Congress Fails to Deliver $700 Billion Check. Will San Francisco Real Estate Finally Fall Victim?

Surely you heard the news yesterday of the failed passing of the $700 Billion economic recovery bill, but today the Monkey gives one last effort to convince Congress to act before he rides off in the sunset to tend to his hogs.

[Photo Credit: New York Times]

The stock market has rallied today, but what about our market? Is this going to be the final blow that knocks us down for the count?

-Bush Urges Congress to Pass Bailout [New York Times]

Ask Us: “Change in Home Buyer Mentality?”

Where readers ask and we (the community) try to answer:

We’re planning to put our house on the marketing in a couple weeks. Have you seen any change in the SF home buyer mentality resulting from the recent news from Wall Street? I assume it varries by price range, but I’d be interested in your thoughts on how houses in the 1M – 1.5M range might be impacted in the weeks to come.

We could go around in circles on this question, depending on a number of factors (location, size, condition, amenities, views, etc.), but in a nutshell and to answer your question…yes. The market has been impacted, and given the recent near 700 point drop in the stock market, could be impacted more. Loans are harder to come by, and buyers are sitting on the fence. That said, if you have a desirable property in a nice area, it will likely still sell, and a buyer out there ready, willing, and able to qualify for a loan is likely looking for just what you have to offer.

That’s our $.02…


Welcome to our new site!

Welcome to the new look of theFrontSteps. Although I was hoping to change the site up completely, I learned a lot from my attempt on .ORG to steer me into keeping things very much the same, but changing servers to allow more flexibility on future features, posts, and anything else.

The first thing I have to say is a HUGE shout out and thank you to Reggie Nicolay at My Tech Opinion. Without his help, it’d be another couple weeks before we were able to go “live”. Do me a favor and click through to his site and check out all that they do.

A major change you’ll notice…advertisements. Click some ads and help me put shoes on my kids’ feet, and food on the table…can’t say that. (After all I am a Realtor and if you haven’t noticed the market is in the toilet, so they’re telling me, but I still haven’t seen it.)

The site is still technically under construction and there are a lot of little things that still need to be done. So don’t be surprised if you run into a bug from time to time, and please don’t hesitate to let me know (

That’s it. I hope you like it. I hope you come back. And I hope you tell all of your friends and family. Now if you’ll excuse me, after all of this, I need a cocktail!

As a realtor in these times, I get a s#*tload of spam, BUT …

Most of it is hot garbage. However, this one struck me as something that might actually come to pass”

“Dear Kenneth,I am sure that you have read about the $700,000,000,000 government bailout of the financial markets and you are probably wondering what this means to you as a real estate professional.

Well, I have good news and bad news for you.

This bailout is bad for the taxpayers but good news for REO agents and here’s why. After the financial meltdown of the 1980′s the RTC took over 748 Savings and Loans and liquidated their foreclosed properties for pennies on the dollar. The taxpayers were left holding the bag for hundreds of millions of dollars. This time things are going to be different.

The new governement rescue plan, Troubled Asset Relief Program, or TARP, will purchase defaulted loans from financial firms, freeing up cash so that they can continue making new mortgages. The big difference is that the government will leave the banks and lenders responsible for managing and selling their own foreclosed properties.

This is the big opportunity for you and I. You see, there is a huge back log of defaulted mortgages right now because most lenders do not have the cash to foreclose. They have been waiting for months for the government to come to their aid and bail them out. I’m sure that you’ve seen many of these vacant homes in your area. They’re easy to spot, newspapers in the driveway and weeds as tall as a NBA player.

As soon as these lenders get their hands on their share of the 700 billion dollars they will begin foreclosing on these bads loans as fast as they can. And they will need trained REO agents to manage and sell them.

If you’d like to learn how to become the agent of choice for these lenders and get REO listings click here: .

If you are already a REO agent and you’d like to get more listings click here:

Right now REO’s make up 42% of all real estate sales in the US. The number of REO listings is likely to continue to increase into 2012 before leveling off. If you’re not an REO agent you’re missing out in nearly half of the business opportunities in real estate today.

I have been an REO broker for over 8 years and have sold over 1,000 REO properties. Last year I closed 214 transactions. I can teach you how to get REO listings even if you got your real estate license yesterday. And it won’t cost you an arm and a leg. In fact, right now you can get started for less than the price of a tank of gas.

