Second quarter numbers reflected very positive news for homeowners. Single-family home sales had the strongest second quarter in the past six years, a 24% increase in the quantity sold off the low in 2009.
Condos and TICs had a 72% increase off the 2009 low and were just 4% off the high in 2007.
The figures on this chart indicate that buyers are out in force. You may have heard about homes going over asking and wondered how many homes are going over asking, which neighborhoods, and by how much?Â About three out of five single-family homes are going over ask in the hot zones ofÂ Noe ValleyÂ (distict 5), St. Francis Wood,Â Miraloma ParkÂ (district 4),Â Glen Park,Â Bernal HeightsÂ (district 9). The lowest percentage of over asking sales is inÂ Pacific HeightsÂ andÂ Russian HillÂ suggesting that the bulk of the buyer pool may be in their first to second purchase and may favor the south side of the city with better access to downtown and the peninsula. The average percentage over list for single-families is between 12% and 15%, and I am seeing many homes that last sold in 2006 surpass their 2006 sales price. Single-family homes are going about 15% over list in District 6, 9 and 1.
The hot number in San Francisco real estate right now is absorption.Â
Absorption is defined as the percentage of properties that go into contract in the first thirty days of marketing.Â For the last few recession bound years, a typical absorption number has been about 28-34%.Â
Last week of the 41 properties I toured 18 went into contract for a 44% absorption rate.Â For the last 4 weeks the rate of absorption has been a mind bending 57%.Â
Buyers are out in force and theyâ€™re writing contracts.Â This market is screaming for more inventory.Â If you are a buyer and you are looking for a 3 bedroom condo or TIC or Co-op in pacific heights, lower pacific heights, cow hollow, Marins, Hayes Valley, Nopa areas (district 6-7) and you have 1,000,000 to 1,400,000 to spend you have a total of 4 properties to see; one of which has a legal issue and essentially cannot be sold. If your budget is 700-999 then you have 11 properties to go see.Â In this price and asset category, thereÂ are more properties in contract than thereÂ are available.Â
2012 is the year of the black water dragon.Â It is auspicious for finance and bold projects.Â This is very interesting to me asÂ four of my buyers in the last few weeks have been echo boomers; children of baby boomers who themselves are starting their own family and will likely drive this market (along with the tech industry) for the next several years.
Buyers; make sure your lender has all your docs and in addition to checking out rates, ask about how quickly they can appraise a property and get a loan funded.Â The speed at which you can transact is beginning to be a factor in the dynamic of your offers as we are returning to the multiple offer environment.Â Watch the way your loan officer provides service.Â Do they work weekends?Â How quickly do they return your call?Â If they don't, I work with several lenders that are intent on providing excellent service.
Also keep an eye on property that is overpriced to see if you can bid it down in 60 days.
Sellers; List your property now, now, now.Â Make sure it looks great; staging pays off.Â Go ahead and reach towards an ambitious number.Â If you are looking to move to Marin, East Bay or Peninsula; please call me.Â I know great agents there too.
In 2011, I helped my buyer get a prime 3BR/1BA home inÂ Pacific Heights. I discoveredâ€”after the deal closed and we wrapped up 2011â€”that we not only got a great deal, but actually scored the best one of the year! This purchase was the lowest-priced 3BR inÂ Pacific HeightsÂ since 2009, and this is how we did it:
The home had stunning curb appeal in a great location, yet overpriced and not a condo or a TIC but a stock-cooperative.Â
Strategy #1:Â Pay attention to inventory thatâ€™s 20% above your expected purchase price and donâ€™t rule anything out.
Gracious floor plan; includes elegant public rooms to the left and right of its sizable foyer.Â
Strategy #2:Â Floor plans can be toughâ€”but if finishes are all that the home needsâ€”thatâ€™s a cheaper makeover. Always remember to shop for a home and not a deal.
Strategy #3:Â Time your offer well after reductions. This particular property was reduced by $30K after the first 30 days on market (DOM), then after another 60 DOM, was reduced again. On July 13, it was reduced one more time for a listing price of $739K. My buyer and I came in about 60 days after that, timing our offer for Labor Day weekend when no other buyers were around.
Strategy #4:Â Remember that looking for a great deal doesnâ€™t get you one; writing offers is the only way to get a great deal. When negotiating with a seller that doesnâ€™t budge on price, be willing to walk away for two or three days and come back. The seller may feel differently, having almost had a deal, and then losing it. But donâ€™t wait around a week; by that time the seller will have likely resolved any remorse they had from your going.
Come learn more! Iâ€™m hosting a buyerâ€™s seminar and youâ€™re invited:
WHEN:Â Thursday, Feb. 16 TIME:Â 6:30 p.m. WHERE:Â 555 Mission Street, San Francisco RSVP:Â To Jamie Comer at (415)Â 420.2510 orÂ firstname.lastname@example.org
Examining renting vs. owning
Overview of current market conditions
Review of the home buying process
Strategies for shopping and uncovering the best dealÂ
If you think buying a home in San Francisco may be in your future, you won't want to miss this! Seating is limited, so be sure to reserve your space now. To RSVP, call me at 415-420-2510, write me at email@example.comÂ or in the comments field below.
A Home of Your Own. Â It's Easier Than You Might Think.
February 16, 2012 at 6:30 PMÂ
555 Mission Street, San Francisco
Join me for a FREE homebuying seminar!
