Sunday Open House feedback on 514 Elizabeth Street

As a Real Estate agent I pride myself in pinpointing the "fair market value" of homes I'm assisting Sellers to sell, and Buyers to buy. I spend countless hours evaluating all comparable sales and current property on the market. Sometimes it happens quickly, sometimes I feel the need to keep researching, but eventually I come to a certain conclusion of what Buyers will think a home is worth.

It's always interesting to then see my research get tested by real buyers, in this case by feedback at this past Sunday's Open House for 514 Elizabeth Street.

We've priced the property at $895,000 for a 2 bedroom (can be used as a 3 bedroom) 1 bath. There are plenty of "comparables" that sold for far less, some very close in price. But then you need to add in some seriously valuable features that 514 Elizabeth has, that most comparables don't.

For one, the location is simply as good as it gets in Noe Valley. Elizabeth is just 1 block to the extremely popular 24th Street shopping corridor in Noe Valley. Yet Elizabeth is a quiet and quait street. In addition, 514 Elizabeth is just in from Noe Street which means it's basically a flat walk to get to 24th. Just 1 block over towards Castro Street and you have to deal with a hill. Elizabeth & Noe Streets is also 3 blocks to Church Street and the J-Church MUNI line and several bus lines. In other words, it's got it all location-wise.

Secondly, and this is from serious feedback from the Open House, the kitchen/family room/dining area is amazing. The sun shines everywhere with 2 skylights and windows in nearly every direction. Plus you look at green immediately outside nearly every window. One buyer who started at the front where the formal living room and bedrooms are located then entered the kitchen/family room area and her eyes went wide and she exclaimed "oh my, I love this".

Thirdly, I'll group a bunch of mini-features, that when added up, really do set this Condo apart from it's competition. And again, this is Open house feedback. 1) It's remodeled, yet it retains significant old world charm. 2) top floor is more desirable since no one stomps on your ceiling. 3) everyone remarked how special the shared garden is. 4) large walk-in laundry room with storage/closets. 5) large pantry and tons of kitchen cabinets.

Fourth, it comes with the attic deeded, and that kind of additional storage is definitely valuable to a number of buyers.

Frankly, 514 Elizabeth is close to a $1 million dollar property with one exception. The downstairs owner owns the garage. They are going to lease a side-by-side spot to the new owner of 514 Elizabeth for $200 per month. But having it "deeded" adds value. So when other Agents came by on Tuesday at the "Broker's Tour" and they immediately saw what appeared to be an under-priced property. But the non-deeded spot made the price seem about right to most.

Of course I'm convinced because I spent so much time researching the market, and Buyers and Agents alike seemed to agree with 6 sets of Buyers spending a very long time at the Open and asking a ton of questions. Of course you must judge for yourself. If you're in the market for a Top Floor 2 to 3 bedroom condo in Noe Valley come by this Sunday's Open House from 2-4pm. Or call us for a private showing. Or first check out the video walk through at www.514Elizabeth.com

TIC lottery conversions taking longer than ever

San Francisco requires all multi-unit buildings with 3 to 6 units that wish to convert to Condos to enter their lottery to try to win an application ticket. Only 200 units are allowed to convert a year, and that was just fine when only 200 units entered. Today there are so many units vying for a lottery ticket that according to G3MH.com "The City estimates that most properties entering the 2009 conversion lottery for the first time will not win conversion eligibility before 2030."

In other words, don't plan on buying a TIC in a 3+ unit building (or a 2-unit with only 1 owner occupier) unless you plan to also sell it as a TIC.

There's been a push to try to get the City to allow current lottery entrants to buy an application to convert to generate revenue for the City. But San Francisco's Board of Supervisors are unlikely to agree to that no matter how dire the City finances might become.

When considering buying a TIC, be sure to hire a Buyer's agent who knows TIC's so you know what you're getting into. I personally think TIC's are excellent investments, and the "risks" are over blown by unknowledgeable people. But since the promise of a conversion to a condo is so remote for all except 2-unit buildings with 2 owner occupiers, you need to know you are likely to be selling a TIC whenever you plan to move on.


Getting the best loan: Direct lender or Mortgage Broker?

Thinking of buying a San Francisco condo or home? First things first, you need to know if you qualify for a loan, what kind & how much. In the past my recommendation was to speak to two Mortgage Brokers and one direct lender, compare rates and fees and then get "pre-approval" with whoever was the best.

Today things have changed. The contracting credit market has limited the number of banks a Broker can shop. More over, it seems there are only a handful of banks who have competitive rates, and reasonable qualifying criteria. I won't name names on the "bad" lenders, but I've experienced, and heard other stories, of a number of pre-approved loans that did not go through when the lender found some minor item that disqualified the borrower or property from getting the "pre-approved" loan. And these are often at the 11th hour when Buyer and Seller thought the deal was done. Needless to say, after hearing more than one story about one well known lender, I'm done sending anyone there. Plus, a buyer of mine recently shopped that lender, and they couldn't compete on rates and terms with my two favorite direct lenders. So they charge more, have harder qualifying standards, and then change things on you at the 11th hour.

