Recent Activity

The second weekend of the year is here. We had anticipated seeing listings by this time, and we are happy to report that the shipment has arrived! Since our Hotsheet report on January 7th, There have been:

55 Single Family Homes,
96 Condos/Coop/Loft/TICs, and
11 2-4 Unit Buildings released onto the market.

That should include something for everyone to look at as most neighborhoods and price ranges are covered in that list. One of the single family homes has already sold after only four days on the market. It is a three bedroom, three bath home, just over 1930 square feet, and it sits at the ocean's edge.
This tri level home was built in 1997 and is located on the Great Highway at Wawona. The list price was $899,000; we will keep you posted for the sales price.

Another listing that was snatched up after only one day on the market was this 2 unit building on 20th Avenue in Central Richmond. It was listed both as separate TIC interests and as an entire building. It had been on the market last year for 47 days and then withdrawn. It came back on at the same price just yesterday, and they have already accepted an offer. Somebody may have seen it last year and wasn't ready to move until now.

Noe Valley is in the lead with 8 new single family home listings. They range in price from $699,000 for a total fixer to $2,595,000 for a remodelled 5 bedroom 3.5bath home on 23rd & Castro.

SOMA is the leader with 15 new condo listings. These particular listings start at $449,000 for a studio condominium at the Palms on 4th Street at Brannan. Believe it or not, the high end listing is in the same building. It is a two level, two bedroom condominium with a private terrace listed at $1,089,000. The Palms features a concierge, gym, yoga studio, movie room, club room, and a business center. The nice thing is if you like the building, you are sure to find something there in your price range.

In the 2-4 Unit category, the neighborhood with the most activity is the Inner Mission. There are three new listings in the $900,000 range. They are all tenant occupied, which is why they are on the lower end of the price range for two unit buildings in the neighborhood. Stay tuned for information on our 2 Unit listing in the Inner Mission.

Hotsheet

One of the great features available to Realtors through the San Francisco Multiple Listing Service is the 24 Hour Market Watch. This gives us a quick overview of what has happened in the last twenty four hours; it is a glimpse into current trends. We will share this with you from time to time as once you have seen a number of them you can start to draw your own conclusions. The categories we will report on today are:

New Listings

9 Single Family Homes. The neighborhoods represented in this group are Outer Richmond, Lone Mountain, Outer Parkside (spelled "Outer barkside" in the listing; choose your agent carefully!) , Oceanview, Westwood Park, Bernal Heights, and Visitacion Valley.

13 Condo/Coop/TIC/Lofts. One of these just came out as I am writing. It is a two bedroom, two bath condominium on Castro at 20th Street listed at $965,000.

1 Two Unit Building. This building was on the market previously but withdrawn and relisted with a different agent as a new listing this year.

Back on Market

1 Single Family Home. This category represents homes that were in escrow but have fallen out and were re released for sale. They can fall out of escrow for any number of reasons ranging from problems with the buyer's financing to something uncovered during the buyer's inspection period. This particular home is a four bedroom, two bath, tenant occupied home in Visitacion Valley listed for $598,000.

4 Tenancy in Commons. Three of the four are in one three unit building; two have been remodelled and the cottage in the back needs some work. TICs have an additional set of hurdles to get over during escrow. If it is a group loan, the partners need to approve of each other and each other's finances before proceeding. This particular three unit building that has come back on the market is on 29th Street in Noe Valley. The individual units are listed for $849,000, $799,000, and $399,000 for the cottage.

Price Increase

1 Condo. This shows as a price increase but was actually only a typo. Technically there were no price increases. Generally, the reason somebody increases the price on a property is because they began with a low asking price hoping to create a frenzy. For whatever reason a frenzy was not created. The likelihood of the seller receiving more than their asking price decreases as time goes on. They may, at some point, decide to raise their asking price to a number they are willing to accept.

Price Reductions

2 Single Family Homes. One is a short sale in the Outer Sunset; the other is a bank owned property in the Bayview.

2 Condos. One of these is a loft that is being reduced in price for the second time.

1 Two Unit Building. This is a fixer probate sale in Visitacion Valley listed at $695,000.

The Year of the Serious Homebuyer

2008 has arrived and it is time to hit the ground running. All signs are pointing towards a recovering market as even the hardest hit sections of the country have shown signs of improvement. We should, however, pay much closer attention to the San Francisco market. Laurence Yun, chief economist for the National Association of Realtors, likens national real estate reports to a national weather report. What an excellent visual.

