/The Average San Francisco Homebuyer Has a Budget of About $1.7 Million, and It’s Holding Steady as Sale Prices Decline

The Average San Francisco Homebuyer Has a Budget of About $1.7 Million, and It’s Holding Steady as Sale Prices Decline

The average home sale price in San Francisco has been falling for the last three quarters, but the average home budget for Redfin.com users is holding steady—and the dichotomy could signal that home prices are heading for a rebound, possibly due to anticipated IPO wealth.

The average San Francisco homebuyer had a budget of just over $1.67 million for their home purchase last quarter, down slightly from a $1.71 million peak in the first quarter of 2018.

This is according to an analysis of maximum price filters set by homebuyers in roughly 180,000 saved searches on Redfin.com for homes in the San Francisco metro since 2012.

San Francisco price filters

Since 2012, changes in the average home budget for San Francisco area Redfin users have tended to precede similar changes in the local average sale price. For instance, the average home budget for Redfin users peaked in the first quarter of 2018, just before the average sale price peaked at $1.75 million in the second quarter.

Since then, average home prices in the metro have declined to $1.59 million last quarter, while budgets are holding steady around the $1.7 million mark. The consistency in max prices for saved searches, coupled with the slew of local tech companies going public this year, suggests that average sale prices in the San Francisco area are likely to rise in the coming months.

“Redfin.com users’ home search activity tells us that the current dip in San Francisco home prices is most likely a temporary blip,” said Redfin chief economist Daryl Fairweather. “There is an immense amount of wealth in the city that will continue to grow as billion-dollar-plus tech companies go public. And since there is already a shortage of homes for sale, it’s hard to imagine a scenario where home prices don’t go up.”

With the wealth created from Lyft’s IPO alone, current and former employees of the ridehailing business could purchase every single home for sale in its San Francisco hometown in cash. Uber, Slack and Pinterest, all of which are also based in the city of San Francisco, are all rumored to be hitting the public markets sometime this year, with Airbnb rumored to come down the pipeline sometime in 2019 or 2020.

Some tech workers in the area, whether they’re first-time buyers or contemplating moving up, are anticipating an influx of funds into their bank accounts in the months after their company goes public and the lockup periods end. They may not be ready to buy just yet, but they are upping their expectations in online searches,” said local Redfin agent Miriam Westberg. “Lower-than-expected interest rates are another reason why San Francisco residents are bumping their budgets and looking at more expensive listings this year.”

Print Friendly, PDF & Email