This Buzz is a quickie—I wanted to address an article

(http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/10/18/MNGTTLRF721.DTL)

in today’s Chronicle about the “bubble bursting in home values”— These kinds of stories irritate me because they front-load the article with gloom and doom, then bury the good news in paragraph three or four. I want to quickly parse the article and let you know the real scoop:

First off, the statement that, “In San Francisco, the price of an existing single-family home rose 5.5 percent to $800,000, the biggest increase of any Bay Area county,”

is buried in the middle of the article, as usual.

Second, the reporter cites two examples of San Francisco homes having problems selling, but fails to mention that both homes are located in the worst spots of their respective neighborhoods– one next to the Bernal Heights (St. Mary’s Park) Recreation Center, and the Potrero Hill Recreation Center, where jobless youths congregate. She also fails to mention that the home in Bernal Heights is being listed by an East Bay agent.

As with any market, up or down, quick or ’slower’, it’s all about “Pricing Correctly”. It’s also about hiring the most knowledgeable, experienced and competent people to handle every aspect of the sales transaction. A careful review of stats reveals that while fewer homes are selling in San Francisco, we aren’t seeing a drop in prices.

There is one exception to this rule— the median condo price city-wide is down 1.3% over the past year. This decrease is attributable to the rules of supply/demand in SOMA/South Beach, where there is a high concentration of condos. New construction in those neighborhoods has dramatically increased supply, and any condo buyer in those neighborhoods who bought within the past two years is unlikely to do better than break even right now. I suspect, however, that condo sales in other neighborhoods have not dropped (if you want me to prove this, email me and I’ll send you the stats.)

If you’ve been in your condo for more than two years however, you’re up 15% from $649,000 to $750,000. The average price for the same period also took a leap, from $716,000 to $835,000.

The rule of thumb for any home buyer is that if you hold for five years or more, you will do well. There may be bumps in the road during that time, but ultimately your investment will yield excellent returns.

For a more balanced view of the market, please see the post directly above this one. It presents a different viewpoint and get into the heads of these people who make such compelling arguments about the sky falling on the real estate market.

This entry was posted on Wednesday, October 18th, 2006 at 12:00 pm and is filed under Market Conditions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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