Preparing for homeownership
Strategies for shopping and uncovering the best deal
Overview of current market conditions
Affordable mortgage programs
Review of contracts / the home buying process
Questions and answers with mortgage specialists
Since this seminar has already been conducted, you are welcome to phone me for an overview of the buying process specifically geared toward buying your first home.Â Jamie 415 420 2510 firstname.lastname@example.org
In the old model of real estate sales during the boom years, a seller hired aÂ neighborhood specialistÂ to sell their home. The neighborhood specialist sold many homes in their area, the seller saw their signs, gotten their post cards, and hired them because they feltÂ comfortableÂ with them.Â Specialists give theÂ SELLER a higher degree of comfort but this is not BUYER based selling. In a buyerâ€™s market, itâ€™s understandable that you would want to hire the more familiar agent. But the goal as a seller shouldnâ€™t be comfort; itâ€™s to attract a buyer! The specialist concept is outdated;Â when you buy into the specialist concept you are essentially being sold.Â
One of the most interesting 2011 trends is what I callÂ â€œThe New Buyer,â€Â and weâ€™re seeing a reversal of trend as a function of the buying trends of new buyer.Â Â For example, with reduced inventory comes a rise in price, right? Not necessarily. There were fewer sales of single family homes (SFH) in:
Strangely, as inventory diminished in Districts 1/7, so did the price; down 3% and 6% respectively. Usually with scarcity comes higher value so whatâ€™s going on here? The new buyer doesnâ€™t want these homes. Itâ€™s either too expensive or too far away.
The new buyer isnâ€™t just buying houses either. Take a stroll throughÂ NOPAÂ orÂ Hayes Valley, you will not believe the amount of gentrification that has occurred in retail. Restaurateurs and retailers alike continue to flock toÂ District 6because commercial leases are less expensive there, filling these neighborhoods with amazing stores and eateries. On the flipside, bothÂ UnionÂ andÂ FillmoreÂ Street saw an unprecedented 30% vacancy rate in retail during the downturn.Â Check out my Facebook pageÂ to see stores in these areas; they remind me of NYCâ€™s East Village or SoHo in the early â€˜80s.
As an alternative, edgier professional fields like the tech sector and social start-ups have gained employment footing, while the longtime traditional employers in San Francisco have lost traction. The more offbeat, unique, and urban neighborhoods continue to attract the buyer pool. Particularly when you consider that the price for a 3BR/2BA SFH inDistrict 6Â is roughly the same as a 3BR/2BA condo inÂ PacificÂ orÂ Presidio Heights. People appear to be favoring asset class over neighborhood. In addition, todayâ€™s eligible buyer is different from the one who was buying five years ago; what they value and respond to has simply changed.
This bears itself out when you compare the average number of sales inÂ District 7Â condos and TICs toÂ District 6. In the boom yearsâ€”2002 to 2006â€”the average number of sales in District 7 was 13% higher than District 6.Â In the five year period from 2007â€“2011, District 7 averaged 263 sales to District 6 at 264. No difference. Buyers may be well served to broaden their search and sellers need to make certain when reviewing comparables that they are focusing beyond a direct comparison in their own immediate neighborhood, moreover, they need to make certain their agent has sold properties in several neighborhoods so they can discuss with high specificityÂ the pros and cons of different locations.
Buyers shop price first, then bedroom/bathroom count, followed by asset classâ€”is it a condo or a TIC?â€”it now matters less since everything requires 20% down. While a neighborhood is still a guiding element, itâ€™s no longer the frame of the debate. If the person in your home doesnâ€™t have aÂ broad sales history, from various asset classes and neighborhoods, then they cannot make a meaningful argument of why that buyer should chose your home against the others!
How Do You Value Finishes/Upgrades? Upgrades help your home get sold sooner as they attract more people into open houses and private appointments,Â but upgrades alone do not get a home sold. The first filter for a search will always be price, bed and bath count, and neighborhood. Seldom, is this order of filter revised. In a down market where buyers have anxiety about purchasing a home that may lose value, the buyer gets very nervous about spending up for finish level. Finish quality may contribute $50K of value unless the home has undergone a down to the studs remodel and the actual floor plan has been altered or square footage has been added. Â I have seen homes in premium neighborhoods likeÂ Pacific HeightsÂ andÂ Presidio HeightsÂ sell for 10% less than their 2008 priceâ€”despite the factâ€”that the kitchen and bath had been beautifully remodeled.
When in doubt about adding an upgrade remember this:Â In a down market finishes ADD urgency, not value. As a former interior designer, I will tell you theÂ key to adding value with upgrades is to create lifestyleÂ not aesthetic. Donâ€™t buy a subzero fridge for $10,000; instead spend $8,000 adding a home office alcove to the kitchen, and $2,000 on a stainless steel GE monogram. Donâ€™t spend $18,000 on custom drapes. Spend $18,000 on French doors and a patio to the backyard. Remember you are creating liquidity, not value; youâ€™re spending money on the freedom to make a move.Â
Do I Take Foreclosures and Short Sales Into Account?Â If theyâ€™re a dominant force in your neighborhood or a competing one, then yes.Â For example if you own a unit in District 8B,Â Downtown/Barbary Coast, then yes because of the inventory of the neighboring communityâ€”South Beach, which contains 18% distress. If you own inÂ Cow HollowÂ then no becauseÂ Pacific HeightsÂ and theÂ MarinaÂ andÂ Cow HollowÂ have seen less than 1% distress in their neighborhoods; itâ€™s not a significant valuing factor in these neighborhoods.Â
Whatâ€™s the Value Difference between Side by Side Parking and Tandem? An independent spot is valued at approximately $60K, while tandem spaces are valued at approximately $40K as they have less accessibility. A private garage may be valued at $80K because it affords storage space.
Is There a Difference between a Two-Unit Building and a Six-Unit Building? Absolutely! An appraiser will likely add $50K in value to a home in a two-unit building when comparing it to a four or six-unit building.Â Â Â
What About Outdoor Space?
On an appraisal schedule, outdoor space can be valued at $75K and, on paper, a property may qualify for the adjustment whether it has direct access to the outdoor space or not.Â In interacting with the home, whether Â a buyer is engaging with a property online, in private appointments or on open house, there is much more value and urgency placed on those homes that offer direct access to an exclusive use (or even shared) outdoor area, particularly if it is a backyard as opposed to a deck. If you have a home with a yard but no direct access, it isÂ absolutely worth your time and money to investigate whether your CCRs allow for you to create direct access.
