How to buy a home in San Francisco’s completely insane housing market

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Joe Raedle/Getty Images

No two ways around it, San Francisco is in the midst of a housing crisis.

It’s hard to find an apartment that’s even approaching affordable, as the average rent for a one-bedroom is over $3,500.

It can be tempting for many to get out of that market and get into homeownership. But that’s even harder, with an estimated 57% of all homes in the San Francisco Bay Area worth $1 million or more.

To get more insight into how to navigate the insane San Francisco housing market, I talked to Zephyr Real Estate’s Suhl Chin, an 18-year Bay Area real estate veteran. I can vouch for Chin’s bona fides – she helped me buy my first home, here in San Francisco, late last year.

Here’s the current state of the San Francisco market, and how to succeed despite the hurdles this housing crisis can place in your way.


Suhl Chin, my realtor during my own home-buying process, has been doing this since 1998 — right when the dot-com boom hit San Francisco.

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Zephyr Real Estate

The tech industry gets a lot of flak for exacerbating the housing crisis, with lots of young, well-paid people coming in and driving prices up for both rentals and home purchases. But Suhl says that neither tech boom in San Francisco has changed THAT much around here.

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A mural in the middle of San Francisco’s Mission District.
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Biz Carson/Business Insider

“The kind of properties here are very unique,” Suhl says, and there’s always a lot of competition for any given house — whether or not there’s a tech boom.

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Shutterstock

Home buying hit a fever pitch in 2015. “It didn’t matter what you’re selling — it’ll sell,” Suhl says.

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A still from “The Million Dollar Shack”
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Michelle Joyce/Youtube

Still, Suhl says, the market has been leveling out lately: Developers are building way more high-occupancy buildings in the few San Francisco neighborhoods where tall buildings are allowed, driving down the price for condominiums.

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A vintage streetcar passes in front of a new housing complex along Market Street in San Francisco, California.
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Reuters/Robert Galbraith

And there’s less overall demand for San Francisco homes valued at $2 million or less, Suhl says.

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Coldwell Bankers Preview International

But getting an entry-level home for less than $1 million is still very competitive, Suhl says. There are only so many to go around, and neighborhoods like Excelsior or Bernal Heights that used to be cheap are seeing values go up monthly.

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Bertl123/Shutterstock

If you want a home, there’s one simple strategy: “You can just pay the most,” Suhl says. It sounds obvious, but if you’re willing to pay above the home’s asking price, you can get away with a lot.

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Reuters photographer

Of course, that can backfire, too. Sometimes, Suhl says, people come in with a willingness to overpay on relatively cheap properties, only to realize that they’ll end up shelling out hundreds of thousands for a real lemon of a home.

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Reuters

As a general rule of thumb, Suhl says, you should never pay more than 20% above asking price for a property in San Francisco unless you’re 120% sure this house is way better than any other house and that it’s the only way to be the highest bidder.

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Getty

Suhl also recommends at least a 20% down payment to be competitive. You can get away with less, Suhl says, if your loan with the bank has already gone through final approval, mitigating risk on the deal …

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Joe Raedle/Getty Images

… but Suhl doesn’t recommend online mortgage providers like Quicken Loans, LendingHome, or SoFi. In San Francisco’s intensely competitive market, home sellers are looking for more traditional, trusted lenders like Chase, Bank of America, and Wells Fargo.

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Glassdoor

Beyond the cash, Suhl says that your choice of agent is key here. It’s their job not only to guide you through the process, but also to network on your behalf. “You really have to network as much as possible,” Suhl says of an agent’s job.

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Joe Raedle/Getty Images

A good realtor will find properties that suit your needs and budget. A well-connected realtor can also help you find properties that haven’t officially been listed yet, meaning you can beat your competition to the punch.

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Justin Sullivan/Getty Images

Plus, if your agent and the seller’s agent have a good relationship, you can get the skinny on how much they think it’ll sell for. Forewarned is forearmed, and in San Francisco, it can be good to know when to just walk away.

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Ricky Thakrar / flickr

And ultimately, your agent is going to be the one presenting your case to any potential sellers. When a property gets multiple offers — in my experience, a desirable property will get as many as 23 — the relationship between your agent and the seller’s agent can make the difference.

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Suhl says one of the biggest mistakes people make is to send out multiple agents, scouring for deals. There’s such limited housing inventory in San Francisco that they WILL run into each other, and it undermines the trust between you and your agent. “You have to trust your agent,” Suhl says.

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Wilson Webb / Columbia Pictures

All of this can be overwhelming. Depending on your budget, buying a home can take from six months to over a year. Suhl says she’s had clients take a yearlong break before they start looking again.

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Flickr/nasrul ekram

Eventually it does happen, even if it takes a year or more. People can find their dream home in San Francisco for less than $1 million.

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That “grueling process” is why Suhl says resilience is one of the most important tools in any would-be San Francisco home-buyer’s arsenal. She recommends a “nice, sunny attitude.”

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Flickr

As for San Francisco itself, Suhl says she’s not too worried about what happens if and when the current market dies down. “I think it will always come back. It’s an amazingly resilient city,” Suhl says.

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Shutterstock