How many times have you seen that map of the United States with thunder showers over the northeast and sunshine over good old California. What is happening across the country will not help you decide if you should wear an extra sweater or throw on a scarf. You need the local report for that. The weather even varies in the Bay Area; San Francisco may be foggy while the South Bay is sunny and warm. Even in San Francisco we have micro climates. You can sit outside a cafe in sunny Potrero Hill and watch the fog roll in over Twin Peaks. Real estate is no different. If you want to know what is happening in the area you wish to buy, look at the data from that area.

Along with his brilliant analogy, Yun also made some predictions. He sees appreciation getting back to a normal pattern in 2009. This gives serious homeowners a window; an opportunity to get in while prices stay level and interest rates stay low. He attributes much of the problem with the sub prime market to greed. Greed on the part of the lenders to make the deal and get a higher return. Greed on the part of homeowners to buy more than they could afford, and greed of real estate professionals who let it happen in the interest of making a deal. This year, greed will pass and the serious home buyers will step in taking full advantage of the situation.

If all of the San Francisco real estate agents are like us, they have a long list of clients who were waiting for the new year to kick their search into high gear. The new year has arrived. Our schedule is already filling up with property tours; now we are just waiting for the properties to hit the market.

We are excited to see what the year brings. In the meantime, we promise to continue our reports and keep you informed on our local climate.

Look Back; Look Ahead

As the curtain gets ready to close on 2007, it is a good time to take one last look at what we have seen throughout the year. The year started out like any other, slow but steady. Only the naysayers were talking about the bubble bursting, but then again they had been predicting that for years. The typical housing market cycle was present as things picked up in the spring and summer. The end of the summer marks the most dramatic event; the fall of the sub prime market. We will continue to see these effects well into 2008, but in San Francisco the effects are much harder to see than in much of the rest of the country. Our number of sales is down, but in most neighborhoods prices are holding steady. Interest rates for a thirty year fixed jumbo mortgage have managed to stay under seven percent.

Over the course of the year many homes were bought and sold, and with each transaction comes a lesson learned. Buyers and sellers learn the ropes, and the agents come away with a new pearl of wisdom each time.

Right now the majority of the people we meet are waiting. Many of them have been waiting for some time now. What are they waiting for? They say they are "waiting to see what the market is doing". As you saw in the District Study, in San Francisco the market is simply plugging along. The wait will continue into January, and once people see that the bottom has not dropped out from under them, the wait will end.

Activity will start to pick up again mid January, and as people's confidence in the market is restored, that activity will continue to grow into the spring and summer. The moral of the story is, the sky is not falling. As San Francisco is a strong market, it will be the last to be affected by the national woes and the first to recover.

It has been a great year for us. The VanFenton team was born and is thriving. Our families are healthy, happy, and growing! Anja was fortunate enough to visit all of her sons and most of her grandchildren this year, and my family was blessed with a new addition.

Have a safe and happy new year. We are looking forward to working with all of you in 2008.

Nothing at ALL

The title of this post was in the subject line of an email I received from Anja yesterday. She had been reviewing the properties that were scheduled to be on the Tuesday tour with some specific clients in mind. Nothing at ALL! These poor clients are ready to move yesterday and there is simply nothing out there for them to buy. At this point they have seen everything that is currently available in their price range and neighborhoods of preference. Now they are just waiting for new properties to hit the market and they are ready to jump.

Just before I logged on to write this article, I checked the MLS once again for these same clients. I saw something that looks promising; zero days on the market! We will get them in tomorrow and make an offer straight away if they like it. Doesn't that sound like the old days? If inventory stays this low, we will start seeing the good properties sell in a matter of days.

According to the MLS, just over 70 single family homes were listed this month, and only 40 condominiums. Those numbers are for all of San Francisco! There are thousands of buyers out there, and with only 120 properties a month, many of those buyers will be left out in the cold.

Why, then, are so many properties having trouble selling? Buyers are cautious and more demanding than they used to be. They will hold out for the right property.

What makes a home the right one? Neighborhood is very important. Is it on the right side of the hill? Is it close to public transportation? Parking is huge; homes with no parking are sitting on the market unless it is otherwise spectacular and sometimes even then. Does it have usable outdoor space? All of these "extras" are key right now.

