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.

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!

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.

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.

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.

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!