We take absolutely no credit for the below quotes whatsoever. They are pulled from a recent Domicile Properties newsletter that was sent our way. Enjoy:
The Good, the Bad, the Ugly and The State of the Market
Beautiful, stylish, architecturally compelling single-family homes in prime neighborhoods are still in great demand. They are selling quickly and sometimes with multiple offers. Those prices are holding steady. The same goes with elegant, spacious condos (and 2 unit TIC’s) in the same high demand neighborhoods.
In the past couple of months the usual way of doing real estate business in San Francisco has changed. Transactions move a lot more slowly. Buyers are more ponderous and deliberative. Lending requirements are more restrictive. Those with the wherewithal to obtain a loan, and the guts to escape the herd mentality of waiting on the sidelines until things get better, have a better environment in which to buy with a minimal amount of multiple offer activity.
TIC’s in 3-6 unit buildings have gone down in value. Financing can be even more difficult and expensive than with a single family or condo. Lenders require larger down payments. That said, TIC’s with good square footage, nice original detail and tasteful finishes in desirable locations are very good investments especially with the advent of better fractional financing. We’re hoping to see fractional financing in the near future with better rates and terms.
Lofts have also gone down in value. Consequently, very few lofts are on the market. The good news is that we think lofts will also make a big comeback. The city of San Francisco has a moratorium on new loft developments, so the supply will remain constant; and in comparison to the small square footage of new, high rise condo projects, lofts will emerge for many buyers as the better choice for home and investment.
If you are considering investment property, rent control and tenant’s rights can be daunting. But with knowledge, patience and a certain amount of flexibility the long-term potential payoff can be huge.
Some recommendations for an insecure market
To the best of your ability, try to be flexible with your initial plan for how long you will stay in your home. You may have to stay in your home just a little bit longer than you thought to realize the financial gain that you planned on.
If you have the money and time to remodel your place, do it. Properties that are remodeled, in good condition and show well sell for more money and will sell no matter what the market conditions are. These are the properties that are selling now.
When the market was red hot and highly competitive buyers overlooked many structural issues. In this market we are finding that buyers have greater parity and power, and are therefore less forgiving of items they see as problems. (i.e. big pest control reports, older roofs and heating systems, etc.) Consider investing in the structural work that’s needed. If you are planning or are in the middle of a cosmetic renovation push your contractor to give you a great price to also do some of the structural work that might be needed on your home. It is a good market for negotiating on services.
If you’re planning to repaint or do a big remodel, try getting a little help from a great designer. It will save money and aggravation.
We couldn’t have said it better ourselves and frankly are glad we didn’t have to.
3 thoughts on “The State Of The Market”
Sounds like pretty solid advice. I like how they talk about people overlooking structural problems during a red hot market. IMHO, this is never advisable no matter the market condition or the level of emotion about a particular home. Structural problems are very costly and once you finish them, there’s no guarantee you have actually added any monetary value to your home (other than made it a bit more marketable).
I wrote about a similar subjects here:
sounds like a lot of bs to me
“sounds like a lot of bs to me”
I gotta give it up. I LOL’d.