January 2022 Real Estate Market Report

Arrian Binnings | February 5, 2022

Market Update + Prediction

Happy New Year and welcome to the inaugural edition of the Artemis Advisor for 2022! The new year has started off with a bang as buyers are raring to go but inventory is few and far between. Imagine eager buyers walking around a retail store that has mostly empty shelves with only a few, oftentimes lackluster, products. That’s January in a nutshell, and it’s one of the best times (weather permitting) to be on the market as a seller. If you’ve been following our newsletter, you’ve known this little real estate hack for a while now. As a result, overbid madness is the name of the game here in the top of the first inning.

As the months unfold and the spring market comes to life, we expect conditions to continue to favor sellers, even as more inventory comes out. What is new and interesting this year are a few downward forces that will butt heads with the epic bull run we’ve been on. More on that below.

Here at Artemis, we’re busy preparing our listings and have already launched a few new ones. We listed 2130 Filbert in Cow Hollow a couple of weeks ago for $3,995,000 and were able to achieve an astounding number for our sellers after receiving multiple offers and negotiating the deal. 2199 Divisadero and a newly remodeled single-family home on Lake are both coming soon, and just today we listed 885 Masonic in NOPA. We have a few Marin listings in the works and will be able to announce those very soon, including a show-stopper in Sausalito! Our buyers are also very active — awaiting more inventory and trying to lock in low rates before the hikes.

Monthly Prediction: Two worlds colliding

Sorry to disappoint but this month’s prediction is not really a prediction — it’s more of a question that has huge implications and it’s important we highlight it. We have two mega-forces set to collide and it’s uncertain how things will play out. Here they are:

First, we have unprecedented demand for housing driven by the pandemic combined with historically tight supply and low interest rates. It’s a perfect storm that has led to a huge run-up in housing prices. As if that weren’t enough, fuel was poured onto the fire in the form of inflation. Supply chain issues have driven construction and renovation costs higher, and labor has also become significantly more expensive. All of these forces lead to a big, bold, green arrow pointed upwards for home prices.

However, after announcing their plans for rate hikes, The Fed sent the stock market into a tizzy and much of that volatility landed squarely on the shoulders of high-growth and/or tech stocks. And as anyone who’s spent time in the Bay Area knows, the real estate market here can most certainly be affected by what happens in the tech industry. Because our local marketplace has a lot of cash deals, it is less susceptible to modest changes in interest rates. However, the impact of rising rates still gets us by coming in the back door and impacting industries that thrive on liquidity — ie; high growth and technology. And when tech feels the pain, people feel less rich, and when people feel less rich, they stop shopping for homes. Or do they? That’s the big question here and what we’re tracking closely in this new environment.

In normal times, people buy homes to get out of renting, move up the property ladder, or move to another market. But this time it’s different. People are buying homes because the pandemic redefined what they need and they are more ‘foaming at the mouth’ than ever before. Tech stocks are important, yes, but do they usurp the raw human emotion of needing a completely different living arrangement? Time will tell.

I write this a day after Facebook (Meta) lost 26% of its value in a single day— the most ever by a US company— some $240 billion. Many tech companies have already been derated 30-60%, which of course affects the VCs, PE firms, and the entire ecosystem. It’s too early to tell how things will shake out which is why I suppose you should stay glued to our newsletter for the latest. For now, though, the real estate market keeps humming along and is still the hottest we’ve seen in our careers.

Click here to read the San Francisco market report.

Click here to read the North Bay market report.

Thanks for checking out this month’s edition and we’ll see you again very soon!

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.}