Verbatim: “Why is housing in some cities still booming?”

Real Estate: Last of the red-hot markets

Why is housing in some cities still booming? The answers may help you navigate your own market.

For the most part, the iron laws of supply and demand explain what’s going on…

The basics haven’t changed. Job growth and rising incomes boost demand for, and prices of, housing…

If it’s not demand pushing prices up, it’s got to be you-know-what…[supply]

A trio of economists, Joe Gyourko, Christopher Mayer and Todd Sinai, have argued that persistent growth in cities they dub “superstars” (for example, New York City and San Francisco) is fueled by a limited supply of housing and by a concentration of high-income families who are willing to pay top dollar to live there.

True, both cities have hit bumps in the road in the past, and prices over the past year in the New York metro area rose by only 2.7% while in San Francisco they sank by about 1%. But, Gyourko says, “over the long term they will outstrip the national average.”

Thank you “Craig”.  Thank you readers.  Thank you commenters.  Thank you CNN Money.  Have a good weekend.

-Real Estate: Last of the red-hot markets

Why is housing in some cities still booming? The answers may help you navigate your own market. [CNN]

Straight Confusion: NOPA Where the F*ck are You!?

Who’s got the answer? We want to hear it. NOPA…boundaries…exactly.

Park North it is not. North Panhandle it is not. You’re back yard it might be…let us know. North, South, East, West street borders. If it kinks, we want to know that too. If it stinks, save it. Fav hang out. You might as well dish it.


The most detailed districts map you’ll find to help you nail down those streets.

Ask Us: Terraces at Millennium Tower?

Where readers ask, and we try to answer:

Other than the penthouses, do any of the condos in the Millennium Tower have outdoor spaces, i.e. terraces/balcony? Thanks.-BD


Yes, there are six homes with terraces on the third floor.The six available homes with terraces range in price from approx. $895,000 to approx. $2.7M.

The other Penthouse with outdoor space currently available is on the [keeping our word and not publishing this to the public.] The price point anywhere from approximately $10M – $12M, and it is a “shell”. Meaning you can build whatever floor plan you desire.

-Millennium Rising and Selling Rather Quickly [theFrontSteps]

-Ask Us [theFrontSteps]

Quote du Jour: “most seafood”

Different than our comment du jour, which is strictly from our readers, this new feature (totally in beta mode) is a quote we found “out there” in San Francisco that is just too good to pass up. From the Chronicle’s “San Francisco Bay opens to fishing, effective immediately“:

Tests on fish and crabs show that the spill is no longer causing most seafood to be unhealthy to eat, officials announced today.

“Attention shoppers, we’re running a special on ‘most seafood’ in the store today, as for ‘the rest’, heck, we’re practically giving it away…”

[For those that might just be joining us, we had a bit of an oil spill not too long ago that might make that crab taste just a bit funky. You know we're still eatin' it though!]

Rent vs. Own: The Old Debate in a New Spreadsheet

We just found this on Submedian, which is calling itself a “San Francisco affordable housing blog”. (There is no “affordable” housing in San Francisco, but we’re moving on, and we like your stuff, so you’re on our radar.)


So far this person has gone into detail about the median vs. average issue (we found this blog when they caught our blunder), and now they have put together an excellent, and what must have been extraordinarily time consuming spread sheet (shown above) as a way to determine if it is better to rent or own. If spreadsheets aren’t your thing, remember the New York Times has a nice interactive graph to keep you occupied.

We haven’t had much time to play around with it completely, but thought some of you might. Let us know what you think, if it is accurate, and when it’s going to rain.

From the author’s site regarding this graph, “I’m looking for feedback, so if you see something I left out, or some way to improve it, let me know.” That’s

Off to meetings….

-rent vs. own spread sheet [Submedian]

-Re-run: NY Times Interactive Graph, Rent vs. Buy [theFrontSteps]

Hmmm….$354,000 Over Asking in a Down Market?

135coleIs that correct? Let’s see, sales price $1,553,000, minus list price $1,199,000 equals $354,000. Is that right? Hmmm. Day offer received 9/28/07 minus list date 9/12/07 equals 16 days on the market. Is that right? It can’t be. We just said volume is down 41%. Ohhhh. We get it. We’re just being led astray that the San Francisco market has tanked, when in fact, it has NOT! Don’t believe what you’re reading. Cooled, yes. Tanked, no. Go ahead and put that on the Craigslist Housing forums,“Planet of Slums”.

135-137 Cole in Park North. Two units, both vacant, both needing some love, and both flying off the shelf in unison.

