Prices Jumping – Yet Again – Across San Francisco

The San Francisco real estate market grew increasingly frenzied as the first quarter of 2014 progressed, leading to another surge in home prices in virtually every neighborhood in the city. The high-demand/ extremely-low-inventory/ competitive-bidding situation is similar to what occurred first in spring 2012 and then, to an even higher degree, in spring 2013. After the market seemed to stabilize in the second half of last year, we didn’t expect to see it turn this fierce in early 2014, but right now it appears to be every bit as ferocious as last spring’s.

Of major metro areas, the new Gallup-Healthways survey ranked SF-Oakland second in the nation (behind San Jose-Santa Clara) on their index for “well-being.” Though already the second most densely populated city in the country (after NYC), San Francisco simply has many more people wanting to live here than there are homes available to rent or buy.

Sales over Asking Price
The heated competition for new listings coming on market has resulted in an astounding percentage of sales occurring above, and often far above, list price.

This chart below breaks down, by neighborhood, the average sales price to list price percentage for the 90% of homes selling without price reductions. Of the areas assessed, Bernal Heights came out on top with sales prices averaging an incredible 21% over list prices over the past 2 months.



Median Sales Price Spikes
Typically, the first quarter of the year does not show a dramatic increase in median sales prices over the previous quarter – in fact, a decline is not unusual due to holiday market dynamics. But the first quarter of 2014 saw large spikes in median prices for both single family homes (houses) and, especially, condos in San Francisco.
This next chart is a look at quarterly median price appreciation over the past 3 years.



Longer-term trends: While virtually the whole country has been experiencing a large market rebound, San Francisco, because of our particular economic circumstances, is generally outperforming almost every other market area. The big exception is Silicon Valley, whose high appreciation rate is being driven by many of the same employment and demographic causes.



Far Too Little Inventory
When the market recovery began in earnest in early 2012, there were complaints of a shortage in inventory. In 2013, the market grew even more heated and supply declined further to what felt like desperately low levels. Now in 2014, amid no lessening of demand that we perceive, the supply of SF homes available to purchase has dropped again.

There are increasing numbers of new-construction housing units coming on market – and many more being planned and built – but so far they’re being snapped up, at very high prices, without noticeably altering the supply and demand dynamic.



Listings Selling Faster than Ever



San Francisco Neighborhood Snapshots
We updated analyses for a number of city neighborhoods with enough sales for quarterly data to be meaningful. In every district we looked at, there were significant spikes in median sales prices and/or average dollar per square foot values in the quarter just ended.
Below are two samples, but our full collection of long-term neighborhood analyses can be found here (some updated through the first quarter, others through the end of 2013):San Francisco Neighborhood Values







Affordability by Neighborhood
We broke the city down by neighborhood according to the number of house and condo sales in each price segment. Of course, in a generally appreciating market, these prices continue to move upward en masse. Below are 3 analyses from our 11-chart report, which can be found in its entirety here:Where Can I Afford to Buy in San Francisco






Please call or email if you have any questions or comments regarding these analyses.

Fluctuations in median and average sales prices and average dollar per square foot values are not unusual and these fluctuations can occur for other reasons besides changes in value, such as seasonality, inventory available to purchase, buyer profile and new condo development projects coming on market. How these statistics apply to any particular property is unknown without a specific comparative market analysis. All data from sources deemed reliable, but may contain errors and is subject to revision.

How Much Is My Home Worth?

“How much is my property worth?” “How much could we get for our place?” “How much do you think my condo would sell for?”

San Francisco Median Home Price Graph, What Is My Home Worth

I get asked different variations of this question every single day, everywhere I go. It doesn’t matter if I’m at a dinner party, bbq, school event, or even on a field trip with my 7 year old. It’s okay. It’s totally normal. Everybody wants to chat real estate. It’s why I started this blog, and it’s a go-to if conversation about Blue Bottle versus Ritual Roasters gets so heated it’d be better left settled in the Octagon. Everybody wants to know if their home value has gone up, and everybody wants free information about the market and their property. So how does a real estate professional accurately answer this question in a market where (currently) home values seem to be going nowhere but up every week, and every new sale sets a new high water mark in your area?

The answer is this, nobody REALLY knows. A couple things I do know are Zillow Zestimates do you no good in San Francisco, your property is worth more than your cousin’s in Kansas, and your property could be worth more than it ever was. I know what comparable properties have recently sold for, and I know how I can help you market, show, and price your property to get the maximum number of people through the door in an effort to let the market dictate what is the maximum value your property is worth.
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Something For You Fence Sitters And Gold Panners To Ponder…

1761hayes

My clients just got shelled by 16 other offers on 1761 Hayes, a top floor 2 bed, 1 bath condo in NOPA asking $849,000. We offered $1,051,000, and they accepted an offer that was “barely higher”. So here’s a thought:

I’d say it’s time for many of you long time residents sitting on the selling fence to pack it up, cash out, and head for greener pastures where the $$$ you make on your sale can buy you acres of space, money in the bank, and plenty of breathing room. I’d even suggest all of you gold panner techies flocking to SF looking to strike it rich consider building another hub for tech activity somewhere else. Don’t get me wrong, I love all of you, many of you are my clients, we love what you’re doing for the economy (for that matter, the world), and there is a reason everyone wants to be in San Francisco, but at some point, I’d think even you, the innovators, would get tired of throwing your money at sellers and it still not being enough. Surely, the internet works in other locales around the world, and surely companies can be built and go viral from anywhere. Perhaps the companies that are leading the innovation now should open satellite offices in markets where their talent can afford to live? I know Oregon, Seattle, and Salt Lake City have a reasonable real estate market, as well as hip scene. Makes perfect sense to me, and might ease the frenzy that is San Francisco real estate. What do you think?

On a side note (somewhat related to technology): in case you aren’t on the VIP list, and you’re stuck waiting in line for your real estate agent to send you stale data via snail mail about recent sales in your ‘hood, comps that by the time they reach you are old news, I published yet another issue of sfnewsletter last week, and it’s chock full of good real estate porn, including a few good overbids you’ll want to share amongst friends, and a link to the stuff you really want: real time market data sortable by neighborhood and property type (courtesy of The Goods-SF).