QUESTION: I recently toured with a buyer that was keen on finding a condo inÂ Pacific Heights,Â Presidio HeightsÂ or theÂ Marina/Cow Hollow. Because these were experienced buyers, we viewed a larger cross section of inventory than the average buyer would. They were willing to consider things that needed significant workâ€”adding garages, bathrooms, replacing foundations, etc.â€”and also included TICs and co-ops in their search. Despite casting this larger net, they were surprised at how few choices they still had. As we were about to write an offer the buyer asked, â€œHave we really seen everything? It doesnâ€™t seem like there are a lot of homes to choose from.â€
ANSWER: Contrary to national news, the reality of these highly-specific neighborhoods and corresponding employment pool has created a local experience where there isnâ€™t enough inventory. The average number of transactions inÂ Pacific Heights,Presidio Heights, and theÂ Marina/Cow HollowÂ from 1996 to 2006 was 386 per year. As of Dec 1, 2011 there have been 220 transactions. Assuming the rest of the 2011 paces at the same rate, volume is down 38 percent over the pre-crash, 10-year average.Â You could say there arenâ€™t enough buyers. However, I have several that cannot find a home and a list of sellers that will not market their home at the suggested comp price. AsÂ someone that works this market every dayÂ I will tell you that the problem is not demand, itâ€™s supply!
QUESTION (follow up): Iâ€™m a seller; what does this information mean to me?
ANSWER: If youâ€™re considering a move then turn off the news, pick up the phone, andÂ call a REALTORÂ®Â for a current market analysis of your home; make certain you get more than one opinion. I can provide an accurate value assessment, andyouâ€™re welcome to call and/or email meâ€”donâ€™t worry about your home beingÂ â€œshow ready.â€ The best time to market your home is April through June, so pick up the phone now. These charts show that condos inÂ Pacific Heights,Â Presidio Heights, and theÂ Marina/Cow HollowÂ move the fastest and sell at higher prices in the second quarter. Now is the moment to call your REALTORÂ® and make a list of things to get done in your home.
2694Â Bush St. at BroderickÂ sold inÂ April of 2004Â for $826K which was seven percent over its $769K list price. This condominium home is a well-laid out, top floor flat with three bedrooms (two large, one small) and one bathroom inside of 1471 sq ft. The home features an excellent floor plan, wonderful light, partial city views, a deeded parking space, two storage rooms, two fireplaces, and an updated kitchen and bath. It did not offer an outdoor space.
The new owners moved in and redid the fireplace surrounds with stunning Waterworks tile; they repainted the entire home including the kitchen cabinets, replaced the counter tops, and replaced all the appliances.
Six years later, they decided to sell the home and repainted, thinned out closets and meticulously staged it for sale. The home hit the market on June 18, 2010.
Mistake #1:Â Was selecting June 18th as this was two weekends before the Fourth of July. Unless youâ€™re planning to bust onto the market with a â€œrun donâ€™t walkâ€ price, you need to have at least three weekends ahead of you that are not holidays so that the buyer can find you without distraction. By the 54th day on the market (DOM) the home was reduced by $45K to $829K.
Mistake #2:Â If there is not significant interest after the first three open houses, there should be a reduction before the fourth. In this case, the fourth open would have been on July 10, when the buyer returned from their Fourth of July holidayâ€”well-rested, relaxed, and ready to look again. In this case, a buyer was alerted to the home by their agent and after visiting the home twice and signing off on disclosures, the buyer submitted an offer at approximately $790K and the sellers chose not to respond.Â
Mistake #3: Unless someone is dying, always respond to an offer in a timely and considerate fashion. Why would a seller not respond to an offer that was five percent under their new list price when they themselves offered seven percent over?Â Arenâ€™t these percentages similar? Hadnâ€™t the market reversed between 2004 and 2010?
The home aged another 56 DOM and at day 110 reduced to $799K on October 6. The home was withdrawn two months after this on December 5, after spending close to six months DOM. Apparently the buyer that offered at $790K was correct on value. This buyer later purchased a top floor 3BR/1BA with a totally remodeled kitchen, bath, tons of original detail, fireplace and deeded parking. The unit was 20 percent larger, the finishes were higher end merchandise, and the home had a backyard. It was in theÂ Inner RichmondÂ as opposed toÂ Lower Pac HeightsÂ and cost $80K more.
HEREâ€™S A TO-DO LIST FOR A SUCCESSFUL SALE:
Look closely at your calendar and choose dates that coordinate with the market.
Give yourself enough time to prepare so timing does not get delayed.Â Get help if you need it.
Be on the same page with your partner and your agent about pricing and goals. A meeting after the 3rd open house to re-assess marketing, price and market changes should be set in your calendar before you even hit the market.
Make everyone aware of times you may not be able to be reached or the house may not be able to be shown.
Price is marketing.Â Itâ€™s an invitation to dance.Â Value is determined by what a willing, ready and able buyer will pay.Â
TheÂ Lake Street DistrictÂ andÂ The RichmondÂ (District 1) offer one of the lowest dollars per sq ft, as well as some of the highest average appreciation year-over-year; this is one of the best spots to look if you want to maximize your investment. Other lesser dollar per sq ft areas for SFHs areÂ the Sunset,Â ParksideÂ andÂ MercedÂ (District 2â€“3). The highest dollar per square foot areasâ€”afterÂ Pacific Heights,Â Presidio HeightsÂ andÂ Russian Hillâ€”areÂ Noe ValleyÂ (District 5) andLower Pacific HeightsÂ (District 6).Â If youâ€™re looking to sell your home itâ€™s imperative to not only look at sales comparisons in your neighborhood, but in those comparable and competitive neighborhoods too, as buyers shop for homes there as well.
It should take betweenÂ 20 and 60 days to get a buyer into your home, and get thatÂ buyer to write a contractÂ for it. By the third or fourth Sunday open house there should be significant interest in your home; a second showing or a request for a disclosure package. If this isnâ€™t the case, and there have been very few private showings, then you may need to rethink the price.Â
April, May and June are the best months to market your home. If this time frame does not work for you, then the next preferred time would be the first quarter or the third. The fourth quarter should be avoided if at all possible. With the exception of 2009 when the real estate market was recovering from the crash in the stock market in Q4 of 2008, the second quarter has seen the highest selling price over list price (2007) and the highestÂ under ask price; 2010, 2011.