Click here and get training from a real live REO broker. This is not an ebook, and I’m not from some “guru” who just jumped on the REO bandwagon last night.

To your success!

Frank Patrick

REO Broker

PS. Many companies will only list their REO’s with one agent per office. Join me today and get started before the other agents in your office find out..

PPS. Join today and get access to 117 of my REO clients for FREE.”

I’m really not cool with this type of marketing, and I’m not going to sign up or anything. I also don’t think this is particularly applicable to SF. But will this go down? I think it’s likely.

This property caught many of us off-guard

2448 Folsom 2448 Folsom went on the market on August 1st. It got an offer within 11 days, went pending a week later, and sold on 9/22 for $1.509M. That was 34K above its asking price of $1.475M.

This is Folsom street between 20th and 21st. Those of us familiar with the area were very surprised by this to say the least. The reasons for that are many, not the least of which is the fact that this is the very center of the Mission. With all that has happened, wouldn’t you think such a result unlikely?

MLS LINK here.

Just a reminder, theFrontSteps is under construction

Although it may look exactly the same to you, behind the scenes theFrontSteps is going through a massive redevelopment project and it’s going to take some time. Thanks for your patience, browse and converse on the current posts at will, and don’t hesitate to contact us if you have any questions or concerns regarding San Francisco real estate.

(Don’t be surprised if a little tech gremlin makes things blow up, or the power goes out from time to time during this project either.)

The “have we hit bottom?” thing.

Saw some interesting numbers today. The Data Quick numbers came out for August. They basically indicated that the Bay Area is going to cease to exist. Apparently, we are all going to get sucked down a rather large submerged drain. A gigantic rubber stopper is located in the silt about 600 yards to the northeast, off the coast of Treasure Island. A strategic command unit of trained bear underwater demolition aquanauts is standing by, ready to pull the plug at a moment’s notice.

Just kidding. But take a look, and check out Contra Costa County in particular. We’ve all been wondering about the bottom. Well, CoCo saw a big spike in sales YoY, but got really slammed in median. That looks like it really could be bottom.

Guess what? Here in SF we saw the same thing in D10. This year over last, more people bought in 10 and for cheaper.

In fact, in areas 10 and worst of 3 there were four more sales this year than last, at 10% cheaper.

Areas 10 alone had four more sales this year, 42 over 38, and cost 423 a foot as opposed to 515 last year. Average sales were 559K this year, 718 last. (Apologies to those who would prefer median over average, and no I didn’t look up the tax or permit records to see who did or did not grab square footage in various basements and garages and attics.)

Anyway, it isn’t as dramatic as CoCo, not by a longshot. But when was it ever? There were more D 10 sales this August than last? For 18% cheaper?

–Kenneth Kohlmyer a k a der fluj

A Front Steps request — can we get some lender input?

What does this latest round of failure and acquisition do to the mortgage market? We keep hearing the same refrain. Basically (to paraphrase), “Interest rates will likely get lower short term. But conversely credit will be even more difficult to obtain.”

To put a fine point on it, what does this mean to the average buyers with 20% to put down on a house? Or, can you describe a typical scenario right now? Something that has come across your desks?

Any and all input would be greatly appreciated.

Changing Technology on theFrontSteps

I’m officially forcing myself to switch my blogging platform here behind the scenes and as much as everyone is telling me, “It’s so easy!”, “It’s seamless”, I anticipate many, many bumps in the road. With any luck, it will go easily and we’ll be up to blogging full speed and all that good stuff soon enough. If not, blame WordPress.

Millennium Tower, San Francisco: A walkthrough, a few photos, a little scoop, and my opinion

For those of you that read this San Francisco real estate blog on a regular basis, you’ll know I’ve been watching the progress of many of the new developments around town. One of my favorites happens to be Millennium Tower (301 Mission). Not because I’ve sold many units there, but because it truly stands out (and above) from the others.


(Yes, that is the Infinity you see way down there, and this shot is only from the 26th floor.)

Don’t get me wrong, I love the other new developments (towers) as well, and I’d love to show any of you around all of the buildings, because they all have their attractions, but Millennium Tower just seems to have that vibe. That…je ne sais quoi…It seems like it will have the same high end/high net worth residents (at least one penthouse in contract at +$10 million and….damn I want to tell you more, but promised not to) as those in the St. Regis, but twice as many amenities at half the dues…not to mention a Michael Minna restaurant. The Infinity feels much more Hard Rock Hotel meets San Francisco (not a bad thing at all), and One Rincon Hill with the dazzling views, just doesn’t have the location (trust me, I’ve had several clients turn away from the location) to put it in the same class as St. Regis and Millennium Tower, not to mention the uncertainty of Tower Two.


