The San Francisco Department of Public Works published a flow chart of how the a 2-unit Owner Occupied building gets converted to Condos here http://www.sfgov.org/site/uploadedfiles/sfdpw/bsm/FlowchartConversion2UnitBypass.pdf
For Buildings with 3 to 6 units, or a 2-unit building with only one owner occupier, if you want to convert to condos in San Francisco you must go through the lottery process. I found a surprisingly informed discussion about the lottery on SocketSite after they published a San Francisco Chronicle article about the Mayor's Office considering the idea of allowing lottery participants to buy the right to convert. That San Francisco Chronicle article can be found here.... but for those curious about how some of the TIC rules work, and for an interesting discussion of the pros and cons of TICs, rent control, and condo conversion in San Francisco, the SocketSite comments are smarter than your average joe (well, most of them :)
That discussion can be found here. The article was typical of mass media... bad. The final comment was perfect... someone saying a lottery is fairer than allowing someone to buy their way out of the lottery. Not well thought through because if you can't afford to buy your way out, wouldn't you hope and pray that EVERYONE else did? You'd then be the only remaining building in the lottery... so obviously you'd win. So the more the merrier right? Anyway... watch out for anything mass media says... including the Chronicle, when it comes to Real Estate. Blogs can be notoriously un-researched, but most people know that... whereas they think a paper like the Chronicle must always be accurate, thorough, researched, and fair... hardly.
1/31/09
How to Prepare Your Home for Sale: Video
10 Step Video on how to prepare your home for sale. Several aren't quite appropriate for San Francisco... but there are true gems in here:
Thinking of selling your San Francisco home or condo? Contact the SFisHOME Real Estate Group at INFO AT SFisHOME DOT COM or get your home value report at www.Evaluate-My-Home.com
Thinking of selling your San Francisco home or condo? Contact the SFisHOME Real Estate Group at INFO AT SFisHOME DOT COM or get your home value report at www.Evaluate-My-Home.com
1/23/09
Best deals & biggest price drops in San Francisco
The tough times are in the outer fringes of San Francisco and a home just caught my eye as what appears to be one of the best deals going... and it still won't sell. 279 Flournoy St, San Francisco is a single family home that's listed 3 bedrooms, 2 bathrooms and 1034 SqFt. It's a Bank owned REO from Countrywide that struck me as a major deal for two reasons. For one it was only asking $389,900. Now if you live in the Midwest and are contemplating a move to San Francisco this price will seem outrageously expensive, but in San Francisco you can't even by a studio condo in the north end of town for that price. 
The second thing that struck me as this being a major deal is that it last sold in 2003 for $440,000. That is striking because 2003 is BEFORE the market took off with crazy financing. Most major price drops are down to 2004 or maybe down to 2003... but not below 2003.
The third thing that struck me... this home was withdrawn from the MLS (the San Francisco MLS or multiple listing service) in mid-December without having sold (as far as I can tell). That means it's low asking price of $389,900 was too high.
Finally, when doing a 1/2 mile radius search around the house for all homes that are on the market for sale, in contract, Sold in the past 6 months, or expired or withdrawn off the MLS, it is the 4th cheapest property out of 51 in total. So by any measure it is REALLY CHEAP and still didn't sell. The three that are cheaper appear to be smaller homes, but these homes are active on the MLS and they aren't selling either. They are 262 Minerva St, 127 Broad St (looks like a shack that needs to be torn down) and 269 Montana St (a short sale with 3 offers submitted to the lender already - per the MLS). Check them out at www.SF-MLS-Search.com.
If you're interested in exploring properties for sale in San Francisco, whether for investment or a primary residence, please contact me for assistance at www.SFisHOME.com.
The second thing that struck me as this being a major deal is that it last sold in 2003 for $440,000. That is striking because 2003 is BEFORE the market took off with crazy financing. Most major price drops are down to 2004 or maybe down to 2003... but not below 2003.
The third thing that struck me... this home was withdrawn from the MLS (the San Francisco MLS or multiple listing service) in mid-December without having sold (as far as I can tell). That means it's low asking price of $389,900 was too high.
Finally, when doing a 1/2 mile radius search around the house for all homes that are on the market for sale, in contract, Sold in the past 6 months, or expired or withdrawn off the MLS, it is the 4th cheapest property out of 51 in total. So by any measure it is REALLY CHEAP and still didn't sell. The three that are cheaper appear to be smaller homes, but these homes are active on the MLS and they aren't selling either. They are 262 Minerva St, 127 Broad St (looks like a shack that needs to be torn down) and 269 Montana St (a short sale with 3 offers submitted to the lender already - per the MLS). Check them out at www.SF-MLS-Search.com.
If you're interested in exploring properties for sale in San Francisco, whether for investment or a primary residence, please contact me for assistance at www.SFisHOME.com.
Finding Rentals or rent prices in San Francisco
Time and again I ask what are rental prices are like in San Francisco, or in a particular neighborhood or size range. 
I almost always send them to Craigslist since it seems like that every rental listing shows up there. But wading through Craiglist isn't all that easy. With all the mashup technology someone, sooner or later, had to come up with a map based search... and sure enough someone did.