Get on the list at sfnewsletter.com. Get out of town with money in the bank by giving me a shout (alexclark@gmail.com, 415-254-5351).

-1761 Hayes Property Detail [theGoods-sf.com]

Current San Francisco Home Values by Neighborhood, Property Type & Bedroom Count

These tables report average and median sales prices and average dollar per square foot, along with average home size and units sold, by property type and bedroom count for a wide variety of San Francisco neighborhoods. The tables follow the map in the following order: houses by bedroom count, condos by bedroom count, 2-bedroom TICs, and finally a small table on 2-unit building sales.

The analysis is based upon sales reported to MLS between April 1, 2013, when the last big surge in home values began in San Francisco, and February 21, 2014. Value statistics are generalities that are affected by a number of market factors and all numbers should be considered approximate.

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“Can You Tell Me What The Property Down The Street Sold For?”

“How much is the house down the street?” “Do you know how much over that condo sold for?” I get those questions a lot. So much in fact, that I built a tool/service for all of you to track new listings and sales in your area with ease.
Show Me The Goods!

As much as I’d like to be able to share this data publicly here on theFrontSteps, I can’t. But, you can sign up for my newsletter at www.sfnewsletter.com, and I’ll send you something along the lines of this just about every other week, (click here to see my recent sfnewsletter), and it has access to insanely awesome and easy to use market information like this (Show me the Goods (sample data)). So sign up today, and be the one in your area that knows more about the property on your block than all of your neighbors.

Rock on! Have a great weekend, and let me know when you’re ready to buy or sell in this wonderfully expensive, and worth every penny, city we call home.

Oh, you fellow Realtors, you can send this data to your clients. Just ask @ www.theGoods-sf.com.

Possible Shift In San Francisco Real Estate Market? Should You Sell Your Home Now?

February 2014 San Francisco Market Report

It is far too early in the year to reach definitive conclusions regarding substantive changes in the market, but there are indications of a number of shifts. From the hurly burly on the street, the word is that the quantity of offers coming in on new listings is declining. Where a new listing might have attracted 10 or 12 offers last spring, 3 or 4 are coming in now; where 3 or 4 offers would have arrived, the seller is getting 1. And, according to Broker Metrics, for every 2 listings that offers in December and January, another listing expired or was withdrawn without selling.

The amount of competition deeply affects home price increases.

There are still a very large number of buyers looking at listings online and at open houses. But more of them appear to be first-time buyers and they are proceeding more cautiously. Some buyers are burned out on the multiple-offer bidding frenzies of last year and are reluctant to participate in them. Though the market remains hot by any reasonable standard, by some statistical measures it is cooling. This may reflect a transition or only a lull before the spring sales season begins.

Recently, the investment-property analysis firm Reis speculated that SF apartment-rent growth — which has been extraordinary by any measure, especially in a period of low inflation — will slow despite intense demand and very low vacancy rates, simply because people can’t pay any more. It’s an idea which may or may not be correct or apply to other types of housing costs. Rent rates do play a role in purchase prices as buyers often compare the net housing costs of the two options.

Median Sales Price Appreciation by Neighborhood

In San Francisco, some of the most affluent neighborhoods — such as the Pacific Heights-Marina district and the Noe, Eureka and Cole Valleys district — started their recoveries in the second half of 2011, well before virtually every place else in the city or country. When 2012 began, prices in these districts soared, while other areas played catch up. In 2013, that dynamic flipped: Appreciation rates in comparatively less expensive neighborhoods surged, while slowing in the most affluent areas.

A big part of this is simple affordability: Priced out in one neighborhood (or city), buyers focused on others, similar in ambiance but less costly. Home prices there looked so good in comparison that buyers were willing to bid them up. The huge decline of distressed sales in areas severely affected, such as in Bayview, has had an outsized effect on median sales prices there. Continuing gentrification, as in the Mission, and increasing “luxury” condo construction in less affluent areas have also played parts in this trend. It’s not as if demand plunged in the Pacific Heights-Marina district (or Noe Valley, for that matter). Quite the contrary: its 9% appreciation rate in 2013 translated into the city’s largest median price increase in dollar terms ($300,000). However, in the previous year, this district saw year over year median price appreciation of 25%.

Note that median price appreciation does not perfectly correlate to changes in home values, as it can be affected by a variety of market factors. It does give an approximate sense of market trends.
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Top 10 Overbids Of The Week, And One Mind Bender On Church That Wouldn’t Even Make The List

[Update: Most recent Overbids can be found here, and delivered to you biweekly via email at sfnewsletter.com]

Before we get down to the top 10, I thought you all might like a bit of first hand story to ponder over lunch or dinner with your friends.

This property: 1850 Church, technically in Glen Park, practically in Noe Valley.
1850church
It is a top floor, three bedroom, two bath, down to the studs remodel including moving the bedrooms from the back of the house to the front, moving kitchen to the back, blowing out walls, opening up space, adding a deck, and basically making it awesome…and it has two car parking and a yard. For all practical purposes, it’s pretty sweet. It is however bordered by a shack on the right and left of the property, which can either lend to its appeal or detract, depending on your tolerance for jungle overgrowth. But enough about that. What happened?

Listed for $1,195,000, maybe a bit low, but probably pretty fair, all reasonable comps suggested a sales price in the high $1.2s to mid $1.3s. Single family homes are selling for that, and this is a condo! After all the dust settled, there were seven offers. My clients wrote at $1,350,000, my colleague’s clients wrote at $1,410,000 (You doing the math? That’s already $215,000 over asking.), and neither of us won. Go figure. So any day this property is going to close at $1,435,000 with a cash offer that came with zero contingencies, which equates to $240,000 over the asking price, and right into the range of insanity. Exact square footage is not known, but a ballpark would put this property to at least $1000/psf, and at 20% over asking, it doesn’t even get on the top 10 list!

