Moving to SF: What First-Time Home Buyers Should Expect

Planning to relocate and become a first-time home buyer in the San Francisco Bay Area? Whether it’s a move across neighboring towns, states, or even continents, it is important to plan your move carefully as there are various factors to consider. We can help you navigate this journey to make sure you are not skipping any steps, just keep reading! 

Step 1) Demystify the San Francisco Real Estate Market

The San Francisco real estate market has fluctuated in recent years. To gain an edge, make sure to consistently monitor market trends – not just seasonally, but on a monthly or even weekly basis.

Understanding the complexities of the San Francisco price-to-rent ratio, the impact of inflation, and identifying the optimal times for buying and selling properties are crucial. These factors can make purchasing a home in San Francisco challenging, yet strategically rewarding.

Step 2) Know Your Budget & Numbers

In the Bay Area, property prices can vary dramatically by neighborhood. As you calculate your budget, it is vital to understand the average home price in the city you are interested in calling home.

The San Francisco median residential property price was a staggering $1.65 million in April 2024 according to a recent report from the California Association of Realtors® (C.A.R.) after Q1. This should give you a ballpark figure to kickstart your planning.

A common question from our first-time clients is: what salary is required to purchase a home in the city? The answer hinges on your specific needs and situation, but the same report suggests a homebuyer would need an annual income of at least $422,000 to secure a median-priced single-family home in the city – and that assumes a 20% down payment.

Start by determining your affordability range. A common guideline used in mortgage qualification is the 28/36 rule. Housing costs (including insurance, taxes, interest, etc.) shouldn't exceed 28% of your gross income. Total debt payments (including housing payment, credit cards, car loans, etc.) shouldn't exceed 36% of your gross income. This is a helpful rule of thumb, but remember to factor in the hidden costs of owning a home. Buying a property often means paying condo fees, HOA, or TIC fees – and that doesn't include maintenance, repairs, and upgrades. Keep these ongoing costs in mind as you plan your move to San Francisco.

Step 3) Collaborate with with a Savvy Local Real Estate Agent

While you might be mentally prepared for high prices, get ready to face some fierce competition – buying a house in the beautiful city of San Francisco is a unique experience.

You'll likely encounter all-cash buyers, homes selling above list price, and a fast-paced market. For this reason, finding the right allies is crucial. Collaborating with a knowledgeable local real estate agent should be a top priority, especially for first-time home buyers. A seasoned professional who understands the market's intricacies will guide you smoothly through this process and provide invaluable advice along the way.

Even before you start house hunting, your agent might suggest getting pre-approved for a mortgage first. This is important anywhere, but it's vital in a city where sellers are accustomed to receiving all-cash offers and expect swift closings.

Step 4) Dive into House Hunting!

Now for the exciting part: house hunting! Given the competitive nature of the San Francisco housing market and limited inventory, be prepared before you embark on your search.

If you're a first-time home buyer in San Francisco, set realistic expectations and work with your agent to create a list of must-have features and deal breakers for you and your family.

Your real estate agent can assist you in exploring neighborhoods that align with your lifestyle, needs, and budget. If you need help, don’t hesitate to ask for help. 

Step 5) Plan a Strategic Offer Strategy with Your Agent

When you find a dream home and feel ready to make an offer, be prepared to move fast.

Some home sellers accept offers "as they come" while others prefer a set offer date. Another common tactic you'll see in San Francisco is homes being intentionally underpriced to spark bidding wars and garner multiple offers. That being said, you might be surprised by the various possibilities when you delve deeper into this process... But fear not, your agent will guide you with expertise and inform you of your options.

It might take a few tries, but once you finally have an offer accepted, congratulations! You'll be officially under contract and well on your way to making San Francisco your new home!

Moving to San Francisco as a first-time home buyer is an exciting journey filled with opportunities and challenges. By understanding the nuances of the local real estate market, setting a realistic budget, and working with an experienced real estate agent, you can navigate the process with confidence. With careful planning and the right guidance, you'll soon be calling San Francisco home.