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.