Isolated incident? Sadly no. The pattern is the same. Buyer loses once. Buyer loses twice. Buyer loses three times or more. Buyer gets fed up, goes crazy big, blows our minds, blows everyone else out of the water, and sets the bar that much higher for the next. It’s a vicious cycle we’re in.

In case one anecdotal sale isn’t enough for you, I present San Francisco’s top 10 Overbids of the week.

Address BR/BA/Units DOM List Price Sold Price Overbid
2820 Sacramento St 2822 2-4 Units 11 $1,825,000 $2,550,000 39.73%
360 Guerrero St 1/1.00/404 11 $599,000 $780,000 30.22%
1013 Rhode Island St 2/2.00/N/A 9 $1,099,000 $1,410,000 28.30%
125 Bella Vista Way 3/2.00/N/A 42 $749,000 $960,000 28.17%
664 Teresita Blvd 2/1.00/N/A 9 $699,000 $891,000 27.47%
26 Pleasant St 30 2-4 Units 75 $2,395,000 $3,020,000 26.10%
1335 31st Ave 2/2.00/N/A 14 $795,000 $1,000,000 25.79%
415 Missouri St 3/1.00/ 19 $995,000 $1,250,000 25.63%
3380 22nd St 3/1.00/ 70 $849,000 $1,060,000 24.85%
2446 17th Ave 3/2.00/N/A 15 $729,000 $908,000 24.55%

So when will this madness end? I’m guessing not anytime soon. I’ve been saying it’s a great time to be a seller, but if you’re a seller needing to buy in San Francisco and stay here, not so fun.

To you out of town readers that have waited for your time to unload your SF property, are you going to keep rolling the dice and bet things get hotter, or get out while the gettin’s good?

-1850 Church [Property Detail]
-Noe Valley, Glen Park comps for 1850 Church [MLS]
-Overbids you may have missed [theFrontSteps]

The House Of Haight Ashbury Vintage Gets $1.3M More, Two Potrero Hill Comps You’ll Want To Track, And More Overbids To Ponder

Before I show you the list of the top 10 overbids, have a look at the building that houses Haight Ashbury Vintage:
Haight Vintage Building sells for $8,250,000
Listed for $6,950,000 back in October, it just closed for a mere $1,300,000 more. Apparently, Vintage is more hip than you thought…

I have more story. Just yesterday I heard of 25 offers on this condo on Missouri in Potrero Hill, and there will be many on this other condo on Mississippi, but those are not done deals. Get on the list and know when they close.

So…the overbids. Regardless of where these are priced, consider the number of buyers out there bidding on what little inventory we have, which ultimately drives the price up. Think it’s just a matter of pricing below comps to eventually get to market? I don’t. The data shows staggering growth in SF, and a possible plateau, but the truth is, buyers far outnumber sellers, and until those two numbers meet in the middle, we can expect another year of mind boggling overbids. Another thing to consider is when these properties went into contract, that being the “slowest” time of year for San Francisco real estate: The Holidays and a couple weeks after.
Anyhow, here you go. Overbids, cuz I know you love them:

Address BR/BA/Units DOM List Price Sold Price Overbid
2510 39th Ave 2/1.00/N/A 15 $599,000 $788,000 31.55%
179 Vienna St 2/2.00/N/A 11 $499,000 $650,000 30.26%
200 Amber Dr 4/2.50/N/A 12 $1,299,000 $1,670,000 28.56%
506 Molimo Dr 3/2.00/N/A 31 $859,000 $1,100,000 28.06%
12 Sherwood Ct 3/2.00/N/A 5 $788,000 $1,000,000 26.90%
700 Illinois St 1/2.00/3 13 $499,000 $630,000 26.25%
726 Masonic Ave 2/1.00/ 34 $750,000 $925,000 23.33%
94 Eastwood Dr 2/2.00/N/A 26 $898,000 $1,085,000 20.82%
738 Masonic Ave 2/1.00/ 6 $799,000 $955,000 19.52%
1501 Haight St 1509 N/A/N/A/14 39 $6,950,000 $8,250,000 18.71%

DECEMBER 2013 SAN FRANCISCO CONDOMINIUM PRICES INCREASE 18 PERCENT OVER PREVIOUS YEAR

San Francisco condominium prices rose 18 percent in December 2013 over the previous year, according to the Condominium Pricing Index released today by The Mark Company, a leading urban residential marketing and sales firm.

The Mark Company Condominium Pricing Index for December was $1,034 per square foot, which is up 2 percent from November. New construction inventory was 78 percent lower than a year ago, and down 26 percent from the previous month, with 92 units currently available.

“With fewer than 100 new condominiums now for sale in San Francisco, price appreciation is likely to continue in 2014,” states Erin Kennelly, senior director of research, The Mark Company.

The Condominium Pricing Index, part of the firm’s monthly Trend Sheet (available at www.themarkcompany.com), represents the price per square foot of a new 10th floor, 1,000-square-foot condominium. It is based on recent sales data, and uses a proprietary quantitative method to measure trends in market demand. It tracks the value of a new construction condominium without the volatility of inventory changes.

The Mark Company Penthouse Pricing Index, which applies the same methodology to a new 30th floor, 2,000-square-foot condominium, was $1,776 per square foot, up 18 percent year over year.

The condominium price per square foot was $868 for resales, up 26 percent over December 2012, according to The Mark Company Trend Sheet for San Francisco. In addition, there were 229 condominium resales in San Francisco in December, 134 active condominium listings representing less than one month of inventory, and 123 pending condominium units, the Trend Sheet found.

That’s some pretty insane growth and is not surprising. Thanks Mark Company for the info.