A new internet must is Mullinslab2.ucsf.edu/SFrentstats
Click on "2BR" or whatever segment you're interested in, and the map pops up, and from there you can drill down into neighborhoods. Or you can click on "Neighborhood Data" and see rents and total rentals by neighborhood. Or look at trends over time under "Overall Stats/Notes" for "Graphs of rent over time".
To me the best part, especially if you are looking for San Francisco rental properties, or if you are looking to buy a Condo or house to then turn around and rent, you can see the Craiglist rentals in a much easier to digest way.
I almost always send them to Craigslist since it seems like that every rental listing shows up there. But wading through Craiglist isn't all that easy. With all the mashup technology someone, sooner or later, had to come up with a map based search... and sure enough someone did. A new internet must is Mullinslab2.ucsf.edu/SFrentstats
Click on "2BR" or whatever segment you're interested in, and the map pops up, and from there you can drill down into neighborhoods. Or you can click on "Neighborhood Data" and see rents and total rentals by neighborhood. Or look at trends over time under "Overall Stats/Notes" for "Graphs of rent over time".
To me the best part, especially if you are looking for San Francisco rental properties, or if you are looking to buy a Condo or house to then turn around and rent, you can see the Craiglist rentals in a much easier to digest way.
Another interesting REO property
530 Ashbury looks like it might have been a victim of fraud... in August 2006 someone paid $825,000 for it and got 100% financing with two loans from the same company... Fremont Investment & Loan. It looks like these guys closed down or sold their residential mortgage business... and no wonder if they were doing 100% financing for buyers who clearly over paid. 
Fast forward to February 2008 a mere 18 months later and the property goes back to Fremont Investment & Loan... and in July 2008 CapitalSource Bank buys up Fremont.
Fast forward again to today... and 530 Ashbury is listed for sale as an REO (Real Estate Owned by a bank) in the San Francisco MLS for $599,900... but it's got a tenant in the property, and it says "bank has no record of any paid rents". My, my, how interesting. So the buyer probably collected the rents and never paid a bill and made off with the rental income as long as she could. You really have to wonder if the loan officer at Fremont was in cahoots here, because even at $4000 per month in rent for 18 months, it doesn't seem worth the blow to your credit report, or being criminally prosecuted.
By the way, now the owner of record is a company called Liquidation Properties, Inc... how appropriate! And per the tax records they got it from Fremont in a Quit Claim deed for $493,500. So if any unrepresented buyers are out there and like 530 Ashbury, drop me a line and lets see how low we can negotiate this down towards that number. To see the property on the MLS, visit www.SF-MLS-Search.com and enter listing# 351360 into the listing number search.
Fast forward to February 2008 a mere 18 months later and the property goes back to Fremont Investment & Loan... and in July 2008 CapitalSource Bank buys up Fremont.
Fast forward again to today... and 530 Ashbury is listed for sale as an REO (Real Estate Owned by a bank) in the San Francisco MLS for $599,900... but it's got a tenant in the property, and it says "bank has no record of any paid rents". My, my, how interesting. So the buyer probably collected the rents and never paid a bill and made off with the rental income as long as she could. You really have to wonder if the loan officer at Fremont was in cahoots here, because even at $4000 per month in rent for 18 months, it doesn't seem worth the blow to your credit report, or being criminally prosecuted.
By the way, now the owner of record is a company called Liquidation Properties, Inc... how appropriate! And per the tax records they got it from Fremont in a Quit Claim deed for $493,500. So if any unrepresented buyers are out there and like 530 Ashbury, drop me a line and lets see how low we can negotiate this down towards that number. To see the property on the MLS, visit www.SF-MLS-Search.com and enter listing# 351360 into the listing number search.
1/22/09
REO's make for interesting stories
San Francisco is finally seeing some Bank Owned "REO" properties... some had attempted Short Sales first... and I don't think I'm going out on a limb by guessing there were offers but the banks couldn't or wouldn't get their act together to accept it. So not too far down the road the same property hits the market again.
88 King St #101 is one of those properties. I saw it when it was a short sale, and last week it came back on the market priced lowered than the short sales price at $779,000. This is an unusual condo... it's across from AT&T Park where the San Francisco Giants play, and it's literally on the street. With a wall of glass, you'd be staring a lot of Giants fans in the eyes during their 81 home games. In the photo, note the street level glass door leading to the Condo's patio which then leads to a door that puts you in the unit's living room. There's also an interior entry way.
But at $779,000 for nearly 1500 SqFt, 2 bedrooms and 2.5 baths on two levels, it looks like a pretty good deal. I'd even suggest trying to pick it up for a little less. If you're interested in the property, check it out at www.SF-MLS-Search.com or email or call me and I'll send you the info.
1/21/09
Infinity SF & Blu SF updates
Tower one or phase one of the Infinity, 318 Spear St San Francisco, still isn't sold out. Tower two or phase two of the Infinity, 338 Spear St, which many claim is the superior tower since it's closer to the water and has more unobstructed view homes... and is rumored to have better finishes... isn't yet complete, nor is it for sale as of today. Speculation at sites like Socketsite, a San Francisco real estate blog with active commenters, has been that the Infinity's tower two would begin selling soon after the first of the year.
Well, per the Sales office, you can now see tower two via private appointment, but with scarce appointments available. But in early February they will be ready for drop-in appointments. As always start at the Sales office, and it's still best to book an appointment. In addition, Sales will commence around the time that drop-in appointments begin. HOWEVER, tower two is still not ready for occupancy and may not be until June or so.