If you are thinking of selling but afraid because you are hearing it is not a good time to sell, check the MLS to see if there are any other homes like yours in the neighborhood for sale. If not (and there are probably not) then you might want to consider putting yours on the market. Somebody out there has a client waiting for it.

The Final Stretch

Your nice long and hopefully restful weekend has come to an end, and it is time to get back to work...work on finding your new home that is! The end of the year is finally here, and to be in by the holidays or enjoy the 2007 tax break, you really must act now. You need to find the right home in the next two weeks and have an offer accepted in order to leave enough time for escrow and close by the end of the year.

In our open house yesterday, which was surprisingly busy by the way, there were still many people saying that they were just trying to figure out what the market is doing. Why is that so hard for people to figure out? The first reason is, of course, that we cannot see into the future. The second reason is that people are listening to the media. We're not saying you shouldn't listen to it, just to take it with a grain of salt.

DataQuick is a research service which gathers data and statistics for the real estate market. They produce many different types of reports. One such report gives the number of properties sold, and another reports the average price of the properties. This past October was the slowest October in terms of number of sales in Dataquick's history which goes back to 1988. Before that, the slowest October was in 1990, and the busiest was in 2003.

On the flip side, also according to DataQuick, the average price for a home in San Francisco has gone up 3.9% from October 2006 to October 2007. In the Bay Area as a whole, it is up 2.4%.

To listen to the media, you would assume that prices have fallen, and they have in some spots, but not all, and certainly not in San Francisco as a whole. Consumers are being scared away from buying, thus the "We are trying to figure out what the market is doing". The best way to figure it out is to look at statistics; not turn on the six o'clock news. The news will never talk specifically about Noe Valley, Potrero Hill, Glen Park, Pacific Heights, or any other neighborhood you are thinking of purchasing in. Trulia is a great source for year to year neighborhood statistics. We are not saying the number will always be positive; just that you should have all of the correct data when making this kind of decision.

I received an email from a friend at a title company that chronicled real estate headlines over the years. Where would we be if we had listened? Here are a few examples:

“Financial planners agree that houses will continue to be a poor investment.”
– Kiplinger’s Personal Financial Magazine, 1993

“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.”
– Los Angeles Times, 1993 (Note: 1993 was the absolute low-point for real estate values in Los Angeles. Priced have sky-rocketed since.)

“Most economists agree...a home will become little more than a roof and a tax deduction, certainly mot the lucrative investment it was....”
– Money Magazine, 1986

“If you are looking to buy, be careful. Rising home values are not a sure thing anymore.”
– Miami Herald, 1985

“The era of easy profits in real estate may be drawing to a close.” (Average price at the time: $28,000)
– Money Magazine, 1981

Of course there are no guarantees in life and being cautious is absolutely commendable. If you buy real estate as a home first and an investment second there is no losing.

Is now a good time?

In sitting down to write today's entry, I realized it was Friday and time for the Weekend Events series. I was excited to see what the weekend would bring as I started to gather the info and choose the events to be featured. I first went to sfgate as they have a good entertainment section. Of course I got distracted with the real estate section, and I clicked on Carol Lloyd's Surreal Estate article titled, "What's happening now in the reportedly stormy San Francisco housing market?". Quite a title, isn't it?

She goes on to talk about how she was confused by the contradictory information she was receiving from the media versus that from real estate agents. The media was telling her that home prices are falling, but agents will talk about multiple offers and overbidding. Which is it? She concludes that San Francisco is unique and even backs it up with a statistic showing a small rise in median home prices in San Francisco as a whole over the past year.

Don't be confused. When you hear California or Bay Area statistics, they are not San Francisco specific. San Francisco is unique; the housing market here is unique. Of course the country's financial health overall will have an impact on San Francisco; we are not immune to that, but housing prices and market trends are specific to this city, and specific to each neighborhood within the city.

Lloyd also talks about hearing stories from buyers and sellers that seem to be in line with what Realtors are telling her. I clicked on the comments below the article because I was curious to see what peoples' reactions were to the article. That was a mistake. People's comments about Realtors were all but friendly. The general consensus was that the Realtors will always tell you that it is a good time to buy, so don't listen to them.

That sure makes me feel good! Here is the bottom line as we see it. The time to buy is when you need a home or want to move. The fact is that when the market was at it's peak and prices were soaring, it was a terrible time to buy. People were writing an average of six offers before they got one accepted, and they were paying 20% over asking with no contingencies to finally get it. It wasn't a good time to buy, but people were buying; enough people to generate that type of insane competition.