So today, I refer my Buyer clients to only 2 banks, with a 3rd and a 4th as back ups in the very rare case #1 and #2 can't get the job done. One of my two "go-to" banks is Bank of America.

The impetus for this blog post was an article today in Inman news about BofA getting aggressive with their Jumbo loans. Currently the "low end" of the San Francisco market (if you can call $600k's and lower "low end") is smoking hot. Two recent listings of mine, one asking $649k and another $625k, both got multiple offers soon after hitting the market. I also have several buyers with top ranges of $600k and have included condos just above $600k hoping they could get them at $600k, and yet everything they like is getting snapped up by other Buyers very quickly and above my Buyers' purchase price range. So, so much for a falling market, at least on the "low end" of the San Francisco market.

The reason for this hot market is 3 fold. First, the Spring (March thru June) is the seasonally the hottest market in San Francisco every year with buyers and sellers coming out of the wood works, and that's true this year too. I had over 100 people through an Open House yesterday. Second, interest rates for "conforming" loans (those at $629k or less) are at record lows at 5% and even less. So buyers can afford a lot more (10% more in comparison to when rates were 6% for example). Third, the "low end" of the market are largely first time home buyers who have been priced out of the market for so long, and they seem to be viewing this market as their first chance in years to get into the San Francisco market. I had one first-time home Buyer at my open house yesterday tell me his Accountant recommended he find a write off, and said a real estate loan was the best way. So there are a few reasons first time home buyers are jumping in.

So if the "low end" is hot because of low interest rates, the BofA news could spark the high end market too. We saw this happen in 2006. I had thought we were in for a soft and slow year in early 2006 but then the market took off again. In hind sight that was apparently sparked by the availability of alt-A loans which qualified a lot more buyers. More demand spurred price appreciation.

Could we see a resurgence in the $1million+ market in San Francisco? Only time will tell. But for those in that market, BofA was already one of my top two lenders, so they need to be one of your first calls. Feel free to contact me for a referral to the lender in BofA I use.... who incidentally worked for a Brokerage a few months ago and made the change to a direct lender for the very reasons I cite above. There were far fewer places to shop, so his services weren't needed as much. Today, he's got a lot on his plate with re-fi's and lots of new applications, especially on the "low end". I suspect after BofA's jumbo loan announcement he'll only get busier.


Video tour of 514 Elizabeth St

Top floor 2BR remodeled Condo in the heart of Noe Valley

Condo is located just 1 block to 24th Street's shops, and 3 blocks to MUNI and Church Street. Open Sunday 1-5pm and Tuesday Noon-2pm

Contact us for showings at INFO at SFisHOME dot COM or 415-652-3780

Noe Valley Condo - new Listing

Top Floor Remodeled 2 Bedroom Condo in the Heart of Noe Valley. Just 1 block to 24th Street, and 3 to MUNI & Church Street. This is a very light and bright condo with an amazing kitchen, dining, and family room area great for entertaining. Full details and photos at:



Excelsior District update - a closer look at the CBS report

The CBS TV news report started off with a story about a home in the Excelsior getting 40 offers. I find it instructive to compare what's happening now, to what's happened this same time last year.

Running a search using the San Francisco MLS, for all Single Family homes that are For-Sale now, or in Escrow ("active contingent" or "pending") or have Sold in the past 2 months (1/10/09 - 3/11/09) we find the following:

For Sale = 21
In contract = 22
Sold past 2 months = 11
(report details here)

Same time frame in 2008 = 12 sold (report found here)

Looking ahead in 2008, over the next month only 5 more sold in the next 30 days, and 11 more in the 30 day period after that. So assuming the 22 that are in contract now end up closing within 30 days sales would be up 400% year over year. If they close in 60 days they are up by 37%. The truth is probably somewhere in the middle, but either way, the CBS report certainly seems accurate for this one neighborhood (I'm not convinced of that for all of San Francisco even though I have seen a significant uptick in my own business too).

If you then compare Sales prices, the 11 that sold these past 2 months averaged $532,400 (median $530,000). The 12 sales from that period last year averaged $642,000 (median $644k) so prices are down 17%. But if you take a closer look, in part it is that Buyers are buying smaller places this year. The price per SqFt is only down about 3% from $467.38 to $452.28.

One final point about the statistics. Looking at the current report, you'll note the 21 homes for sale. With 11 selling in the past 2 months, or 5.5 per month, it's only a 4 month supply of homes. That supply was probably a lot larger just a few weeks ago since 22 recently went into contract. It looks to me that in the past month, an entire 4 months of inventory was purchased. Talk about "pent up demand". Wow.

Single Family home Short Sales in San Francisco

Single Family Homes continue to far outpace Condos in the Short Sale category according to the San Francisco MLS. As I just wrote there were 46 apartments short sales, but this report shows 86 Home short sales.