I must say I am a bit disappointed with the ranges, and islands in the kitchens at the Millennium, and that some units don’t have deeded parking, but those are easy enough to remedy. The building is solid, and the finishes are very high end. The views are extraordinary, the location is getting better, and the amenities are through the roof. The units are still selling very quickly and many owners losing their money in the stock market have bought multiple units here, so all signs still point to a successful development by Millennium Partners, and I can’t wait until they start moving people in.


(Penthouse terrace views.)

There are still some very choice units available at the Millennium and several at many other developments around town. I haven’t heard of any negotiations or price incentives at Millennium Tower, but I know some of the other developments around town have been offering them up, and the “off market” trading that is going on at many of them is nothing short of extraordinary.

I have more photos, and a lot more details, but you’ll have to contact me if you’d like to learn more.

Name It and Claim It

We thought about trying a little something new here on theFrontSteps for your Friday. That is to test your knowledge of your surroundings, since we’re all experts right? ;-)

It goes like this: we post a picture of something in San Francisco, you name it and claim it (your uberknowledge of San Francisco and its environs). We’ll start off fairly easy, and hopefully get harder and harder should this idea gain traction. Feel free to submit photos (, but if you do, make sure to tell us exactly what it is and where you find it.

What reads on the blue arrow you can’t see? Where is it….exactly?

A good reason to get out and explore this weekend.

Have fun! Happy Friday.

Ask us: How can I add a roof deck to a 2-unit building?

Where readers ask and we (the community) try to answer:

Firstly, thanks for such a great site! It has really given me some amazing insight into the San Francisco market. One item I’ve been trying to research to no avail, is just how hard it is to add a roof deck to a two unit building. Specifically, are the permits easily obtained? How long would such a project usually take to construct? Estimated costs etc? I’m not looking to do this without professional help, so if anyone has any recommendations of an architect and/or contractor who has any experience with roof deck design/construction it would be greatly appreciated.


Unfortunately this came to us anonymously so we can’t thank the reader or direct any experts to them directly, and that, in turn, opens the door for you to plug the hell out of your (or anybody you know) services in the comments. Just answer the question first, so we all benefit. ;-)

A Good Deal for Everyone: 727 Grafton ($369,900)

It’s not often a deal like this comes around and everybody shares in the goods, but 727 Grafton promises not to disappoint.

Here’s the deal:

1. The seller gets to walk away (its a REO)…DEAL!

2. The contractors didn’t have to pull permits (“permit status if any is unknown”), or put in a kitchen, “The home has no kitchen or bathrooms…” DEAL!

3. Buyer gets “Ocean View Location” and a 3% (of selling price) credit towards closing costs (not to mention a $369,900 asking price)…DEAL!

4. The selling agent (represents buyer) will get a $3000 bonus…DEAL!

5. We get to talk about the downstairs “partial basement with framework of a room and potentially a bathroom”…DEAL!

Did we forget anyone who gets a good deal on this deal?

-727 Grafton [sfnewsletter listing detail page]

theFrontSteps is Dabbling in Porn

As always, we like to share some of the behind the scenes traffic and search word humor with you. Still one of the all time most random and continued successful search terms to find this site is “Monstertruck” (not sure if that’s a good thing), but climbing the ranks recently…..”Video Porn”. We kid you not. The culprit, Transbay Terminal High Speed Video Porn.

Should you think you’re reading this site with a couple monster truck loving perverts, fear not. “the front steps”, “one rincon hill”, “Millenium Tower”, “rent vs. buy”, “sf real estate blogs”, and things like that drive most of the [new] traffic. It’s the random ones like this, and “ocean themed kitchens” that make us chuckle. We thought they might make you chuckle too.

Stats & Numbers: Single Family Homes 8/07 vs. 8/08

From the SFAR Advantage Online:

click for larger image

click for larger image

NUMBER OF UNITS is the equivalent of number of sales/transactions. For condominiums, each unit is treated as a sale. For 2- to 4-unit buildings, the “building” is treated as a sale.

