San Francisco sellers anxiously await upcoming IPOs including Uber to sell their properties to newly minted millionaires. There’s a slew of upcoming IPOs in the Bay Area which have sellers anxiously waiting for the right time to list their properties
Selma Hepp chief economist at Compass in San Francisco recently crunched the numbers. “After a short period of improved inventories, sellers in San Francisco took homes off the market in recent months waiting for IPO buyers. This is bringing inventories below last year’s levels in all price ranges,” explains Hepp.
Hepp points to Santa Clara in the Silicon Valley where it averaged 30 % more inventory in the first quarter of 2019. Then, inventory slipped down 10% in March as IPO fever hit the area.
Head up to San Francisco with sellers responding in kind. “After the first annual increases in 25 months between October and December, inventory declined again by 32 percent year-over-year in February and March – the largest declines across the region seen among homes priced below $1 million. However, San Francisco sellers of all price ranges decided to hold off on listing their homes, whereas there were more sellers of higher-priced homes across all other Bay Area regions,” Hepp observes.
According to a report from CB Insights: The 2019 Tech IPO Pipeline, “2019 is shaping up to be a blockbuster year for tech IPOs. Consider that if Uber, Airbnb, Pinterest, and Slack were to go public at their rumored IPO valuations, they would all rank among the 10 largest venture-backed tech IPOs since 2012. Consider those mentioned, Uber, Airbnb, Pinterest (which recently had its IPO) and Slack are all headquartered in San Francisco.
“Uber employees have been clutching their valuable shares and options for years now. The Uber anticipated IPO at a valuation many forecast to top $80 billion will bring long-awaited liquidity to stakeholders once the lock-up period ends,” said Steve Lawrence, a Wharton MBA who runs start-ups.
As sellers are holding off on selling unless they have to the flip side is buyers’ behavior. “I’m seeing two things hit at all price points. Some sellers are saying they want to delay for a while, at least until the fall. I am seeing diminishing inventory compared to what we usually have in the spring,” observes Nina Hatvany of Compass one of San Francisco’s top brokers.
“On the other side, I’m seeing more buyers than usual with the same conversation repeating itself at every level. They tell me they want to find a property soon with all the IPOs going on and before these newly minted multi-millionaires are out there looking,” Hatvany reports.
Not so fast, no matter what an IPO comes out at you can’t become an overnight millionaire. “The reality is it will take a while to be able to sell your stock given the lock-up period. Then they have to decide if they want to invest in real estate in San Francisco and then purchase a property,” Hatvany says wisely. Of course, this pre-IPO mode feeds on itself as sellers get greedy and buyers anxious. Hatvany had a $10 million Pacific Heights listing a few weeks ago. A high-ranking executive flush from an IPO ended up buying it for $12 million.
If you’re a San Francisco seller who has the luxury of waiting might not be a bad strategy to wait and possibly net a higher return.