The 86 is up from 54 on Sept 1st 2008. Once again, there are a smattering in prime locations, at least in terms of sections of the city like the 2 in Cow Hollow. However, upon closer look 2243 Greenwich is next door to a fire station and is pretty hideous, and 2621 Lombard is "highway 101" just as it turns towards the Golden Gate Bridge on ramp.

56 of the 86 are in "District 10" or the southern most part of the City that has been hardest hit by price drops. This district include the Excelsior where yesterday's CBS TV news reported on a home that received 40 offers. So the low prices appear to be attracting a ton of interest, potentially marking a bottom in the local market.

"Known Short Sales" in San Francisco

Keep track of Short Sale listings in the San Francisco MLS, today, March 12th brings us 47 Condo/Loft/Coop/TIC listings with the "Known Short Sale" box checked in the MLS. The list of the 47 can be found by clicking here (only available for 30 days).

For more info on any of these listings you can enter the address in the quick search section in the left column of this blog.

I ran a similar search on Sept 1st 2008 and found only 13 Short Sales. Of course this could have as much to do with the fact that SFAR (San Francisco Association of Realtors) only recently introduced the "Known Short Sale" check box back then. But just as interesting are that Pacific Heights has 2 Short Sales and Nob Hill has one.

Interestingly these also make a case for the "location, location, location" mantra. All 3 are within 2 1/2 blocks of each other along the 3 busiest thoroughfares in the area.... Van Ness, Franklin and Gough.

Not a surprise to me are the increasing number of short sales at The Beacon with 6 at the 250-260 King St complex. Also not a surprise, 19 of the 47 Short Sales are in SOMA/South Beach/Mission Bay, with virtually every major building that has been open at least a year having one. That includes One Rincon Hill, The Metropolitan, The Palms, Watermark and Bridgeview. In early February I wrote about "The Coming Foreclosure Wave" in this part of town due to an over supply and off the charts prices buyers have been paying for the "new car" smell of new condos in the area. Well, here they come.


Sales spike since March 1st

I was about to write a post this morning pointing out a spike in sales, particularly in Noe Valley where virtually nothing was selling for over $1 million, but in the past 10 days 3 homes priced at $1.799 million or above just went into contract.

And for all disrespect I give general media, not only was I beaten to the punch on a similar story line by CBS TV news, their story is full of facts and data. Check out the video here:

On the other hand, something doesn't add up in the report. It cites TerraDatum as showing "more homes sales in San Francisco than in the previous 6 months". But they must be referring to any other 2 week period. But even then, per the MLS it appears we're about average. Hmmm... it's too late tonight to get to the bottom of this, but let me tell you, I am incredibly busy right now.

The one item I'll share is a report I ran via the San Francisco MLS, which doesn't include many of the new-construction sales like those at the Infinity, and found 82 residential properties (homes & condos) that have gone into contract since March 1st.

You'll see "D/S" which stands for "District/Subdistrict" and then note that "5C" stands for Noe Valley

4338 Cesar Chavez asking $1,799,000, 1470 Noe St asking $1,850,000 and 731 Douglass St asking $2,150,000 all went into contract in the past 10 days. In the prior 6 months only 6 properties priced above $1.7 million Sold, or 1 per month vs. the 3 in only 10 days.

Has the bottom come and gone? I'm not so sure just yet, but it speaks volumes about how many well off buyers there are in San Francisco competing for the very limited Supply no matter how tight the credit markets.


New York City to try auctioning off new condos

What struck me most about this New York Times article about new condo developments in Manhattan turning to auction companies to sell off slow moving inventory was the very last sentence "The average sales price of a two-bedroom Upper East Side condo was just above $1 million in 2002. It rose to $1.5 million in 2004, and to $2.2 million at its peak in 2008."

What is so shocking is that not only did the Upper East Side 2BR's significantly outpace San Francisco in percentage appreciation, but look at the following chart and the real dollar difference between the two cities. From 2002 through 2008 Upper East Side 2BR condos increased $1.2 million, or the entirety of Pacific Heights 2008 average price.

Pacific Heights has basically caught up with the Upper East Side's 2002 price. Now I'm from New York City and realize that the Upper East Side and Pacific Heights are two vastly different areas. Maybe I should throw in Russian Hill to pull in some of the expensive Coop buildings like 999 Green. But either way, New York City has gone through the roof while San Francisco experienced a much more even pace of appreciation.

Meanwhile, New York is getting crushed right now by the financial crisis after having been the biggest beneficiary of the out sized Wall Street bonuses. Sprinkle in a little Ponzi scheme from Madoff, and then compare to San Francisco.

The bottom line, New York has to fall in half to be "as cheap as San Francisco" is today, which it might. But will San Francisco's better neighborhoods like Pacific Heights fall like you'd expect New York to fall? When I left in 1997 to move here, New York was cheaper than San Francisco. So you can draw your own conclusions.