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Tag Archives: San Francisco Real Estate Market
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Pockets of Movement in the San Francisco Housing Market, Despite Lessening Inventory
The nice spring-like weather we have been experiencing has had some positive effects on the home buying public, as it has brought more buyers into the market. And with interest rates continuing to stand at a 60-year low, this has made homes more affordable and led to a wave of refinances that has increased disposable income for property owners. But despite these encouraging trends, the city’s inventory has tightened.
As inventory levels dropped in January by 32.9 percent, compared to January 2011, the number of homes under contract rose by 8.7 percent. But the low inventory seemed to also contribute to fewer completed sales, which is fairly normal market behavior for this time of year.
For homes that were priced below $700,000, the months of supply inventory fell by 47.3 percent to 1.6 months. For higher priced homes between $700,000 and $1.2 million, the months of supply inventory fell by 38.9 percent to 2.4 months. These short time frames continue to indicate a seller’s market, where sellers have more leveraging power over buyers who are competing against a limited pool of properties.
Here in our San Francisco market, I urge all of my buyers to gain pre-approval for a loan before they begin their home search. Many people seem to think that pre-approval is like applying for your entire loan, but it is not.
Once you have chosen a direct lender, Bank, or Mortgage Broker, they will ask you to fill out a loan application and assist you in gathering the necessary documentation and verifications to complete what will eventually become your “loan Package”.
Once the loan professional has verified your income, assets and employment, they are able to estimate the type and amount of loan you will likely qualify for. This will assist you in knowing what your monthly payment, insurance, property taxes and interest will be and in turn, you will know the right price range to look in when shopping for your home!
Now that you have that pre-approval letter you are ready to search. This will give you a competitive advantage, as you will be able to submit offers immediately on what could be the “perfect” property for you with that valuable pre-approval letter. This letter lets the listing agent know that this buyer is already working toward their loan approval and has the right income and assets to qualify for that particular purchase. What do you think about loan pre-approval and working with an agent. Do you feel it is necessary?
Four-Unit Market Gathers Steam – Republished from the San Francisco Apartment Association Magazine
by Erika Burke
During the third quarter of 2008, 120 multiunit properties transferred, for a total dollar volume of $156,899,485. This number is 7.5% less than the prior quarter’s overall dollar volume of $163,923,750, with only one less property transferred. We did see a dip in volume, and in the average sales price of $1,307,496, which was down by 6.5% from the second quarter’s average sales price of $1,398,656. The list vs. sale price dropped less than .5% to 99.43%, meaning multiunit owners have seemingly appropriately priced property in this tentative market. As a whole, property is staying on the market for 67 days until sale, 8 days longer than the last quarter.
Coldwell Banker led sales with 37 listings representing buyers and sellers for a total market share of 14.13% and dollar volume of $44,341,000, with an average sales price per sale of $1,198,405. Zephyr was close behind with a dollar volume of $43,037,998 and a 13.72% market share, though it sported a higher average sale of $1,229,657 for its 35 listings. Following behind them were Vanguard with 16 sales and Pacific Union/GMAC Real Estate with 13 sales.
This quarter awards Scott Flaxman of Scott Flaxman Real Estate the “Extreme Patience Award” for his sale of 68 Cayuga Ave. in Mission Terrace, a 2-unit with four-car parking that stayed on the market for 332 days. It had an initial asking price of $979,000 and a final sales price of $860,000.
Barbara Callan of McGuire Real Estate took the “Curb Appeal Award” for 472-474 Euclid Ave., a gorgeous Mediterranean-style property. The units sold in a swift 23 days for $1.695 million and $1.7 million each, despite two protected tenants in residence. It goes to show that a coveted and beautiful property can sell quickly, despite its circumstances.
The Honorable Mention in this category goes to Angela Lam of Pacific Union/GMAC who brought 140 Arguello Blvd. to market for $2.695 million. This large and unusual 1967 property stood out architecturally from the rest of the sales pack.
On the other side of the aesthetic spectrum, the “Lack of Curb Appeal Award” goes to David Cattich of Coldwell Banker for the 3-unit building at 2070-2072 McAllister St. The property, though unremarkable and apparently hand painted, sold for $1.1 million, only 8% below asking.
In a breakdown of marketing remarks, 17 tenant-occupied properties were mentioned and positioned as income properties, 37 properties were listed as vacant, 7 were probates, 22 have been remodeled, 6 were to be sold “as is,” 8 had reduced asking prices and 6 listed protected tenants. There were two bank-owned sales and one short sale. Though the market in general may have been reported as slowing, in fact, all types of property across the board have been moving and there appears to have been a rise in the sale of income properties, rather than units positioned exclusively for TIC purchase.
