Monthly Update for SF + North Bay

December 2021 Real Estate Market Report

Arrian Binnings | December 31, 2021

Welcome to the final edition of the Artemis Advisor for 2021!

What. A. Year. We hope you’re catching your breath after that all-out sprint. While 2021 was arguably a little better than 2020, it was still a roller coaster ride that made even the most iron-stomached of us nauseous at times. Multiple waves of COVID, insurrectionists at the Capitol, supply chain backups, social unrest, the great resignation, boarded-up financial districts, remote work, spiraling inflation… all while a Gatsby-like party took place at the top with stock markets and real estate reaching all-time highs… it’s been wild.

One thing is certain from all this: home has literally become a place of refuge. We've always taken pride in our work, but these days, the meaning (and importance) of home has been elevated to new heights. Never have our jobs been so important. We are extremely grateful to be able to provide our expertise, counsel, and experience to clients, especially in such tumultuous times. And a lot of that gratitude goes out to you, the readers of our newsletter, who continue to support and send referrals our way. We cannot thank you enough!

A quick summary of 2021 goes a little something like this: The pandemic spurred more people into motion than ever before. This surge in demand, coupled with red-hot inflation, historically low interest rates, and supply chain bottlenecks, sent prices soaring. Especially for the most desirable properties. “Desirable” has a new meaning as well. Turnkey single-family homes with great outdoor space and room for a home office top the list. Suburban school districts, while historically a factor in buying, suddenly became the most important factor for many. Living near the office became less important. And million-dollar overbids made the headlines. San Francisco, while down in the dumps during 2020, made a roaring comeback in 2021 but not all property types rejoiced. Marin, by comparison, has been hot the entire time. So, what’s in store for 2022?

Monthly Prediction: Monetary policy will be of paramount importance in 2022

This is where we'll attempt to make a prediction about the future based on all the inputs we receive each month - whether it be boots-on-the-ground experience, roundtable discussions we're participating in, or the countless articles, podcasts, industry reports, and other media consumed. Read at your own risk!

Usually when we talk real estate, we talk micro. Micro markets, hyper-local trends, block-level data— you get the gist. But in 2022 we expect the macro to reign supreme. The Fed has signaled that they intend to raise interest rates, possibly in three separate rate hikes beginning in late spring. Jay Powell and his pals are aiming to tame inflation and stabilize prices. This leads us to believe that the first half of the year will be very robust in real estate, with buyers trying to lock in the lowest rates possible before purchasing power is diminished. With cash depreciating and rate hikes on the horizon, we expect to see a frenzied spring market, with sellers in the driver’s seat and multiple bids the norm. Refis should also be very active during this time.

If the Fed sticks to their plan, the spring buying frenzy should ease up beginning in the summer and continue through the remainder of the year. While prices will continue to rise, the rate of home appreciation will slow. Purchasing power will go down slightly, but buyers may have less competition in the second half, bringing the market more into balance. If we had to wager, we predict home prices to go up another 10-12% next year, with 6-8% of that increase happening in the first half. A portion of appreciation will be in the form of inflation (as was this year - but that's a topic for another newsletter). All this barring any black swan events, of course. Rest assured, we’ll be on top of it - and be sure to stay tuned to the Artemis Advisor for the latest.

Click here to read the San Francisco market report.

Click here to read the North Bay market report.

Thanks for tuning in, have a very Happy New Year, and we'll see in '22!

Warm Regards,

Arrian, Payton, Sejal, Jennifer, Lorelei, and Colin

Disclaimer

_{NFA / DYOR - Not Financial Advice / Do Your Own Research}

_{Information provided herein is for informational purposes only and is subject to change without notice. This publication does not constitute, either explicitly or implicitly, any services or financial advice by Artemis Real Estate. Information provided is not guaranteed, and Artemis does not guarantee the accuracy of any information obtained from a third party.}