Say it with us now. The market is still good. The market is still good. The market is still good. Eventually, it might sink in.

-What’s going on $500,000-$700,000 [theFrontSteps]

-God Save the Queens of the Craigslist Housing Forum [theFrontSteps]

-135-137 Cole [mls]

Headlines versus Reality, Volume Down, Median Up…again.

Headlines: “Bay Area median prices rise, but overall home sales news grim.

Reality: “As Homeowners, Volume is not Very Relevant.

For what it’s worth, we’re happy to see our little report was right on the money as far as the decline in volume at around 41%. Guess we’re not so mathematically challenged after all.

And since you might not click through to the Chronicle’s daily dish of doom, we’ll pull some quotes for you:

Amid continuing fallout from the subprime lending crisis and credit crunch, home sales for California and the nation plummeted in October, while the median price slumped, according to two reports released on Wednesday.

In California, sales volume fell 40.2 percent in October compared with a year ago, while the median price slumped 9.9 percent…

Sales in the Bay Area, which the group defines as Alameda, Contra Costa, Marin, San Francisco, Santa Clara, San Mateo and Solano counties, fell 41.5 percent. The median price in the region was up 8.9 percent to $810,490, compared with $744,300 a year ago. Median price is strongly affected by the composition of homes sold; in the Bay Area the median has been buoyed because a greater number of more-expensive homes have been sold. [We've been through the median/average thing already.]

The inventory of unsold homes rose by 1.9 percent to 4.45 million units. Analysts said the backlog was about double what it is during normal times and will probably rise further as increased mortgage defaults in coming months dump more homes on the already glutted market.

Patrick Newport, an economist at Global Insight, predicted that home sales could decline another 10 percent from the current depressed levels by mid-2008. He said that by that time, home prices will have fallen enough for sales to rebound.

-Bay Area median prices rise, but overall home sales news grim [SF Gate]

Stats & Numbers: Condo Sales 10/06-10/07

From Garrett:

District 1 Oct-06 Oct-07
Number of Sales 15 7
Median Selling Price 701,000 779,000
Average DOM 33 25
District 2 Oct-06 Oct-07
Number of Sales 0 2
Median Selling Price 752,500
Average DOM 27
District 3 Oct-06 Oct-07
Number of Sales 3 0
Median Selling Price 595,000
Average DOM 22
District 4 Oct-06 Oct-07
Number of Sales 2 5
Median Selling Price 466,500 600,000
Average DOM 47 30
District 5 Oct-06 Oct-07
Number of Sales 28 31
Median Selling Price 785,000 891,000
Average DOM 34 37
District 6 Oct-06 Oct-07
Number of Sales 15 28
Median Selling Price 692,000 742,500
Average DOM 40 36
District 7 Oct-06 Oct-07
Number of Sales 20 28
Median Selling Price 950,000 1,400,000
Average DOM 46 35
District 8 Oct-06 Oct-07
Number of Sales 38 30
Median Selling Price 782,500 772,000
Average DOM 45 45
District 9 Oct-06 Oct-07
Number of Sales 34 46
Median Selling Price 702,500 669,000
Average DOM 49 39
District 10 Oct-06 Oct-07
Number of Sales 2 8
Median Selling Price 454,299 353,500
Average DOM 24 39

Data Provided by San Francisco Association of Realtors

Walkabout: Berlin and €21 Million (that’s Euros)

So here’s the problem. Once you go walkabout you eventually get Wanderlust, and end up in Berlin Germany…Stadt Mitte! Danke Schoen.


So what do you get for €21 Million?


That’s what you get. A sweet corner building with retail and office space located in the heart of Berlin, with a Rolex sign to boot! Not to mention total rental space of 2,811 square meters, underground garage with 26 parking spaces, gross rental income of 835,000 €, a complete renovation of the entire building in 1997, and a total of nine full floor offices & three shops.

We’re on our way, but we’re gonna knock that price down a bit if you don’t mind, because our beloved green backs are a little lifeless in your neighborhood these days.

You know, of course, “ick bin ein berliner”.

-21 Million Euros Property [website]

Walkabout: Oaxaca Mexico and $380,000

Let’s face it. Our front page is filled with too much text, too much black and white, and too much doom and gloom as of late. Time to go walkabout (get your best Australian accent on when you say that), and head south of the border.


All you surfers should delight in this Oaxacan beauty in Puerto Escondido. The quick stats: US $380,000; 1,800 SQFT; 3BD,3BA; Ocean View. Sounds good to us. Who’s making the margaritas and which hammock is ours?

