Comments on: Comment du Jour: Things aren’t so bad (relatively speaking)

By: 44yo hipster

44yo hipster — Sat, 25 Oct 2008 03:45:46 +0000

morgan- why would there be a long term price correction in SF? SF will continue to have a strong long term job base, not only in high tech, but also in biotech & alt energy. and the attributes that make the city desireable (natural beauty, diversity, urban ammenities) are not going to go away.

if anything, once we get past this global recession, SF will continue to become more and more expensive.

also, you can offer your tenant ownership opportunities-just sell them the units they own as TIC’s.

By: fluj

fluj — Fri, 24 Oct 2008 16:07:59 +0000

Morgan,

When you said. “OR, is it ALSO because of artificial controls on housing construction, rent control, and apartment building owners (such as myself), not being able to convert rental units into ownership opportunities for tenants?”

The thing about the factors you mention there is that they are a constant between the last downturn and this one. They are problematic, no doubt, and work to lessen supply. But they were there in the last downturn, and they will be around for the next one. They’ll probably remain until the day SF ceases to be a leftist/renter voting body that places obstuctionists in city council.

By: 40YearOldRenter

40YearOldRenter — Fri, 24 Oct 2008 14:36:55 +0000

I just feel bad for so many people like me, who are 30-40 year old renters who missed out on the boom these past 10 years. But, i feel worse for the disciplined few who are just getting POUNDED in the stock market.

The stock market has shown us that wealthy is illusory. Money doesn’t mean anything. The only thing money is good for is to consume things, and buy assets.

This is where landlords are just killing it.

By: Morgan

Morgan — Fri, 24 Oct 2008 12:22:55 +0000

Is the relative strength of San Francisco caused by the so called economic stregth of the city, OR, is it ALSO because of artificial controls on housing construction, rent control, and apartment building owners (such as myself), not being able to convert rental units into ownership opportunities for tenants? We all love to talk about the high cost of housing here as proof of the strength of this city, but I fear this is not the right long term approach.

My brother, a doctor, left his 1bd, no pkg., condo in 94123 for a position in Chicago, where he was able to buy a Victorian HOUSE in Lincoln Park (Think Pacific Heights north of Sacramento) for the same amount of money. Not everyone works in tech., and not everyone is going to be willing to stay here at these prices. I think a price correction would be long term positive for San Francisco.

By: 44yo hipster

44yo hipster — Fri, 24 Oct 2008 05:38:44 +0000

the main advantage of the SF (city) market is that it is one of the last to fall in the bay area, and will probably be one of the first to rise again. i personally don’t think the central areas of the city will fall more than 20% max, and they may level of at -10%. that is my personal belief.

as for oakland, i just spent the day w/a friend there. i think temescal is interesting/gentrifying, and a good rental bldg there may make sense. but i also looked at, get this, a victorian fixer duplex on 35th st and mlk, for $142,000! the problem is that not only is this a marginal area, but the bldg is right across from the freeway overpass. sure, you could fix this to rental condition and get cash flow, but i doubt it would appreciate much, and the tenants you’ll get will always be marginal, and you’ll have constant hassles managing it.

coming from a SF perspective, where you can rent a decent unit in a decent area to a quality tenant, i’m suspicious of marginal “deal” areas in oakland. you could sit on a avcancy for 3-4 months, or end up renting to a lower level tenant w/poor credit/job history, etc.

anyone have experiece w/inexpensive oakland rental properties to comment??

By: dothemath

dothemath — Fri, 24 Oct 2008 04:49:56 +0000

I don’t know. i think many listing now are being smart.
they predict (and i agree) that their house may be worth say 20% less over the course of the next year, know the resets are coming, are worried about job security etc etc
if they bought long enough ago they may still make a profit – just not as much if they sold a year ago – but more than they would make by selling in a year. many people may be trying to cash in.
i believe even after closing costs you could sell now,rent and buy again in say 18 months and get a better, bigger place.
i think san francisco has been in denial stage for a while but has now entered fear. i think, as with the rest of the the bayarea, capitulation will shortly follow.

By: 40YearOldRenter

40YearOldRenter — Fri, 24 Oct 2008 03:17:22 +0000

I do pity and question those who are listing their homes on the market NOW. Seriously, some serious foolishness. Sharks are swarming, and I’m one of them.

By: The banker

The banker — Thu, 23 Oct 2008 22:04:49 +0000

I think we all need to hold on tight. San Francisco, Manhattan, Omaha. . .it really makes no difference at this point. Banks are not lending to banks. . .we have had a small loosen up over the past few days as libor dropped and credit spreads decreased. The reality is overbuying the past few years, too much supply for the current conditions, and not enough demand, or the buyer can’t get a loan.

SF is not immune.

By: eddy

eddy — Thu, 23 Oct 2008 19:14:59 +0000

I think fluj has the best / most honest radar of the “now” market and Alex does the same for the most part. There is a standoff. Deals are not getting done outside of a few high profile / top notch listings that don’t represent the broad market. It’s really less of a standoff as I think the ‘buyers’ are not ‘ready to pounce’.

The market will be defined by foreclosures and those owners with massive equity from pre-2002 that sell at market prices. My guess is we will not see any real movement / activity until 1Q 2009. Owners here have far greater financial means to be patient.

This is going to be interesting.

By: anon8mizer

anon8mizer — Thu, 23 Oct 2008 19:01:48 +0000

Are any of u looking at east bay properties as rentals? There are some amazing deals and some seem to have positive cashflow if the rental market holds up.