Dropping Knowledge: San Francisco Property Pie Chart

I know you’re all like me, you drive around town looking at all the wonderful, insanely expensive property we have here in San Francisco. I know you wish you knew how many of the properties you see were single family homes, how many are condominiums, how many are big ol’ properties of which you’d love to be the landlord (or maybe you already are). My company came up with this nice little pie chart for all y’all. Enjoy:

sf_housing_units

San Francisco Rated #1 Real Estate Market In The Country, And Solid “Buy” By The Urban Land Institute

In their “Emerging Trends in Real Estate 2014 (pdf)”, The Urban Land Institute named San Francisco the #1 real estate market in the country:

#1- San Francisco
The top-ranked market in the survey for the second year in a row, San Francisco has a real estate sector driven by a thriving economy that is projected to add jobs at a rate of 2 percent next year. According to survey respondents, the city is a solid “buy” for all property types, with each of these recommendations higher than the average for the other major markets.

The other cities rounding out the top 5, in order are: Houston, San Jose, NY and Dallas/Fort Worth

Multifamily housing, which has been the most popular sector in recent reports, is still popular with investors, as the underlying fundamentals remain intact due to demand from members of generation Y seeking to rent and baby boomers looking to downsize from houses to apartments.”

There is a TON of good information in this report, so I highly recommend clicking through to read some, if not all, of the report.

-The full and very long report is here (pdf) [Urban Land Institute]

Even With San Francisco Market Near A Peak, Many Expect More Growth Ahead

With all the talk of bubble this, bubble that (did you cast your vote?), which I do not think we’re in, I thought it important to share a little report from the Goliath, National Association of Realtors.

medianpriceexpectation

REALTORS® generally expect a modest increase in prices in the next 12 months , with the median expected price change at about 4 percent. This is based on responses gathered from the August-October 2013 REALTORS® Confidence Index Survey. About 3,000 REALTORS ® respondents answer the survey each month. See the October report at http://www.realtor.org/reports/realtors-confidence-index.

The graph above shows the median expected price change across the states which are grouped into those with “low”, “middle” and “high” price expectations. States in the West and in the South expect the highest price increase in the range of about 4-8 percent. Tight inventory continues to bolster prices in these areas.

-Expected Price Growth Strongest In West And South Markets [Realtor.org]

Poll: Is San Francisco In A Real Estate Bubble

The question comes up often enough, so why not put it up to vote. Power (and wisdom of markets) to the people.

Penthouses, Mansions, Short Sales & Fixer-Uppers

What Did San Francisco Homebuyers Buy in 2013?

Views, prices, architecture, neighborhoods, property types and sizes, parking, probate sales and appreciation rates: We data-mined all of San Francisco’s 2013 sales reported to MLS through the end of November and charted the results below.

Please call or email with any questions or comments.

Sales as described in and reported to San Francisco MLS by 11/25/13. All data herein is from sources deemed (at least somewhat) reliable — i.e. the information input by listing agents regarding their own listings — but may contain errors and is subject to revision. These charts do not include sales unreported to MLS, such as the sale of many so-called “pocket listings” and many of the new-development condo sales that occur.

San Francisco (Bay Area) Case-Shiller Index Shows Staggering Home Price Recovery And Possible Plateau

Case-Shiller Index numbers all reflect home prices as compared to the home price of January 2000, which has been designated with a value of 100. Thus, a reading of 180 signifies home prices 80% above those of January 2000.
caseschiller

The Case-Shiller Index for the San Francisco Metro Area covers the house markets of 5 Bay Area counties, divided into 3 price tiers, each constituting one third of unit sales. Most of the city of San Francisco’s house sales are in the “high price tier.” The Index is published 2 months after the month in question and reflects a 3-month rolling average. September’s Index was just released November 26th.

This chart illustrates the price recovery of the Bay Area high-price-tier home market which really got under way in 2012. In both 2012 and 2013, home prices surged in the spring and then plateaued in the summer-autumn. The surge in prices that occurred in spring of 2013 was particularly dramatic, reflecting a frenzied market of huge buyer demand, historically low interest rates, increasing consumer confidence and extremely low inventory. In San Francisco itself, it was further exacerbated by the high-tech-fueled explosion of new wealth. The market has since calmed down somewhat and that cooling is reflected in the Index readings of the past three months (through September).

Thankful For Overbids

The most recent top 10 overbids in San Francisco Real Estate. Hope you all had a great Thanksgiving! If you’re selling and getting out of dodge, you have much for which to be thankful.

Address BR/BA/Units DOM List Price Sold Price Overbid
22 Flora 3/2.00/N/A 19 $299,888 $500,000 66.73%
306 Guerrero St 308 2-4 Units 18 $849,000 $1,300,000 53.12%
1032 Castro St 3/2.00/N/A 35 $959,000 $1,340,000 39.73%
3303 Folsom St 2/2.50/N/A 6 $1,095,000 $1,510,000 37.90%
1001 Ashbury St 2/1.00/N/A 35 $998,000 $1,325,000 32.77%
2341 Cecilia Ave 2/2.00/N/A 17 $799,000 $1,050,000 31.41%
19 Delano Ave 3/1.50/N/A 11 $789,000 $1,033,000 30.93%
76 Ramona Ave 2/1.00/ 8 $898,999 $1,168,000 29.92%
3311 Jackson St 3/2.50/N/A 15 $2,880,000 $3,701,000 28.51%
1156 Florida St 3/2.00/N/A 72 $995,000 $1,275,000 28.14%

More Overbids For Your Monday

It’s another Monday, and the madness continues.

Address BR/BA/Units DOM List Price Sold Price Overbid
3691 17th St 3693 2-4 Units 16 $1,499,000 $2,200,000 46.76%
127 Central Ave 129 2-4 Units 60 $1,200,000 $1,720,000 43.33%
152 Hancock St 2-4 Units 26 $1,100,000 $1,557,000 41.55%
82 Peralta Ave 3/2.00/N/A 28 $998,000 $1,380,000 38.28%
1628 York St 3/2.00/N/A 17 $1,095,000 $1,458,000 33.15%
130 Randall St 3/1.50/N/A 7 $1,195,000 $1,575,000 31.80%
325 Precita Ave 3/2.00/ 18 $925,000 $1,216,000 31.46%
327 Richland Ave 3/1.00/N/A 35 $749,000 $980,000 30.84%
4430 Cabrillo St 2-4 Units 14 $925,000 $1,200,000 29.73%
1108 Cabrillo St 3/1.50/N/A 11 $1,295,000 $1,677,000 29.50%

[Copyright ©2013 TheGoods-SF.com. Visit www.thegoods-sf.com for more information. Data feed from SFAR MLS deemed accurate but not guaranteed.]