The prices quoted at Tower one are still amazingly high. One of the only (or was it the only???) 1 bedrooms remaining that has water views is asking $895,000 for just over 800 SqFt. At over $1,000 per SqFt it amazes me that anyone would pay that (well, they haven't since this particular one is still for sale - and they proactively tell you that they will entertain lower offers), but with the credit freeze, stock market drop, and over-supply of homes in and around SOMA/South Beach including their own Tower two... it seems to me a 1 bedroom condo ought to be asking $700,000, not $895,000.
Regarding Blu, or 631 Folsom St San Francisco,
they will begin showing finished models next week, and occupancy will begin at the end of March or beginning of April. Thus far only 10% of Blu is in contract whereas Infinity tower one claims to only have about 10% remaining... but of course 0% sold in tower two.
Of the three hottest new buildings in the area... the ultra luxury Millennium SF at 301 Mission is the most expensive (despite an announced 15% drop in prices), Infinity is a pretty luxurious building, at least in terms of amenities, and is cheaper, but is more expensive than Blu. But in addition to amenities, Blu has few private patio/balconies (only 2nd floor and penthouse) whereas Infinity has the most.
It will be a very interesting year in real estate throughout San Francisco, but the SOMA/South Beach/Mission Bay market, and in particular these three developments all opening this Spring, will be very interesting to watch.
If you would like to be updated on all MLS activity at these three buildings you can enter your specific search at Automated-HomeFinder.com, or try out SF-MLS-Search.com or register at CleanOffer.com or email me at info @ SFisHOME.com for direct service.
Well, per the Sales office, you can now see tower two via private appointment, but with scarce appointments available. But in early February they will be ready for drop-in appointments. As always start at the Sales office, and it's still best to book an appointment. In addition, Sales will commence around the time that drop-in appointments begin. HOWEVER, tower two is still not ready for occupancy and may not be until June or so.
The prices quoted at Tower one are still amazingly high. One of the only (or was it the only???) 1 bedrooms remaining that has water views is asking $895,000 for just over 800 SqFt. At over $1,000 per SqFt it amazes me that anyone would pay that (well, they haven't since this particular one is still for sale - and they proactively tell you that they will entertain lower offers), but with the credit freeze, stock market drop, and over-supply of homes in and around SOMA/South Beach including their own Tower two... it seems to me a 1 bedroom condo ought to be asking $700,000, not $895,000.
Regarding Blu, or 631 Folsom St San Francisco,
they will begin showing finished models next week, and occupancy will begin at the end of March or beginning of April. Thus far only 10% of Blu is in contract whereas Infinity tower one claims to only have about 10% remaining... but of course 0% sold in tower two.Of the three hottest new buildings in the area... the ultra luxury Millennium SF at 301 Mission is the most expensive (despite an announced 15% drop in prices), Infinity is a pretty luxurious building, at least in terms of amenities, and is cheaper, but is more expensive than Blu. But in addition to amenities, Blu has few private patio/balconies (only 2nd floor and penthouse) whereas Infinity has the most.
It will be a very interesting year in real estate throughout San Francisco, but the SOMA/South Beach/Mission Bay market, and in particular these three developments all opening this Spring, will be very interesting to watch.
If you would like to be updated on all MLS activity at these three buildings you can enter your specific search at Automated-HomeFinder.com, or try out SF-MLS-Search.com or register at CleanOffer.com or email me at info @ SFisHOME.com for direct service.
1/6/09
REO's in San Francisco - Condos
Bank Owned "REO" properties in San Francisco still remain at far lower levels than other parts of the Bay Area, State and Country. Currently there are 21 Condos that are REO's in San Francisco. Click here for a PDF list of these REO's as of today, January 6, 2009.
Note from the list that within San Francisco the REO's are concentrated in certain parts of the city. The report lists the names of the neighborhoods, and if youclick here you can see a Map Report of the 21 San Francisco REO's.
Note that there are no REO's north of Geary Street (the map is lopped off to only show where the REO's are located) and that there is a concentration of REO's in the Bayview/Hunters Point (south eastern San Francisco) and in SOMA/Mission Bay (where all of the new and newer construction is located).
If you're interested in getting REO listings emailed to you the day they come on the market, visit www.Automated-HomeFinder.com and use the comments section to ask for REO's only.
Note from the list that within San Francisco the REO's are concentrated in certain parts of the city. The report lists the names of the neighborhoods, and if youclick here you can see a Map Report of the 21 San Francisco REO's.
Note that there are no REO's north of Geary Street (the map is lopped off to only show where the REO's are located) and that there is a concentration of REO's in the Bayview/Hunters Point (south eastern San Francisco) and in SOMA/Mission Bay (where all of the new and newer construction is located).
If you're interested in getting REO listings emailed to you the day they come on the market, visit www.Automated-HomeFinder.com and use the comments section to ask for REO's only.
12/23/08
Market updates - the best local resource I've found
Case-Shiller... bah humbug. Dataquest... better than a sharp stick in the eye, but not by much. Talking heads on CNBC... please stop talking. So WHO can you listen to when trying to figure out what is going on in the LOCAL San Francisco real estate market? Well, the two best things to do are go to open houses and scrutinize the market for months, and you'll get to know it better than anyone. The 2nd is to turn to someone who does that for a living... a hard working Realtor. But if you just want data... a quick place to check in on the market once per month... Trulia's "heat map" with (and this is critically important) it's ZIP CODE box checked.
