Wednesday, October 29, 2008

It's Not Just the Bottom Feeders Anymore!

In our weekly sales meeting this morning, one of the agents stood up and asked if we could have a discussion on how people are pricing their listings these days. She mentioned that two of her listings had received offers, but in both cases the offers were $100,000 below asking. The agents presenting the offers told her that "$100,000 under is our new mantra!" She wanted to hear from the group if we felt the same way. The discussion was interesting, and verified what Anja and I have already been telling our clients. Some important points were:
  • If someone really needs to sell, they should determine the market value and price their home 10-20% below that in order to get activity at the listing price. It doesn't mean that you shouldn't sell at this time; only that you should sell at today's value.
  • When making an offer, calculate in a future price decrease, and negotiate that into the purchase price.
  • The value is what the market brings; it is the definition of an open market. If two or more parties are telling you that value is significantly under the list price, then that indeed is what the property is worth.

We are in a declining market, and it seems that agents (and sellers) are the last people to accept this. The point was made today that accepting this fact, and helping the market make the necessary adjustment will help turn things around. The adjustment does need to be made. Of course nobody wants to sell their stocks when they are down. They don't want to sell their house when the price is lower than it was a year ago. They feel they have lost that money, but it was only money on paper; never in their pocket. It is most important in these times to look at your investment over all. If you bought five, or ten years ago, look at what your money has done over that time period. Look at where you lived, and the quality of life you had. These things count as well, probably much more than we acknowledge.

A few years back, when the San Francisco market was in a complete frenzy, we were in the exact opposite position. When working with a buyer who was interested in making an offer, we would look at comps from six months prior and say they were no longer relevant, because the homes were appreciating so rapidly. We were regularly seeing properties go twenty percent over asking price. We were calculating the appreciation into the offer. All we have to do is the reverse for our clients today: calculate in the depreciation, look at making long term investments, and enjoy our homes!

Friday, October 24, 2008

A Different Market/A Different Approach

Here we are, less than two weeks from the most important election of our time, and almost unable to concentrate on anything else. Granted, if you have children you may be distracted every now and then with discussions of what their Halloween costumes might be, but for the most part we are frozen...almost unable to breathe until we see the outcome. We need some positive news, some encouragement that "things are going to be OK"! They will be, in time, of course, but we are worried about today, tomorrow, and next month.

In many ways, the trickle down effect is happening in reverse. Trickle down economics was first introduced during the Great Depression, and later made popular by President Reagan, saying that "money was all appropriated for the top in hopes that it would trickle down to the needy." It never seemed to work properly in its intended order. Instead, we are now seeing a much different kind of trickle. First, the major corporations, banks, and insurance companies go bankrupt. Stocks around the world plummet. People lose their jobs, millions lose their homes, it becomes much harder to get a loan, and people are frozen in fear therefore not spending money which makes things even worse.

The point is, if there is one, that times are different and difficult, but we must continue to move forward. Thankfully, the election is almost here and Obama seems to be ahead in the polls. We hope that things will change, but can't expect them to change overnight. The fact is, and most people seem to agree, that we have a good year ahead of us before we really start picking ourselves up and brushing ourselves off. Suze Orman said that the economy is in the ICU, and will be for another year or so. After that, she says, it will move into the hospital, where it will continue to need treatment for some time, and then it will finally be in recovery.

Many home buyers are waiting for prices to drop further before they enter the market. As Anja said, you need to be careful what you wish for. Remember, this is our economy you are talking about, and we don't want to see it go even further down the tubes. Everyone is affected by this in one way or another, and we are seeing the effects around us more and more each day in friends that are losing jobs, taking pay cuts, or simply not getting as much work.

It is amazing that Zephyr has a large new office tour each week. There is a lot of inventory out there, and now is the time to take advantage. Granted, prices may come down from where they are, but if the right property comes along, we can negotiate a lower price. If you get the house for 10% under list price, you should feel safe.

The main tips for working as a buyer in this market are:
  • First step is to get pre-approved for a loan (this was always the first step but is even more important today
  • As you continue searching, and time goes on, continue to check in with your lender to see if the loan programs you are approved for have changed
  • Be ready to go, but not in a hurry...timing is important in negotiating
  • Don't be afraid to make a low offer; the worst they can say is "NO"
  • Once your offer is accepted, be diligent in your inspections; this will give you the opportunity to renegotiate should you find anything

It is so much nicer to be a buyer in today's market; you can breathe, take your time, negotiate, and make wise and informed decisions.

Monday, October 20, 2008

What is a walk score?

This past weekend, both Anja and I hosted an open house at 126 Noe St. This is a two bedroom, one bath condominium in Duboce Triangle, with a high end kitchen and bath remodel done in 2006. The price was just lowered to $901,500, includes one car independent parking, and extra storage in the garage. This property also has a "walk score" of 95 out of 100. This last point, along with the rest of the property profile, was printed on the flyer. It was something that many people had not seen on property advertisements, so we thought it would be a fun thing to explore.

If you are already very familiar with a neighborhood and its amenities, it may not be so helpful. But if you are exploring new neighborhoods, and especially if you are new to the city, this is a great tool to add to your home buying tool kit. The website is actually called Walk Score; their tag line is "Find a Walkable Neighborhood". It is definitely one of the most common criteria we hear from the buyers we meet, "I want to be able to walk to a cafe, a restaurant, or a BART station." Of course, these are all reasons to live in the city, and why home prices in San Francisco have been as stable as they are in this trying economic climate.

San Francisco has many wonderful neighborhoods to offer, all with their own commercial center, and wonderful places to meet, eat, and shop! Walk Score is yet another way to explore these neighborhoods. You can go to the website, and enter an address to get the score. The score is a number from 0 to 100; 100 being the best possible score. Their patented scoring system awards points based on the distance to the closest amenity in each category. A final score of 90-100 is a "Walker's Paradise: Most errands can be accomplished on foot and many people get by without owning a car."

Their website lists 34 San Francisco neighborhoods; 17 of which scored in the 90th percentile or above. Here is a look at the top ten and their scores:

1. Chinatown--99
2. Financial District--99
3. Downtown--98
4. North Beach--98
5. Mission--96
6. Nob Hill--96
7. Pacific Heights--96
8. South of Market--96
9. Western Addition--95
10. Haight-Ashbury--95

Also interesting to point out, San Francisco ranks above New York in their overall scores:

San Francisco--86
New York--83
Boston--79

So add this to your tool kit when shopping for your home, or visit the website if you are curious about what is close to your home that you may not have noticed. You simply type in the address, and you will get a list of the businesses in each category, and how far it is from the address in question. It will all be mapped out for you; enjoy your walks!

Thursday, October 16, 2008

What can I buy for $350,000 or less in San Francisco?

Moving up to the next level in our study, there are suddenly many more options. There are 42 active listings from $251,000 to $350,000.
  • 14 of those are single family homes
  • 12 of the single family homes are in Bayview (1 in Ingleside and the other in Visitacion Valley)
  • 17 of the properties are tenancies in common
  • 11 are condominiums
  • 5 are short sales
  • 3 are in pre-foreclosure
  • 2 are offered through the mayor's office of housing

It is safe to say, that most of these single family homes are in need of some TLC. Here are some examples:

This is 1650 Quesada Avenue; the cross street is 3rd Street. It is a three bedroom, one and a half bath home and is 1422 square feet according to the tax records. By the boarded up window, you can see that this home does need some work, but it is said to have "great bones" and good views from the top level. It sounds like a steal at $266,000.


The house above is 1226 Palou; cross street is Ingalls. This is a two bedroom home and is 1022 square feet according to tax records. It is clean, with a remodelled kitchen, new appliances, a new deck, and a wood burning fireplace in the living room. This home is being offered at $319,900.


Quite elegant for just $349,000, isn't it! This condominium is located at 2010 Eddy Street, unit B. It is a studio with beautiful Victorian details, views of the Civic Center, and a sleeping area. There are four units in the building, and the association dues are yet to be determined. There is no parking with this unit. It was originally priced at $385,000, and was recently lowered to $349,000.

