An interesting sale and a theory

This Precita street Bernal Beauty
was on and off the market in a flash. I’m not going to harp on over asking or anything. But I do want to point out that such a sale, no matter how lovely the home, would not have happened on Precita street three years ago, let alone four years ago, five years ago, etc.

I do know we’re in a downturn, even in SF. However my theory is that the runup that’s now over was not only aided by easy credit, and housing policies, but by the change in the workforce/economics around here. A consequence of the workforce’s change has been the gentrification of Bernal Heights, for one. The Pacific Heightsification of Noe Valley is another. The Noe Valleyfication of North Slope Potrero is a third. The Bernal Heightsification of the Mission is a fourth. We’ve seen high sale prices this fall for North Slope Glen Park; Sunnyside is now thought of as desirable because one can walk to BART; Miraloma Park sales continue to surprise (515 Foerster,with no garage, no views, maybe 1600-1700 sq feet or so, and a smallish backyard went for 830K yesterday) and on and on.

In a nutshell, the city gentrified south. It’s undeniable. And good — well at this point GREAT — properties are getting 2006-2007 prices still. The great properties make it all the more difficult for people selling OK or marginal properties to capitulate by lowering prices drastically. They look at their neighbors and think, “Hey. That house is a little better than mine but so what? I can get that sort of number too.” A stasis has in effect been reached.

Am I preaching to the choir here? Am I being pedantic because this is all fairly obvious to you guys? I’m interested to know what people think.

10 thoughts on “An interesting sale and a theory

  1. wait till google/cisco start to announce layoffs early next year, sure some people still have money but it’s like a tide going back to the ocean. You still have tide pools here and there but if the tide doesn’t come back in soon the tide pools are going to dry out, they just take longer.

  2. I agree. If huge tech layoffs happen, then insert shrinking/dessicating/reverse/negative analogy here.

    Look at Seattle. I am very familiar with the city because one of my best friends in the world, this guy, lives up there. Their “bubble” parallels ours remarkably in my opinion. It is not for naught that to use your analogy, tidal pools of relative strength have remained despite the tide.

    Do you happen to know about Cisco/Google layoffs specifically? I spoke to a Cisco employee at length a few weeks ago. She was pretty much of the opinion that as long as consumers continue craving Internet video, Cisco is better off than most companies. I mean, we’re still 10 years away from “convergence” and Cisco is at the forefront of that. I don’t doubt that Cisco will lay people off. I do doubt that it will be anything but strategic, now.

  3. I’ve been preaching this theory for the last two years. Well said.

    The same gentrification / wealth factor happened in NYC with all the lesser quality areas in Manhattan (lower east side, murray hill, hells kitchen, west chelsea) all became major hot zones as supply in the Prime areas became unattainable. Further to the point was the fact that these well heeled buyers Viking’d up their apartments and drove psf prices up even higher. It’s happening here too but constrained by Prop tax issues. In ten years you will not be able to find a “raw loft” / “needy vic”.

    Of course in NYC the trend leaked over to Brooklyn and Harlem and those areas are starting to show major signs of weakness right now so who knows what’s going to happen here.

    All I know is that 2009 is going to be a historic disaster that makes the second half on 2008 look like a blip. Hang on. How it will impact Prime SF remains up for grabs but I’m personally still very hesitant. Looking for the bottom.

  4. Sun announced 5000-6000 layoffs today.

    My sources at Cisco say they will be trimming early next year. Fluj, you can classify that as “strategic” if you like.

    Google has been shedding workers too. Mainly contractors right now, and some of it is housecleaning.

  5. If another person tells me Sun has announced 6000 layoffs I will definitely win the “Sun has announced 6000 layoffs” award for e-kibbitzers. Sun also laid off 2500 workers in May, and has been declining since 2000, I read.

    Again, if tech continues to lay off droves of workers, then yes, SF real estate will be directly affected. Like I said. Zanon/Foolio, I appreciate your softening that statement. It was rather rude the way you told me to “put my infrastructure” on the other site prior to your comment’s deletion.

  6. good points fluj. and eddy too- that part about people viking’ing up their places fits in well. gentrification happens.

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