If you are considering selling your home you should target Q2 of 2012. Essentially, you have six months from now to make your home camera ready.Â Buyers still respondÂ to fabulous finishes, so it pays to have a realtor come in now and tell you what to fix or change. Pay close attention to the after labor day, fall market as the properties that sell then will be instructional for you in terms of what buyers are responding to, they will also be the comparisons by which an appraiser will judge the value of your home.Â Call me for a free, detailed action planÂ andÂ I will tailor a strategyÂ for yourÂ particular propertyÂ and the needs of you and your family.
Statistics for Q1 2011 reveal that the market is stabilizing. In 2006, the number of condo/TIC transactions was just over 700, in Q1 2009 it dropped by half at the bottom of the market. Q1 2011 increased 95 percent from the low of 2009, with 559 sales. Single family homes trailed its high point in 2006 by just 5.8 percent.
The average days on market (DOM) indicates shifting consumer behavior and is a good chart to study if you are considering selling. Sales numbers are up, indicating increased demand, so average DOM should be downâ€”right? Wrong. The average DOM has increased past the numbers we saw when the market all but died in Q1 of 2009. As the market stabilizes more sellers are choosing to list their homes, giving more choices to buyers. Buyers are taking a longer time to look to consider all of their options. Theyâ€™re cautious, empowered, and surprisingly flexible about neighborhood and property types.
Now that weâ€™ve discussed volume, letâ€™s look at price. Average sales price by district is down five percent year-over-year, with the exception of the ninth district (SoMa, South Beach). Because new construction was released at exactly the wrong momentâ€”back in 2008â€”this area saw some of the cityâ€™s steepest price declines as inventory swelled and demand evaporated. Now that inventory is sold off, and the remaining sellers are unwilling to sell at a loss. Thus you have increased distressed sales there, and with the decline in available inventory, an increase in price.
This is reflected in my own practice: I had two listings in the last two weeks that went into contract. The Presidio Heights listing sold in a few days with one offer. The South Beach listing sold in about the same amount of time but with seven offers.
So how are buyers and sellers relating at the table? There is much more back and forth on price. Where there may have been one or two counters in an offer process, itâ€™s now more likely to see two or three. How much movement off of list depends on price category? If you are listed in the $750Kâ€“$1M range you can expect about four percent movement below the list price. If you are listed at $2M then you can expect the difference between list and sale to be eight percent. Because of shifting interest rates and loan programs itâ€™s smarter to leave money on the sale side, in order to get to the right side of the table and pick it up on the buy side.
During a recent transaction in my practice, a seller who purchased his property in 2006 lost one percent of value, turned around and became a buyer purchasing a far better home at 17 percent below its 2007 value. For a strategic plan tailored to your specific circumstances, please call me at (415) 420.2510 or send an email to email@example.com.
Days on market determines whether a property is priced correctly.Â I was recently asked if a 15% under ask offer would be worthÂ writing on a home in Sea Cliff.Â I had to say no because the property had only been on the market 21 days.Â Had the property been on 75 days, it would have been worth considering.
Citywide, condos are averaging 82 days on the market and single family homes are averaging 60 days.Â In Pacific Heights the average is 64 days.Â Nob Hill/Russian Hill is taking an average of 86 days to sell, slower than SoMa at 75 days and the Sunset is selling fastest at 52 days.Â The marketing tradition in the Sunset is to list lower than comparisons to encourage activity and this remains efficient.Â Â Average days on market was highest for those homes under 500K and shortest for those homes over 2 Million.
1.)Â Â Â Google announced it would be hiring 6,000 new employees. This may be to keep competitive with other Bay Area tech powerhouses; Yahoo, Salesforce, Apple, Facebook, Twitter, Zynga.Â Many of whom are either looking for space to lease, have recently leased space or are building a new space.
2.)Â Â Â Jobs.Â Housing follows jobs and while new jobs are not as clearly in evidence as we might like to see; unemployment claims are down indicating the tide may be turning on this front.
3.)Â Â Â Pent up demand; college grads and newly marrieds have been on the sidelines waiting.
4.)Â Â Â If the federal moratorium on foreclosures is any indication that the tsunami of foreclosures isnâ€™t going to happen how about common sense?Â Why would a bank willfully destroy the value of itâ€™s own assets by flooding the market with foreclosures?Â The bears in this market need to ask themselves if this really makes any sense at all.Â Â Have you done the work of actually comparing the price of a foreclosure to a standard sale?Â The 3-7% differential is about the same as a property that gets lowballed after 100+ days on the market.Â You have a better selection of homes Â if you shopped homes that their sellers have mispriced and then checked the tax record to see how much they owe.
5.)Â Â Â Inflation.Â If inflation does happen this usually reduces supply as people jump into the market believing the market is going to go up; rising inflation pulls the market forward.Â Historically, real estate has been an excellent hedge against inflation.
6.)Â Â Â Higher rents and lower vacancy due to increasing demand are giving Landlords the edge.Â As rental inventory decreases and interest rates remain low, would be renters are giving buying a second look.
7.)Â Â Â 3147Â Sacramento, a multi unit apartment building listed at 1.4 Â received 16 offers.Â Investors are offering, not shopping.
8.)Â Â Â Baby boomers turn 65 this year and rather than fund cruises and rounds of golf, they are looking at downsizing seeking the comfort having a reduced monthly would provide.