Comment du Jour: “As Homeowners Volume is Not Very Relevant”

Sometimes we beat our heads against the wall to come up with a way, in a paragraph or less, to describe what is going on in this market. We show the highs, and we show the lows. Today, we pull from our previous post about the 41% dip in volume at the $500-700,000 price range, and quote “Gaz” who hit the nail on the head.

As homeowners, volume of houses sold is not very relevant. What matters more are three metrics:

For a determined period of time:

- How many properties where listed within a certain price range ?

- How many properties where sold within that price range ?

- What was the price difference (bid vs. ask) at sale ?

These metrics help assess if inventory is building up and what effect is it having on prices.

From my own research (I’m looking to upgrade homes) into the $800K – $1.2M properties (condos/single family in west and north neighborhoods of SF) from the Sep. 1 period to the Nov. 21 period:

* ~70%+ percent of properties listed have moved into escrow

* There has been downward pressure (-5% to -7%) on asking prices for ~10% of properties in that range/timeframe

* A few properties have sold above asking

* ~10% of properties have been on the market longer than 80 days

Interestingly, we’ve looked at 30+ properties in that category, and we found a grand total of … one that fit all of our requirements !

Why do we pull comments? It’s simple. Not all the people coming to this site (there are a lot) are commenting. Not even close. And not all are reading the comments, but they should.

Thank you “Gaz” for sharing. We appreciate it. Now go ahead and tell everyone you know that your analysis is world famous…well almost. ;-)

-Nothing Special, just $421,000 over asking, that’s all (1809 Diamond) [theFrontSteps]

-Big Price, Big Wine Cellar, Big Time Stalefish [theFrontSteps]

-What’s going on: $500,000-$700,000 [theFrontSteps]

What’s going on: $500,000-$700,000

We hear a lot of talk, and get a lot of heat about always using “high end” bits of anecdotal sales information, and always cheering the market on. All of which we’ve taken into consideration. So…we did a little searching.

Since 10/31/2007, according to MLS 85 homes throughout the entire city (condo and single family) within the price points of $500-700,000 closed escrow. The majority of which sold within 5% of asking.

A few averages in 2007:

List price $612,603

Square footage 1202

List price per square foot $602

Sales Price $613,093

Sales price per square foot $599

How does that compare to the same period one year ago? Well…it sucks. Using the exact same search criteria, we found in the same period in 2006 there were 144 homes that closed escrow, the majority of which also sold within 5% of asking. That equates to roughly 41% less activity today than a year ago in the price range $500-700,000, according to MLS. It does not take into consideration any new development sales, or off market deals.

The averages in 2006:

List Price $620,754

Square Footage 1090

List price per square foot $613

Sales Price $619,297

Sales Price per square foot $612

The verdict: You are now, officially, getting more for your money in the price range $500-700,000 than you were last year. We could, of course, go back to 2000, 2001, 2002, 2003, 2004, and 2005 to show that you really need to think long term when thinking real estate, but we’ll let you all enjoy this little bit of doom and gloom reporting by yours truly, theFrontSteps. Don’t get used to it. ;-)

-2007 Properties List/Report [MLS]

-2006 Properties List/Report [MLS]

29 offers!? (1851 26th Ave.)

We didn’t say it, those loonies over at San Francisco Schtuff did:

I’ve walked into a lot of homes in my day–some of which required hard-hats and safety waivers, but I have yet to see a home as wet and soggy as this one. There was water coming in from every crevice. Leaking through the (probably) 50 year old roof creating holes in the ceiling, mold in the corners and dry-rot throughout…

-Falling Over with 29 offers [San Francisco Schtuff]

Let’s fix this mess, says Shiller

From a reader, “This is the same person who publishes the Case/Schiller housing index which is so widely cited…”:

We have to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent[...]

We should take full advantage of the innovation opportunities stimulated by our current troubles. We would emerge much stronger and better for it.

-A Time for Bold Thinking on Housing [New York Times]

More mortgage fiasco reporting

From today’s San Francisco Chronicle:

The subprime mortgage fiasco stands to cost the Bay Area economy more than $5.4 billion next year, according to the latest report intending to put a dollar figure on the rising wave of real estate foreclosures.

The lending crisis will cost the national economy $166 billion and 524,000 potential jobs, said the report [...] In addition, homeowners across the country will lose $1.2 trillion in property values in 2008.

[...]“Today the foreclosure crisis has the potential to break the back of our economy, as well as the back of millions of American families.”

[...]The mayors’ report did not forecast a recession, but it said 128 metropolitan areas – including the San Francisco-Oakland-Fremont metropolitan statistical area – would see GMP growth fall into the “sluggish” category of below 2 percent.

