Friday, August 31, 2007

Average Person vs Average House

People have been complaining about the prices of homes in San Francisco for as long as I can remember. I always answer them by saying, "It's such a wonderful city; everyone wants to be here and that drives the prices up!" While this is true, the fact is that not everyone can afford to be here, and certainly not everyone can afford to own property here. A study performed by the Center for Housing Policy shows that from 1997 to 2005 the median price of a single family residence shot up 86% while wages in that same period have only gone up 25%. You do the math. Any way you tweak those numbers they just don't add up. The median income in San Francisco is $73,804. That means that if you are a single income household, you can search for a home in the range of $450,000. You can pretty much forget about a single family home; the median home price in San Francisco is $825,000. There are currently three homes in the entire city listed under $450,000: one in Ingleside Heights, one in Bayview, and one in Bayview Heights. All three are contractor's specials.

There is good news for you average San Franciscans. I wasn't expecting this turn when I began writing, but as I was looking up how many condominiums and tenancy in commons are available for under $450,000 so that I could wish you a fair adieu as you head to the East Bay, I was blown away by a whopping 71 available units! As a matter of fact, we have a client who is currently getting ready to close on a wonderful unit on Dolores priced at only $359,000! It is a studio tenancy in common (tic) and it met all of our clients' needs, and more importantly it fit into her budget. Congratulations Erin! I suppose the moral of the story is don't be discouraged, there just may be something out there for you. It may not be what you were dreaming about, but just remember that your first home is never your dream home. If you are one of the many who is waiting for the market to bottom out, I should report to you that the National Association of Realtors just released their numbers for 2007's second quarter and a majority of the nation's markets showed appreciation with San Francisco's median house price going up 7.6%. They also predict a turnaround for the market overall in spring of 2008 at which time they expect prices nationwide to begin to show steady appreciation. That gives you a window of about nine months of down time. Get in while you can! Enjoy your Labor Day Weekend.

Thursday, August 30, 2007

Going Green in San Francisco

It seems that everybody's talking about it...finally! Al Gore has been trying to get the word out for years now and it seems that his crusade for educating the world about Global Warming is finally paying off. From recycling and buying flourescent light bulbs to driving hybrid vehicles and owning solar powered homes, there are many things we can do for our planet to help turn what now looks like a bleak future around. For those people who are just starting to think about going green , the light bulbs are a great place to start. Many people, however, have gone way beyond recycling bottles and cans and have decided that their largest assets should be environmentally friendly as well. My partner Anja is really enjoying her new Prius; she watches the little diagram on her dashboard as she goes which gives her a reading of how much gas versus electricity she is using each moment, "oops, I'm using too much gas," she says as she lets up on the pedal! Taking it even one step further are those who are building and purchasing green homes! There are many exciting things happening on that front in San Francisco, and as we are in the midst of a shaky market, there is no question that everyone wants to be in on this cutting edge of housing.

One very exciting new building in the Inner Mission is called "La Casa Verde". This is Sunset Magazines' 2007 Idea House, and it will be the first of its kind in such a dense urban neighborhood. They chose this location to show how you can maximize a small space; it is essentially a showplace for green technology. The home is a three story single family residence complete with spa and rooftop garden (my personal favorite features). La Casa Verde is one of the first LEED (leadership in energy and environmental design) certified residences in the nation.

Another recent addition to San Francisco's Inner Mission neighborhood is 3280 22nd Street. This is a three unit green constructed condominium complex complete with hardwood floors made out of reclaimed mine timbers and Solar PV Systems. All three units just hit the market at the end of July ranging in price from $849,000 to $1,399,000. Just two short weeks later, mid August, all three units were in contract and were reported to all have multiple offers and sell above their asking prices. Everyone is eager to go green!

Wednesday, August 29, 2007

Weekly Sales Report

People are constantly asking, "So how's the market looking these days?" Especially lately with all the happenings in the financial world and the gloom and doom talk in the media, everyone wants to know what is actually happening in their local market. Every Wednesday morning our office holds a sales meeting. It is a time for all of the agents to come together and report on their activities for the week. There are actually two Coldwell Banker offices in San Francisco that attend this same meeting which puts attendance well over one hundred agents. I look at this meeting every week as a mini market study. Because we have such a large number of agents who cover all of San Francisco, looking at the weeks activity for these offices give us a general idea of what is going on in San Francisco as a whole. We not only share sales numbers, but also stories that might help each other in the field, and we can use this forum to help get the word out on some of our own listings. I thought I would share this weekly sales report with you so that you have a sense of what is happening in San Francisco's real estate market.