9.)Â Â Â The Dow Jones topped 12,000 and the S&P topped 1,300 for the first time since 2008.Â It makes sense to cash in the gain and use it for a down payment.Â
Increase in volume and price underscores the divide between buyers and sellers.Â
2010 saw a 10 % increase in sales volume , the first increase since 2004.Â Since Q4 of 2008, sales volume has been at its lowest level since 1995, however, the 10% gain would indicate that buyers see the value in this market and are coming off the fence.Â Average price was also was also up 1% over 2009, Â the first increaseÂ in two years.Â Some districts are performing better than others; sales are up in every district except district 6 (Hayes, NoPa) and district 10 (Bayview).Â The uptick in sales was most notable in district 8 Nob Hill/Russian Hill); up 26% , district 9 up 22% Â (SoMa) and district 1(Lake, Richmond, Sea Cliff) up 21%.Â With increase in activity came increase in price.Â Average sale price was up 6%, in districts 1, 5 and 6 but down in district 8.Â Â Change in average price year over year suggests a 5 years up two years down pattern which follows historically.Â Percent change year over year in average price was up 95-2000 down 2000-2002, up 2002-2007, down 2007-2009.Â
All property types (whether theyâ€™re TICâ€™s, condos or single family homes) are selling further below asking price.Â ThisÂ indicates that sellers are either less in touch with the market value of their home or are padding price expecting offers to come in lower than ask.Â Â Conventional wisdom in the agent community is that if a home is not receiving meaningful interest after 30 days itâ€™s at least 10% off the price it should be listed at thus buyers will not make an offer sensing they are too far apart to make a deal work.Â The 2010 numbers on price reductions demonstrate this thinking as homes above a million requiring a price reductionsaw an average reduction of 9% in order to get into contract.Â Frequently final sale price is another 2-3% below that final ask on homes that are reduced.Â If a buyer is looking for a home in the 1.3 range then they should have their search set up to 1.5 and sellers researching comparisons for a home they feel is worth 1.5 should look Â hard at whatÂ actually sold Â for 1.3.Â
Of those home listed over 1 million approximately one Â in every three homes requires a price reduction in order to sell.Â Â Â Days on market are the barometer on reduction, with 35 or more days most likely to see a sale price below list.Â The longer the days on market, the further below original list the property is likely to sell. This may suggest that if a reduction is necessary, a seller is more likely to mitigate further loss by reducing no later than 21 days.Â A home ought to produce a serious buyer a few days after your third open house.Â
Listening to a buyer recently, I heard something that underlined the shift in consumer attitude this market has produced.Â We had just seen a lovely condo that was beautifully staged in a super location listed at a very attractive price, it was clear the home was a good dealÂ becauseÂ it was listed about 1% below a similar unit in the building that had just sold.Â Â We then moved on to our next showing and grabbed a cup of coffee.Â The buyer had been quiet for some time and then said â€œI donâ€™t know why I wouldnâ€™t buy the one we saw before.â€Â Selling a property today is about removing any doubt.Â To subscribe to this blog ; http://www.sfhomeforsale.com/Blog
The strength in this category underlines San Franciscoâ€™s recovery.Â Sales of homes priced at 2 million and above Â rose 18% Â in 2010 as compared to 2009. Â 252 luxury homes found new owners in 2010 as compared to 206 in 2009.Â This is particularly encouraging when one considers the 2010 number beats the 2004 number which saw 241 homes trade when the market was on fire. Back in 2000, only 177 homes over 2 million sold, 30% lower than 2010â€™s volume, clearly the luxury market is coming back stronger and healthier than itâ€™s ever been.Â
The luxury neighborhoodÂ that has shown a surprising amount of movement has been Sea Cliff where 10 properties sold in 2009 compared to 22 in 2010.Â The unprecedented amount of supply there has been the cause of prices trending down.Â If you're looking for a bargain;Â shop Sea Cliff. Â In 2010 only 2 homes sold for under 1.6, and in 2009 there was only one.Â There were no sales that were below 1.6 in 2008.Â Q1 2011 saw Â 2 homes on the market there under 1.6.Â Given the strength in the 2 million dollar category, itâ€™s possible that Sea Cliff sellers are transitioning to other more expensive homes.Â Currently, Sea Cliff is the favorite place to find a high end bargain.Â
The reverse trajectory is also in evidence; there is currently a 5.4 million dollar home in Pacific Heights on the market because the ownersÂ Â found their "dream home" in Sea Cliff.Â 2737 Divisdaero was reduced by half a million dollars recently and is a lovely home. The nearest sold comparison is 2800 Vallejo which sold for 4,775,000 in November.Â Â Â The half million dollar difference between these properties could be owed to the elevator and design features in The DivisaderoÂ home.Â
There were 4 sales above 10 Million in 2010.Â The highest sale of the year sold privately in Q4 for 15.5 Million.Â 2600 Pacific was designed in 1936 by architect William Wurster; who was mentored by Bernard Maybeck andÂ landscape architect Thomas Church and was a former dean of UC Berkeley Architecture school.
Gold CoastÂ MansionÂ 2701 Broadway Â Â
Currently active on the market is the premierÂ Gold Coast mansion,Â 2701 Broadway (at Divisadero) Â 7 bedrooms and 7 baths in 16,400 square feet.Â This completely restoredÂ home Â is quietly holding its ground at 32 Million.Â An infinitely livable floor plan with stunning views, this home features 2 family rooms, 2 offices, 2 kitchens, 6 fireplaces and a basketball court at theÂ ready for a quick pick up game . A commercial speed elevator services all 5 floors.Â Â Easily twice the size of the typical home in this neighborhoodÂ theÂ most clever aspect of thisÂ property is the degree to which it is understated.Â To subscribe to this blog ; http://www.sfhomeforsale.com/Blog
In 2010 there were 745 distressed sales as opposed to 655 in 2009.Â Distressed sales made up 17% of the total inventory sold with 67% of that total being REOâ€™s and 33% being short sales.Â Significantly, 56% of distressed sales were priced 500K or below.Â Only 4% of the distressed inventory was priced above 1 Million.Â Â Â The only price category in which there was a decrease in distressed sales was theÂ 500-750 category.Â Slight increases in distressed sales occurred in every neighborhood except districtÂ 10, Bayview where distressed sales lessened.Â Nevertheless, Bayview remains the area with the highest number of distressed sales. But the fact that they are decreasing may indicates this area has bottomed out having cycled through the larger portion of its distress inventory.Â Increase in distress activity was noted in Soma/ South Beach.