This is a below market rate studio in the Landmark building of Union Square. The building was originally built in 1908 and restored in 2004. The unit has tall ceilings, brick and concrete walls, a contemporary kitchen with stainless steel appliances, washer and dryer in the unit, and extra storage. The building also has a bike room, a part time doorman, a roof deck with views, and a possibility of leased parking. 333 Grant Avenue #405 is being offered for a firm $256,542. It is important to note that the association dues are $753 a month.


For the last example, we introduce the Cubix Yerba Buena, a community located in the Yerba Buena Arts District. All of the units in this building are studios, and as you can see in the photo, they are well appointed and filled with light. Green building features are incorporated throughout, from drought tolerant plants on the landscaped roof-top deck to the City Car Share pod in the garage. This unit, 766 Harrison #410, is offered at $314,000. The association dues are $270 a month.

Please contact us for a full list of properties in this or any other price range.

Tuesday, October 14, 2008

What can I buy for $250,000 or less in San Francisco?

This is the start of a new series called "What can i buy?" I was originally going to start with a higher amount, closer to five hundred thousand, due to the high median house price in San Francisco. In doing some searching for clients who are entering the market at a lower price point, we were amazed to find that you do have options at just $250,000 and under! Fifteen options, to be exact:
  • 5 of those are short sales
  • 3 are in the mayor's office of housing program for lower income households
  • 2 require all cash
  • 2 are bank owned
  • 1 is a total fixer
  • 4 of them are single family homes
  • 10 of them are in district 10 (Bayview, Silver Terrace, and Hunter's Point)
  • 6 of those are in the same development, the Mariner's Village

This is 2025 Keith Street in Bayview. At $149,00, it is the lowest priced single family home currently listed on the multiple listing service. It is also a total fixer, and a probate sale. It is a two bedroom, one bath home of 1190 square feet, and does not have parking.

Welcome to 60 Ora Way #201, a condo offered through the mayor's office of housing. It is located in Diamond Heights; the asking price is a firm $211,791. It is a five hundred square foot studio with a sleeping alcove and one car parking. The association dues are $370 a month; the building has a swimming pool, gym, a playroom, and wonderful views. Above is 126 Kirkwood Avenue #8. It is a three bedroom, three bathroom townhouse style condominium in the Mariner's Village. It is 1360 square feet according to the tax records, and is listed at $190,000 with association dues of $324 per month. It has partial bay views from the second story, and needs some TLC. The last and most shocking example of all is that this or any property in Russian Hill is even on the list. But before you go and grab your checkbook, there are a few things you should know about it. First of all, it is a 10% interest in 1847-1857 Stockton Street, making it a tenancy in common in a thirteen unit building. That is not all, folks. It is also tenant occupied with a protected tenant, and will be delivered that way at the close of escrow. It keeps getting better, because there have been previous OMIs (owner move in evictions) in the building, so you could never do one with this unit, AND, last but not least, this sale requires all cash. And to think it has only been on the market 188 days!

Please contact us for a full list of these are any other active San Francisco listings.

Thursday, October 9, 2008

San Francisco Public Schools

Like many good San Francisco parents, I spent a lot of time last year learning about the public school system here in the city. First you learn about the lottery and placement system, and then you spend your time touring the schools and choosing your favorite seven for your wish list. Also, like many good San Francisco parents, I did not receive any of the programs on my list, so my son was given our neighborhood school. Luckily, our neighborhood school is Leonard Flynn. There are two programs at Flynn; the Spanish Immersion Program (which was on our list) and the General Program (which was not on our list but what we were given). The very last week of summer, we received a phone call saying that Octavio (my son) was chosen to be in the Spanish Immersion Program, so in the end we ended up exactly where we wanted to be. There just happened to be an emotional roller coaster leading up to it!

We are now a little over a month into the school year, and we are very happy with the school. It turns out that we would have been happy with the General Program as well; the teachers are great, and all of the kindergarten teachers work closely together to come up with the curriculum for the year. It also helps that the school is a block away from our home. We step outside our door and can hear the first bell...ooohh better run so we can make the light and get there by second bell!

Leonard Flynn is one of the neighborhood public schools that has really risen up through the ranks in the last couple of years. The creation of the Immersion Program has helped, and parental involvement and fundraising is key. Last year they raised over $30,000, and their goal this year is $55,000.

With all of the uncertainty in the economy, and the flawed budgets both at the state and federal level, it is important that we take care of our schools. The quality of our public schools directly affects all of us, whether we have children or not. Shall I quote Whitney Houston? For those of you who don't know, she believes that children are our future!

As a new parent in the San Francisco public school system, I wanted to get involved. Because my son is in one school, and Anja's grandchildren in another, we decided we would like to give back to the schools. For each sale from now until the end of the year, we would like to donate $500 to your child's school. If you do not have children, that money can go directly to the school in your neighborhood, and if you have another worthy cause you are passionate about, we can point the donation in that direction. On top of the $500, Zephyr has agreed to donate an additional $250, bringing the grand total to $750 to the school with each sale. These numbers can add up quickly, and our schools, children, and community can benefit.

Wednesday, October 8, 2008

Can Anybody Get a Loan?

The state of today's economic crisis has people scared, confused, cautious, and certainly frustrated. When I tell people what I do for a living, they either respond with laughter or pity. In a sense, they are both saying the same thing, "Wow, are people really still buying real estate?" or "Can anybody get a loan these days?" The answer to both questions is "Actually, yes!"

Now please let me rephrase. Not just anybody can get a loan. The days of simply "fogging up a mirror" in order to qualify are long gone, and isn't that for the better? There are some basics that you must have in order to qualify:

  1. Down Payment
  2. Good Credit

For the most part, for a jumbo loan, which the majority of San Francisco loans are, you need a minimum of 10% down. I say for the most part, because there are also FHA loans which only require 3% if you qualify. We are currently representing buyers who are in contract for a house in the Sunnyside district (right next to Glen Park) for just under $600,000. They are using an FHA loan and have put 5% down. Many people are under the impression that FHA loans have more guidelines and conditions than a regular loan. The only difference that we have seen so far is that they required a second appraisal.

Another client of ours has just checked in with his credit union, who is offering 5% down on conforming loans. Our advice is always to check with your credit union first, if you are a member of one. They have always offered the lowest rates, and although they do indeed have more conditions to meet, it can be worth it in the end. There was a story on the news the other night that put credit unions and small local banks above the larger banks in terms of safety. Credit unions and local banks tend to be more conservative in their lending practices, and therefore are not facing the trouble that some of the larger banks are in.

You do also need to have good credit. If your FICO score is 700 or above you are fine. Below that, you will need to shop around a bit and see what the various lenders are offering. Do not assume you won't qualify, and make sure you talk to more than one lender as they all offer different loan programs. I have seen advertisements from banks offering very low fees in order to bring people through the door.

Of course, we don't know what will happen tomorrow. It seems that there is huge news every day, and it always seems worse than the day before. Today, there was "the rate cut heard around the world" where the fed cute the rate by half a percentage along with Canada, England, Sweden, and Switzerland. Unfortunately, in spite of their efforts, stocks and oil both fell sharply.

For today, here are the facts:

  • Yes, there is still financing available
  • Interest rates are relatively low
  • You can get a loan for as low as 3%, and definitely with 10% down payment
  • Yes, people are still buying and selling houses

Check in tomorrow and see if it is still true!

Tuesday, October 7, 2008

All Parties Agree

Having just finished watching the second Presidential debate, and not sure I am at all the wiser, I realize that all parties agree on one issue. We are in the midst of a crisis. The Dow fell another 500 points today, and there are reports saying that the global economy is heading for a `Major Downturn' in 2009. If we are heading for a major downturn, maybe somebody could explain to me what this is we are already experiencing.

The Bailout Plan is now in effect, or has at least been signed. When and how it will affect the greater picture is still an unknown. It will "free up credit" which is supposed to prevent the bottom from completely falling out. And if the bailout plan doesn't work? Who cleans up that mess?

If only we did have that crystal ball. People are always asking us what we think will happen to prices. "How long do I have before prices start going up again" or "How much more will prices go down?" Of course we do not have these answers, and clearly neither does anybody else at this moment. We are treading in unknown waters right now.