NUMBER SOLD is the number of properties in the market segment that closed escrow during the month.

NUMBER FOR SALE is the number of active properties on the market for one day or more during the month.

MEDIAN PRICE (SOLD) reflects the “middle” price point of a group of properties that have successfully closed escrow on a monthly basis, i.e. half sold for more and half sold for less than the median price. Tracking the movement of median prices over time provides a good indicator of the direction market forces are moving.

If the percentage change is positive between the two periods then there is upward pressure on prices in that market segment. If the percentage change is negative between the two periods then there is downward pressure on prices in that market segment.

AVERAGE DAYS ON MARKET (DOM) reflects how long it has been taking (on average) to draw an offer on a reasonably priced property exposed to the market. The AVERAGE DAYS ON MARKET is defined as: The average number of days it took all of the properties that went under contract during the period to accept a first position offer.

MONTH’S SUPPLY OF INVENTORY (MSI) is a measure of how long it would take, in months, to sell the existing inventory at the current sales rate for the specific neighborhood and property type. The MONTH’S SUPPLY OF INVENTORY is defined as: The number of active properties on the market for one day or more during the month, less the number of properties that have been withdrawn or expired, divided by the number of properties that have gone under contract during the month.

* * * * *

Data provided by Terradatum. For additional information about market statistics and/or additional information about Terradatum’s products and services, please call Terradatum at 1-888-212-4793 Ext. 2 or send e-mail to

[District Map, Tour de San Francisco (real estate) by Districts]

Lembis Unloading Properties, Buyers Quickly Snatching Them Up

Had you been reading theFrontSteps for a while, you’d already have known the Lembis were hinting at unloading some property, but we don’t even scratch the surface of the kind of excellent real estate information that is available in the San Francisco Business Times. (As always, we HIGHLY suggest a subscription should you want to be plugged in to San Francisco new development and big time real estate news.) The latest issue is no exception.

We’d like to bring your attention to the recent article, “Lembi’s buying binge turns to selling spree”, “the latest indication that the city’s largest owner of apartment buildings is under pressure to unload properties to reduce short-term debt.”

As always, we tend to focus on the positive, rather than the negative (unlike some), and would like to point out a few things:

The Lembi Group, which controls 300 buildings and 8,000 units through subsidiaries Skyline Realty and CitiApartments, had put all but one of the 19 buildings up for sale early in the year. It recently sold 72-unit Nob Hill Tower to the Prado Group and Felson Cos. for $37.2 million. The company also sold 1850 Clay St. for $7.9 million and 1801 Pacific St. for $4.2 million.

Seth Siegel and Zach Siegel, senior directors at Cushman & Wakefield, have the listing.

Seth Siegel said 210 parties have completed confidentiality agreements, about twice the number expected. He said “nothing like this has ever sold before.”

This has been the strongest response we have ever had to any single offering,” he said. The time it takes to accumulate a portfolio of buildings like this is enormous. Here you have an opportunity to immediately make a foothold in one of the best residential markets in the world.”

Those interested include real estate investment trusts, large multi-family owners and institutions. Fifteen percent of prospective buyers are foreign, Siegel said.

“We’ve heard from people in Dubai, London, Switzerland, Germany and Amsterdam,” said Siegel.

Last year, San Francisco was the top metro area for apartment rental growth, according to Marcus & Millichap, and rental rates are projected to grow another 7 percent in 2008. Siegel said the weakness in the condo market has bolstered the demand for apartments.

Just goes to show, one man’s loss, is another man’s gain, and all of the focus on the downturn of one market, could mean the uptick of another. As we’ve said before, the savvy buyers are licking their chops in this “down” market looking for some solid long term investments in San Francisco residential real estate.

[Since we know it's coming, here is your counterpoint: Bosa Development suspends Mission Bay condo Project. And here is a counter to that: Shorenstein to start Oakland office tower...and so you see, we could go back and forth, or we could bury our heads in the sand.]

-Lembi’s buying binge turns to selling spree [San Francisco Business Times]

Taking Over Fannie Mae and Freddie Mac, Some Clarification

If you’ve been wondering what all of this Government takeover of Fannie and Freddie means, you’re hardly alone, so we just went ahead and copied what we just read to give you some different perspectives of what is being said in the real estate world. We take zero credit for this, it all came from the San Francisco Association of Realtors Advantage Online:

[Update: And we just discovered more info on Trulia].

