Category Archives: Doom & Gloom

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….

San Francisco Neighborhoods Prone To Liquefaction And Earthquake Induced Landslides (Bedrock vs. Landfill Take Two)

Back on February 15th, 2008 (yes, theFrontSteps has been around that long) we were asked by a reader if we knew of any good maps showing areas in San Francisco that are either bedrock or landfill. You’d be amazed how many people, to this day, read that post, and how many more emails we get asking if we have an even better map that will drill down and show the exact streets and topographic undulations as they pertain to a specific home/condo or listing.

Until now, we’ve come up empty, but we’re pleased to say, we have been informed of two new (to us) maps. One is a State of California Geologic map showing San Francisco areas prone to liquefaction (green) and “earthquake induced landslides” (blue), and you can really drill it down to the street you live on. (Click on the image to download the pdf and get your SF liquefaction/landslide knowledge on…quiz next week):

That’s a cool map. The other map is hidden in our MLS, and it allows us to layer the Liquefaction map over the listing location map. Do they give that access to you? Of course not, but we welcome you to contact us if you’d like us to research a listing for you (expect to work with us on the transaction, or tell your Realtor to do it for you).

Have a look at this property at 260 Green, a gorgeous 4 bed, 4.5 bath trophy San Francisco home in Telegraph Hill, with a recent price reduction from $12,900,000 to $11,000,000. By way of magic mouse clicking we’re able to tell you immediately if that home is in a prone area, and apparently price is not the only thing subject to sliding at 260 Green. (Obviously our one second look at a map does not compare to consulting with an expert soils or seismic engineer, so make sure you do if you have your eye on this property, or any others for that matter…okay.)

So that’s all great and what we can do for you, but what if you don’t want to contact a Realtor? San Franciscans, if you don’t know roughly where your home/neighborhood is on that map…you got issues. For the out of town readers considering a move to San Francisco, you can compare the liquefaction/landslide map to this San Francisco Neighborhood map. That will give you a good starting point. (For details go here.)

And in case you missed our original post and would like to know whether the chances of your house crumbling during “The Big One” are Very High, or Low (not just whether you’re in the zone), here you go:

liquefaction
Needless to say, if you live/plan on living in an area of green (first map) orange or red (bottom map), you better know how to duck for cover, and know that earthquakes don’t discriminate based on property values…if you’re in the zone, you’re in the zone. We hope “The Big One” never hits, but we all know it’s a matter of when, and not if, so choose your property location wisely, inspect, inspect, inspect, and remember to do those seismic upgrades you’ve been putting off for so long.

[Update: As is often the case, our readers are more bad ass than we are, and so provided a link to a soil stability (types) site: Click here to see it.]

IF YOU’RE LOOKING AT THIS POST CONSIDERING WHERE YOU WANT TO PURCHASE OR NEED TO SELL PROPERTY IN SAN FRANCISCO, IT’S BEST YOU CONTACT ME! I can get into details with you.

-Map of San Francisco locations prone to Liquefaction and Earthquake Induced Landslide [State of California Geologist]
-SF Districts Map (Not the totally new one with new zones, but close enough)[SFAR]
-Map of Bedrock Versus Landfill San Francisco [theFrontSteps]
-Contact Us to Check Your Property Liquefaction/Landslide Location[email thefrontsteps@gmail.com]

Or use this form.

Can California Keep Her Bling?

 

I used to look at houses in Portland, OR like this 2/2 SFH in one of the most gorgeous neighborhoods, Sellwood, listed at $440K.

And then I would look for somthing similar in SF. And then I would need a very large martini. We all know, even after the martini, that a comparable home is SF (in a comparable lovely neighborhood) would go for twice or three times that price.

Experts in the field offer myriad explanations: SF has limited homes, limited land, high demand, good jobs, California property is worth more… etc., etc.

I am curious though how many of those factors still exist, or can continue to exist as the economic climate changes.

The Chron estimates that Bay Area homes lost $202 billion in value in 2008. Agreed, the Bay Area includes areas much harder hit by the slump than SF, but SF is not impervious to these problems. Maybe they aren’t horrible yet, but conditions aren’t as crazy-good as they used to be (right? We can agree on that at least?); could they get worse?