[...] with estimated losses of $3.6 billion in the San Francisco area, the Bay Area stands to lose at least $5.4 billion[...]

By most estimates, the number of foreclosures could peak in 2008, when the next batch of mortgage interest rate resets is scheduled to occur[...]

[...]Economic growth will be cut by one-third in 65 metropolitan areas and by more than one-quarter in 143 regions.

[...]One expert on the Bay Area economy, however, said the study overstates the size of the impact. First, economist Ken Rosen said, the GMP is inherently an imprecise measure that involves cobbling together varying economic indicators on a local level.

Second, Rosen said he believes investors in subprime mortgages – who may be far afield – will likely bear the economic brunt of the subprime meltdown, not local economies.

“Most of the loss is not to the homeowner, but to the owner of the mortgage, and they’re not regionally concentrated in the Bay Area,” Rosen said. “We’ve exported maybe a quarter of this loss to the rest of the world.”

[...]Several recent studies have attempted to quantify the ripple effect of the subprime debacle.

Last month, the Association of Community Organizations for Reform Now found that nearly 4,800 subprime loans made to Bay Area borrowers in 2006 probably will fall into foreclosure in the next couple of years, costing homeowners, cities and lenders as much as $1.5 billion.

A report by another advocacy group found that foreclosures in the Bay Area could depress neighboring home values by as much as $11.6 billion.

And finally, research by the U.S. Senate Joint Economic Committee found that California homeowners are at risk of losing $23.6 billion in housing wealth if real estate prices continue to decline and foreclosures soar[...]

There you have it. Sounds like a hung jury. We can all agree things have changed. We can all agree they might continue to change. And we can all hopefully agree that nobody knows exactly to what extent they will change.

We’re going to go write a couple an offers on some a homes today and see just how skittish this market is, because the scale of what they’re reporting, we’re not seeing. Little bits here and there, but not all out disaster.

-Mortgage crisis expected to cost Bay Area $5.4 billion next year [San Francisco Chronicle, Kelly Zito]

God Save the Queens…of the Craigslist Housing Forum

If you’re going to call us out, at least let us know about it. We found this on Craigslist today:

The Front Steps Blog is Hilarious. < [author] Planet_of_Slums > 11/24 14:18:22

The entire Bay Area has gone into crash mode, but, over at the Front Steps blog: they’re not gonna take this Housing Crash B.S. lying down!! Ho Ho!

You tell ‘em!

I really like the attitude of these folks. The greatest credit bubble of all time is merging with a housing and US Dollar bust, and these guys are gonna Shout it Down!.

My message to these clowns is follows: Try Ring-fencing this, Kids.

We’re not kids, and did you check the map on that article? No? Here it is:


We’re only concerned with that little red circle that, although only 47.1 miles away from Fairfield, is worlds away in market dynamics. But as soon as things take a massive turn for the worse in San Francisco, we’ll let you know. As for now, they have not. How’s that for a ring fence? A little red one for you.

Nice name by the way.

-Fairfield balances on the edge as housing prices plunge [SF Gate]

-Craigslist Forum Discussion

Coming Soon: “The Registry”

Having just been interviewed by a new publication in town, “The Registry”, we thought we’d pass the information along to all of you real estate obsessed readers out there, that there is, in fact, yet another avenue for you to get your fix. Look for us in the February issue…or maybe January, if we make the cut.

What do they hope to accomplish, and what will they be? Look to The Real Deal New York for some hints.

-“The Registry” [website]

Glassing Off: Downtown and a Bottle of Windex

Following on the heels of our latest post on Millennium Tower, today’s Chronicle/SF Gate provides the latest on all the glass going up on many of the other buildings we’ve featured. Have a look at this audio slideshow by John King of the SF Chronicle.

san francisco chronicle

And of course, feel free to share your thoughts.

-One Rincon Hill Posts [theFrontSteps]

-The Infinity Posts [theFrontSteps]

-Millennium Tower Posts [theFrontSteps]

-audio slideshow [SF Gate]

-Newest Towers Will Give SF Skyline a Touch of Glass [SF Chronicle/John King]

In Marketing, Less is More

Our neighbor’s (Tiburon) “back yard”.

(Yes, that is the Golden Gate Bridge on the right, and the city of San Francisco just left of center.)


In case you are wondering, that back yard could be yours for $7,650,000, and you get 5300 square feet of “Romantic View Property” to go with it. Can’t afford to buy it, you can rent it for $19,500/month, but we’ll leave that debate up to you, and go ahead and make this reason we live here #10.