If we had that crystal ball, we could have told all of you months ago to take your money out of the stock market. Maybe some of you did have the foresight to do that. If so, where did you put your money? At least the FDIC will now insure up to $250,000, so hopefully that will help you sleep a little bit better.

There is one thing we don't need a crystal ball to see. Real estate does not disappear. Barring a major earthquake, or the Bay Area being completely under water as a result of global warming (ok, either one of these things can happen), your San Francisco real estate investment is safe in the long run. Even if prices fall, and they have only fallen slightly in most San Francisco neighborhoods, they will eventually recover and then rise. A long term real estate investment, which is what they should be anyway, is your safest bet; now more than ever.

Thursday, July 24, 2008

Weekly Sales Report

It is the time of the cautious buyer. People gear up to go out and look at houses, but are wary of entering a real estate market amidst a suffering economy. Nobody argues with the old "buy low sell high" philosophy, but the question is when to get in. I read an article called Housing Rebound: When to Spot One. They talk about the importance of following local data, and comparing year over year statistics rather than comparing this month to last month, as there are yearly cycles.

It is also very important to look at the numbers for sales volume as well as price. Let's look at June for example. According to DataQuick, there were 633 homes sold in San Francisco last June compared to only 571 homes sold this year. That shows a decrease of 9.8% in number of sales. The median price that San Francisco had been holding on to for so long is also showing a decrease. In June of 2007, the median price in San Francisco was $825,000, compared to a median price of $726,500 this June, a decrease of 11.9%.

To take the advice of looking at local statistics even one step further, when you are looking to buy or sell in San Francisco, or anywhere for that matter, you need to do price comparisons for other homes in that specific neighborhood. City wide statistics won't even necessarily apply. There is a great graph also found on DataQuick's website with the same statistics broken down into zip codes. There are some zip codes whose volume and sales activity go either up or down together, but others show interesting differences between sales and volume changes. One of the largest differences is in 94133, which is located in the very north eastern corner of the city around North Beach. While the sales volume plummeted in that area almost 40% in June year over year, the median price went up almost 60%. If you live in Noe Valley and are thinking of selling, 94114 shows a decrease in sales volume of just over 10%, but an increase in median price of 18.3%.

The moral is to look at not only local data, but the neighborhoods surrounding your house or the neighborhoods you are looking to buy into. Have a Realtor help you compile the data.

We have already looked year over year; now for our weekly report. Number of sales was low, but the number has stayed consistent throughout the month. This week, almost half of the sales were reported coming in under the asking price. The big success story of the week is a purchase at Radiance, one of the new developments in Mission Bay. One of our agents represented the buyer in a purchase there, and was able to negotiate the price down $150,000, as well as an additional $25,000 in concessions. There is a lesson in this as well. Technically, you can walk into any of these developments by yourself and purchase a unit. You do not need representation; actually they prefer that you do not have any as they stand to make a higher profit that way. However, as you can see, we will negotiate for you. We have a strong agent network and we talk to each other about what kind of deals people are getting, and where they can be found. What doesn't cost you a dime to begin with can save you a lot of money in the end.

Thursday, July 10, 2008

Weekly Sales Report

Another week of beautiful summer weather, and another week of properties sold in San Francisco. The number of sales was low again this week, but the surprising part of this week's statistics was how many multiple offer situations there were, and how many homes sold over the asking price.

70% of all homes Zephyr sold last week were both in multiple offer situations and sold over the asking price. This was true of the market back in the frenzy five years ago or so when roughly 75% of all properties sold with multiple offers. Of course we have not arrived back at that type of market, but buyers are still out there and are waiting for the right property.

One type of buyer that is definitely out there in full force are investors. They know that now is the time to buy and possibly walk away with a decent price. That brings me to the winner of the multiple offer wars which was 432-436 Laurel Street at California which is right at the Laurel Village shopping center but technically in the Presidio Heights neighborhood. This is a four unit building with two units in the front, two in the back, and a shared courtyard on an extra large lot. The asking price was $1,200,000, there were 7 offers, and it is a probate sale. It went between 20 and 30 percent over the asking price...again like the good old days.

As we must always provide the other end of the spectrum, we will be taking some new clients out on a tour this afternoon. With a price point going up to $750,000 and needing a minimum of two bedrooms somewhere in the central part of the city, I immediately assumed we would only be looking at condominium for their search. I thought just in case I would take a look at the single family homes in their desired neighborhoods and price point, and I was delighted to see there are a good 30 options for them. Granted, some are fixers, others are tenant occupied, and some have no parking. The worst have a combination of all three.

Many buyers have been complaining that the market doesn't feel as "soft" as the media is reporting, as they are being outbid time and again. I believe a sign of the softness is that properties with a strike against them, such as tenants or no parking, are not selling as quickly, and are often having to be reduced in price before moving at all. Pricing is always the key. If it is priced right it will sell; they all eventually do! Remember that when you go to list your home. We can help you do a careful market analysis, one that takes every detail into consideration.

Thursday, July 3, 2008

Weekly Sales Report

Summer is here, and although many people think of the summer as buying season, there is actually usually a dip in sales during this time of year. People are busy with summer activities with the children, vacations, and celebrating the 4th of July! While numbers were slightly up from last week, they still did not hit the highs of the spring. Things should stay relatively calm in the summer, and we will most likely see a peak again in September and October.

Having said that, of the sales we had last week, almost 40% of them were multiple offer situations, some with four and five offers. Another couple I met this past weekend had put some offers in and had been outbid each time. They looked a bit disillusioned, and their parents who were in town visiting from Chicago simply did not believe that it was true. "We believe them, but we can't believe it!"

The property with the most bids this week was a nice little two bedroom condo on 18th Ave in the Central Richmond District; the cross street is California. One might argue that it was priced on the low side for a two bedroom condominium in that neighborhood at $649,000. The second bedroom, however, is straight off the kitchen and the other bedroom, and it is currently set up as a tatami room, which may not appeal to everyone. We liked it as it was, but also thought it would make a perfect office or nursery. Other than that, the building was only a two unit building, with parking, a nice shared garden with direct access from the kitchen of this unit, and it was well cared for and remodelled. It will close at close to 10% over the asking price.

For those of you looking for a deal because of the soft market, don't fret. Almost 20% of the homes sold last week went for under the asking price. At least one property had multiple offers and still sold under the asking price; you are not the only one looking for a deal.

So let's enjoy our summer; along with our weekly updates and other news, we will bring some of the great summer activites San Francisco has to offer which is always a great way to explore the city. This weekend, don't forget to stop by the Fillmore Jazz Festival which is happening on Fillmore between Jackson and Eddy. Make a point to stop by Zephyr's booth which will be at California; Anja and I will be there Saturday afternoon and we will look for you!

Have a wonderful and safe 4th of July!

Tuesday, July 1, 2008

FHA Loans and Other Financing Options

Although life has many twists, turns, and obstacles, one comfort many of us hold on to is that others have gone through the same thing. Any major step we take, whether it be graduation, marriage, a new career, children, etc, someone we know has already been through it and can give us advice. It is also important to know, that advice should always be taken with a grain of salt. The purchase of a new home, especially a first home, is definitely up there with major milestones in life. Surely you know others who have experienced this before you, and in some cases very recently.

While you should definitely listen to the lessons learned by others, and their advice that follows, you must also do your own research and investigations as every situation is unique.

Because of the current state of the financial world, people are making false assumptions based on stories they have heard. I met a nice young couple this past weekend at an open house whose friend recently purchased a home and had to jump through flaming hoop after flaming hoop in order to secure a loan. They needed 25% down, and in addition to that, their lender was requiring them to show six months of reserves in their checking account. With these guidelines, many people would be forced out of the home buying arena. While the story may be true for those particular people with their particular lender, it may not be true for you.

We have represented buyers in the recent past with anywhere from five to thirty five percent down. There is no steadfast rule when it comes to lending guidelines. Every situation is unique and is based on an equation made up of the lender, the buyer, and the property.

While it is true that the majority of lenders now require a larger down payment than they did a year ago, there are still options out there for those of you who do not have the ability to do ten or twenty percent down. One option is the FHA loan which now has the maximum loan amount of $729,750 and a required down payment of only 3%. Also, if it is a low FICO score that worries you, an FHA loan only requires a 580 or above. While the interest rates may be a bit higher, this may be a good option for you if you don't have a large down payment or a high credit score.