Some overbids that were featured last week are still on this list until they get knocked off.

To answer some questions that popped up in the comments of our last overbid post about intentional underpricing to generate overbids…yes, there is certainly a lot of that out there, but there is also a lot of uncertainty as to what is a correct market price for any particular property when comps continue to escalate. And yes, there are agents that intentionally underprice, not in an effort to be fair and competitive for the market, but in an effort to boost their personal marketing strategy, and that’s just plain wrong.

The name of the game in our market is when you have doubts, price it low and let the buyers set the price. It’s almost always better to price low than high. However, what’s more interesting to us is not the amount over asking a property sells, but the number of offers that come in to generate such a fever pitch. We wish MLS had a metric requiring agents to post the number of offers that came in when a property sells, but who knows if that would ever happen. In any given overbid situation, you can assume there would be at least four to five offers. That seems to be a good average, but really it only takes two offers to drive the price up, and you certainly don’t need 20 offers. That means in any given multiple offer situation, one person wins, many lose, so when another similar property ultimately hits the market in a week or two after that, add another new buyer or two to the interest, multiple offers happen again, one person wins, many lose. Repeat over and over again and you see how prices get bid up, and frustration grows to the point where a buyer that has lost out several times in a row ultimately says, “Eff it! We’re going to win this one, so we’re going big.” They finally win. They become the Maximum Overbid of the Week, and they could care less. The feeling of relief is indescribable for many buyers. All of the searching, the reviewing disclosures, the inspections, the loan pre-approvals, the touring open homes, the emotional thrill of thinking you found your home, then depression of seeing it slip away, all of that is done and gone. As a buyer, you can prevail, and there are strategies to increase your chances of success.

As a seller, it’s not as relaxing as you might think, and it can be stressful rolling the dice and asking for more from buyers that are already offering waaaay more than you expected. Even more stressful is getting a pre-emptive offer and having the nagging thought in your head of whether you could get better than that bird in hand if you wait and get to your offer date. It’s a fine line between getting greedy and getting burned, but it certainly provides for good party conversation, which is why we provide this stuff to you!

As a bystander, blame should not be placed on the shoulders of Realtors claiming they intentionally underprice to generate overbids. The goal of listing property for sale is to get sellers the maximum amount of money possible. Currently, creating an environment that will generate multiple offers for a seller is what works, and it works well. We’ve been blogging about the real estate market long enough to know that the majority of comments against overbids come from bystanders, or buyers that continually get beat up…and it’s frustrating. We know all too well. But as a seller, we have yet to meet one that is unhappy with 15 offers (all over asking), many of them waiving inspections, and many of them cash that can close in five days. Regardless of how much over, under or at asking a property sells…it ultimately sells at market price.

So let the overbids continue, let our market climb, let our economy flourish, let jobs be created! San Francisco is on fire and there really is no place like it…so like a favorite band of ours says, “Embrace the Chaos”. Extra points if you know the band….

Happy Monday! Get back to work.

Maximum Overbid Monday!

Well now that we have the government shutdown (temporarily) behind us, let’s get back to the market at hand. It would appear there is a bit of a calm washing over our waters, but open house activity is still through the roof, so we might indeed be stuck in this craziness for a while. Case in point, San Francisco’s most recent Top 10 Overbids.

Rank| Address | Property Type | Bed/Bath | DOM | Asking Price | Sale Price | % Over

#1-709 York St: Single-Family; 2/2.00; 10 DOM; $799,000; $1,150,000; 43.93%
#2-152 Hancock St: 2-4 Units; 26 DOM; $1,100,000; $1,557,000; 41.55%
#3-82 Peralta Ave: Single-Family; 3/2.00; 28 DOM; $998,000, $1,380,000; 38.28%
#4-514 Precita Ave: Single-Family; 2/1.00; 11 DOM; $925,000; $1,255,000, 35.68%
#5-130 Randall St: Single-Family; 3/1.50; 7 DOM; $1,195,000; $1,575,000; 31.80%
#6-3901 17th St: 5+ Units; 28 DOM; $2,300,000; $3,025,000; 31.52%
#7-327 Richland Ave: Single-Family; 3/1.00; 35 DOM; $749,000; $980,000; 30.84%
#8-515 Powhattan St: Single-Family; 2/1.00; 13 DOM; $708,000; $925,000; 30.65%
#9-4430 Cabrillo St: 2-4 Units; 14 DOM; $925,000; $1,200,000; 29.73%
#10- 1108 Cabrillo St: Single-Family; 3/1.50; 11 DOM; $1,295,000; $1,677,000; 29.50%

[Copyright ©2013 TheGoods-SF.com. Visit www.thegoods-sf.com for more information. Data feed from SFAR MLS deemed accurate but not guaranteed.]

This data set reflects properties that got into contract on average 30+ days ago, so it will be interesting to see how this continues. We look forward to providing this information to you every Monday, now that the Goods has made it easy for us to share it, so come on back!

Effect of Government Shutdown/Default Worries On The San Francisco Real Estate Market

This is a very unnerving set of data. Let’s hope it’s too small a timeframe to give an accurate assessment, but we could very well be on the cusp of a drastic shift in the market if the Government doesn’t pull their head’s out of their a$$es and get back to work!

Effect of Government Shutdown on SF Real Estate

Short period data often doesn’t tell the whole story, so we dug a little deeper to see how October 2012 played out, and you’ll see absorption (properties accepting offers) hovers in the 9-11% range. Therefore, a dip down to 6% is a bit concerning.
[Click Image to Enlarge]
govtshutdownhistory

Buyers get ready. This might be your time to finally get in the market without any competition. Sellers, don’t panic. There are still plenty of buyers out there that want your property, just get ready to negotiate rather than having your cake and eating it too.