Zip codes aren't even as "local" as I'd prefer, but the map will show you the border outlines for each zip code, and then you can see the "year over year" or "y-o-y" difference in "Average Selling Price" and "Median Selling Price". Median is probably best - half sold for more, half sold for less, than the median. "Average" can be skewed by just one or two really high priced (or low) sales.
You can then sort by zip code, or by highest appreciation, or highest depreciation. A quick guide are the color codes - which change as you sort in different ways. And to see the what area is what zip code, just hover your mouse over the map.
The most unfortunate thing about Trulia's heat map is that I'm writing this at the end of December, and they only have July through September data. It shows zip codes 94118 (Laurel Village, Lake and Inner Richmond) as being up 9.9% year over year (surprised????) but as a San Francisco Realtor with "feet on the street" I know the market lost that entire 10% after the financial crisis became mainstream news.
But Case-SCHMiller is old data too and does not have San Francisco City only data... so I find it to be totally worthless, and Dataquest does do San Francisco only, but does not get any more local than that. And as the old adage says, real estate is local, especially San Francisco real estate.
Zip codes aren't even as "local" as I'd prefer, but the map will show you the border outlines for each zip code, and then you can see the "year over year" or "y-o-y" difference in "Average Selling Price" and "Median Selling Price". Median is probably best - half sold for more, half sold for less, than the median. "Average" can be skewed by just one or two really high priced (or low) sales.
You can then sort by zip code, or by highest appreciation, or highest depreciation. A quick guide are the color codes - which change as you sort in different ways. And to see the what area is what zip code, just hover your mouse over the map.
The most unfortunate thing about Trulia's heat map is that I'm writing this at the end of December, and they only have July through September data. It shows zip codes 94118 (Laurel Village, Lake and Inner Richmond) as being up 9.9% year over year (surprised????) but as a San Francisco Realtor with "feet on the street" I know the market lost that entire 10% after the financial crisis became mainstream news.
But Case-SCHMiller is old data too and does not have San Francisco City only data... so I find it to be totally worthless, and Dataquest does do San Francisco only, but does not get any more local than that. And as the old adage says, real estate is local, especially San Francisco real estate.
12/18/08
Looking beyond the mortgage mess - a cement foundation
Buyers have bought homes this year (2008) for 17.8% lower than they did in 2007. More importantly, only 9.3% of them got a 2nd mortgage compared to 43.4% in 2006. ARM's and hybrid loans are down to 7.5% of all loan from 20.2% in 2007.
Finally, 35.9% of all buyers in 2008 were first time home buyers.
So what does all of the above mean? The cement is being poured into the foundation of the future housing market. A strong base is being built, and so unlike the house of cards from the 2004 to 2007 markets, the future housing market is likely to be quite strong and stable.
Interesting report from the California Association of Realtors (found here).
The naysayers, the doom and gloomers, all point to continuing mortgage problems like Option ARM recasts starting in 2009 through 2011. But the government has clearly demonstrated their commitment to supporting the housing market and saving as many homeowners as possible. Meanwhile sales are up 12% over last year... builders have stopped building new homes... and the U.S. still has population growth... so we'll have a housing shortage sooner rather than later.
Meanwhile, lending is still incredibly tight where the majority of buyers have to have 20% down, and often 30%.... and that can only ease over time... it won't get tighter. That will invite more and more first time home buyers, using record low interest rates, who will buy homes that are 30%, 40% and even 50% below their highs.
In the end, we will have a strong foundation upon which the new housing market is now being built... and those who purchase in 2009, 2010 and 2011 will look like real estate geniuses 5 years later.
Finally - since this is a City of San Francisco real estate blog... as the suffering California market stabilizes for all of the above reasons, and the stock market shows that it too has firm legs, the well off San Francisco buyers who are absolutely refusing to buy anything, at any price, will be back. And the drop of 10% in places like Noe Valley and Cow Hollow will be a 2008 blip. Anyone who believes San Francisco is in for a 30% or 40% drop simply because California or nearby Bay Area towns have had drops of that size, will soon find out that San Francisco is different.
Finally, 35.9% of all buyers in 2008 were first time home buyers.
So what does all of the above mean? The cement is being poured into the foundation of the future housing market. A strong base is being built, and so unlike the house of cards from the 2004 to 2007 markets, the future housing market is likely to be quite strong and stable.
Interesting report from the California Association of Realtors (found here).
The naysayers, the doom and gloomers, all point to continuing mortgage problems like Option ARM recasts starting in 2009 through 2011. But the government has clearly demonstrated their commitment to supporting the housing market and saving as many homeowners as possible. Meanwhile sales are up 12% over last year... builders have stopped building new homes... and the U.S. still has population growth... so we'll have a housing shortage sooner rather than later.
Meanwhile, lending is still incredibly tight where the majority of buyers have to have 20% down, and often 30%.... and that can only ease over time... it won't get tighter. That will invite more and more first time home buyers, using record low interest rates, who will buy homes that are 30%, 40% and even 50% below their highs.
