Price Cuts on San Francisco Real Estate are Predictable

Among the strangest phenomenon of the San Francisco real estate market is seasonality. You’d think the largest asset purchase/sale that most people make in their lives wouldn’t be subject to such randomness, but here we are.

The key thing to understand is that buyer demand drives seasonality. Folks are traveling in the summer and around the Winter holidays, so it’s harder to sell home. And during the Winter, the weather is crummiest in SF and homes just don’t show as well when it’s dark and rainy.

Which is to say there is pressure to sell your home in the Fall before the weather turns. That sets a bit of context about what I’m about to show you.

So when do you see the most price cuts in the San Francisco residential real estate market? I did an analysis to find out. The below chart shows the percentage of active listings by month with a price cut over the last five years.

Lo and behold, it follows a pattern! Price cuts generally surge and peak in October. Why then? Sellers are trying to get things sold before the market softens in the winter.

So if you see a home you like that’s for sale in September, by all means buy it. But if it’s just a bit out of your price range, wait till October and see if it’s still on the market then. If they haven’t sold it yet, the sellers may be getting nervous and ready to accept a below-asking price offer.