John M. Lee: San Francisco's Real Estate Cycle

Timing the stock market can be a dangerous proposition and the same can be said about timing in the real estate market. Just when you believe you have it figured out, everything changes and the timing goes out of whack.

Nevertheless, buyers and sellers always ask whether this is a good time to buy or sell. In San Francisco, we have an annual real estate cycle of our own. Most people believe that activity is strongest during the summer; the reason being that families are trying to get situated in their new homes before school starts to avoid having the children switching schools in the middle of the school year. This might be the trend for the rest of the nation, but not in San Francisco.

Typically, the real estate market is slow the beginning of the year as people recover from the festivities of the holidays. The market does not pick up until the springtime and it is usually very active from March until June. It does tend to be a little slow around April 15, however, as people are scrambling to finish filing their income taxes. But in general, spring is a good time to be a seller as the market is very active.

Our market tends to slow down as we head into the summer months. Because we have a high singles population, we do not follow the trends of the rest of the nation in purchasing for the school year. Also, many people, including buyers, sellers and agents, are out of town part of the summer months on vacation, causing sales activity to slow.

If you are a buyer, these might be good months to be shopping as there is less competition. The market picks up once again typically after Labor Day with the fall season. Most people are back in town and their attention turns to real estate again. This lasts until mid-November and then the market slows down again for the holidays. This is the typical annual real estate cycle in San Francisco.

However, keep in mind that this cycle is not set in stone and other factors will affect it. For example, the fall selling season never took place after the Sept. 11, 2001 tragedy. In fact, the fourth quarter of 2001 was extremely quiet as everyone turned their attention to the New York World Trade Center bombing, causing our market to come to a standstill the last four months of 2001.

But, starting Jan. 1, 2002, the phones rang again (even on New Year's Day) and our real estate market came roaring back because of pent-up demand and declining interest rates. So there are exceptions to our annual cycle.

In order to take advantage of the marketplace, buyers and sellers can position themselves in the cycles by selling when there is more activity and buying when there is less activity, or competition, in the marketplace. In San Francisco, though, no matter where we are in the cycle we always seem to be lacking good inventory. So, if a property is nice and priced right, there are always buyers and sellers should not be afraid of marketing their property.

Buyers, if you see a good property you want to own, do not hesitate to make an offer on it because there are others who want to own the same properties.

Currently, in the Richmond and Sunset districts, we are still experiencing a very strong market with multiple offers and bids over asking price on most listings. When this will end is anyone's guess. But for the time being, enjoy the low interest rates and our strong real estate market.

John M. Lee is a top-selling broker at Pacific Union specializing in the Richmond and Sunset districts. If you have any questions, call him at (415) 447-6231 or e-mail him at johnlee@isellsf.com.