The moral of the story is that you need to talk to a lender yourself. Don't assume that because your friend, neighbor, or relative had trouble with financing that you will have the same experience. It is important to talk with a few different lenders and give them your specific information, as one may offer options that the other does not have.

This all brings us back to the importance of having a team. Your Realtor should have a few good referrals for lenders or mortgage brokers in their database. The connections that we make are not for profit, meaning we do not enjoy any financial gain from referring you to a particular lender. We do, however, work with people we trust and know that they have your best interests in mind.

Thursday, June 26, 2008

Weekly Sales Report

At one time all we heard about in the media were reports of the housing market and credit crisis. Although we are still in the midst of a struggling market, it seems that now people are more worried about the prices of food and oil. Of course, it is all so intricately connected.

Everyone agrees that when prices are down it is a good time to buy, and everyone agrees that prices are down. The optimum time to buy is when prices and interest rates are both at their lowest. Again, at the moment, interest rates are still fairly low. The problem people have who say they are going to wait until the market bottoms out is that interest rates are only expected to go up. If that happens, the slight decrease in sales price may be counter acted by a rise in the interest rates.

The good news on that front is that the Fed did not raise the interest rates yesterday, which everyone was expecting them to do. They did acknowledge the complexity of the problem, which is trying to keep the economy from slipping while at the same time trying to keep prices from skyrocketing. The problem with the rising prices on staples such as food and fuel, is that it is a world market issue and "beyond the reach of the US central bank" as stated in the Los Angeles Times this morning.

Normally the answer to out of control prices is higher interest rates. The Fed recognized that raising the interest rates in an already wounded housing market could be disastrous. That is the decision for now, anyway. We will, of course, keep a close watch.

So how is our local San Francisco market doing right now? Sales this past week were at an all time low for the year. Having said that, they were at an all time high for the two weeks prior, and judging by the size of the Zephyr office tour for properties coming out in the next week, the sales number will be back up before we know it.

Friday, May 23, 2008

Weekly Sales Report

As promised, here is the first sales report brought to you by Zephyr! As somebody said at the meeting on Wednesday, "Spring is finally here!" Sales were up this week, nearing the number of sales we saw at the beginning of March. We should see this level of activity continue through May and June, then of course a slight decrease as everybody and their agent takes a vacation in July and August.

In terms of sales statistics, the number of properties sold over and under the asking price was exactly equal, each representing 30% of the total sales. 16% of the sold properties sold at asking price. 30% of all sold properties were multiple offer situations.

One interesting thing about multiple offer situations that has been reported lately is that they are not always going over the asking price. We were amazed at the number of sales reported as having multiple offers but selling at or even sometimes under the asking price.

We have actually just experienced it first hand. A client of ours submitted an offer yesterday on a four unit building with plans of occupying two of the units with his family. It was a solid offer with a well qualified buyer. The property had recently experience a 5% price reduction in hopes of generating some interest, which it definitely did, even though it had been on the market for 60 days at the old price.

We suddenly found ourselves in a competitive situation as it was reported to us that there were two other offers. Our client decided that the numbers worked for him at the asking price, and he didn't feel the need to bid any higher. His offer was strong in a couple of other areas; he did not have any inspection contingencies as he is experienced with renovating and remodelling. Also, his escrow was slightly shorter than average, and he had a large down payment. All of the terms of the offer do contribute to it's strength. Although it usually comes down to dollar amount, you want to look at strengthening all aspects of the offer. Did I mention that his offer was accepted? Congratulations! Well done; it must feel good to win a bidding war without overbidding!

Monday, May 19, 2008

Zephyr!!!

After a bit of a break from blogging, The VanFenton Team would like to announce our new affiliation with Zephyr Real Estate, the largest independent real estate firm in San Francisco. We both value the time, training, and connections we made at Coldwell Banker but felt it was time for a change.

We found that Zephyr could offer us what we were looking for in a company. We had noticed at our listings that there were more Zephyr agents than agents from any other company touring the properties. Why did the agents from this company seem to be more active? We decided to find out, and in talking with the managers at two different Zephyr offices, we started to see why, and we liked what they had to offer. Their agent network is strong, they offer great support and profit sharing, they are technologically advanced, well run, and organized. We are looking forward to being a part of this great team.

All of the Zephyr offices get together each week for a meeting and a tour. This means we can keep providing our Weekly Sales Report as the number of agents in all of the offices combined will still be large enough to provide a snapshot of what is happening city wide.

Aside from the change, it is business as usual. The last month and a half has been busy. We currently have two properties in escrow, and one buyer in back up position. The first property in escrow is The Cutting Edge Condo. We received and accepted one offer. The second property is a large house in Glen Park with an excellent garden.We represented the buyers and were the only offer although there was other serious interest. The buyers we have in back up position were one of three offers on a loft in the Dogpatch. The first offer already fell through because their dog weighed more than the CC&Rs allowed (don't forget to read those)! We were in 2nd back up position, and have now moved up into first.

There is a glimpse of what is happening, we are back and promise to continue regularly as before. Comments are always appreciated; especially on the blog itself. Many of you are email subscribers and comment to me personally, but sometimes I feel that you can benefit from each other's feedback. Thanks again for reading!

Thursday, April 3, 2008

Weekly Sales Report

"How's the market" they ask. Who's they? Everybody! Everybody wants to know; hears something in the news and wants to know more. The answer varies depending on who you are asking. It clearly varies nationwide. It varies statewide, countywide, and even here in San Francisco, depending on who you ask and what their experience is, you will get a very different answer. Even looking at the statistics can be confusing. Statistics can be played with in such a way that you can make the data say whatever you want to hear.

First ask the buyers who just got outbid on their second property how the San Francisco market is doing. The property I am referring to is in Westwood Park which is a desirable neighborhood with homes in the million dollar range, but it is not considered one of San Francisco's hottest neighborhoods. Tell that to the thirteen parties who just recently bid on this wonderful three bedroom craftsman style home on Miramar Avenue. The highest bid went more than thirteen percent over the asking price. Those buyers might tell you a different story than what you hear in the news.

Next ask the buyers who just had an offer received by a property which has been on the market for almost two months and had two price reductions. They got the property for slightly under the already reduced asking price. This is a loft in the media gulch section of the Inner Mission. It is selling for just 3% over the price it sold for three years ago. Their story is different still, and tells you what a great time it is to buy.

Two extremely different scenarios; both typical stories at the moment. You cannot make the blanket statement that it is not a good time to sell. It couldn't have been better for the sellers on Miramar. There are no other three bedroom houses available in the neighborhood. There hasn't been for some time. Their product was unique and desirable, and demand was high.

The past week's activity reflects this wide range of activity. Of the properties which accepted offers this week, 50% were multiple offer situations. Some of the properties received 8, 9, and of course 13 offers.

Of the properties that closed this week, 50% closed over the asking price. The highest overbid was on 28th Street in Noe Valley at 16% over. 33% of the closed homes sold under asking. The underbids were very close to the asking price with the largest gap being 3%.

The answer to the question, "how's the market" will also differ depending on which lender you ask. Ask US Bank who has just declared San Francisco to be a "declining market" and have therefore dropped their 95% Loan to Value program. On the other hand, talk to Countrywide who is more than happy to do a loan with a 5% down payment, and they can close in just one week!

The moral of the story is to do your own research. If you are thinking of applying for a mortgage, do so. Don't assume you won't get one if you have a smaller down payment. Also, don't assume prices are soft because depending on the neighborhood and the property itself, they may not be. You need to get out there and see for yourselves!

Monday, March 24, 2008

Contemporary North Waterfront Condo


For those of you who are not familiar with the North Waterfront neighborhood of San Francisco, it runs along the Embarcadero and lies just north of Telegraph Hill, North Beach, and Russian Hill. This location gives you San Francisco charm and the convenience of the shops and restaurants of all these neighborhoods combined

225 Bay Street is in the middle of it all. Right outside your door you will find Trader Joe's, Safeway, 24 Hour Fitness, Barnes and Nobles, and countless other shops, restaurants, and cafes. Enjoy the North Beach nightlife, or a Saturday afternoon at the Farmer's Market. Public transportation is close by, and commuting is made easy to either bridge or freeway via the Embarcadero.