In the end, we will have a strong foundation upon which the new housing market is now being built... and those who purchase in 2009, 2010 and 2011 will look like real estate geniuses 5 years later.
Finally - since this is a City of San Francisco real estate blog... as the suffering California market stabilizes for all of the above reasons, and the stock market shows that it too has firm legs, the well off San Francisco buyers who are absolutely refusing to buy anything, at any price, will be back. And the drop of 10% in places like Noe Valley and Cow Hollow will be a 2008 blip. Anyone who believes San Francisco is in for a 30% or 40% drop simply because California or nearby Bay Area towns have had drops of that size, will soon find out that San Francisco is different.
11/19/08
When is an offer too low?
In today's real estate market Buyers are submitting absurdly low offers. Some so low that Sellers are being insulted and not bothering to Counter offer. So how low can you go?
The answer is entirely dependent on YOUR goals. If your goal has more to do with getting a low price than finding the home of your dreams, go as low as you want. If the Seller doesn't counter you, you move on. Of course you may end up submitting 100 offers before one is accepted. Personally I see no "art", no strategy, and no sense to this method. There are better ways.
If your goal is to buy a property that you really do want, and have studied the market and feel you KNOW it's "real" worth, my suggestion is to write up the offer at that price, AND submit your offer with your research or at least an explanation of HOW you came up with your offer price.
The wrong way, and the way I so often see unsophisticated Buyers and their agents do it, is to submit an offer below even what they think the property is worth. Then provide no reasoning or logic for how they came up with their absurdly low number. Of course they have no reasoning or logic, so how can they provide any? And how does the Seller react? They are confused, confounded, and often insulted. However, with reasoning and logic to support the offer, they'll at least give the offer some thought and consideration.
So how low can you go? If you believe the market is in a downward spiral, so much so that while your research shows that the fair market value is $xxx,xxx, but in 6 months it will be 10% lower, you can and should submit an offer 10% lower than your research. But again, you must provide your reasoning to the Seller. Of course the Seller may think the market will be up 10% in 6 months, but at least they understand why you submitted the offer you submitted.
Should you go that low? Frankly, if you think the market will be 10% lower in 6 months, and you are sure of it, then you should wait 6 months. This is a San Francisco blog, and I discuss only the San Francisco market, and I know many Buyers who think the City will be down 10% in 6 months. But I have yet to meet a Seller who believes that. So Sellers are not accepting offers that are 10% below what they believe the current bottom is right now. So you are wasting their time and your own.
For that reason, the last time I checked, sales were at a run rate of about 1/3 of what they were last year because there is a stand off between Buyers and Sellers. Buyers only seem to be offering absurdly low amounts, many with no rhyme or reason, and so the Buyers are not even getting responses. Isn't that a waste of time? In my book it is
The answer is entirely dependent on YOUR goals. If your goal has more to do with getting a low price than finding the home of your dreams, go as low as you want. If the Seller doesn't counter you, you move on. Of course you may end up submitting 100 offers before one is accepted. Personally I see no "art", no strategy, and no sense to this method. There are better ways.
If your goal is to buy a property that you really do want, and have studied the market and feel you KNOW it's "real" worth, my suggestion is to write up the offer at that price, AND submit your offer with your research or at least an explanation of HOW you came up with your offer price.
The wrong way, and the way I so often see unsophisticated Buyers and their agents do it, is to submit an offer below even what they think the property is worth. Then provide no reasoning or logic for how they came up with their absurdly low number. Of course they have no reasoning or logic, so how can they provide any? And how does the Seller react? They are confused, confounded, and often insulted. However, with reasoning and logic to support the offer, they'll at least give the offer some thought and consideration.
So how low can you go? If you believe the market is in a downward spiral, so much so that while your research shows that the fair market value is $xxx,xxx, but in 6 months it will be 10% lower, you can and should submit an offer 10% lower than your research. But again, you must provide your reasoning to the Seller. Of course the Seller may think the market will be up 10% in 6 months, but at least they understand why you submitted the offer you submitted.
Should you go that low? Frankly, if you think the market will be 10% lower in 6 months, and you are sure of it, then you should wait 6 months. This is a San Francisco blog, and I discuss only the San Francisco market, and I know many Buyers who think the City will be down 10% in 6 months. But I have yet to meet a Seller who believes that. So Sellers are not accepting offers that are 10% below what they believe the current bottom is right now. So you are wasting their time and your own.
For that reason, the last time I checked, sales were at a run rate of about 1/3 of what they were last year because there is a stand off between Buyers and Sellers. Buyers only seem to be offering absurdly low amounts, many with no rhyme or reason, and so the Buyers are not even getting responses. Isn't that a waste of time? In my book it is
11/11/08
The "perfect storm" Real Estate Buying opportunity
Trying to time the market? Stop. This is it. Outside of the city of San Francisco in counties like Contra Costa, Solano and Sacramento, investors have poured into the market snapping up bank owned properties left and right. Sales are up 50% to 100% over this time last year, but prices are down 40% since the vast majority of sales are in the low price ranges. With all of those sales, prices will start to rise... and I've heard story after story of multiple offers and bidding wars on many of the REO's... so prices won't be going any lower there.