Shorts and REOâ€™s increased by 3% in Soma South Beach.Â Overall, sales were up year over year there and astounding 23%Â demonstrating that while the area may be experiencing some undertow, it clearly remains extraordinarily attractive to buyers not only for its value but for its lifestyle.Â This area, more than any otherÂ neighborhoodÂ in the city requires a real estate professional that is a neighbrohood specialist, so if you are considering buying or selling here it is imperative to hire an agent that does at least 30% of their business downtownand is familiar with all of the buildings.Â Â Â Some buildings are experiencing more problems than others and not all issues are the same.Â Most Â notably; The Beacon, The Palms, The Metropolitan and Bridgeview require expert guidance. To subscribe to this blog ; http://www.sfhomeforsale.com/Blog
the Federal Open Market Committee voted 10-to-0 to leave the Fed Funds
Rate unchanged within its target range of 0.000-0.250 percent.
its press release, the FOMC noted that since
Decemberâ€™s meeting, economic growth is ongoing, but at a pace deemed â€œinsufficientâ€
to make a material impact on the jobs market. In addition, the Fed said
household spending â€œpicked upâ€ late last year, although it continues
to be held back by joblessness, tight credit and lower housing wealth.
This is similar to the language used in the FOMCâ€™s November
and December 2010 statements.
Also like its last two statements, the Fed used this monthâ€™s
press release to re-affirm its plan to keep the Fed Funds Rate near zero
percent â€œfor an extended periodâ€, and to keep its $600 billion bond market
support package in place.
And finally, of particular interest to home buyers and
mortgage rate shoppers, for the second straight month, the Federal Open
Market Committeeâ€™s statement contained an entire paragraph detailing the
Federal Reserveâ€™s dual mandate of managing inflation levels, while fostering
The Fed acknowledges progress toward this goal, but calls
that progress â€œdisappointingly slowâ€. Inflation is too low right now,
and joblessness too high.
Over time, the Fed expects both measurements to improve.
Mortgage market reaction to the FOMC has been positive
since the statementâ€™s release. Mortgage rates are unchanged.
â€œ"Be greedy when others are fearful and fearful when others are greedy".
Real Estate is an asset.Â Like all assets; stocks for example, values can go up or down.Â Unlike other assets; real estate is an investment that you actually need to use and canâ€™t live without; you must live somewhere, so Real Estate has the additional benefit of building wealth by capturing and retaining dollars you would have spent elsewhere anyway.Â In addition it provides you a tax benefit in two ways.
First; the interest is deductible on your income taxes and second Uncle Sam protects the gain of your appreciation up to 250K for single people and 500K for heterosexual Â married people (which is why marriage should be recognized for all couples).Â Stocks pay dividends which are taxable at the capital gains rate.Â With Real Estate Â you are retaining more of your money because you do not have to pay capital gains on every dollar earned and you are paying off an asset that you own instead of giving the money away to a land lord.Â You are creating a tax shelter for your yearly income as you write off interest payments and you are protecting capital gains from being taxed.Â
Letâ€™s say you are a first time home buyer looking to buy a 1 bedroom condo near work and youÂ find that you can own one for more than it would cost to rent a 1 bedroom condo. Â You might rent it for 2500 and to own it costs 3400.Â Why would you pay 900 dollars a month more?Â Especially when to rent one costs about 5K up front (for security deposit and so forth) and to own one might cost 50 K up front for the down payment.Â The reason is simple.Â The cost differential on a monthly will be absorbed by the tax write off and in 5 years time, assuming no appreciation at all, you will have retained the 150,000 dollars in building your own wealth rather than giving that money to your landlord.Â Now, if you qualify for this one bedroom apartment here in San Francisco chances are that you make about 150K a year.Â Â Would you be willing to work for free for one year?Â How about a year and a half?Â
The answer is probably no, however this is exactly what you are doing when you give a landlord your after tax payroll dollars.Â At 150K a year, you are handing your landlord 19 months of your work over a 5 year period.Â If your boss called you into her office and let you know that you did not need to work more, in fact you could actually work a little less and she was going to give you a 33% raise so instead of making 7875 a month, she was going to make sure you got 10,375 would you back out the door and say, no, I donâ€™t think so, it doesnâ€™t seem like a good idea?Â
Yet this is what you are choosing when you choose to remain a renter.Â You are letting other people control your ability to retain the wealth you are working so hard to develop.Â You may have heard that real estate is a bad investment on the news.Â Real Estate did not decline, the way that it was monetized declined.Â Did the houses and condos disappear because they had no value?Â Did they blow up?Â No.Â Â The banks blew up and disappeared. Â The problem has never been real estate; you need it and have to have it.Â The problem was with the banks.Â Real Estate as an asset class is and always will be imperative in a portfolio whose aim is to build and retain wealth.Â For a detailed explanation on the steps to buying, feel free to visit my website http://www.sfhomeforsale.com/Step-By-Step-Home-Buying
If you thought success stories for underdogs were limited to The World Series Champions; The San Francisco Giants you have no further to look than the area immediately surrounding the ballpark: SoMa, South Beach and Mission Bay.Â A team of misfit commercial real estate lease ups and land sales will champion the otherÂ Giant underdog in San Francisco; Residential Real Estate.
In the past month, TMG partners, a development company focused on office and retail space ranked #1 Real Estate Developer by the San Francisco Business Times, has taken control of nearly 1 million square feet of SoMa Real Estate.Â Here are their home runs:
1. Â Â TMG has signed a 270,000 square-foot- lease at 650 Townsend (@ 8th street)for social gaming company Zynga (think Farmville on Facebook).Â
2. Â Â TMG has taken ownership stakes inÂ in 680 Folsom at third street (405000 sq ft) .
