandemic, a volatile presidential election, the storming of the Capitol, global warming, and polarizing world views on just about everything, it's nothing short of AMAZING that the market not only DIDN"T lose a beat; it skyrocketed in the face of catastrophic world events. In fact, according to the S&P Corelogic Case-Shiller Index, prices rose 18.3% year over year in the U.S. (Who'd a thunk?)
Far be it for me to suggest that I know what the market will ultimately bear when it comes to my house, your house, or any other house for that matter, but the plain truth is that houses are unique commodities, with vastly disparate attributes and values, which is to say that not ALL homes are created equal (nor are all neighborhoods).
Some are in better condition. Some are far more "on trend." Some have tremendous potential, Some have great floor plans. Some have stellar locations. Some have great BIG backyards. Some have highly-coveted school systems, and some have a value proposition that's hard to find, making them incredibly desirable (level living in Piedmont comes to mind). In other words, a $2 million pre-pandemic value, doesn't automatically translate to a $3 million sales price in today's world just because . . . even though the value has certainly gone UP. How much, is the trickier part to determine.
Suffice it to say that it would certainly make all our jobs easier if the equation were as easy, as A x B = C, but it isn't. Homes, by and large, are EMOTIONAL PURCHASES and their values are tied most deeply to how Buyers feel when they walk in; about the memories they'll create, and about the lives they'll live. (Whether these dreams bear any resemblance to actual reality is irrelevant and beside the point.) Not to dismiss location or condition, but above all else, Buyers are looking for a curated narrative that fits their "ideal."
While residential Realtors, not to mention Sellers, are relieved that housing prices didn't go into free fall when the stock market took an unexpected nosedive in February, 2020, and then followed up with the utterly surreal Covid-19 lockdown (it was a one-two punch), it seems unsustainable to expect the markets will continue to RISE no matter what, if for no other reason than it will eventually out price most people's ability to pay the going rate.
That being said, the combined wealth of Sales Force, Apple, Tesla, Google, and Facebook (as of this week) is $6.44 trillion dollars! By way of comparison, the combined value of every single company listed on the London Stock Exchange is less: $6.3 trillion dollars. With these five tech giants gratefully ensconced in our collective backyards - at least for the moment - Bay Area real estate seems to be fairly well insulated.
How lucky are we? (Lucky!)
So what's that mean for housing prices in the future, and for housing in the Bay Area specifically?
I'd say the future looks bright.
Still, when it comes to value, we should all understand that "value" is a moving target. (By way of example, the massive Caldor fire has certainly impacted the value of our cabin at Fallen Leaf Lake.) And while I'd like to believe that 35+ years of combined buying and selling experience gives Sarah and me some sort of vantage point as to where your house will ultimately sell, like everyone else, our opinions are based on recent activity, closed sales, and gut instinct. In short, the best we can provide is a good "guesstimate" - but a guess just the same.
Ultimately, the market will carry the value where it will. What's harder to measure day-to-day, is demand. With news that the housing market is short some 4 million houses nationwide, and that affordable housing units aren't being built fast enough or nearly often enough, demand should continue to outpace supply for the foreseeable future.
On the flip side, mortgage forbearance is about to end, and whether or not this translates into foreclosures flooding the marketplace remains to be seen, but it's doubtful - at least in the high-end of the marketplace where homeowners tended to fare far better than those on the lower end. However, that doesn't mean that Buyers aren't road weary from all the overbidding - they are - and that matters too. (Avoid the temptation to skewer your Buyers; they're often at their max, both emotionally and financially.)
Whatever the public opinion, Sellers shouldn't get too swept up in the hype that surrounds the marketplace, the outlandish "predictions" of their neighbors and friends, the rumors of what the house down the street sold for, OR the inflated Zillow estimate they pulled up online. Going one step further, the belief that every house will receive double-digit offers or sell for a million dollars above the asking price just isn't true, nor should Sellers expect it. (Your house is still going to sell for more than you ever thought possible.)
So go ahead and dream big, stay optimistic (but keep your feet firmly on the ground), listen to your Realtor's advice, let us create a compelling narrative, move into faith and trust, and continue to keep good thoughts throughout the process. That's really the best pathway through the journey, and much more likely to bring you the desired result.
How can we help you?"
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.