This unit is the best priced two bedroom, two bath condominium on the north side of town. It features a wonderfully open and bright living space with bamboo flooring. The combined living and dining room flows nicely into the breakfast nook and kitchen with stainless steel appliances. The first bedroom has its own master bath and great closet space. The second bedroom has been used as an office and guest room; the full second bath is perfect for your guests.

There is one car deeded parking in the garage below. The building also features a shared roof deck with wonderful views of the city and Coit Tower, and a common garden with a spacious patio and barbecue area. The HOA dues for this unit are $330 per month.

This condo is new to the market and has so far received a very positive response. Please visit us at one of our showings:

Saturday, April 5th, 1-4pm
Sunday, April 6th, 1-4pm
Tuesday, April 8th, 9:30-11am

Please contact us for a private showing. Also visit the property website at www.225Bay.com.

Friday, March 21, 2008

Weekly Sales Report

Taking a look at the numbers for the week, we can see that spring is upon us. It is buying season, and the good old San Francisco numbers are starting to reappear.

Seventy percent of all properties that accepted offers last week received multiple offers. I remember a number very close to that in 2005 and 2006 when buyers were writing an average of six offers before getting one accepted. Luckily for the buyers the competition is not quite as fierce as it was then, but the fact remains that interest is strong, and buyers are out there. Part of what is surprising about these numbers is which properties received multiple offers. One is a home in Bayview, a home in the Portola district which received six offers, and a condominium in the Diamond Heights neighborhood. It's not just Noe Valley anymore, folks!

To back the statistics up with our own story, here is an update on our listing at 886-886A Capp St. We were on the market for two weeks and looked at offers that second Wednesday. We had been marketing it both as a two unit building, and as two separate Tenancy in Common interests. It seemed to be equally divided in terms of the interest on the building versus on each unit separately. The offer date arrived which is always a bit nerve wracking. In this case, the sellers are already in contract for a replacement property, and not receiving a good offer would have put a lot of stress on them.

We did receive offers...four to be exact. Three were on the whole building, and one was on the upper unit. The sellers accepted the first offer which was a strong one, and above the asking price. The second and third offers were countered with the option of being in back up position, but neither accepted. A back up offer is important, particularly in this market with so much uncertainty in the financial world.

We will be open again this Saturday, March 22nd from 1-4pm. Come by if you haven't seen it. If you have seen it and are still interested, you may be able to get into back up position.

For closed sales this past week, a majority of the properties sold over the asking price, but on the average they only went over very slightly. You buyers out there still have an opportunity to get into the market before prices really start to go up again. Many people are waiting to see what the interest rates will look like once the new conforming limits settle in. There are only guesses out there at this time. Pricing will fluctuate as Fannie Mae and Freddie Mac actually start buying loans. Then lenders will see the ability to sell on the secondary market and adjust accordingly.

Thursday, March 13, 2008

Cutting Edge Ashbury Heights Condo


For those of you waiting for that special property, for something with that "wow" factor, look no further. Sitting at the top of the hill in Ashbury Heights at 345 Upper Terrace is this wonderfully designed condominium with incredible sweeping views of the city and the bay. It is a one bedroom condo that sits on two levels and feels like a single family home.

The first level is perfect for entertaining as it is completely open.
The entryway is designed to showcase your art collection, and new slate tiles have just been installed. Step in further to the living room with a fireplace, a built in entertainment center and walls finished with Venetian plaster.The dining area is next with beautiful city outlooks, then the designed breakfast table and spacious kitchen with marble counter tops and cork floors throughout. Also on this level is a half bath, a laundry room, and an extra storage room.Now something we must take a minute to discuss is the deck. This is not just any deck. This is a huge deck with beautiful views of San Francisco and the bay. It is straight of the kitchen and dining area which make it the perfect layout for entertaining. Enjoy your morning coffee, afternoon tea, evening cocktail...just enjoy!Upstairs you walk down a beautiful hallway into a huge master suite and will again be struck by the beauty of the San Francisco views out of the floor to ceiling windows.
What a way to wake up! The room features a wonderfully designed master bath, an enormous walk in closet, and a private built in office nook.There is one car parking in a shared garage with the only other unit in the complex. The spaces are side by side.

This really is a must see property; come visit us at one of our showings:

Saturday, April 5th, 1-4pm
Sunday, April 6th, 1-4pm
Tuesday, Broker's Tour (public welcome) from 12:30-2:00pm

Please visit the property website at www.345UpperTerrace.com

Wednesday, March 12, 2008

Weekly Sales Report

Daylight savings time is here, buying season is upon us! You can start scheduling those property tours after work; there will be plenty of light! You may start to see more twilight open houses popping up as well. We will most likely start to see the inventory pick up over the next few months. Historically, April, May, and June are very strong months.

That is what's to come, but let's take a look at what has happened. In the past week, two thirds of the properties accepting offers only received one offer. As they say, it only takes one! Although we may not have reached "the bottom", you can certainly get a good property at a decent price at the moment which was at one point completely unheard of in San Francisco.

One of our clients submitted an offer this past week at asking price on a beautiful, spacious, completely remodelled condo in the Inner Mission that had only been on the market for less than a week.

We felt it was a long shot as the listing agent mentioned they were experiencing a high level of interest; they would certainly be looking for well over asking price at this stage of the game. They did counter our clients' offer, but only for $11,000over asking, and they agreed to the long sixty escrow our clients requested. Don't be afraid to ask; you just might end up with a reasonably priced home in this incredibly expensive city! OK, reasonable is relative, but you understand.

Also this past week, 55% of the sold properties went for under the asking price; the other 45% were above the asking price.

Mortgage Minute

The main focus at the moment is the upcoming change in conforming loan limits. The new loan limits have been released. The temporary jumbo conforming loan product will apply to loans originating from July 1st, 2008 to December 31, 2008. The maximum loan limit is calculated as 1.25 times the median home price in the area. For the purposes of this calculation, San Francisco has been grouped in with Alameda, Contra Costa, Marin, and San Mateo counties. The loan limit in general cannot exceed $729,750, which is what it will be for the San Francisco area.

Monday, March 10, 2008

Redfin-Call me a skeptic

The name has been tossed around, but we have never had direct experience with which to form an opinion...until now. For those of you who are unfamiliar with Redfin, they are an online brokerage whose claim to fame is that they refund a large portion of their commission to the buyer at closing. They share this in common with Zip Realty, another online brokerage that is a bit more established. I am familiar with Zip; I actually interviewed with them when I was looking for a place to hang my license. It wasn't the right fit for me, but I don't have anything negative to say about them or their business model.

Redfin, however, I am not so sure about. Let me start by saying that I have never met a Redfin agent. That is not to say that they don't exist, but where are they? I realize that a lot of their work is computer based, but don't they need to visit the homes they are selling? On tour, we meet agents from all the major offices, and many smaller ones. It is our duty, as your agents, to see and be familiar with as many homes as possible...not just the home you want to buy, and certainly not after you have made the offer.

This all started at our open house this weekend. I met a nice young man with serious interest in the property. He let me know that he had some questions, but that he was working with Redfin and "will that be a problem?" I think they are told to identify themselves as Redfin customers. I laughed and said, "No, but it scares me a bit." He had a lot of Tenancy in Common questions, as the building is being offered either as a whole or as two separate TIC interests. I answered his questions, and he told me he would be in touch.

He called me twice today, the first time was to let me know his pre-approval had gone through with Wells Fargo, again something they are told to do through the Redfin website. The second time he called was when the red flags went up. He said that he had been on the Redfin website, and he couldn't find the listing for the entire building. The listings for the separate units were there, but not for the two unit building. He needed to find the listing on their site in order to make the offer.

That is when I started to realize how Redfin works. You search on their website for listings. You go to open houses on your own and find a property you are interested in. You get pre-approved on your own, and when you are ready to make an offer, you fill out some form on their site and then get paired up with an agent. They even have a process so that you can come to your own conclusion on how much to offer.