Meanwhile, in San Francisco, prices had held up, and even risen... until September. I've been referring to this time period as the "financial crisis market". The well off still have plenty of money, but they are also the most educated about the financial markets, and they've never, ever, seen anything like what's happening now and it's given them pause.
Pausing has lasted 2 months now, and 2 months of very low sales has put downward price pressure on homes and condos alike throughout San Francisco. It's had about a 5% impact on the "better" neighborhoods, and at least 10% and arguably 15% in over-supplied areas like SOMA and South Beach. In fact, some are saying the One Rincon and the Infinity, along with SOMA Grand, are offering up to 25% off... but then again they were over priced... I'm referring to 10% to 15% off what it was really worth, not off of unrealistic prices.
So... will San Francisco real estate go any lower? I don't think it will... or at least it won't be more than a couple more percentage points... and here's why:
Buyers have come out of the wood works in the past month. Bargain hunters, first time home buyers, and investors have started to show up at Open Houses in droves. They smell blood in the water, and they all want to pounce. But this is the perfect storm... they think the market is going to go lower, so many aren't offering yet. Many others are putting in outrageously low offers that are being rejected by Sellers. And many of the first time home buyers are in the education phase... they are afraid of making a mistake with the biggest purchase of their entire lives, and it often takes months of research and looking before they'll pull the trigger.
The perfect storm has led to this 5% to 15% drop (depending on the neighborhood) and it's my feeling that they are all going to start writing offers all around the same time... and that will start prices upward again.
Many Sellers are also responding by removing their properties from the market and renting them out, or staying there and waiting until Spring. Many who want to sell now aren't even bringing them onto the market. So it's a stand off, and once the Buyers realize it's not going any lower, and the newbies are then educated, offers will start coming.
Meanwhile there are great deals right now... many of the Short Sales and Bank Owned REO's are priced incredibly low... and they are getting offers. Offers means a bottom. If the Short Sales and REO's were not getting offers, we'd have further to drop. And if Buyers were not flooding Open Houses, we'd have further to drop. If more Sellers had to sell now and didn't have other alternatives, we'd have further to drop.
Finally, you add the increasing interest of Banks and the government to provide loan work outs with their borrowers, and that will reduce the number of Short sales and REO's. Plus the LIBOR is incredibly low right now... so those with their mortgages re-setting right now are actually getting LOWER PAYMENTS... not higher. So their homes are becoming more affordable, not less.
Add it all up... and if you are a Buyer... recognize that now is the perfect storm. Conditions will continue to improve next year as lending eases, as rates stay down or continue to drop, as new construction is totally stopped in San Francisco so the current over supply gets reduced. Now you may argue that layoffs are yet to come and that will produce more distressed sellers... but I'd argue that smart resilient San Franciscans who are property owners will largely be able to weather that storm in ways that mid-west auto workers can't.
If you disagree.... please share your comments. If you agree and are ready to start house hunting, start with www.Automated-HomeFinder.com or CleanOffer.com, or read some of the below articles.
REO search on the San Francisco MLS
Short Sales in San Francisco
First Time Home Buyer - where do I start?
San Francisco Email Search --- or --- Live SF MLS Search Service
Click any image button to get started with your favorite San Francisco home search service, or get your Home's Value here:
Meanwhile, in San Francisco, prices had held up, and even risen... until September. I've been referring to this time period as the "financial crisis market". The well off still have plenty of money, but they are also the most educated about the financial markets, and they've never, ever, seen anything like what's happening now and it's given them pause.
Pausing has lasted 2 months now, and 2 months of very low sales has put downward price pressure on homes and condos alike throughout San Francisco. It's had about a 5% impact on the "better" neighborhoods, and at least 10% and arguably 15% in over-supplied areas like SOMA and South Beach. In fact, some are saying the One Rincon and the Infinity, along with SOMA Grand, are offering up to 25% off... but then again they were over priced... I'm referring to 10% to 15% off what it was really worth, not off of unrealistic prices.
So... will San Francisco real estate go any lower? I don't think it will... or at least it won't be more than a couple more percentage points... and here's why:
Buyers have come out of the wood works in the past month. Bargain hunters, first time home buyers, and investors have started to show up at Open Houses in droves. They smell blood in the water, and they all want to pounce. But this is the perfect storm... they think the market is going to go lower, so many aren't offering yet. Many others are putting in outrageously low offers that are being rejected by Sellers. And many of the first time home buyers are in the education phase... they are afraid of making a mistake with the biggest purchase of their entire lives, and it often takes months of research and looking before they'll pull the trigger.
The perfect storm has led to this 5% to 15% drop (depending on the neighborhood) and it's my feeling that they are all going to start writing offers all around the same time... and that will start prices upward again.
Many Sellers are also responding by removing their properties from the market and renting them out, or staying there and waiting until Spring. Many who want to sell now aren't even bringing them onto the market. So it's a stand off, and once the Buyers realize it's not going any lower, and the newbies are then educated, offers will start coming.
Meanwhile there are great deals right now... many of the Short Sales and Bank Owned REO's are priced incredibly low... and they are getting offers. Offers means a bottom. If the Short Sales and REO's were not getting offers, we'd have further to drop. And if Buyers were not flooding Open Houses, we'd have further to drop. If more Sellers had to sell now and didn't have other alternatives, we'd have further to drop.
