Maximum Overbid of the Week | Bernal Heights Fixer Wins Again

It’s Friday! Yeah! (If you’re not a Realtor who works every weekend.) That means overbids, and look at that, another fixer takes the cake. This time it’s 554 Anderson in Bernal Heights, a 2 bed, 1 bath home listed for $549,000 and sold for $920,000. As for the rest of the top 10, I think this is the first time we’ve seen the list not contain one single property over $2,000,000.

Top 10 San Francisco Real Estate Overbids:

Address BR/BA/Units DOM List Price Sold Price Overbid
554 Anderson Street 2/1.00/N/A 10 $549,000 $920,000 67.58%
1397 12th Avenue 2/1.00/ 38 $525,000 $750,000 42.86%
2751 23rd Street 2753 2-4 Units 14 $1,200,000 $1,700,000 41.67%
2077 Jackson Street 2/2.00/301 21 $995,000 $1,220,000 22.61%
933 Stanyan Street 3/2.00/ 9 $1,399,000 $1,700,000 21.52%
264 Grand View Avenue 1/1.00/N/A 37 $998,000 $1,192,999 19.54%
191 Cleo Rand 2/1.50/ 15 $528,000 $630,000 19.32%
566 South Van Ness Avenue 2/2.00/9 76 $795,000 $945,000 18.87%
518 Oak Street 2/1.00/N/A 13 $1,249,000 $1,475,000 18.09%
1535 Oak Street 1/1.00/2 41 $699,000 $815,000 16.60%
Dining Room before...

Before & After On A Noe Valley/Glen Park Victorian

There is always a lot of talk around town about how “easy” it is to sell a property in San Francisco, and that all we (Realtors) have to do is sign up a listing, put a sign out front, and the hordes of buyers will come marching through the door, offer oodles over asking, beg to buy the property, offer up their children as security deposit, and seller sells it for a mint.

Not so, and to prove you need us (particularly theFrontSteps) to market your property for sale in San Francisco, I’d like to share some “before & after” shots of recent property transformations.

view

Maximum Underbid | Russian Hill Property Wins | List $3.2M, Sold $2.6M

Closed on the last day of 2015 was this 3 bedroom Russian Hill condominium with dramatic views. Listed for just shy of $3.2M and sold 18% under asking, at $2.6M, it takes top spot on the top 10 Podium Underbids of the week for San Francisco.

Interesting to note is that out of the top 10 underbids that closed in the past two weeks, 7 of them are condos and 3 of them are single-family homes (That’s R.E. 101 in college…supply/demand).

And here are the rest.

Happy New Year everyone!

Address BR/BA/Units List Price Sold Price Underbid
1070 Green Street #1402 3/2.5/1 $3,195,000 $2,600,000 -18.62 %
151 Everglade Drive 3/3/2 $1,599,000 $1,400,000 -12.45 %
68 Landers Street 2/2/1 $1,499,000 $1,315,000 -12.27 %
400 Beale Street #1407 2/2/1 $1,150,000 $1,053,000 -8.43 %
3315 Pierce Street 3/3.5/3 $2,699,000 $2,500,000 -7.37 %
33 Perine Place 2/2/1 $1,500,000 $1,400,000 -6.67 %
425 28th Street 3/2/1 $1,695,000 $1,588,888 -6.26 %
355 1st Street 2/2/1 $1,595,000 $1,500,000 -5.96 %
739 48th Avenue 3/2/1 $995,000 $945,000 -5.03 %
1760 Ofarrell Street San Francisco, CA 94115 2/2/1 $879,000 $835,000 -5.01 %
1333 Jones St., Nob Hill San Francisco

13% Under Asking In Nob Hill | That’s An Audi R8

Hope everyone had a great Thanksgiving! I know I did. Back to the grind…

With the grind comes daily ganders at all things San Francisco real estate, and today is no exception. Check out this this Nob Hill Co-op apartment at 1333 Jones topping our weekly list of underbids (because they do exist).
1333jones

Listed just under $1.5M and sold for $1.3M… that’s gotta put a smile on your face. The $200,000 savings can put an Audi R8 in your garage (it is holiday season after all), or your kids through San Francisco pre-school (go with the R8). :-)

