At today’s sales meeting, we had a debate on pricing and whether or not certain properties should be priced lower.
Ironically, our focus wasn’t on properties listed in the million(s) of dollars—sales are healthy in that group—but rather, our discussions focused on smaller, lower priced inventory.
A couple of examples were:
- Whether or not a Potrero Hill condo was priced fairly in the mid-$700Ks?
- Whether some houses in Bernal Heights had to be under the $600Ks?
What struck me were the amounts of money we talked about. Objectively, $600K or $700K is still a lot of money. We also talked about what options a buyer has in these price ranges.
In Potrero Hill, if you want size, parking, and outdoor space for less than $800K you have to be near—we joked, as close as a few feet from—the housing projects.
In Bernal Heights, smaller houses are…well…small. For $600K you may or may not get parking.
Yet the lack of options begs the question: are they attractive enough to buy?
Tech money from recent IPOs or high salaries won’t support this market. Those buyers are looking at more expensive properties.
In this price range (i.e. $700K or less), buyers do not have a lot of discretionary funds. Borrowing half a million dollars and paying home owners’ dues (or house insurance and utilities), and property taxes can cost about $3,600/month with a low interest rate of 4.5%.
Do buyers want to pay this for the next ten—possibly thirty—years?
What do you think? Please take my poll.
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