It seems that California itself is losing value. The S & P has already lowered her credit rating , tying her with Louisiana,  and may lower this rating again if the budget crisis can’t be solved– a phenomenon we have no real optimism to witness, unless we relish our tax refunds being issued as IOUs as part of the solution. From the LA Times:

“Should the state not enact timely midyear budget gap closing measures by February 2009, or should the state’s cash position weaken significantly compared with recently revised state cash flow projections,” the rating firm warns, the ratings on California’s long-term debt could be lowered, S&P said.

That could drive more investors away from California bonds, forcing the state to pay higher interest rates to borrow. Municipal bond yields in California and elsewhere have been surging in recent weeks as state budget troubles have deepened.

As for the prospect of borrowing to plug budget gaps, S&P warned that without “meaningful budget adjustments on the revenue or expenditure side,” California may face “constrained investor appetite” for its short-term notes.

In the meantime, Prop 13, once meant to protect the housing consumer, is now a very big part of the problem.

So my question is, can Californians expect to see deals like those in Portland, OR anytime in the near future in San Francisco? (And I pick Portland for its many similarities, physically and politically, to SF.) Ironically, though this would be a nightmare to some people, it would be a dream come true to the vast majority of renters who are currently priced out.  And if this untapped pool of buyers could actually buy, well…  we’d see that scary-good rush to buy again, like before the dot.com and current economy bust when people offered children and unneeded organs along with 50% over asking— but with distinctly post-bust differences.

Recession: 3, Realtor: 1

A real email exchange from moments ago (edited for privacy, of course):

Dear [buyer],

Thank you for your emails regarding [some of the condos] we had seen with you and wanting to see them again. We set up some times for Friday from 1-3 pm. Are you available during that time to tour?

Sincerely,
[Realtor]

Dear [Realtor]

Thank you so much for your time and patience with us these past couple of months. Regrettably, the worst has happened. My husband just lost his job and we are forced to put our home search on hold indefinitely. Should our circumstances change, we’ll be in touch.

Sincerely,
[Buyer]

Number one was the fear of the pink slip. Number two were clients we had written offers on property for, one of which was almost 1342 Shrader (cash buyers up to $2.5M, but works for a bank, and fears a layoff). The above email makes three. We did close on a condo on 17th not too long ago, so it’s not all dark clouds, but it certainly is not all sunshine and roses either.

East Bay: Berkeley Named Top Spot For Selling Your Home

By Home Girl, aka real-estate blogger Tracey Taylor

If you are selling your home, Berkeley is the place to be doing it, according to a piece in Forbes which ranks the ten best suburbs to sell a home. (Suburb? Ouch that hurts.) This is how they put it:

Berkeley known sometimes as a hippie haven, is becoming a hotbed for home sales. Prices in the Bay Area suburb are up 9% this year, with homes selling for a median price of $790,986. Properties are sitting on the market for 73 days on average, the lowest of any area with positive price trends within the confines of the country’s 75 largest Census-defined metro areas. Only 37% of sellers have been forced to reduce their prices, one of the lowest rates in the country.

“Only 37%” of sellers reducing their prices? Shows just how bad it is. Other California spots to make it into the Top 10 include Encinitas and Venice.

The report draws on stats from Altos Research and the really interesting angle — and one Forbes fails to mention — is provided by Altos CEO Mike Simonsen on his blog. He says this was a difficult one to call:

Their editors called and asked, “Where are the best selling suburbs for sellers right now?” It’s a tough question because the answer, really, is nowhere… By our Market Action Index, there are essentially no markets with demand levels high enough to call them “Sellers’ Markets”. We settled on identifying ten suburbs whose demand trends … simply weren’t horrible.

Of course, a Forbes ranking of “10 suburbs to sell that simply aren’t horrible” doesn’t have quite the same ring to it.

[Photo credit: http://www.cityofberkeley.info

Bay Area Home Prices: a la San Francisco Chronicle

From the Chronicle: Home prices down in 90% of Bay Area Zip codes. A bold statement indeed, and thank God we don’t live in 90% of the Bay Area, but what’s this?

One of the few standouts was the 94114 ZIP in San Francisco, home of Noe Valley, where houses go for well over a million dollars, designer strollers clog the sidewalks, posh shops peddle handmade ethnic tchotchkes, and the Google bus regularly cruises the streets.