Hey look! Two other full service bachelor pads also sold under asking recently: one at the Four Seasons and the other at the Ritz Carlton. Underbid by about 8% after being on market for 339 and 227 days respectively. Wowza…

Anywho…the weekly top 10 list of Underbids for your Monday viewing pleasure:

Address BR/BA/Units List Price Sold Price Underbid
1333 Jones #801 1/1.5/1 $1,495,000 $1,300,000 -13.04 %
2955 Pacific Avenue 3/2/1 $4,100,000 $3,650,000 -10.98 %
2535 Vallejo Street 3/3.75/2 $6,275,000 $5,600,000 -10.76 %
956 South Van Ness 4/3.5/2 $2,995,000 $2,674,000 -10.72 %
3283 25th Street 2-4 Units $1,788,000 $1,615,000 -9.68 %
765 Market Street #27B 1/1.5/0 $1,550,000 $1,415,000 -8.71 %
690 Market Street 1/2/1 $1,150,000 $1,050,000 -8.70 %
3236 Scott Street 5+ Units $2,450,000 $2,250,000 -8.16 %
825 Rhode Island Street 4/3.5/1 $1,895,000 $1,750,000 -7.65 %
1069 Capp Street 5+ Units $1,799,000 $1,675,000 -6.89 %
14thst

Top Floor Teaser Sells $502,000 Over List | Mission Dolores | Maximum Overbid

Who prices a top floor Mission Dolores 2 bed, 2.5 bath, 1328 square foot condo WITH PARKING, and roof deck, in the epicenter of hip at $998,000 anyway! Everyone knows the going rate is at least $1000 per square foot. Teaser price. Teaser.

14thkit

Anyhow, this week’s top spot on the list of jaw dropping Overbids goes to 425 14th Street #4. A sweet condo in a hot location with everything you need to live the San Francisco dream.

Address BR/BA/Units DOM List Price Sold Price Overbid
425 14th Street 2/2.50/4 13 $998,000 $1,500,000 50.30%
1534 44th Avenue 3/2.50/N/A 14 $899,000 $1,280,000 42.38%
1351 10th Avenue 3/2.00/N/A 16 $1,189,000 $1,665,000 40.03%
472 12th Avenue 2/1.00/ 22 $899,000 $1,250,000 39.04%
1459 31st Avenue 4/2.00/N/A 21 $995,000 $1,290,000 29.65%
724 Masonic Avenue 2/1.00/ 13 $997,000 $1,280,000 28.39%
2514 40th Avenue 3/2.00/N/A 12 $799,000 $1,020,000 27.66%
15 Scotia Avenue 3/2.00/N/A 11 $688,000 $868,000 26.16%
1497 Palou Avenue 4/3.00/N/A 39 $719,000 $905,000 25.87%
333 Dellbrook Avenue 2/1.00/N/A 13 $925,000 $1,150,000 24.32%

To the listing agents, who I know very well, thank you for understanding all of what I say is all in good fun. You did what you had to do, and you got the job done. :-)

Have a great weekend!

More Real Estate Porn [The Goods]

Housing Affordability and Market Corrections

A look at San Francisco Bay Area housing affordability trends over time and how they intersect with real estate market corrections:

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The 2008 San Francisco Bay Area real estate crash was not caused just by a local affordability crisis: It was triggered by macro-economic events in financial markets which affected real estate markets across the country. It’s important to note that in the past, major corrections to Bay Area home prices did not occur in isolation, but parallel to national economic events. Ongoing speculation on local “bubbles” often neglect to remember this.

Still, dwindling affordability is certainly a symptom of overheating, of a market being pushed perhaps too high. Looking at the chart above, it’s interesting to note that the markets of all Bay Area counties hit similar and historic lows at previous market peaks in 2006-2007, i.e. the pressure that began in the San Francisco market spread out to pressurize surrounding markets until all the areas bottomed out in affordability. This suggests that one factor or symptom of a correction, is not just a feverish San Francisco market, but that buyers can’t find affordable options anywhere in the area. We are certainly seeing that radiating pressure on home prices occurring now, starting in San Francisco and San Mateo (Silicon Valley) and surging out to all points of the compass.