3. Â Â 155 5th st.Â between Howard and Mission (400,000 sq ft).Â
4. Â Â 260 5th street X Folsom ; Residential
5. Â Â 900 Folsom x 5th; Residential
6. Â Â 208 Utah (cross street 15th) purchased for 7.5M
Tenants looking for new headquarter in TMGâ€™a dug out include both rookies and veterans Twitter, Dolby, and Dugoni School of Dentristy.Â Michael Covarrubia, TMG CEO reveals â€œThe activity is tremendous.Â There are a bunch of large users out there which is causing a tidal wave of activity.â€ Â
The largest land deal since 2005, Salesforce.comÂ paid 278 Million dollars for 14 acres of undeveloped land Â by the ballpark in Mission Bay.Â This purchase is more than double the space it currently occupies in the financial district. CEO Marc BenioffÂ said the company looked at buying in Silicon Valley and in OaklandÂ but decided to remain in San Francisco because of the cityâ€™s growing status as a technology hub.Â
â€œSan Francisco really has become the home of the next generation Internet Companiesâ€ and made reference to the tremendous labor pool available here.Â Salesforce.com has already broken ground and is slated to move in by 2013. Right behind them , theirÂ neighborÂ UCSF Medical CenterÂ will be complete in 2014 at a cost of 1.5 Billion dollars.Â This is precisely when the existing pipeline for new residential units will be utterly dry.Â There is Giant diversity of business digging into San Francisco which promises a stable employment future.Â
If you have any doubt that this city has a splendid future, please remember that San Francisco is whereÂ Â Tim Lincecum showed up as a rookie and rented a 1 bedroom apartment.Â That was only three years ago.Â If you have any uncertainty that this glorious city will make it out of this torturous recession Â remember our Giants who took us on the most amazing ride these last weeks. Â They have taken our leftover hearts, united us in celebration and reminded us:Â Donâ€™t Stop Believing.Â To subscribe to this blog ; http://www.sfhomeforsale.com/Blog
Update Feb 20 2011: According to CB Richard Ellis SF to be first in nation in office-rent growth this year by a 9% increase; NYC was secondÂ expected to increase byÂ 7%.Â
How do I get in???? Short of actual labor and delivery, getting your kid into day care in San Francisco is the most long and painful aspect of parenting a child under the age of two.Â And much like the age-old, wise advice â€œGet an epidural,â€ the thing you frequently hear is â€œGet on the wait lists early.â€Â
It sounds easy enough (better than a needle in the spinal cord), but once you get on one or two waitlists and then call to follow up, you realize it may be more complicated than you thought because no one seems to have a straight answer.Â No one can tell you where exactly you are on the list. Why is that? Isnâ€™t there an implied order to a list? Isnâ€™t that why we create a list?Â
What is the wait list and how does it work?Â I finally got a straight answer from Marin Day School Director Kathleen Herrera-Autumn. Kathleen is the graceful and focused director of one of the most popular day care centers in San Francisco, Marin Day School, so she gets this question a lot. Located in Pacific Heights, right near the Fillmore shopping district on California between Webster and Buchanan, the school is prized not just for itâ€™s A-plus Â location, but for its incredibly skilled, present and powerful teaching staff .Â
The first thing I learned about the wait list is that I had the wrong language. Turns out itâ€™s not a wait list. Itâ€™s a wait pool.
Â â€œItâ€™s really a puzzle,â€ she explained. â€œThere is priority given to the community it servesâ€œ (i.e. affiliations with companies like The Gap or Lucasfilm). â€œThere is also priority given to existing members who may be adding an additional sibling or may be shifting from part time to full time care. Then in addition, priority is given to the broader community within the Bright Horizons network. So if you want to re-locate your child into another school that may be more convenient to you, you are afforded the opportunity to remain a part of the bright horizons network.â€œ
O.K. Soâ€¦ How do I get in? Kathleen advises, â€œFlexibility is helpful and sometimes puts you in sooner. If you have the flexibility to do part time for awhile, starting with the available slot gets you into priority status because then you are an existing community member.â€Â Additionally, since Marin Day School is part of the Bright Horizons network of child care facilities, you may get priority because your child attends a Bright Horizons elsewhere in the city.Â
So the key here may be very similar to buying your first home: Get in where you can and then move where you want.
Last week I wrote about changes in the San Francisco real estate market, and the challenges sellers are facing to get the greatest value for their home. Today Iâ€™m writing about strategies that will help you achieve that goal.
1. Value Letâ€™s suppose you have a firm idea of the value of your home. Youâ€™ve looked closely at home sales and how home values in San Francisco have performed.Â If you feel discouraged, I want to congratulate you for being willing to accept reality.
2. Agents Next, forget about what you know about real estate agents and what makes them effective because there is nothing â€œtraditionalâ€ about the market we are in.Â With 1 of every 7 homeowners late on a mortgage payment, you can be certain of very little except that the rules have totally changed.Â Therefore any listing agent that speaks exclusively about marketing is only telling you half of the story.Â Â Â
3. Focus on Whatâ€™s Important There are three ways to market a property: price, price and price. End of story.Â The agent you are talking to about listing your property is not the person thatâ€™s going to get it sold for you. The agent that will sell your home for you is the one you will never meet. Itâ€™s the agent who has the buyer that will write an offer. Did you know on all contracts here in San Francisco the agent that represents the buyer is referred to as the selling agent? Thatâ€™s the person you need to get along with, not the person telling you how great their marketing is and what a long list of past clients they have. Itâ€™s very nice that they have a long list of clients but how does that help you exactly? Instead of talking to other people who have sold their homes with that listing agent, you should be talking to other agents that have transacted with that listing agent.Â Look at it this way: who knows more about your work?Â Your boss or your co-worker?Â
4. Commission and Bonus I highly recommend investing a 3% commission to the buyersâ€™ agent, in addition to a bonus if they get it into contract within a certain time frame. Homes rarely get sold without a buyersâ€™ agent, and with so much inventory out there, you need a way to draw the attention of the agent. The buyer will follow.Â Â Â
â€œA bonusâ€ you ask? Yes. The datahere tells us that you will have to reduce your price if you stay on the market too long, so arenâ€™t you effectively saving money by spending money on a bonus to get it sold sooner?Â If it does not sell in that time frame, what have you lost?