It is not that way anymore. Things have slowed down. People are able to negotiate decent and smart deals. Yes, some properties generate multiple bids and sell over asking, but the numbers are smaller. Now is a much better time to buy. I can't tell you what it will be like in six months.

There are always people sitting on the sidelines and asking the question, "Is now a good time?" I can finally say without a doubt that it is. What a surprise, the Realtor is telling you that now is a good time. More important than what I tell you or what the market tells you is what your family needs. Do you need a bigger home? Do you need a garden for the children to play in? Do you need to move to a safer neighborhood? Are you simply tired of paying your landlord's mortgage?

When you decide it is time, look specifically at the neighborhoods where you want to live. Look at the prices and the trends of that specific neighborhood. Even beyond that, you need to look specifically at each property's situation. Averages, medians, and trends will only help to a certain point. Each situation is different, and it takes the highs and the lows to create an average.

Beautiful Grand Edwardian

Yesterday was quite a festive day in San Francisco. If you were out enjoying Fleet Week, the Castro Street Fair, or the music festival in Golden Gate Park, I may have missed you. But if you were one of the many people house hunting in the Inner Richmond, you were probably at 739 12th Ave at one point or another. I had more than seventy groups of people come through yesterday, most were serious buyers, and many were serious about that house particularly.

It is a grand Edwardian in a wonderful neighborhood just blocks from Golden Gate Park. It is also a fixer. Some of you may remember that in my weekly sales report on September 19th, the house with the most offers for the week was another grand Edwardian. It was priced at $799,000 and labeled a "major cosmetic fixer". It received 22 offers, and I can now report that it sold at $950,000.

That is now sounding like a bargain; 739 12th Ave is priced at $999,000 and will no doubt be in a multiple bid situation thus driving the price even higher.
This house is also a heavy cosmetic fixer but will be an amazing house when finished. It has two levels of living space; downstairs is the living room, formal dining room, kitchen, breakfast room, and a half bath. Upstairs you will find the three bedrooms and the only full bathroom in the house. The master suite has a really cute vanity/closet area leading into the bathroom. There are many wonderful details about the house: wood floors, huge windows, wainscoting, and a huge backyard with a wonderful apple tree. There is also a full garage/basement with two car tandem parking. It has approximately 2400 square feet of living space.

The questions people were asking are serious buying questions such as, "How long has it been on the market", "Do you have disclosures", and of course "Is there an offer date". I asked questions myself, and was amazed at the answer I got for one question in particular. I often ask people how long they have been looking and of course get all sorts of responses from, "Oh, I'm not really looking" to "It seems like forever".

I noticed a pattern in that answer yesterday. It seemed that the majority of the buyers I met had been looking for a year to a year and a half! That supports the theory that there are many buyers out there who have been waiting on the sidelines. Some are waiting for the right house. Others are waiting for prices to drop. In either case, it seems like it's time to buy a house and move on so you can enjoy everything else San Francisco has to offer on Sundays. Don't get stuck in the "looking" mode for too long. The perfect house isn't out there, and the Blue Angels are the only ones doing the nose diving, San Francisco home prices are not.

Time to Sell

Although many buyers are waiting on the sidelines to see what will happen to home prices, others are acknowledging the fact that when the market is slow it is the best time to buy. The object of the game is to make sure you don't wait too long. It is a cycle really, is it not? The downward motion of that cycle seems to be somewhat of a self fulfilling prophecy. The media talks about prices falling, people get scared to buy so they wait, and because nobody is buying prices are actually affected negatively.

I am starting to hear about recovery in certain spots around the nation; people are finally seeing that the sky is not falling and there has been talk of 4 to 7 percent appreciation in the next year. Finally there has been a positive spin on news stories; it seems the media just had to get the doom and gloom out of their system.

Unfortunately when it is a good time buy, it is a bad time to sell. You cannot have it both ways. So even more than the buyers waiting on the sidelines, the sellers are holding out. Inventory will drop making it a sellers market again before we know it, and all of those buyers who were waiting will realize they waited just a bit too long. The funny thing is, there is another cycle here. If nobody is putting their house on the market, and there are no new listings for the buyers to look at, isn't that the best time to put your home on the market?