Finally, you add the increasing interest of Banks and the government to provide loan work outs with their borrowers, and that will reduce the number of Short sales and REO's. Plus the LIBOR is incredibly low right now... so those with their mortgages re-setting right now are actually getting LOWER PAYMENTS... not higher. So their homes are becoming more affordable, not less.
Add it all up... and if you are a Buyer... recognize that now is the perfect storm. Conditions will continue to improve next year as lending eases, as rates stay down or continue to drop, as new construction is totally stopped in San Francisco so the current over supply gets reduced. Now you may argue that layoffs are yet to come and that will produce more distressed sellers... but I'd argue that smart resilient San Franciscans who are property owners will largely be able to weather that storm in ways that mid-west auto workers can't.
If you disagree.... please share your comments. If you agree and are ready to start house hunting, start with www.Automated-HomeFinder.com or CleanOffer.com, or read some of the below articles.
REO search on the San Francisco MLS
Short Sales in San Francisco
First Time Home Buyer - where do I start?
Thanks for Visiting the SFisHOME Blog courtesy of Rob Regan. If you're ready to Buy or Sell a San Francisco Property start with the best online tools for finding San Francisco properties: Condos, Houses, TIC's, Income properties, Co-ops, High Rises, 2-Unit Buildings and more:
San Francisco Email Search --- or --- Live SF MLS Search Service
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Click any image button to get started with your favorite San Francisco home search service, or get your Home's Value here:
10/3/08
Is San Francisco hot again?
Could pen to paper on the bailout bill be enough to re-ignite the San Francisco real estate market? Well, I think San Francisco Sellers and their listing agents must think so. In the last full week of September in two of the hottest sections of town, District 5 (includes Noe Valley, Cole Valley, the Castro, Glen Park and many other central/south San Francisco neighborhoods) and District 7 (the Marina, Pacific Heights, Cow Hollow and Presidio Heights all in the north of SF) had 43 new listings come on the market (Condos, Single Family Homes and 2-4 unit buildings). But in just the first 3 days of October, 41 new listings have come on the market in those same SF areas. 16 yesterday, and 17 today.
I noticed the flood of new listings for a Buyer who was getting fed up with the lack of anything decent to see. I was excited for her when I was able to email her 3 new matching home listings yesterday. Then today... another 5. These are Single Family Homes in District 5 mostly priced from $1.2 to $2.2 million. That's a pretty amazing influx of new homes when you consider that in 2 days it matched the new homes of the previous 13 days.
Now the naysayers will say that's too much inventory and it will slow things down, but generally there is so little good quality inventory in San Francisco that we need supply to generate more sales, entice more buyers, and get things going again. This particular Buyer is very active in looking and will probably see all 8 of the new homes this weekend. And trust me, there will be a LOT more than 8 buyers at each of these open houses. The top 2 or 3 of these 8 probably have a chance of going into contract this week because all of the other District 5 buyers are probably as frustrated as my buyer... so the best of the bunch may get jumped on by quite a few buyers.
With the bailout bill behind us I'm going to guess that more than a few Buyers are going to feel more comfortable and get back to serious house hunting... and now with a new supply of homes to see... watch out. As with all of my predictions, only time will tell... but San Francisco is almost always
a Sellers market in the more affluent neighborhoods, and the pre-bailout confusion definitely put a temporary break on things... apparently from both Buyers and Sellers... and so far the Sellers have lifted off the brakes and hit the gas pedal. Will the Buyers do the same this coming week? What do you think?
I noticed the flood of new listings for a Buyer who was getting fed up with the lack of anything decent to see. I was excited for her when I was able to email her 3 new matching home listings yesterday. Then today... another 5. These are Single Family Homes in District 5 mostly priced from $1.2 to $2.2 million. That's a pretty amazing influx of new homes when you consider that in 2 days it matched the new homes of the previous 13 days.
Now the naysayers will say that's too much inventory and it will slow things down, but generally there is so little good quality inventory in San Francisco that we need supply to generate more sales, entice more buyers, and get things going again. This particular Buyer is very active in looking and will probably see all 8 of the new homes this weekend. And trust me, there will be a LOT more than 8 buyers at each of these open houses. The top 2 or 3 of these 8 probably have a chance of going into contract this week because all of the other District 5 buyers are probably as frustrated as my buyer... so the best of the bunch may get jumped on by quite a few buyers.
With the bailout bill behind us I'm going to guess that more than a few Buyers are going to feel more comfortable and get back to serious house hunting... and now with a new supply of homes to see... watch out. As with all of my predictions, only time will tell... but San Francisco is almost always
a Sellers market in the more affluent neighborhoods, and the pre-bailout confusion definitely put a temporary break on things... apparently from both Buyers and Sellers... and so far the Sellers have lifted off the brakes and hit the gas pedal. Will the Buyers do the same this coming week? What do you think?
To buy a Short Sale or not to buy a Short Sale?
More short sales have popped up in San Francisco's southern neighborhoods including SOMA and South Beach. But should you buy a Short Sale, in San Francisco or anywhere else? The answer - it depends on your time line and your goals.
Short Sales take a very long time to work out. You'll always see the statement "subject to lender approval". With banks overwhelmed by short sales and the banking crisis, it takes time just to get to files. Worse, you have to get the file started, and that often doesn't happen until an offer is received. And it definitely doesn't get started until the Seller complies with all the requested information in the "short sales packet". The problem with that is Sellers aren't exactly anxious to share their bad financial news, and banks always seem to have more to ask them even months down the line.