San Francisco real estate weathers market storms much better than the rest of the nation, we have a true supply/demand problem here, we’re surrounded by water, in most neighborhoods building over 40 feet is prohibited, and our city really doesn’t like to approve development, so as long as people still want to be here, companies continue to innovate, we think we’ll do just fine. But who knows. This government shutdown thing certainly isn’t helping anybody out.

Think positive thoughts….

What Your Realtor Should Really Be Sending You…The Goods

I am pleased to announce the launch, and early adoption by Paragon Real Estate Group, of the newest addition to the San Francisco real estate scene “The Goods“, real estate marketing made simple.

The goal of this new offering is to make it easy for real estate agents in the San Francisco/Bay Area to provide their clients with what they need, and should expect, from their agent…time sensitive, factual, market data that pertains to the area in which their property is located, or the area where they would like to be. We’d like to put an end to unnecessary print marketing (think of the trees!), stop the sending of mugshot branded magnets, notepads, Zagat Guides, coffee mugs, and all the other crap clients don’t need, or necessarily want from their real estate agent. Keep in front of your clients with valuable real-time market data they can use.

The Goods will provide your company with a new link every two weeks to newly listed, as well as recently sold property data your clients can browse by location, property type, price, beds, baths and DOM. You can include the link in your marketing pieces, and also receive a raw html snippet/preview of the data to include in your marketing, inviting your clients to click through and track sales in their area.

Paragon Real Estate Group is the first to adopt and use this great new product for their agents’ clients, and positive feedback is already rolling in.

-The Goods is a terrific tool for our agents to deliver to our clients: It’s fast and easy to use and it provides our clients with extremely timely and valuable information about new listings and what’s selling in the market, which is at the top of the list of resources our clients want most from us. -Patrick Carlisle, Chief Marketing Analyst, Director of Business Development, Paragon Real Estate Group

Here is a sample of how Paragon incorporates it into their marketing. You’ll notice they call it “Market Watch”. You can call it whatever you like.
ParagonMarketWatch

In this age of Zillow, Trulia, Redfin, and the countless apps hitting the market which afford your clients the luxury of tracking the market without your help, you can’t afford to let this opportunity slip you by. Brokers of every company in the Bay Area should be jumping on this offering, as simply put…it’s a no-brainer.

For more information about The Goods, visit www.theGoods-SF.com.

Home Ownership as an Investment, Home Prices, Inflation, Leverage & Home Equity

First and foremost, any home purchased needs to work as a home: it fulfills your housing needs at an affordable monthly cost – ideally, a cost, after tax deductions and principal pay-down, less than or similar to that of renting the property. However, though it cannot be compared on an apples-to-apples basis to investments such as stocks, bonds and CDs (that you don’t live in), it’s worth looking at the issue of homeownership as a financial investment as well.

Home-Price Appreciation vs. CPI Inflation since 1988

This chart compares, over 25 years, the amount of inflation per the Consumer Price Index (CPI) to price appreciation for high-price-tier homes in the 5-county San Francisco Metro Area per the Case-Shiller Index. (Most of the City of San Francisco’s housing is in the high-price tier, the upper third of Bay Area unit sales.) In this chart, 1988 equals a price-value of 100; 127 equals a price 27% higher than the price in 1988 for the same goods or house. CPI inflation is relatively slow and steady: the average across the past 25 years is a little less than 3% per year. Home prices, however, jump dramatically up (appreciation) and down (depreciation) depending on the market cycle, but average appreciation from 1988 to mid-2013 was about 5% per year – though this calculation can vary greatly by the exact start and end dates chosen.

An average SF Metro Area home purchased in 1988 appreciated by 244% as of July 2013, while the overall CPI inflation rate was 97%. If the home had been sold at the recent bottom of the market, the difference would have narrowed to 165% appreciation vs. 95% inflation. Purchase and sell timing always matters and if one has to sell at the bottom of the market, it affects the return on any investment. As the chart illustrates, home-price appreciation usually outpaces inflation by a significant margin over the longer term: this is a good thing for homeowners and doesn’t include other benefits such as living in the property and the capital gains exclusion on the sale of a principal residence.

This analysis applies well to homes purchased with all cash and no financing. Leverage alters the picture substantially.

Leverage (Financing), Inflation and Home Equity Growth

If one leverages one’s home purchase by taking out a loan, then the growth in one’s home equity dramatically outpaces inflation over the longer term. For the sake of simplicity, in the example above, we’ll assume that home price appreciation and inflation both run at 3% per year, and that the buyer put down 20% in cash plus closing costs, and financed the remaining 80% with a 30-year fixed rate loan. In this scenario, each year that the inflation/ home appreciation rate is 3%, one’s home equity asset grows by about 15%, plus the principal repayment on the outstanding loan (which is a major component – like a forced savings account – in the growth of equity over time). Indeed, the higher the inflation rate, the greater the equity growth. If home price appreciation outpaces inflation as well – as it has over the past 25 years – that accelerates the increase in home equity further. Moreover, the financing cost is currently subsidized by the mortgage interest tax deduction, if that applies to your financial situation.

This is why, using reasonable leverage, real estate is typically considered a good long-term investment – short-term can be much riskier – as well as an excellent hedge against inflation. Of course, if leverage is abused as it was in the years of subprime lending, underwriting standards decline, predatory lending and home-refinancing frenzy (i.e. “using one’s home as a piggy bank”), other risks arise.

In earlier times, when people didn’t move around as much, one bought one’s home, paid it off over the years and when retirement came, had a home owned free and clear – a huge financial asset to be used as appropriate.