San Francisco, with a Housing Affordability Index (HAI) reading of 10% is about 2% above its all-time historic low in Q3 2007, but affordability in most other Bay Area counties, while generally declining, still remain significantly above their previous lows. By this measure, the situation we saw in 2007-2008 has not yet been replicated.

Significant increases in mortgage interest rates would affect affordability quickly and dramatically, as interest rates along with, of course, housing prices and household incomes, play the dominant roles in this calculation.

Note that Affordability ratios are just one relatively blunt measuring tool, and there are certainly other factors at play affecting our real estate market: local (high-tech boom; surging population, employment and wealth; inadequate housing supply, rental rates, etc.), national (financial markets, unemployment rates, consumer confidence, etc.) and, nowadays, even international economic factors (such as recent events in the Chinese stock markets and the EU).

Information on the methodology behind the California Association of Realtors’ HAI can be found here.

Speaking of financial markets, we decided to take a look at how the recent volatility played out in the S&P 500 and the Shanghai stock indices. These indices are constantly fluctuating, but the general picture has not altered significantly since we graphed this in early November:

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Luxury Home Segment Cools | “Affordable” Homes Market Remains Competitive

In case you don’t get sfnewsletter (I posted this there), here is our November 2015 San Francisco Real Estate Market Report, including 11 Custom Charts:
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San Francisco led the Bay Area and the nation when its real estate recovery began in early 2012. Within the city itself, the more affluent neighborhoods led the rebound from the 2008 – 2011 recession and saw the highest rates of home price appreciation. That dynamic began to shift in 2014, when the more affordable neighborhoods began to take the lead in demand and in appreciation. All price segments in San Francisco have cooled off from the overheated frenzy of the spring 2015 selling season – this cooling is a common seasonal phenomenon – but while lower and mid-priced homes in the city have continued to remain solidly in “seller’s market” territory, in the luxury home segment, the dynamic between buyers and sellers has fundamentally shifted, at least for the time being.

A number of reasons may explain this: Firstly, the affluent are much more invested in the stock market than other groups, and the volatility of late August, early September may have encouraged more wealthy homeowners to sell (before things might possibly get worse), and more wealthy homebuyers to postpone buying until things clarified. As of very early November, the S&P 500 has regained its lost ground from August, so this effect may fade. Secondly, it’s certainly possible that sellers and listing agents have finally pushed the envelope on prices a little too far: San Francisco’s high prices have clearly motivated some buyers to look at options outside the city (which has helped pressurize the markets of other counties). Last but not least, more and more luxury condos are being built in San Francisco: Growing supply not only gives buyers more options and more negotiating room, but it decreases the urgency to write strong offers quickly or the motivation to compete with other buyers.

However, the luxury home market hasn’t “crashed”: there are still high-end homes selling very quickly for very high prices amid competitive bidding. But it has markedly cooled and the number of luxury home listings in San Francisco hit a new high in October, so correct pricing has becomes increasingly vital. It remains to see if this change is just a transitory market blip – such blips are not uncommon in financial or real estate markets – or the beginning of a longer term reality.

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Median Sales Price by Month

Even with the general cooling in the market since spring and the significant slowdown in higher end home sales, the overall median sales price for houses and condos bounced back up to $1,200,000 in October. Median prices are impacted by seasonal trends: typically peaking in the spring, dropping in the summer, up again in the autumn and then plunging during the winter holidays. This has more to do with inventory than with changes in fair market value. Short-term fluctuations are not particularly meaningful: It is the longer-term trend that gives a sense of what’s going on in the market.

For houses alone, the median sales price in October was $1,300,000 and for condos, it was $1,100,000.

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Supply & Demand Statistics
by Price Segment, October 2015

Months Supply of Inventory (MSI) is a classic measurement of supply and demand, calculating the time it would take to sell the existing inventory of homes for sale at the current rate of market activity. The lower the MSI, the greater the demand as compared to the supply, i.e. the hotter the market. The house market in San Francisco has been stronger than the condo market since the recovery began – though the condo market has been crazy hot as well – because the supply of houses is more limited and is dwindling as a percentage of sales because virtually no new houses are being added to inventory. However, new condos are being built in quantity. This chart above illustrates the dramatic difference in the markets for homes up to the median price ($1.3 million for houses, $1.1 million for condos) and in the next price segment higher, versus the luxury home segment, defined here as houses selling for $2,000,000+ and condos for $1,500,000+. (By this definition, luxury sales currently make up about 20% of San Francisco’s home sales.)