If there's a 2nd bank, you have to go through all of the above again... but worse, you have to negotiate a settlement with the 2nd lender who will be forced to accept as little as $1,000 to agree to lose a lot of money (in San Francisco often $100k to $200k) so they aren't anxious to agree and will often hold up negotiations for weeks at a time - partly again because they are overwhelmed with files.
So... should you as a San Francisco buyer buy a short sale? If you can wait 3 to 6 months... even 9 months... just to get a response to your offer, then "yes", you're likely to get a great deal because so many others won't wait. But if you need a place to live now, the answer is "no". Not only do you have to wait up to 6 months, the bank may turn your offer down. It may also take so long that the home ends up in foreclosure. Or you may simply get beat out by a higher and better offer.
To help avoid some of the above problems with San Francisco short sales, I recommend not bothering to deal with "new to the market" Short Sales. If the Short Sale home has only been on the market for 60 days or less, wait. Around the 45 day mark you can check in with the Listing agent for an update on the bank's approval process, and how many, if any, offers they have received. If there's an approved price (unlikely since it usually takes 90 days) you know what you have to offer to win it. If there are 3 other offers at that price, you know that if you over-bid that (which is still likely to be under the actual market value) you're most likely to be the winning bidder.
But chances are you'll get an update from the listing agent that they are still waiting on the bank, and that the only offers they got so far are ridiculously low. So low that the bank would rather foreclose than work it out. With that, I recommend calling every one to two weeks (more if the updates are positive, less if there is clearly no progress with the banks).
So - buy a short sale if you don't need to move and have a very long time line... or if it's been on the market around 90 days (and you'll still probably have 60 days before you can get into the home). Don't buy if time is of the essence.
By the way, if you want to buy a Short Sale in San Francisco, use the "Homes via Email" button on the left, use the form to select your basic home criteria - and then write into the "comments" area that you "only want short sale listings". Short sales will be included in a general search, but if you only want short sales in San Francisco, just write that in. Keep in mind, this is a San Francisco only service. Bank owned "REO" properties are also a searchable feature in the San Francisco MLS. Again, they will be emailed to you in any regular search, but if you only want to see REO properties, use the comment section. And obviously if you want both Short Sales and REO's write that too.
If you liked this article you may also be interested in:
REO search on the San Francisco MLS
Short Sales in San Francisco
First Time Home Buyer - where do I start?
Short Sales take a very long time to work out. You'll always see the statement "subject to lender approval". With banks overwhelmed by short sales and the banking crisis, it takes time just to get to files. Worse, you have to get the file started, and that often doesn't happen until an offer is received. And it definitely doesn't get started until the Seller complies with all the requested information in the "short sales packet". The problem with that is Sellers aren't exactly anxious to share their bad financial news, and banks always seem to have more to ask them even months down the line.
If there's a 2nd bank, you have to go through all of the above again... but worse, you have to negotiate a settlement with the 2nd lender who will be forced to accept as little as $1,000 to agree to lose a lot of money (in San Francisco often $100k to $200k) so they aren't anxious to agree and will often hold up negotiations for weeks at a time - partly again because they are overwhelmed with files.
So... should you as a San Francisco buyer buy a short sale? If you can wait 3 to 6 months... even 9 months... just to get a response to your offer, then "yes", you're likely to get a great deal because so many others won't wait. But if you need a place to live now, the answer is "no". Not only do you have to wait up to 6 months, the bank may turn your offer down. It may also take so long that the home ends up in foreclosure. Or you may simply get beat out by a higher and better offer.
To help avoid some of the above problems with San Francisco short sales, I recommend not bothering to deal with "new to the market" Short Sales. If the Short Sale home has only been on the market for 60 days or less, wait. Around the 45 day mark you can check in with the Listing agent for an update on the bank's approval process, and how many, if any, offers they have received. If there's an approved price (unlikely since it usually takes 90 days) you know what you have to offer to win it. If there are 3 other offers at that price, you know that if you over-bid that (which is still likely to be under the actual market value) you're most likely to be the winning bidder.
But chances are you'll get an update from the listing agent that they are still waiting on the bank, and that the only offers they got so far are ridiculously low. So low that the bank would rather foreclose than work it out. With that, I recommend calling every one to two weeks (more if the updates are positive, less if there is clearly no progress with the banks).
So - buy a short sale if you don't need to move and have a very long time line... or if it's been on the market around 90 days (and you'll still probably have 60 days before you can get into the home). Don't buy if time is of the essence.
By the way, if you want to buy a Short Sale in San Francisco, use the "Homes via Email" button on the left, use the form to select your basic home criteria - and then write into the "comments" area that you "only want short sale listings". Short sales will be included in a general search, but if you only want short sales in San Francisco, just write that in. Keep in mind, this is a San Francisco only service. Bank owned "REO" properties are also a searchable feature in the San Francisco MLS. Again, they will be emailed to you in any regular search, but if you only want to see REO properties, use the comment section. And obviously if you want both Short Sales and REO's write that too.
If you liked this article you may also be interested in:
REO search on the San Francisco MLS
Short Sales in San Francisco
First Time Home Buyer - where do I start?
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