The bonus should be in-line with the purchase price of the home, but it should be at least $5,000 because the buyer agent broker or office will retain approximately half of it. When you think about this additional investment, if your home sells more quickly and therefore closer to the home value you're after, arenâ€™t you effectively getting the money back in not having to discount, or pay additional mortgage payments and property taxes?Â
Itâ€™s a tough market out there, but with a healthy dose of persistence, creativity and reality, you can meet, and even exceed, your expectations. Good luck! To subscribe to this blog ; http://www.sfhomeforsale.com/Blog
Are you wondering: what is the value of your home? Are you concerned about selling in a down market?Â
In 2007, the stalling housing market helped to initiate the
recession. Now in 2010, a stalling economy is preventing the housing
market from gaining momentum.
On Tuesday July 20, The Wall Street Jouranl reported that San Francisco had a 16% increase in inventory and has 6 months of supply.On Wednesday July 21, in his semi-annual monetary policy report to
the Senate Banking Committee, Ben Bernanke stated that the economic
outlook is â€œunusually uncertain.â€Â This lack of confidence is easily
apparent in the numbers of contracts we are seeing being written
following the 4th of July holiday. Weâ€™re confronting an
excess of inventory, and unfortunately, three of the biggest causes of
the excess inventory are things that you as a seller can do nothing
People are not buying because of job instability. San Francisco is
at 9% unemployment, which affects a large segment of the buyer pool.
The trade-up buyer canâ€™t transact. They purchased a home four years
ago and may come to an open house today looking to trade up, but canâ€™t
make an offer because they are underwater in their current home. This
trade-up buyer has contributed to the excess inventory because they are
also a â€œbreak even sellerâ€: theyâ€™ve over-priced their home, attempting
to break even from a price they paid 2-4 years ago (plus transaction
Another cause of swelling inventory is the optimistic seller who,
encouraged by the spring market, overpriced their home 5-10%. Perhaps
they are hoping for a little extra equity, or maybe they are shielding
themselves from discounting by padding the price.
But a strange thing is happening today. Just as a strong spring
market is wrapping up, the summer market â€“ typically a little slow in
July â€“ is suddenly in full-blown hibernation. Active inventory, usually
declining from the absorbed spring market, is bucking the trends of the
last 4 years and actually increasing.
While inventory has been rising, the buyer pool has been diminishing,
and as a consequence we are seeing a significant decrease in new
contracts by week.Â
Pricing is hugely important in this atmosphere, and sellers should
arm themselves with the best information available. They should pay
particular attention to the first number of that â€œvalueâ€. Is it really a
1, or should it be a 9? Being unrealistic in this market is an
expensive mistake.Statistics tell us that the longer a home stays on the
market, the further below original list price it is likely to sell.
Being reality-based about this market is essential when considering
the value of your home. But there is hope. Tune in next week for a
strategy for overcoming this challenging market.Â
Why you should avoid Foreclosures and Short Sales and Why July and August are the bestÂ time to get a killer deal on an A+ property.
Purchasing a foreclosure or short sale property in San Francisco is usually a very bad idea.Â The notion that the only thing wrong with distressed property is the borrowers' ability to pay is like believing that a person can be color blind except when it comes to seeing rainbows.Â There are almost always contributing factors to the â€œbargainâ€ for example, the fact that the home is really in a "B minus to C plus" location or is in a bad location in the building for example where the bedrooms face a busy streetÂ or Â has a bad floor plan that will cost a lot of money to overcome, assuming it can be fixed at all.Â It is unlikely that the only mistake made when the property was purchased was the loan or ones ability to pay for it.Â Life doesnâ€™t work that way.Â When you look at the anatomy of an accident, it is usually several things that go wrong not just one.Â
A far better strategy is to isolate property that is overpriced and has sat on the marke and this is particularly easy to do right now.Â Usually this is just an unrealistic seller who has a good home in a good location and is hoping to get more than this market will deliver.Â Particularly now; in the summer of 2010, this seller has most likely put off selling for a year or two because of market conditions Â and has missed their opportunity to sell in the Spring market. Â Frequently this sellerÂ has equity in the property and can let it go at a discount but they are not getting any offers because the price is wrong.Â I have seen numerous foreclosures and short saleÂ negotiations unfold and it is totally normal to see between 8 and 10 bidders at the table.Â Â The fact that there is more than one buyer at the table withÂ foreclosures and short salesÂ property should indicate to you that you are at the wrong table.Â If you are not the only buyer at the table then you are not leveraging this market.
You donâ€™t â€œfindâ€ a good deal.Â You write offers on property until you get one.Â If you want a deal; isolate anything that came on to the market in the Spring and make a lower offer now that there are no other buyers around to compete with.Â If the seller does not respond walk away and come back in four to five days when they are still emotional about losing the deal; donâ€™t wait 2-3 weeks .You will likely have the sellersâ€™ complete attention.Â Now the buyer has some leverage and you can actually negotiateÂ the deal instead of theÂ bidding contest that happens at foreclosures and short sales. To subscribe to this blog ; http://www.sfhomeforsale.com/Blog
It was an active week for the flip market in Cow Hollow. This showcased both the fixer opportunity and the finished product within blocks of one another.
2130 FILBERT Originally built in 1874, 2130 Filbert was purchased in 2008 for $1,300,000. This was a 2 bed/2.5 bath home, 1,500 sq ft (aprx).
Nineteen months later, 2130 Filbert was back at a price of $2,450,000. Having undergone a down-to-the-studs remodel, the developer transformed the home to a green-certified 3 bed/3.5 bath with 2,500 sq ft (aprx) and 2 parking spaces. Because of the historical significance of the home, the planning department would not permit any faÃ§ade changes or height additions. The square footage was added to the back-side of the top floor, which was not visible from the street.
This home received 3 offers and was under contract in 5 days.
3055 LAGUNA Two blocks away, a fixer was getting a lot of attention: 3055 Laguna was on the market for the first time in over 50 years. At 1,040 sq ft (aprx), it was being offered at $829,000. Despite the fact that the only open house was during the Blue Angelsâ€™ performance, and the only brokersâ€™ tour was during a torrential downpour, an offer date was set with whiplash speed.
3055 Laguna garnered 4 offers, one of which was all cash, and was under contract in 8 days.