Anja and I have a long list of buyers who are waiting for new properties to hit the market in various neighborhoods. There was a lot of new inventory in September; some of which is still sitting on the market and some sold right away, but in the last couple of weeks there has been very little.

If there is nothing coming out in any given neighborhood, and there are buyers out there waiting for something in that neighborhood, isn't that the time to put your home on the market? Yours will be the only house available! If you are thinking of selling but are unsure of market conditions, take a look around your neighborhood. See what else is available and for what price. If there are five other homes in your price range in your neighborhood for sale, you may want to wait. On the other hand, if you find yourself with a unique product, the time to sell just might be now.

Foreclosures in SF

Everybody is talking about the recent fall of the sub prime market. What everyone really wants to know is how their local market will be affected; and, more importantly, how they will personally be affected. I don't want to trivialize what is happening in the financial world, but as the president of San Francisco/Peninsula Coldwell Banker points out, "99.2% of mortgages are not in foreclosure". It really depends on how you look at the numbers.

If I told you that according to Data Quick the number of homes that actually foreclosed in San Francisco went up 444% from 2006 to 2007, you would be shocked. If I told you the actual numbers were 9 homes foreclosing in 2006 compared to 49 foreclosing in 2007, that might put things into perspective. The loans least likely to foreclose in the Bay Area are in San Francisco and Marin counties. Also in the same study, the number of defaults went up 102.4% from 2006 to 2007, from 127 homes to 257 homes. Less than 20% of those defaulting on their loans are ending in foreclosure.

So what is the recipe for disaster? High cost loans and high loan to value ratios is much of it. Lenders were making it possible for people with low credit scores and little to no money down to finance a home. They could get a loan, but not a good a loan. Low credit scores bring interest rates up as do low down payments. The upside to all of this is that many families were able to realize the American Dream, and a majority of them have not defaulted on their loans. Only 10 to 15% of all loans are sub prime, and only 10 to 15% of those have defaulted.

In San Francisco, the neighborhoods with the highest concentration of sub prime loans are in the southeastern corner of the city: Bayview, Visitacion Valley, Excelsior, Outer Mission, Crocker Amazon, and Ocean View. If you see foreclosures or short sales, it will most likely be in one of those areas.

The prices of San Francisco homes in general have not been negatively affected as we continue to see the median price go up. If you are a buyer in today's market, you are most affected by the tightening of lending restrictions. One of our clients was pre-approved for $1.2 Million one day, and it dropped to $900,000 the next. They are now happily in a home they purchased for just under $900,000 thanks to Anja and her stellar negotiating skills, and it is probably for the best for them not to have stretched themselves too thin.

The number of foreclosures will continue to rise through the end of the year, and prices may be slightly affected negatively, especially in those neighborhoods I mentioned, but San Francisco's market as a whole is still going strong.

There are 850 open houses scheduled for tomorrow; one of them is just right for you! See you out there!

Grand Tour

It's time for Sunday Opens! The count of open homes in San Francisco has more than doubled from last week. Many homes that were on the market didn't have open houses because of the Labor Day weekend, and other sellers like to wait to put their homes on the market until after the holiday weekend. September and October tend to be strong months in the San Francisco real estate market, so we are all anxious to see how it will go this year amidst the credit crisis. The consensus I am hearing from the buyers who are visiting my open houses is that they feel it is a good time to buy; they realize that prices haven't dropped in most cases but have leveled and aren't shooting up, at least at the moment. The buyers are out there, and they are looking for deals. I used to say that there are no deals in San Francisco but these days you may be able to find one. Especially if you aren't looking where everybody else is looking, or for the same thing everybody else is looking for.

Anja and I offer something to our clients called the Grand Tour. You tell us what your price range is, and we will take you through the city and show you, in each neighborhood, what you can get for your money. You may find neighborhoods you didn't know existed, or rediscover places you'd been but hadn't yet considered. $700,000 may barely get you a one bedroom condo in a place like Noe Valley, but in Mission Terrace you can get a two bedroom single family home with a garage and a garden! And it's close to Bart! I'm not saying everybody should up and move to Mission Terrace; maybe the one bedroom in Noe is better for you, but it's good to know your options. That way when you make your final decision you know you've made an informed one. Also, when you first set out to look you may think you know what you want, but you may end up with something completely different; sometimes it all comes down to the feeling you get when you walk in the door. Anja had some clients last year who were looking for a fixer in a cozy neighborhood and ended up with a brand new condo on Geary! You just never know.