But even that ZIP didn’t enjoy the double-digit appreciation that became de rigueur during the real estate boom. Instead Noe Valley prices were up 6.8 percent year over year, from $893 a square foot to $954.

We know full well SF is not entirely immune to the forces of the economy, but the mere fact that we are weathering this storm better than any metropolitan area we can think of, deserves to be noted. The fact that some areas of San Francisco are seeing price appreciation (however small) while other areas of the Bay Area (literally within 50 miles) are seeing price drops upwards of 70% is astonishing.

And apparently, Carolyn hadn’t seen this post, or she’d know a statement like, “Noe Valley, where houses go for well over a million dollars, designer strollers clog the sidewalks, posh shops peddle handmade ethnic tchotchkes, and the Google bus regularly cruises the streets” is sure to cause a stir. We’re prepared to let it slide, are you?

Just noticed something else on that map…does it show most of SF as a “Zip code with fewer than 20 sales”?

-Comment du Jour: The People in Noe Valley Have a Fully Realized Liberal Fantasy [theFrontSteps.com]

New Developments Face a New Reality in SF

 

I’ve heard from multiple sources that SF real estate is, for the most part, immune to the havoc wreaked on other parts of the US. But sales at our most recent condo complexes show that happy-smile-don’t-worry line of rhetoric is about as reliable as the clown’s was in Poltergeist (Happy Halloween!).

 

 
Socketsite reports that Symphony Towers, with only 55% of its units sold, has recently reduced prices 30%. The “Tower One Close Out,” advertised on the building’s webpage, demonstrates:
 
T-907 Penthouse studio w/built in Murphy bed & views $515,000 $419,000
T-602 1-br, Quiet courtyard location $565,000 $449,000
 
You have to wonder if those buyers among the 55% sold group are perhaps a wee bit upset. You might also wonder if you can’t, given the hint of desperation (“close out”= we really, really want to sell these goddamn condos!), get one of these units for even less than the advertised price.
 
Plus, Symphony Towers is not the only recent development cutting prices. The Hayes is also making cuts, despite its central location and uber-hip marketing (including requisite “ambient” track playing over your web tour of the property, a photo from which appears below). #610, for example, is a 1 bed/1 bath down now from $599K to $499K.  
inside "The Hayes," life is fabulously vogue

 

 
The Arterra, our newish “green” building at 300 Berry St. is also offering reduced prices, (such as #904, a 1 bed/1bath down from $649K to $599K), as is The Potrero.  
 
More good news for people who love bad news is that, according to the San Francisco Business Times, construction has been suspended at 535 Mission St: “The $100 million HOK-designed tower was put on hold earlier this month in response to worsening market conditions.”   
 
Well then. Seems like if one wants to buy right now, one should take these worsening conditions to the negotiating table. Don’t invite the clown.
—————–
Photo credits, respectively: Scary ass clown: Brain Handles.com; The Hayes staged unit: The Hayes.com.
 
 
 

“Mortgage market weathers storms” – SFGate

Did we read that headline correctly? Is that quite possibly the first headline in over two years about the housing/mortgage market that doesn’t spell disaster? Or is it the shot of Tequila and can of Tecate (a bit of lime squeezed in and a touch of salt on the rim) talking?

Home loan applications are up, interest rates are down and financing continues to be approved, according to national data and local mortgage brokers.

The interest rate on a 30-year fixed-rate mortgage averaged 6.26 percent last week, down from 6.37 percent the previous week, according to Freddie Mac.

Mainstream media is getting soft! We kind of like it. But then you had to go ruin our party:

None of this is to say that the mortgage market has returned to normal. It is still far more difficult to qualify for a loan than it was before default rates shot up last summer, underwriting guidelines are in a continual state of flux and the housing market remains in a deep slump.

The number of homes sold in the Bay Area during June was the lowest for the month since 1993, down 9.9 percent from a year ago, according to DataQuick Information Systems. Across the nine [Bay Area] counties, the median price paid for all home types plummeted 27.1 percent to $485,000, slipping under the half-million-dollar mark for the first time in four years.

Damnit!