Ongoing Homeownership Costs vs. Rental Costs over Time


In this chart, the increase in the annual cost of homeownership with a fixed-rate loan is compared with the increase in rent at a 3% inflation rate, and the increase in rent of a home subject to San Francisco rent control, where annual rent increases are limited to 60% of CPI. As seen, if one locks in a fixed mortgage interest rate, the increase in ownership cost is limited to the increase in property tax costs (limited under Prop 13) and maintenance expenses, while the entire rental cost may be subject to annual raises. Over the longer term, one’s ownership costs become more and more attractive when compared to rental housing costs subject to inflation. If one owned the home for the full 30-year loan period, the monthly mortgage payment itself would disappear.

We have generated two sample rent vs. buy scenarios for San Francisco here:

2-BR Apartment Rental vs. Condo Purchase and 3-BR House Rental vs. Purchase

And you can perform your own rent vs. buy scenario calculations here, using your own financial circumstances, assumptions and projections: Rent vs. Buy Calculator

Important caveats: Trying to compare buying a home to other financial investments on an apples-to-apples basis is impossible, because there are so many other variables at play: the use and enjoyment of the home, how the cost of homeownership compares to renting, physical condition decline over time (without further investment), risks and returns on other types of investments, home tax deductions, the capital gains exclusion on profit from a principal residence sale ($250k for single owner/ $500k for couple), market timing and other factors. All the analyses above are simply sample scenarios, looking at homeownership from a number of angles using a variety of assumptions. It is unknown whether they will apply to future trends.

As said in the first line of this report, first and foremost, any home purchased needs to work as a home: it fulfills your housing needs at an affordable monthly cost. If that’s where you start, with a fixed rate loan, and you don’t refinance out growing home equity, and you don’t have to sell during a market downturn (which, admittedly, isn’t always possible to avoid), then you should come out all right and more often, very well.

These analyses were performed in good faith, but may contain errors, are not warranted and should not be exclusively relied upon. Tax law and other factors referred to are subject to change. All information provided herein should be carefully reviewed according to your own circumstances, plans and economic projections with a qualified financial adviser and loan agent.

San Francisco Home Price Plateau?, And Recent Sales In Your Area – Via sfnewsletter

Holy sh*t! Did I go M.I.A. on tFS or what!? I’m back (for a bit) and wanted to bring you the most recent version of sfnewsletter, from which you can access The Goods. What are The Goods? You’ll just have to click through to find out (pssst….they’re comps…sold property reports…and new listings…at your fingertips.)

sfnewsletter week ending 8/29/13

-sign up for sfnewsletter
-recent issue of sfnewsletter

Heat Map Of San Francisco Median Home Price Changes Since Previous ’06-’08 Market Peak

Who doesn’t love a good heat map? Especially us San Francisco residents caught in the grip of one brutally long fog song…
[Click image to enlarge.]
Zipcode_Appreciation-since-Peak

This heat map compares 2013 2nd quarter or 1st half median home sales prices – for houses, condos, co-ops and TICs combined – with those at the peak value time prior to the recent market recovery. Previous peak value times vary by neighborhood: typically, the least affluent neighborhoods hit peak prices in 2006 and also fell the most, percentage-wise, during the crash, falling 25% to 50%. These neighborhoods were most affected by the subprime and distressed-property sales crises. The mid-affluent neighborhoods peaked in 2007, and usually declined in value in the 20% to 25% range. And the most affluent areas reached peak values last, in the first half of 2008 prior to the September 2008 crash: Their fall in value ranged approximately 15% to 20% from 2008 peak to 2010-2011 nadir.

Generally speaking, when the market began to turn around in late 2011/early 2012, the last neighborhoods to fall were the first to recover, followed by the mid-affluent and then the less affluent areas.

Coming Soon: 16 Jessie (1 Ecker) Unit 409 – Early Century Brick Meets 21st Century Modern In The Heart Of San Francisco

This top floor, one bedroom, one bath, ultra luxury condominium in the heart of San Francisco will be hitting the market (with any luck) on Friday August 9th [It's now officially on the market], but since you’re a fan of theFrontSteps, you get to see it here first.

01-16jessie409-front-800res

This unit is not only on the top floor, but also on the North East corner and features soaring 12 foot ceilings, open kitchen/living area, bamboo flooring, walk-in closet, custom kitchen pantry, Cesarstone kitchen countertops with bar seating, espresso cabinetry, stackable Kenmore High Efficiency Washer & Dryer, Bosch Energy Star appliances (Dishwasher, Gas Range & Hood), Samsung French Door Refrigerator, microwave, and a 64″ Samsung Plasma TV already perfectly mounted to the wall! This unit comes with additional storage, bike parking, and all of the furniture could be included as well. (Parking for one car is currently subleased nearby at 18 Lansing St for $225/mo. Although it is highly likely the sublease would be honored, it cannot be guaranteed.)

03-16jessie409-living-800res

What makes 1 Ecker so attractive and in such demand? 1 Ecker (16 Jessie) is an appealing blend of modern and timeless San Francisco charm, and sustainable down to its very foundation. The original century-old building structure was painstakingly restored and updated with brand-new modern interior fixtures and finishes in every bedroom and bath. The soaring arched windows are 100% recycled, and all of the units were restored with sustainability in mind. Nestled among some of San Francisco’s tallest structures, the grand windows and high ceilings fill this residence with generous amounts of natural light, while the original brick structure is a welcome backdrop for modern, sophisticated living.

1 Ecker’s common area amenities include the comfortable rooftop lounge, with grill and plenty of seating for entertaining a large group or enjoying a quiet dinner for two. Sleek, comfortable modular seating allows for adjustment to meet your group’s needs, as art form meets function. Exotic foliage in vibrant hues frames an antique Balinese water fountain, a tranquil centerpiece. The lounge grill is ready to serve up favorites year-round.. The interior courtyard offers a stylish visual backdrop featuring exotic, vibrant foliage. Common areas are maintained by the building’s Home Owners Association, and monthly HOA dues of $500.68 for this unit help serve to keep them in pristine order. HOA dues also include water, garbage, and professional property management services.