Of course they can refund a majority of their commission to the buyers; they haven't done any work! I went on their site to see what else I could find. Another shocker was that they only give you two home tours for free. The third and fourth cost $250 each and are subtracted from your closing credit. After four tours, you need to pay the $250 up front. Of course they don't want to spend too much time with you...they're hardly making any money!

There are a couple of things that are important to mention. At the end of the day, getting a refund check is a great thing. However, you do get what you pay for; this may not be one of the places to cut corners. Working with a good agent from a top brokerage may not get you a credit from their commission, but it will get you:

1) Unlimited time spent touring homes, providing information, and answering questions
2) Informed opinions on value and condition
3) Top negotiating skills that may end up saving you the same amount of money...or more
4) Protection...knowledge is key

In this economy, everyone is trying to save a buck. That is easy to understand. Just be careful; protect yourself, and if you don't have the time it takes to learn the ins and outs of buying property by yourself, hire a professional to help you!

Sunday, March 9, 2008

Inner Mission Painted Lady


We have a wonderful new listing in the Inner Mission, and we just finished our first weekend of open houses. It is a wonderful two unit Victorian building located on Capp Street at 24th; just one short block away from the BART station! This is a true Victorian, built in 1890, and retains all of the wonderful charm and details of its era including high ceilings, hardwood floors, stained glass windows, moldings, medallions, bay windows, and much more.

Also included is a two car garage with plenty of extra storage space, a laundry area, and a private patio. Both units will be delivered vacant making it the perfect partner opportunity. Remember, if both units in a two unit building are owner occupied, you can bypass the lottery after one year of owner occupancy and convert to a condominium. This conversions gives you a ten to fifteen percent boost in value. You can also purchase the entire building and use the second unit for extra income which is what the current owners are doing.

This building was put on the multiple listing service on Friday. That same day, we had three private showings. Both Saturday and Sunday we had between 60 and 70 parties come through, and we gave out a handful of disclosure packages. A huge majority of the people I saw this weekend are serious buyers; not many just passing by. That first weekend on the market is crucial. I also think it is important to be open both days, because we had many repeat visitors on Sunday.

Specs

886-886A Capp Street is offered at $899,000

The units are also offered as separate TIC interests:

886A Capp (the lower unit) is offered at $430,000
This unit is 1 bedroom/1 bath/1 car parking
886 Capp (the upper unit) is offered at $469,000
This unit is a 1+ bedroom (second room is perfect for office or nursery)/1 bath/1 car parking

We will open for broker's tour on Tuesday, March 11th, from 2-3:30pm

We will also be open next weekend:

Saturday, March 15th, 1-4pm
Sunday, March 16th, 1-4pm

Unless we are already in contract...we will keep you posted!

Wednesday, February 27, 2008

The Dogpatch

If you look on a map, this area will be labeled as the Central Waterfront. If you stop a San Francisco resident on the street and ask how you get to the Central Waterfront neighborhood, you might be met with a blank stare. It is much more commonly known as the Dogpatch. This is a neighborhood with an extremely rich history, and a very bright future. It is located at the bottom of the eastern slope of Potrero Hill. It lies between Mariposa and 23rd, and the 280 Freeway and Illinois Street. This is only nine square blocks.

The Dogpatch began to take shape in the mid 1800s as an important center for heavy industry. This was a true working class neighborhood. Many homes were built between 1860 and 1910, and many were built by the homeowners themselves. Architect Jon Cotter Pelton Jr. often published his designs in a local bulletin to make it possible and affordable for the workers to build their own homes. The Dogpatch is now officially recognized as a historical neighborhood.

It is also being recognized as one of the most up and coming neighborhoods today. It has become the home of many newer live work developments designed with the artist community in mind. It has also recently become much more accessible with the addition of the "T" Third Street light rail which will get you downtown in just minutes. The Dogpatch is also surrounded by the Mission Bay, which is the largest redevelopment plan in San Francisco's history, and by the new UCSF research campus.

In today's housing market, you will most likely see lofts or new condominiums available in the Dogpatch. The Victorians are still in existence, but rarely for sale. There are twelve active listings at the moment; eleven of which are lofts or condos. Six of those loft/condos are in one development, Esprit Park.

We actually just toured this development with some clients yesterday. The models are not yet finished and they are one third of the way sold. It is quite amazing how many people are willing to purchase their home without ever setting foot in it! There are a lot of great things about; they are using quality finishes, green materials where they can, and two of the buildings are the original brick and timber structures. There is the obvious great location and sunny weather. My favorite thing was that the smallest floor plan is over 800 square feet! So many of these larger new complexes start with studios at 400 square feet; I thought this was refreshing. I believe their models should be ready sometime in March.

The units in Esprit Park are condominiums, but the most common product in the Dogpatch are lofts. Those that are currently available range in price from $529,000 to $699,000. Only nine lofts have sold in this neighborhood in the past six months at an average price of $784,000. Most of the sold units were two bedrooms, and the current active listings are mainly one bedrooms.

The only two bedroom loft that is currently available is 1325 Indiana #102.
It is two bedrooms, two and a half baths, fourteen hundred square feet, and it has a deeded patio and one car parking. It is a nice building and a lovely unit; one problem is the current construction of a new building being erected next door.

Last but not least, we can't forget to mention the plans for Pier 70, which is one of the largest ship repair yards on the west coast. This will be turned into a bike and walking pathway that will circle the bay and make the waterfront much more accessible. The Dogpatch is defintely a neighborhood you want to keep your eye on!

Thursday, February 21, 2008

Weekly Sales Report

As we enter the fourth week in February, it seems that all of those buyers who are thinking of buying in 2008 are starting to get serious. Our loft in Potrero Hill is finally in escrow after over three months on the market. We had received offers previously, but they were low and the seller was patient and confident that he would eventually get his price. Interestingly enough, the last two weeks on the market were the busiest. In those last two weeks, we had more private showings and more clients with their Realtors on Sundays than we had any other time. Private showings are a good indicator of activity. Those are usually the most serious buyers, and they are often returning for a second visit with their Realtor after seeing it first at the open house.

If that growing activity is any indicator of a market that is starting to come out of hibernation, you sellers out there should wake up too! Many sellers we spoke with last year were waiting until mid February/early March to put their homes on the market. Here we are!

In terms of numbers for the week, one third of the properties sold were multiple offer situations. Half of the properties that closed were over asking; the other half were under. The winner for highest bid over asking was (surprise) a house in Noe Valley. We mentioned it in a previous posting as it had received 12 offers after being on the market for only 10 days. That house was on Newburg at Castro, and was listed at $899,000. It was a two bedroom house, and as we mentioned before, it was nice but not spectacular. It sold for $1,090,000. There is another house nearby, on 28th Street at Noe. It is three bedrooms instead of two, and on a much larger lot, but otherwise a similar house. It is listed at $949,000 and it will be interesting to see how fast and how high it goes.

Mortgage Minute

As you know, the Economic Stimulus Package has been signed into effect. The loan amounts will be provided within 30 days. The limits will be 125% of the median home price at a maximum of $729,000. You are probably thinking that we are obviously fine in San Francisco and will benefit from the maximum loan amount. What is still undecided is what area will be used to determine median home price. It may not be just the city of San Francisco. It may be the greater bay area, or some combination of counties within. It may be San Francisco with Sonoma and Napa. We will wait and see. They are also calculating the latest median home price in order to incorporate January and February sales.

The rates for jumbo loans will not be the same as those of conforming, as they will still be larger loan amounts, but they will be closer than they are now. These "new conforming" loan limits will be in effect for an interim window of July 1st to December 31, 2008. This may be extended, but for now the time is limited. Don't wait and see; be sure and take advantage of these lower rates. Also, the Fed is again expected to lower interest rates in March.

Sunday, February 17, 2008

Back Up Offers

Although many people assume that the market is "soft" at the moment based on what they hear in the media, the fact is that multiple offer situations are still happening in San Francisco. Not as often as they once did, but in desirable neighborhoods and well presented properties, you may very often encounter competition.

Just last week, two of our clients wrote offers on properties and were offered "back up position". Not only were they offered second position, but they were asked to raise their price in order to be there.