During the third quarter, 79 2-unit properties transferred, 8 less than the prior quarter. The dollar volume of $99,384,487 was down by 14% from the last quarter and the days on market were 62 days (3 days more than last quarter). List vs. sales price is down to 98.72%, showing that 2-unit properties may require sellers to adjust their asking prices down. The median sales price has dropped to $1,258,031, which is a drop of $72,413 or approximately $36,000 per unit. A unit in a 2-unit property is currently worth an average of $629,015. This reflects the lowest average sales price for this quarter in comparison to the same quarter over the last four years (though in 2006 the median average came close). This average is down 7% from this quarter last year and has dropped 11% from the first quarter of this year. It appears we are no longer looking at fluctuation, but rather a steady drop in average sales price in the 2-unit market sector. The value of the 2-unit building may be following in the footsteps of the decrease in value of single-family homes in the Bay Area and nationwide.
The district that shows the most 2-unit sales activity is the Richmond, with 10 sales, and is followed by the Parkside/Sunset with 8 sales. There were 6 sales each in Bernal Heights and Noe Valley, 5 in Potrero Hill, 4 in Hayes Valley and 3 each in Russian Hill and Pacific Heights.
In the third quarter, 24 3-unit properties transferred, which is happily 8 more than the previous quarter and 10 more than the first quarter. Unfortunately, the median sales price has dropped from the prior quarter by a significant 20% to $1,405,962 or $468,654 per unit. We’re seeing these units stay an extra month on the market for an average DOM of 93 days. The dollar volume was up to $33,743,086, which is merely reflective of the increase in the number of transactions. The list. vs. sales price stayed about the same at 98.37%.
Four 3-unit properties sold in the Inner Mission and three sold in Hayes Valley, with two each in NOPA, Russian Hill, Noe Valley and Nob Hill. This sales segment has slowed down in 2008, but the number of transactions is only five less than this quarter last year and the median sales price only $9,000 less.
During the third quarter, 18 4-unit buildings transferred, 3 more than the prior quarter. The median sales price has risen by $46,000 from the prior quarter. The dollar volume at $25,972,000 was higher than the previous quarter and a remarkable 100% increase from the first quarter of 2008. The DOM was 68 and the list vs. sales price was 103.18%.
For about two years, the 4-unit market has been gathering steam as a multiunit purchase with value. At $360,722 per unit, this is a value for the TIC purchaser, the investor or even the developer with an eye on improving property for resale. Even during these uncertain times, the 4-unit property is holding its value, perhaps because we do not have as many 4-unit properties as 2- or 3-unit buildings. Presidio Heights showed two 4-unit transfers, along with two each in the Inner Mission and Hayes Valley. The 4 unit is still a residential purchase and will not fall under the state’s subdivision rules for the sale of individual units.
The Big Picture
We are not seeing the across-the-board price reductions, foreclosures and short sales that are becoming more commonplace in the single-family home sector. Despite that, price reductions have become commonplace as prospective purchasers are being handed a stiffer list of qualifications in order to qualify for loans. The word on the street is that the appraisers are becoming more conservative when using the comparison method. We’re still seeing multiunits transfer as they were before the market turned, if not for slightly less and with a little more time on the market. Likewise, the 2-4-unit buildings remains a solid income property and owner/user investment.
Of the 120 2-4-unit properties transferred, 75 were priced between $1 million and $2 million, 31 were under $1 million and 18 sold for between $2 million and $3.5 million. That means 77% of all properties transferred in this segment were for over $1 million. It appears the higher end properties are moving faster and appealing to well-qualified buyers who are able to secure mortgage money during the current climate.
I had thought I would come to this quarter’s market survey and find horrific numbers, yet this has not been the case. We have seen the 2-unit sector decline steadily since the start of 2008, though the public’s desire for homeownership via the 2-unit property choice seems to have remained intact. It’s nice to see income property continuing to transfer. Remember the 200% rule when divesting your larger apartments so that perhaps you can move toward the purchase of several 2-4-unit properties with an eye on the varying ways you may hold and divest at a later date. One thing is for sure: let’s keep our San Francisco real-estate multiunit economy flowing. Don’t tread water; continue to dive in and take the kinds of calculated risks like you did when you began your investment portfolios.
The opinions expressed in this article are those of the author, and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine. www.sfaa.org. Erika Burke is a realtor with a 25-year background in sales and marketing. She specializes in the sale of San Francisco multiunit properties with Zephyr Real Estate and can be contacted at 415-279-1135 or
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