The location of this wonderful city home (go ahead…map it) puts you steps away from tons of shops, restaurants, clubs, art museums (MOMA), theaters (Metreon), Outdoor Parks (Yerba Buena), conference centers (Moscone), World Champion baseball stadium (Go Giants!), and so much more. Multiple Zipcar® locations are within walking distance for pay-as-you-go car convenience, and the future Transbay Transit Center steps away at 1st and Mission Streets will house 11 transportation systems, including AC Transit, BART, Caltrain, Muni &; Amtrak, for easy access to all of the Bay Area and beyond.

This is certainly a one-of-a-kind unit in a one-of-a-kind property that you won’t want to miss.

The bullet points:

Kitchen:
Bosch Dishwasher
Bosch Cooktop
Bosch Hood
Samsung French Door Refrigerator
Lazy Susan in cabinetry
Cesarstone countertops and espresso cabinetry
Full Pantry
Under counter lighting
Washer/Dryer – Kenmore High Efficiency

Living Area:
12 ft Ceiling heights
~64 inch Samsung Plasma TV
Custom Paint throughout

Bedroom:
12 ft Ceiling heights
Walk in Closet
Custom closet organizer

Bathroom:
Custom cabinetry under sink
Custom Glass Shower Door upgrade

HOA: $500.68

Parking: Currently Subleased $225/month. Location at 18 Lansing St.

Price: $799,000

Showing times: Sunday 8/11 from 2-4pm; Tuesday 8/13 from 2-3:30pm; Sunday 8/18 from 2-4pm, and by private appointment anytime in between. Sorry, no showings until first Open House. But at least you can see the pictures here and get yourself ready to make this fabulous home your own!

16jessie409floorplan

Exclusively listed by Alexander Clark of Paragon Real Estate.
For more details:
alexclark@gmail.com
415-254-5351

Five White-Hot Districts In A Red-Hot San Francisco Real Estate Market

July 2013 Special Report

Virtually every area of San Francisco and the Bay Area has been experiencing dramatic home-value appreciation in the past 12 to 18 months. Some that were hard hit by distressed property sales, which experienced the largest price declines, have surged in price but remain 20% – 30% below previous peak values reached in 2006 – 2008. As a state, California is still about 25% below its 2007 pre-crash median home price. And in San Francisco itself, many if not most neighborhoods now appear to have re-attained or moved slightly beyond previous high points.

But in this past quarter, a handful of neighborhoods and districts in the city have leapt well beyond the highest average home values achieved in the past. Interestingly, comparing these white-hot areas with one another, there are often huge differences in property type, era and style of construction, and neighborhood culture or ambiance. But all of them have been very affected by affluent – often newly affluent – high-tech professionals of one age group and level of affluence or another. Naturally, these neighborhoods are highly desired by other buyers too – often professionals in finance, bio-tech, medicine and law – but the high-tech-buyer dynamic has generally super-charged these markets in particular.

However, please note that the difference we’re talking about between these neighborhoods and the rest of the city is between white hot and red hot: Quite honestly, they’re all very hot markets right now.

The Inner Mission 

Super hot, super hip, generally young: this neighborhood has seen very dramatic changes since the early nineties as a classic process of gentrification occurred — changes which have recently accelerated. Houses here are often large, classic Victorians, while the condos are mostly modern, built within the last decade or so. This area has a large, vibrant and diverse commercial district centered around Mission and Valencia Streets, but is still close to Noe Valley and the Castro. This chart focuses on the condo market, in which values are approximately 15% above the previous peak.

Noe Valley – Eureka Valley (Castro) – Dolores Heights 

These neighborhoods are part of a district that includes Cole Valley, Ashbury Heights, Clarendon & Corona Heights, Duboce Triangle, Mission Dolores and Glen Park, all of which have seen enormous recent appreciation. Housing here is typically older, built in the first 4 decades of the last century; there are many parks for kids and pets; the streets are tree-lined and the ambiance of the neighborhoods is relaxed and family friendly. This district surged in popularity and price in the mid-late nineties, was one of the last to peak in value in 2008, and has been at the forefront of the market rebound which started early here, in 2011. Among other advantages, it has relatively easy access to highways south to Silicon Valley. The district also has a large condo market, but this chart focuses on house values.

South Beach & Yerba Buena 

After the Embarcadero freeway came down in 1991 and then AT&T Park built in 2000, this area changed from a place for B-class offices and car stereo installations to the home of some of the most dramatic and expensive condo and loft buildings in the country. More condos are now sold here than anyplace else in the city and high-floor units with staggering views often sell for millions of dollars – one sold for $28 million. It’s popular with a number of demographics – high-tech and bio-tech workers working in offices nearby in SoMa and Mission Bay, financial district professionals, and empty-nesters who want to enjoy city life and have all the amenities, but without the responsibility of maintaining a house. Affluent foreign buyers are also a significant segment. Its neighborhood ambiance is very urban. This chart is for condos below the price of $1,800,000, but the dynamic for ultra-luxury condos is also white hot, with an average dollar per square foot value of over $1200.

Bernal Heights 

Like Noe Valley and Glen Park, Bernal Heights was originally a blue-collar neighborhood filled with Victorian houses. Noe Valley soared in value first, becoming wildly popular, and now people who want a similar family-friendly neighborhood ambiance, but at a more affordable cost, have increasingly turned to Bernal Heights. It also has easy access to highways south to the peninsula.

 

Hayes Valley-North of Panhandle (NoPa)-Alamo Square

This condo market is made up of two totally different types: Edwardian flats that have been turned into condos and brand new, ultra-modern condo developments. The Hayes Valley commercial district is very hot and hip, similar to, but still different from the Mission’s Valencia Street. Buyers who are priced out of the nearby Cole Valley-Haight Ashbury condo market often look here for a similar neighborhood ambiance at lower cost. Hayes Valley is also close to the Civic Center cultural cluster of museum, opera, symphony, ballet and other performing arts, which appeals to another buyer demographic as well.

To put all of these charts into one simple suggestion: It’s a great time to sell your property in San Francisco, and our market desperately needs the inventory!

If you have questions or would like information regarding a neighborhood not listed above, please contact us.