The first was a lower floor Tenancy in Common on Guerrero. It had only been on the market for 48 hours before they received their first offer which was over the asking price. They were planning to accept that offer, but were looking for back up offers as well, and our clients were willing to submit an offer in hopes that the first offer fell through. The first place offer did have contingencies, and especially with a Tenancy in Common, there would be a few hurdles during escrow. We would be waiting in the wings should something happen.

We didn't know the first offer was over asking until we submitted ours at asking and they asked us to raise it 5% in order to be in back up position. Being in that position secures your place should the first offer fall through. It means you have already negotiated price and terms, and you have the option to elevate to first position should you choose to do that when the time comes. You can, however, continue to hunt around in the meantime, and you can make an offer and purchase another home if you found something else. You would just then refuse the offer to elevate once it did come your way. The fact is, it does happen. Properties do fall out of escrow, and back up offers do move into first place.

The other back up situation we had last week was a multiple bid situation in Bernal Heights. The property was only on the market for a week and a half. They even moved the offer date forward due to the high level of interest. Our clients submitted a really strong offer, but were second of five. We were, again, offered back up position, but only after raising our price almost 5%. It was higher than our clients wanted to go, and the first offer was very clean so the chances of it falling out of escrow would be very low. Actually, I believe it will close this week.

Believe it or not, it still happens. Those two properties went five and ten percent over the asking price. San Francisco seems to be going strong. Even Zillow reports a 3% appreciation over last year in San Francisco. They report Daly City, South San Francisco, Brisbane, Oakland, and Alameda in the negative. Rates are low, and Bush signing off on the stimulus plan which will temporarily increase the conforming loan limit in high cost areas to $729,750 should help even further. It will bridge the gap between jumbo loan interest rates and conforming rates which has gotten wider in the past six months. As of now this will be in affect until the end of the year. Be sure and take advantage of these lower rates!

Wednesday, February 6, 2008

Weekly Sales Report

As we head into February, you can expect to see inventory start to rise. Our clients have noticed that the past couple of weeks have brought more houses to see, and that should build in the coming months.

This past week, sixty percent of the properties receiving offers only received one offer. The other 40% received up to five offers.
One of these was, again, a fixer in Noe Valley. This was a huge three level Victorian on Hoffman. It was priced at $995,000, has no parking, and needs a complete facelift from top to bottom. Once it is remodeled and a garage is added, it can easily be a $2 Million dollar property.

For the closed escrows, just over half, 54%, of all properties sold under the asking price. The remaining 46% were split evenly between properties selling at and over the asking price.

The market is so intersting to watch, and extremely difficult to predict. We can only look at what is happening and try to draw our own conclusions. Even so, in order to find an average, there has to be a top and a bottom.

A house in a prime Potrero Hill location doesn't get the offer they were looking for, but a Tenancy in Common on Guerrero accepts an offer after just days on the market and is expecting a back up offer. If you are interested in a property that has already accepted an offer, or you were outbid, make sure and ask that you be put in back up position. You will still need to agree on price and terms with the seller before that happens. Once you are in back up position, you have secured your position should the first offer fall through. With today's lending market changing and dropping loan programs every day, there is a good posibility that some of these properties will fall out of escrow. In the meantime, you have the ability to shop around and move on another property should one present itself.

Property Taxes

Along with owning a home come many, sometimes unpleasant, responsibilites. Paying property tax is one of them. It is simple in the "you own=you pay" equation, but there are many questions around property taxes that we hope to clear up. In San Francisco, the property tax rate for the 2007-2008 year is 1.141%. Thanks to Proposition 13, the maximum rate for property tax is limited to 1%. What you actually pay is that 1% in addition to all public approved voter projects such as schools, parks, highways, etc. This can make the tax rate vary slightly from year to year.

Property taxes are paid twice a year. They are due on December 10th, and again on April 10th. You will only recieve one bill each year with two pay stubs. Remember to put the second installment on your calendar as you will not receieve another reminder. You also have the option of paying both installments up front, in which case you would include both pay stubs. If you do not receive a bill, you still owe property taxes! If you do not receive your annual tax bill by November 10, you should request one by contacting the Office of the Treasurer & Tax Collector at (415) 554-4400. You can also visit to check your status and pay your bill online.

If you like the idea of putting money aside monthly towards your tax bill, you may be able to set up a reserves account with your lender which would allow you to break these payments up into monthly payments, and the bank would then pay your property taxes when they come due. Some people set up an account on their own where they can set aside the tax monthly into their own interest bearing account from which they draw to make the payment once or twice a year.

Properties are reassessed by the tax assessors's office upon a change in ownership or new construction. They are assessed based on the current market value, which is usually the purchase price.

At the time of purchase, you will be issued a preliminary title report for the property you are purchasing. Among other things, this document will show what the current tax rate is on the property based on the current owner's purchase price. It will also show whether or not the property taxes have been paid. When you are getting ready to close on the property, you will see an itemized list of closing costs. On the list will be property taxes. You will be responsible for paying them from the day of closing until the end of that term. If the seller has already payed them, you will be reimbursing them for the portion during your ownership.

Because the property will be reassessed at the time of purchase, you will be issued a supplementary tax bill. This will be a bill for the difference between the previous assessed amount and the new amount. This may come in one or two bills, and it may not arrive for months after closing. Don't worry, they won't forget about your. Until then, you will be paying taxes based on the previous owner's assessed amount.

Thursday, January 31, 2008

Haight Ashbury

Continuing through District 5 in our neighborhood series, we come to 5B, or Haight Ashbury. The Haight is a neighborhood that is internationally known for the hippy movement of the sixties. Musicians such as Jefferson Airplane, Janis Joplin, and the Greatful Dead all lived within blocks of the famous Haight/Ashbury intersection. There is actually a building currently on the market on Lyon between Page and Oak that advertises on the listing the fact that Janis Joplin's former residence was just two blocks away.

This neighborhood is bordered by the panhandle to the north and Golden Gate Park to the west, so greenery is all around you. It includes the area around UCSF (University of California Medical Center) and parts of Cole Valley. Buena Vista park and Divisadero are the south eastern borders.

You will definitely not be without things to do in this area. If you enjoy the outdoors, Golden Gate Park is a wonderful place to explore. Visit on a car free weekend afternoon where the main road in the park is closed to automobiles and allows you to bike, skate, or just walk through and enjoy the fresh air. You may also stop and visit one of the many attractions such as the Japanese Tea Garden, the Flower Conservatory, or the de Young Museum just to name a few. The children's playground was recently given a major face lift and is quite amazing.

If you're feeling more like shopping, eating, or drinking, the Haight has an unlimited supply of options as well. On and around Haight Street you will find restaurants, cafes, shops, bars, a movie theater, and even a few bed & breakfasts for the tourists. You can do everything on Haight street from selling your clothing to one of the exchange stores like Crossroads or Buffalo Exchange to filling an eyeglass prescription at City Optix. Among the tourist shops, tattoo shops, and smoke shops, you can also find boutique style clothing stores such as Ambiance or Behind the Post Office as well as upscale vintage clothing such as La Rosa.

How about housing you ask? The majority of the housing available in this area are condominiums or TICs (Tenancy in Common). There are single family homes, but only a handful at a time which range in price from one to three million. The average price for a condo is about $785,000. What does that get you? At the moment there is nothing available in that price range (what a surprise). You could get a one bedroom TIC on Carl Street for $529,000. This is a top floor unit with a remodeled kitchen and is located in the Cole Valley or southwestern corner of the Haight. This is a very popular and upscale neighborhood with eateries and wine and cheese shops lining Cole Street. You also benefit from the J Church Muni train which will take you downtown in minutes.

A step up in price will get you a three bedroom condominium on Oak Street at Shrader. It is a large top floor flat with high ceilings and a wonderful shared garden. It also overlooks the panhandle. It has a lot of original charm including two fireplaces. There is in unit laundry and extra storage in the basement, but no parking. It is listed at $899,000.

Jumping up once more in price, the newest listing in the same spot is this wonderful three bedroom condominium located on Belvedere at Frederick. It is also a top floor unit that has recently gone through the condo conversion process. It is completely remodeled and has plenty of storage and closet space. There is parking, however it is leased for $250 a month. The list price for this unit is $1,049,000.

