KW Cares is a centerpiece of the Keller Williams International culture. This was the most amazing event to attend. As someone who has watched the center of San Francisco return from blight over the last 30 years, hearing about Mama Shu’s determined effort to revitalize her block was intensely inspirational. I’m so proud and happy my company could help her complete a piece of her mission. – Jennifer
At the conclusion of Family Reunion, Keller Williams associates gather together to celebrate the spirit, service and acts of kindness that bond us together. This year’s event continued the 18-year tradition with the theme “touching hearts.”
After a moving performance by the Las Vegas Mass Choir, Vice Chairman of the Board Mo Anderson welcomed attendees and emphasized the “unyielding efforts, unshakeable spirit and united action” of Keller Williams associates.
“You are a part of the beautiful things too. You bless our hearts, because of the wonderful acts of kindness that you do every single day.”
After a prayer of all faiths, Anderson and her assistant executive, Kellie Clark, welcomed Khloe Thompson to the stage to share her story.
Heart of a Child
Khloe Thompson is not your average 9-year-old. She is an ambitious elementary student who started her own charity, Khloe Kares, in which she hands out handmade bags filled with toiletries to homeless women near her California home.
With the January inauguration of the new administration came a number of changes that have injected uncertainty into some important aspects of business which may have a ripple effect into the San Francisco real estate market.
The first change is the executive order to ban non-U.S. citizens entering the U.S. from certain countries. This caused an immediate employee travel ban by a several prominent San Francisco and Bay Area employers for employees potentially affected by the ban. Second came the announcement that the administration plans to double the qualifying salary threshold from $65,000 to $130,000 for an H-1B visa, making it much harder for employers to fill positions with foreign talent, a not insignificant source of employees in the high tech sector. Both of these injected uncertainty and potential business disruption into the Bay Area business community and both have received broad coverage in the business and general news, with some high-profile CEO’s speaking out against them because of fears of damage to their businesses.
On a stabilizing note, mortgage rates eased off just slightly (about 1/8 percent) in January. However, most lenders expect them to rise somewhat throughout the year, to around 5%.
The charts on the following pages graphically depict the same message we’ve seen for the past few years: San Francisco remains a strong single family home sellers market, with incredibly low inventory at 1.3 months, down 10% from January 2016. Median sales prices are up 7.1% year-on-year for single family homes. The median sales price of single family homes also continues to be bid up above list price, coming in at 105.9% for January.
Sold for $961,000
Property Type: Single-Family Homes
Sold for $2,500,000
Property Type: 2-4 Units
Pretty much every article from respected economic sources is painting a rosy picture for the results of 2016 as well as the outlook for 2017, with a few caveats.
2016 saw unemployment fall in 271 of 387 urban markets while payroll jobs expanded in 303. Real GDP was revised upwards for 2016 by the Federal Reserve Bank in December to 1.9% and is projected at 2.2% for 2017.
However, it is difficult to predict how significantly some recent changes in economic and monetary policy and actions at the federal level will impact the economy in general and real estate specifically. The first change is the rapid rise in long term interest rates, which are up 0.5% since early November. The second is the dramatic appreciation in the value of the dollar in the same time frame, up 2.5% against the Canadian Dollar, 7.2% against the Euro, and 15.7% against the Yen.
How might these affect the real estate market in San Francisco and the Bay Area? Well, rising interest rates affect a lot more than just home mortgages. They dampen business investment and feed inflation. Rising inflation can have a damaging effect on the economy because it can become part of vicious cycle of rising interest rates fueling inflation which drives higher interest rates, and so on. We have been in that paradigm before and it can take a terrible toll on both the economy and real estate values. As interest rates rise, property values fall (as I discussed in our November report).
Right now, our economy is being driven mainly by strong consumer spending. And while there has been a lot of talk about big infrastructure spending by the new administration, any positive impact on the economy from that will be felt in 2018 and beyond. So, if consumer confidence weakens from concern over rising inflation, or if purchasing power erodes because of it, the economy will suffer.
The charts on the following pages graphically depict this message: San Francisco remains a strong sellers market, with incredibly low inventory of both homes and condos. Median sales prices ended the year up 8.2% for single family homes and down 7.7% for condo/lofts. At $1,300,000 and $1,011,000, respectively, both are below their peaks earlier in the year (October $1,402,500 homes; June $1,162,500 condo/lofts). However, given the incredibly low inventory, it is likely that prices will strengthen as the Spring selling season starts.