-Mortgage market weathers storms [SFGate]

Plunging Home Sales in the San Francisco Bay Area

More doom and gloom data for you to ponder. We won’t even point out the silver lining to the always dark cloud of real estate reporting, but it’s in there…rest assured.

From sfgate:

The price of a typical single-family home in the San Francisco area plunged 22.1 percent compared with a year earlier, according to the S&P/Case-Shiller Home Price index. The study, published by New York credit rating agency Standard & Poor’s, defines the region as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties.

The 10-City Composite index, tracking major U.S. markets, decreased 16.3 percent, also the largest decline in more than 20 years of data. Among the 20 regions tracked by S&P/Case-Shiller, 13 posted record annual lows and, for the first time at least in this market cycle, all stood in negative territory. Las Vegas and Miami were the worst off, down 26.8 percent and 26.7 percent, respectively.

Bay Area home prices declined 20.2 percent year-over-year in March, 17.2 percent in February and 13.2 percent in January. April prices were off 2.2 percent from the prior month.

The indexes show the overall price trend in specific metropolitan areas. Many of the cities or neighborhoods within these regions performed better or worse. Areas like San Francisco and much of the Peninsula have held up relatively well, for instance, but the net figure has been dragged down by steep drops in outlying areas like eastern Contra Costa County.

Many real estate experts consider the S&P/Case-Shiller indexes and others like them more accurate gauges of real estate trends than the median price approach used by other groups. Because they track the value only of homes that have traded hands at least twice, the indexes chart the actual increase or decrease in specific homes.

Median surveys compare prices for homes sold in one month to an entirely different set sold in the next, meaning they can be artificially distorted when a higher proportion of homes sell in the lower- or higher-priced tier in a given period.

-Bay Area home prices continue steep fall [sfgate]

Weekly Fluj: Inventory, is there a lot of it?

Lots of people yapping on and on about how San Francisco listing inventory is through the roof, sales volume is in the toilet, and both median and average home prices have plummeted, but the Fluj says:

Seemingly the perception is that there is a lot of inventory, but is there, really? And as for prices, come on now!

Discuss, debate, have fun.

…and kicking it off, we’ll go ahead and show you Fluj’s first comment in the thread to get you going:

Right, so, “Inventory.”

Seemingly the conventional wisdom is that there is a lot of it. Why the disparity between what buyers in the field are actually excperiencing and the media/blogs then?

I did a search for available properties. I used a metric that I believe to be extremely common for San Franciscans. This is a search for a couple or a small family who hope to buy something with room to grow into.

The parameters are: 750K to $1.205M, 3 brs, 2 bas, 1 car parking. I limited the search zones to only generally safe(r) areas. Essentially I included everthing except Ingleside, Ingleside Heights, and Oceanview, all of 9 save Bernal and Potrero Hill, and all of 10.

I turned up 82 properties.

1. Of the 8 Richmond properties, only one was east of Funston, and it is a cosmetic fixer on 7th Ave for 899K. (On the market for 7 days, offers Tuesday, you best to hurry if interested IMO)

2. Twenty-seven are in the central or outer Sunset.

3. For areas 3, the Arch st. listing appears to be a nice little Merced Heights home for 559 a foot. Many searchers will not entertain areas 3.

4. For areas 4, if they are not on a very busy street or a fixer, only Forest Knoll, and Miraloma Park areas 4-D and 4-H have properties for 550-600 a foot. Like 3, many buyers will not entertain areas 4 as it is not particularly central.

5. Surprisingly, for areas 5, there are only two Glen Park listings. In Noe, there is only 4120 22nd, a permitted fixer in need of at least 600K in capital. In Ashbury Terrace, only one cosmetic fixer I know to have received two offers already. And there is one large fixer property up on Grand View — and it doesn’t have any views.

6. There was nothing in 6. This was surprising.

7-8. Nothing here. Not surprising.

9. Eleven are in Bernal Heights and will not appear in the search perameters of many groups. Two in Potrero Hill. The Wisconsin listing is a total fixer on a corner with very little southern exposure and an entrenched tenant. The Rhode Island property at $1.195M and 663 a foot appears to be a decent deal for North Slope.

So is that a lot of inventory? I really don’t think it is.