There were thirty seven escrows reported open this past week, and ten of those were multiple offer situations. That means that just over one quarter of the sales for the week were multiple offers, two or three offers in each case. This is low for San Francisco but still shows a healthy market. There were fifteen closed escrows reported. Once escrows close we can finally see what they actually sold for. In this case, six went over asking, five went under, and four sold right at asking price. The largest overbid of the week was 125 Richland in Bernal Heights which sold for 20% over asking! And you thought those days were gone! Another property in West Portal was close behind at 17% over asking. It all comes down to supply and demand. The desirable neighborhoods tend to have a smaller inventory and lots of interest. That will always drive the prices up. The market seems to be well balanced at this moment anyway, with almost the same number of properties selling over and under. We'll have to wait and see what comes of this week! I imagine activity will be slow because of Labor Day Weekend (don't forget the Bay Bridge is closed) but things will pick up in September and October. Enjoy the sun!

Tuesday, August 28, 2007

Buyer Beware

One of our most important jobs in the home buying process is guiding the buyer through the inspection portion of the escrow. This is a predetermined amount of time that the buyer has to satisfy themselves in terms of the condition of the property. The two most common inspections that are done in San Francisco are the Home Inspection which covers the systems (roof, electrical, plumbing, foundation, structure) and the Structural Pest Inspection which covers things such as infestations and dry rot. If a buyer does not already have an inspector they like, we will recommend someone we trust, we will be there for the inspection, we will review the inspection report with our clients, and depending on the findings we will advise a course of action. My partner Anja and I have discovered this past year that these two inspections are not always enough. The last thing we want is for our clients to move into their new home only to discover six months, a year, two years later that there was an unseen problem with the house! We started to hear stories of just that happening; buyers move in and some time later their sewer backs up and their homes are flooded! Of course not every disaster can be foreseen, but our goal is be as diligent as possible during the escrow period so that there are as few surprises later as possible.

The third inspection we have advised our clients to have is the video inspection performed by plumbing companies. The plumbing company comes out with a video camera that they snake down into the pipes; they can see things like tree roots growing into the pipes that may not be a problem now but surely will be a problem sometime in the future. They can also see if there are cracks in the old clay pipes, which many homes have. Replacing sewer lines can be expensive so if it is caught during the escrow period you may be able to get some help from the seller. Anja and I have run into this problem twice in the past few months; the first time the seller actually had the sewer line fixed during the escrow period, and the second time the sellers agreed to leave money behind for the problem to be fixed after the sale. There are a couple of clear indicators that will let you know if you need this inspection. One is that it may be recommended in your home inspection; do take those recommendations for further inspections seriously. Another indicator is if there is a large tree growing right outside your house close to the sewer line. There is a wonderful plumbing company in San Francisco; do contact them if you need an inspection or a quote.
San Francisco Plumbing Company is one of those rare companies where the best may also be the least expensive!

Monday, August 27, 2007

Credit Crunch

As we all know, things in the world of finance are unstable at best at this juncture. Many people are wondering, whether they are thinking of buying a home or selling, how they will be personally affected by the recent changes. They are also wondering how their local market will be affected. My local market is San Francisco, so all of my thoughts and professional opinions are based on the market here. It seems that the interest rate for jumbo loans has settled after a recent jump, so hopefully that will help settle some of your nerves. To read the newspaper or watch the six o'clock news on television, you may start to think the world is going to end (I always do). On the other hand, listen to a lender or a real estate agent, and they will tell you, "Don't worry, now's a great time to buy a home!" The truth is, for a lender or real estate agent, anytime is a great time to buy a home. You need to figure out if or how you are personally affected by the recent changes. If you are a buyer you will need to get preapproved by a bank. Even if you were preapproved before the recent credit crunch, you need to visit your lender again. The restrictions have changed. For example, you can no longer buy with no money down. Good credit and a minimum of 10% down is what you need to purchase a home right now. If you have that you can get a great loan from a great lending institution. If you are a seller, you need to look closely into your buyer's preapproval. Are they fully preapproved and by which lender? That has been one way people have been affected directly; as lenders go bankrupt they have pulled out of loans at the last minute; a buyer is left without their home and a seller is left without a buyer. In some cases the buyer is able to quickly find another lender. The point is, you need to find out how the recent changes will affect you and go from there. Getting preapproved is more important than ever, and if you are a well qualified buyer, you have better leverage now than you have had in years.