For school options, there aren't any public schools directly in this neighborhood, but it is centrally located and surrounded by neighborhoods such as the Sunset and Richmond which have many great public school options. There are private school options, one of which is the French International school located on Ashbury. Lycee Francais La Perouse offers classes from two years prior to kindergarten all the way through twelfth grade. Another private school option is the Urban School of San Francisco located on Page St. This is a very well respected and high ranking private high school.

That ends our tour of the Haight Ashbury neighborhood. Please contact the VanFenton Team if you want more information on any of the properties listed above.

Wednesday, January 30, 2008

Weekly Sales Report

It has been another week of limited activity here in the San Francisco real estate market. Overall, statistics look very similar to last week's numbers. Half of the properties that received offers this week were multiple offer situations. The most offers received on a property was three.

All of the properties that sold this week were either at or under the asking price. This should be a message to sellers that pricing the home where you are willing to accept the offer is very important at the moment. The idea of pricing low to generate activity and drive the price up is not getting the results it once did. Sellers are then left with their property sitting on the market at a price lower than they want to accept.

There is a single family home on the north slope of Potrero Hill, located on Rhode Island and Mariposa listed at $1,195,000. It is a large Victorian with three bedrooms, lots of light, and sits just a block away from the new Whole Foods. The sellers are in a hurry to sell and set an offer date just days into the marketing period. Due to the lack of inventory in Potrero Hill, it was a zoo at the open house that first weekend. I spoke to the listing agent on the offer date, and they only expected one offer. There are probably hundreds of buyers at this moment waiting for a single family home on the north slope of Potrero Hill. Granted, this one house wouldn't have been right for all of them, but only one party ready to pull the trigger really speaks volumes. It may very well only sell at asking; maybe even below.

Mortgage Minute

On the financial front, which along with the Presidential race is all we seem to hear about these days, the Fed announced another rate cut this morning of 0.5%. This will most directly affect those with HELOCs, or home equity lines of credit. Some adjustable rate mortgages will be affected as well, although not directly.

The key message to buyers is that rates are the best they have been in two and a half years. Get yourselves ready to go. Get preapproved and underwritten if possible. Being underwritten means that you have met the conditions that were outlined by the lender. There will be conditions specific to you, the borrower, and another set of conditions for the property. Buyer conditions will be your documentation such as pay stubs, W2s, landlord referral, credit report, etc. The property specific conditions will of course wait until you have entered into contract on a home. These are things like an appraisal and a satisfactory preliminary title report.

Because conditions are tighter at the moment, do as much work as possible on your pre-approval. That way you are really ready to go once you locate a property, and there will be fewer bumps along the road when you least need them.

Lastly, we are hearing that more loan programs are being pulled off the market daily. This limits your options when choosing or qualifying for a loan. Areas that are most affected are 95% loan to value ratios, which means that your down payment is 5%. Also stated loans are much more difficult at the moment; your credit score needs to be higher than it used to in order to qualify for a stated program. If you fall into one of these categories, have a conversation with a lender as soon as possible.

Thursday, January 24, 2008

Weekly Sales Report

As so much of the news these days is concentrating on the economy, so was our office meeting. We went through the numbers quickly, and I say quickly because the number of sales was small. The surprising statistic for the week was that four out of five properties were in a multiple offer situation. It is a function of limited supply. On the other hand, of the closed escrows, all of them sold under the asking price.

The discussion quickly turned to what people are thinking, and more importantly hearing, about what is going on with the economy. What is the reality? Well, since our last posting, stock markets on an international level have suffered. Housing prices are down nationally, unemployment is higher than it has been in years, and people as well as businesses are starting to make cuts in their spending. This is a bad equation.

The question that nobody can answer with complete accuracy is what will happen going forward. I think I have quoted my father in the past saying, "Ask 6 economists and get 10 different predictions" or something to that effect. Some say if we do in fact enter a recession it will be fairly mild and only span two to three quarters. Others are much more pessimistic and think it will be severe lasting at least four quarters.

One of the major fears among chief economists is that housing prices will continue to fall, and perhaps accelerate. Again, these opinions vary, and are predicted on the national level. One of the major problems is saturation due to new developments. Developers in some areas are slashing prices up to 50% in order to offer incentives to buy. San Francisco is clearly not in this predicament due to our finite number of single family homes.

Another concern is that foreign investors will begin pulling their money out of the US economy. Stocks would continue to fall thus adding to the fear that will in turn cut spending. Lastly, banks may be unwilling, or unable, to make larger loans to businesses or individuals. Without borrowing, there will be no spending.

What is being done to help the situation?

Fed Cuts Rates 3/4 of a Percent

While many are saying this is "too little too late" this is at least a start, and we may see another rate cut next week. It was an emergency meeting called one week before their scheduled date, and the cut was the largest in over a quarter of a century. These rates will apply to adjustable rate mortgages, auto loans, and credit card interest rates.

Stimulus Plan

Again, they say it won't be enough, but it is action in the form of a tax rebate check. Individuals would receive $600, and working couples would receive $1200 plus $300 per child according to this agreement. The idea is that money in our pockets will be pumped right back into the economy. The checks would be given out between May and July, and the total cost will be about $100 billion. Also included in this plan is $50 billion in business tax cuts.

San Francisco home buyers will receive great benefit from a rise in limits on Federal Housing Administration (FHA) loans. This plan raises the limit to $725,000 in high cost areas. The cap is currently set at $417,000, excluding most San Francisco purchases. This is huge for San Francisco home buyers as the difference in rates from a jumbo to a conforming loan have been up to 1% since the credit crisis. This difference in rates was due to the fact that jumbo loans had no guaranteed buyers on the secondary market making them more of a risk to the lenders.

The buzz in the office meeting was the same that we have been reporting. Buyers are out there and ready to buy. Many are looking but cautious, still "waiting to see what will happen". Most realize that 2008 will be a good year to buy. There is still typical San Francisco frenzy on some properties.This two bedroom house in Noe Valley was only on the market for 12 days before receiving 10 offers. It was cute, not spectacular. Simply the only thing around in its price range. Remember that, sellers!

Friday, January 18, 2008

Recession?

This is quite a subject, and trying to tackle it is almost scary. You hear it everywhere, but who knows what it really means? I just read an article based on a survey conducted by Forbes magazine, that I found rather interesting. According to the survey, 3 out of 4 people believe we are already in a recession or will be sometime in 2008. Does believing we are in a recession make it so? It can be a self fulfilling prophecy. After all, half of the people surveyed have cut back their spending compared to last year. That in itself can cause a recession.

What is a recession? According to Wikipedia, it is "a decline in any country's gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year."

What does that mean? The benchmarks are:

People buying less stuff
Decrease in factory production
Growing unemployment
Slump in personal income
An unhealthy stock market

In the United States, the word for when a recession begins and ends comes from a group called the National Bureau of Economic Research. This is a non-profit committee made up of 600 academic economists. Their definition for a recession is "a significant decline in economic activity spread across the economy, lasting more than a few months,".

Although some signs point in the direction of a recession, such as a rise in unemployment and a falling stock market, there has not yet been an announcement from NBER. The last recession in 2001 was not formally recognized as one until it was ending nine months later. According to NBER, the average recession lasts only ten months. The point is, of course, that by the time it is recognized we will be well on the way to recovery.

What really worries people is how their lives will be affected. The first thing to note is that even those economists who do predict a recession are suggesting that it will be a mild one. That may mean that the worst is over. Depending on your career, you may or may not be directly affected.

If the idea of a possible recession scares you, there are a few things you can do to ease your mind. The first is to stay away from the stock market temporarily. Instead of investing in stocks, you can build or add onto your savings. Make sure you have at least a six month reserve, which is a smart thing to do with or without a recession. Lastly, remember that cutting spending for fear of a recession could be the very thing that sparks one.

Keep in mind that, over the long run, real estate values have tended to hold their values, appreciating at a pace that at least matches inflation. Especially in stronger markets, such as in San Francisco, real estate represents a good investment, both in times of growth and in recession.

Equally important is to recognize your personal needs, both for investment and for personal housing. If you are “in the market” to buy a personal residence, the value of the property as an investment has to be balanced with the security and advantages of home ownership.