-Reasons we live here [theFrontSteps]

-Tiburon Property [property site]

-Rent vs. Buy [theFrontSteps with interactive graph from NY Times]

Reduce and Sell, Reduce and Sell (411 Banks in Bernal)

Even if the market has cooled, and properties are seeing price reductions, they are still selling. There is a technique to employ that usually leads to the same outcome: Reduce, and Sell, and we might add, don’t panic.


Case in point, 411 Banks, a two bed, one bath, 1600 square foot single family home in Bernal Heights, listed in May at $750,000, price reduced and relisted in September at $699,000 and now on track to becoming a done deal during the holiday doldrums. From what we can tell it spent ~160 days on the market. The last recorded sale on MLS was in 1997 at $165,000.

What’s your favorite? The pink, the picket, or the 1997 price?

Ask Us: History of previous occupants

For those that have been reading theFrontSteps for a while you’ll know we have a little thing we call Stump the Stammtisch, where readers write in with all sorts of questions that we attempt to answer. If we can’t answer, we’ll try to find someone who can. As it turns out many questions aren’t necessarily geared towards “stumping us”, so we might be permanently changing the name to “ask us”. (Not that you really care, but we feel obligated to explain.)

Today, Sophie simply wants to ask,

How much do you want (or don’t want) to know about previous occupants of your house?

Today, for the 3rd time, someone from the family who owned the house

for decades [before us] rang my doorbell. I love the visits. Each of them brings

information and insight, and each visit finishes with a “This place is so full of happy memories. Thanks for letting me peak”.

However, there are [things] that I wish I [didn't] know about the

previous occupants. We still receive mail for owners and tenants who moved out 18 years ago (and each and every occupant since).

So buying new? Or buying a property and its history of happy and less

happy events?

Sophie would like to know.

We say, go for both. Buy new, and buy old, just don’t get too old before you buy new.

Millennium Rising…and Selling Rather Quickly

There have been a lot of unconfirmed rumors flying around regarding Millennium Tower, so we thought we’d visit the sales office, call a few reliable sources, get some confirmations, start another rumor, and give you the scoop on the latest with Millennium Tower.


First, to ease your doubts about our market ever seeing $2000/square foot, keep your eyes on this building. Is this the norm for the city? No. But we did say it is possible. For the record, they do have units priced in the $900/square foot range as well, so don’t get scared away.

Second, regarding the Michael Mina restaurant going in the building. It will indeed be named RN74. The restaurant will also be providing services and staff for the Millennium’s private dining area on the club level (Millennium residents only), as well as providing exclusive wine selections to said residents.

Third, there are currently ~60 units of the total 419 “sold” (~13%), and of those, ~80% are beyond the 5 day grace and are now considered “done deals”. Sales have been in all price ranges at all levels. Add to that the sales office has only been open for 12 days, and you see how quickly things are moving.

Fourth, one of those sales is a 60th floor penthouse unit that happens to be 645 feet above ground, with ~4700 square feet of empty shell (meaning the owner can do with the interior as they please), a 580 square foot terrace, views to die for (more on that later), and a $10-12M price tag, or more than $2,000 per square foot. Whether it is true, and whether it is $10M or $12M… we leave to your imagination.

Fifth, yes, most of the sales have been in the “upper floors” or the Grand Residences (floors 26-top) of the tower but that doesn’t mean the City Residences (shorter 11 story building with Tribeca-style lofts) haven’t seen their share of activity as well.

Finally, yes, you need an appointment, and to be pre-qualified with one of their preferred lenders before you will be given the tour.

As you can see, the sky is definitely not falling for San Francisco’s new development high rise luxury real estate. We can categorically, without a shadow of a doubt, tell you that much. We do live in a world class city after all. The rest, true to our word, we’re keeping under wraps.

If you’d like more information, or are considering purchasing a unit at the Millennium, feel free to contact us.

-Millennium Tower [website]

-Millennium Tower Going Up (301 Mission) [theFrontSteps]

Is Help on the Way?

“Countrywide, GMAC, Litton and HomeEq – which collectively service more than one quarter of subprime loans to people with poor credit – agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.”

Hope they have a lot of operators manning their phones today.

“Governor, 4 big lenders agree on plan to stall high mortgage rates” [SF Gate]

Comment du Jour: “The best and brightest homes…”

From “eddy” on Tanking Market? Come again? That’s what she said…”:

The best and nicest homes will continue to fly in this market. Any home with a story or in disrepair is going to get stale.

We didn’t say it, he did. But we’d have to say if “fixer” falls under the category of “disrepair”, we’re going to have to disagree on that one point. Fixers, for the most part, are still flying.