“NAR: What the Government Takeover of Fannie Mae and Freddie Mac Means to Housing Industry

In short-term, home sales should improve as mortgage rates fall Continue reading

Earthquake Reality in San Francisco

As I sit here at the playground in the heart of Cole Valley, I’m looking at the homes around me (within eyesight) from a different perspective, that of how many were built after 1906. From what I can see…all of them!

What strikes me is the thought of that photo in a previous post which showed the city flattened (maybe someone can put up the link?). When selling a home today, we always say, “it survived the 1989 Loma Prieta quake”, but it’s scary to think of something stronger and all these homes around me gone.

That’s my morbid thought of the day. Cocktails!

Posted from iPhone

Eichler Under $700,000 with a Pool?

No, this is not a paid post. Yes, we subscribe to many, many, many newsletters and industry publications. Yes, some get more play than others, but what do you expect…some are simply better. So let us know ( if there is something we should be reading that we’re not.

And how could you pass up an Eichler under $700,000 with a pool! Seriously!?

Our thoughts exactly!

No, this is not in San Francisco, but it’s close enough.

-371 Devon Drive [Marin Modern Real Estate]

An “Apple” in Noe Valley?

An interesting property was pointed out to me today. I hadn’t noticed it because I don’t have any clients in this range unfortunately. It’s weird that I didn’t notice it anyway because I actually lived at the place for a period of time. That’s a whole ‘nother story.

It’s 4545 25th street. Purchased in February of 2007 for $2.725M. It was basically brand new construction at the time. Not having seen the pictures yet, I cannot confirm that this is a true apple.  I do know that the property was done, done, and done when it was last on the market. So I doubt a remodel happened in the interim but I could of course be wrong about that. It’s on the market now for $2.895M.

What’s interesting is that it sold in Feb 2007 after a price reduction, a change of listing agents, and it sold for under asking. Now they are out at more than it was initially listed for.  I’d link you guys to it but there aren’t any pictures yet. I’ll edit this when they come out.



–Kenneth Kohlmyer a k a der fluj

When Neighbors Get in the Way…

If it’s not the city, it can be neighbors in San Francisco hindering property improvements. This home on 18th ave @Fulton is a perfect example. It’s been stopped for at least a year due to “neighbors didn’t like the exterior.”

Sound familiar?

Posted from iPhone.

It’s the LAND stupid!

I just had a nice little conversation with my neighbor who knows a thing or two about the financial world, grew up in San Francisco, had parents that grew up in San Francisco, is ultra conservative with most things, but extremely bullish about the San Francisco real estate market. He’s seen, and been a part of, the ups and downs in both our real estate and financial markets.

We got to talking about golf, kids, and of course, because I’m a Realtor, we talked real estate (seriously, everybody wants to talk real estate, I can’t escape it!)

[Woah! Earthquake!]

I was sayin’….we talked about the normal ups and downs, the mortgage crisis, whether I’ve been busy, and his theory that the home should not appreciate, it’s the land you need to focus on. Sounds pretty simple right, but then why does everybody focus so much on the asset that is the house (guilty as charged)?

Think for a minute about the enormous amount of over-building in places where homes didn’t need to be built. Places where there was already plenty of land (and homes) to supply the current population, and still more land to supply another 60 million people. Yet they kept building. It’s those places that are experiencing the most pain from this recent crisis. It’s places like San Francisco, Seattle, Chicago, New York City, to name a few that are experiencing much less pain. Why? The land. There isn’t any more, people still want to live in these places, and the only logical place to develop is up, but San Francisco is very strict about that. A piece of San Francisco earth is a limited commodity and they ain’t making any more.

We can talk details and numbers and all sorts of things, and we could argue that it is not that simple, but it really, truly is. Sure, our market has felt some pain, and we’ll surely feel some more, but deep down in your gut, do you really think it can/will last? And do you really think that San Francisco will see declines in the 30-40% range like so many parts of over-built America, where there is still plenty of land to go around?

Try not to let your thoughts drift to SOMA and the extraordinary over-development going on there. We could definitely see some big (short term) declines there, and my nemesis will certainly high-light those declines, but what about the rest of San Francisco?

I might not be making complete sense here, because I was not the teacher in this conversation, rather the apprentice, but certainly you get the gist…it’s the LAND stupid! N’est ce pas?