All generations have their life challenges and things that define their lives and expectations. San Francisco has a been on the cutting edge more than once since the Gold Rush beginning in 1849 through the Summer of Love in 1967, and then in the ’90s there was the dot-com boom and bust. Today the tech boom and the mega growth of the South of Market area has grabbed everyone’s attention. The face of San Francisco as we knew it only a few years ago has changed.
You cannot underestimate the power of being offered a job in San Francisco. In the past month, I have met with three new buyers moving to this city. All three had job transfers in some way related to the tech industry. Who are these people, what do they expect to find here in the way of homes, and what is the reality of what actually exists for sale?
Buyer 1: Growing up in the Bay Area, Buyer #1 left home after high school and is returning to the city now due to a job transfer. He thought he would rent while he settled in and look for a home or condo. After fruitlessly searching the Internet for rentals, he told me that in frustration and out of curiosity he expanded his search for an apartment with no price limit in the areas he was looking (Russian Hill, Nob Hill, Pacific Heights, Hayes Valley, NOPA, and Duboce Triangle). Still there was no place he wanted to live at any price. We spent an intense weekend looking at properties for sale with no success. This is no surprise to buyers who have been searching a while.
I looked online at rentals and found exactly the same result as my client. There is little for rent, and a special property that would cause a renter to pay maximum price simply did not exist. This buyer is extremely lucky that he has family in the area and has a place to sleep. This is usually not the first choice for adults in their 30s. Yet all of my friends have adult children with great jobs who are living with them temporarily — or at least they all hope it will be temporary.
Buyer 2: A middle-aged couple is Buyer #2. They used to live in a large home and are moving here for work. I may be more sensitive to their needs because I am older, but the fact is the move takes a willingness to have an adventure and think creatively about a change in lifestyle.
Spending a few days looking at homes, including one Broker’s Tour, I gave these buyers a crash course in San Francisco real estate. They survived the crash and will be moving here in a few months. These buyers are systematically reviewing properties as they come on the market and following up to find out the sale prices. They have heard how competitive buying a home can be and are focused on being ready to make a successful offer when the time comes. They understand they will be living much smaller in San Francisco, because the housing inventory at all price points is smaller than where they currently live. San Francisco is like an island and is only 49 square miles; 1,200 to 1,500 square feet is what a buyer can expect in a median- priced property (maybe smaller depending on the neighborhood). Today this means $1 million.
Buyer 3: These buyers are not here yet but will be in the next few weeks. They are a young couple just starting out on their San Francisco adventure. I am in e-mail correspondence with them now, and I sent them questions that will help me get to know their situation. These questions included: Are you planning to rent before you buy? Are you pre-approved for a mortgage? Do you have a car? Pets? Anything that may be important to you?
The answers: location (safe and secure) with a gated community/security; close to public transportation; and lower price per square foot for the area.
These buyers are off on the right foot by putting their location first. They have never been here and don’t know there are few gated communities or buildings with security guards. Finding a location close to public transportation is fairly easy in San Francisco. With buses, street cars, and Caltrains, finding a location near public transportation will be possible.
As for their third requirement — now here is a challenge. These buyers do not yet understand the concept of low inventory San Francisco style. How could they, no matter where they came from? San Francisco is in a world by itself when it comes to real estate and buying a home. I might have been a bit aggressive when I responded and told them at some point they need a place to sleep and park their car and this will trump all else. They emailed back and will be here soon. My warnings have not frightened them away.
Renting or owning a home in San Francisco is a challenge. Everyone needs to make sacrifices, which for the most part involves downsizing expectations on location, price, size, amenities, parking, view, schools, and anything else you can imagine that might be important to you. In the end, some renters and buyers look to the East Bay, Marin, or the peninsula, depending on where they work. Prices in these communities have gone up, too, and there are no deals in the Bay Area.
One thing is certain: These buyers all have jobs and they will be moving to San Francisco in the next few months.