Real estate isn’t the weather — but like a winter storm or protracted summer heat wave, its seasons can often be forecasted at a distance.
To draw up a picture of what’s likely to come this year in residential real estate in the Bay Area, I spoke with several real estate professionals who work in San Francisco, the East Bay and the North Bay, all who concluded that 2022 would see a continued seller’s market for single family home sales.
Broker Jennifer Rosdail with Keller Williams San Francisco told me she foresees that the threat of higher interest rates could to cause more buyers than ever to jump in the pool to compete for what is still a limited supply of homes. She also noted that buyers are coming back to town who saved up money during the pandemic, which could add to the competition.
“I think any gloom and doom people are preaching over these interest rates is just going to cause the buyers to act more decisively because they’re afraid their affordability is going to shrink,” Rosdail told me.
Things have cooled off since the red-hot market at the beginning of 2021, said Jennifer Lind, president of Coldwell Banker Realty California. But there is sill an imbalance, and she told me there are no major signs that this trajectory will drastically change for the coming year: Housing supply remains lower than the continued demand in the market, especially in the Bay Area.
In addition to interest rates, Lind said brokers are paying special attention to factors that could play a role in the real estate landscape such as recovery and repopulation of office spaces in the Bay Area, new construction and the return of international buyers — specifically from Asian countries and Canada.
Before the pandemic, foreign buyers spent $267 billion on U.S. real-estate in 2018 and $183 billion in 2019, according to the National Association of Realtors. In 2021, that spending dropped to $107 billion, which may suggest there is pent-up demand since buyers weren’t able to visit properties until international restrictions lifted in November.
Buyers will also have their eyes on key selling points, said Linnette Edwards, co-founder and associate broker at Lafayette-based Abio Properties. She told me she expects five home attributes to be the most in-demand this year: pools, homes with four or more bedrooms (used for office or exercise room), yards with gardens, “staycation” homes and homes with accessory dwelling units (used for visiting guests).
She told me she predicts the market will see greater demand than ever before for larger homes with energy saving features due to increases in insurance and building and labor costs.
In terms of seasonality, 2021 experienced a busier than normal spring, something Frank Nolan, co-owner of Vanguard Properties, told me he expects to continue in 2022, especially for the condo market. Nolan noted, however, that this anticipated bump remains contingent upon San Francisco’s anticipated return-to-office surge.
“It’s going to be our transition year back to normal both societally as well as from a real estate perspective,” Nolan said. “I think we are going to see another year of strong transactions, but I don’t think it will be as strong as last year if I had to guess.”
Of course, it all depends on who you ask. Broker Joel Goodrich with Coldwell Banker told me his forecast for 2022 is stronger than it was earlier this year, despite Moody’s Analytics having lowered its first-quarter GDP forecast from 5.2% to 2.2%.
“My expectation is that the as the effects of the omicron virus recede, the economy will continue to rebound strongly,” said Goodrich, who deals primarily with high-end properties. “As momentum for offices to open up builds, and our world-class entertainment, cultural sporting, dining and theater venues open up further, that will add to the dynamics of the San Francisco economy and real estate market.”