Because SF has been so hot for so long, we’ve adjusted the thresholds for what MSI readings define “seller’s market” and “buyer’s market” to better reflect the psychology of the current market.

Luxury Home Listings for Sale

As mentioned earlier, the number of high-end house and condo listings hit all-time highs in October, while sales numbers are well below levels hit in the previous 2 years. Even more so than the general market, the luxury segment is dramatically affected by seasonality and typically goes into deep hibernation from Thanksgiving to mid-January. Having so many active listings on the market just prior to the winter holiday doldrums is one of the reasons why we designate the luxury-home segment as currently having moved into “buyer’s market” territory.

The Luxury Home Market: Months Supply of Inventory
Year over Year over Year Comparisons

This chart above illustrates the change in the luxury home market supply and demand balance over the past three Octobers. As a further point of context to what has happened in the past year, during the feverish market of this past spring, the MSI for luxury houses hit a low of 1.6 months of inventory and the MSI for luxury condos hit a low of 1.7 months. Since 2012, spring has consistently been the hottest, most competitive, selling season of the year and most home price appreciation has occurred during that time.

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4 Neighborhood Snapshots

Much more information regarding SF neighborhood prices and trends can be found here: San Francisco Neighborhood Values

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Average Asking Rents in San Francisco

The real estate market has been challenging for homebuyers these past few years, but for anyone looking to rent a home in the city, it has been distinctly more difficult financially. Homebuyers have the benefit of historically low interest rates, multiple tax advantages and, hopefully, substantial appreciation gains over time; renters enjoy none of those advantages (though admittedly there can be long-term benefits to rent control for renters that qualify). Even with the big jump in home prices over the past 4 years, factoring in the 35% – 40% decline in interest rates and adjusting for inflation, the ongoing monthly cost of homeownership (for someone putting 20% down) is roughly the same as it was in 2007. But average monthly asking rents in the city have surged over 50% during the same period.

This has made rental property ownership an increasingly lucrative proposition, which we discuss in more detail in our last Commercial Brokerage report: Bay Area Apartment Building Market

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Median Household Incomes

In Selected San Francisco Zip Codes

By Bay Area County

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$440,000 Under Asking | Personal Chapel Maybe Included, Wallpaper Definitely

It only took seven months, but in the end, it got there. SOLD for $440,000 UNDER asking!

You read that correctly, this 6-bedroom single family home in Mission Terrace at 100 Delano Avenue just closed $440,000 below the original (back in March) asking price of $1,600,000. After a price chop to $1.5, then $1.4, then again to $1.3, it appears the Lord finally took pity on this property and landed it on top of this week’s Top 10 Underbids. With plenty of extra space, awesome curtains, wow-tastic wallpaper, and your own “personal chapel” how could you not want to move right in!?

As for the other buyer scores, here you go:

Address BR/BA/Units List Price Sold Price Underbid
100 Delano Avenue 6/3/3 $1,300,000 $1,160,000 -10.77 %
355 Bryant Street 2/2/1 $2,345,000 $2,100,000 -10.45 %
18 Palm Avenue 4/3.5/2 $4,995,000 $4,525,000 -9.41 %
1264 Bush Street 1/1/0 $649,000 $590,000 -9.09 %
78 Gladys Street 3/2/0 $1,195,000 $1,100,000 -7.95 %
1437 47th Avenue 1437A 2 unit $1,275,000 $1,175,000 -7.84 %
601 4th Street #321 1/1/1 $1,499,000 $1,400,000 -6.60 %
2040 Franklin Street #506 0/1/1 $575,000 $540,000 -6.09 %
2730 Broderick Street 4/3.5/1 $5,850,000 $5,500,000 -5.98 %
301 Mission Street #51D 2/3/1 $4,495,000 $4,250,000 -5.45 %

You see…”deals” can still be had in San Francisco.