| Market Update for October 2005 | October 26th, 2005 |
|
I have a line on a couple of small mixed use properties that aren’t on the open market— The first is a small three unit building (2 residential over a bail bond shop), near the Hall of Justice. The other is four small vacant units above three commercial on 24th Street in the Mission. There’s also a vacant lot on Connecticut just north of Army for sale. This last property is in a scrappy location and is best suited for light industrial or vehicle storage. If you want more information, please call me at 415-738-7040. Now for an update on how the San Francisco market looks to us at Paragon: We’re no longer expecting automatic bidding wars on every new listing that hits the market. Word on the street is that TIC sales are slowing and properties lacking essentials like parking are also not selling as quickly. Well-priced properties can still sell well above asking. Properties that capture the heart and imagination also set off bidding wars. A Paragon agent listed a 3br/3ba Mission Victorian with high emotional appeal for $995,000 and received 8 offers. Another Paragon listing– a set of flats in the Western Addition that had been severely fire damaged- was listed for $769,000 and received more than 20 offers. We’re also not seeing a slowing of market activity. Right now San Francisco Realtors are selling roughly 130 homes, condos and 2-4-unit buildings each week. That number is about as high as anything we’ve seen all year. And prices are continuing to slip upwards. Even so, we don’t expect the spectacular appreciation we’ve seen over the past few years to continue. The days when you could list your place at a price 10% more than what your neighbor just sold for have come and gone. We also tell sellers not to panic if offers don’t come in right away. But if your property is priced appropriately and shows well, you should have it under contract in a month’s time. My emails love to be forwarded! And my distribution list loves to grow! If you know someone who would like to receive these updates, just send me their address. Thanks! Coming up next week: Some little known ways to find a bargain in any kind of market. . . See you then. And please remember me for your real estate needs or those of your loved ones. |
|
|
|
Happy Halloween To All| Am I Stupid or Am I Smart? | October 12th, 2005 |
|
This week, in lieu of a market update, I’m sending a piece I wrote for The Alameda Sun newspaper in 2003. I hope you enjoy it. We’ll be back next week with further market updates, (including some information on that wacky TIC market!) But if you want to opt out of receiving these emails, please let me know and I’ll take you off my list. Am I Stupid Or Am I Smart? On December 28, 1988, I closed escrow on my first property, a two-flat building with a studio on Grove Street in San Francisco. It cost $375,000. I paid for it by putting down $75,000 and getting a new loan on the property for $300,000 at a rate of around 9 percent. I moved into the top unit. Much of an investor’s success in the real estate market can be attributed to dumb luck. You can either look very stupid or very smart, depending on where the market is going at the moment you buy. Within a year’s time I was looking pretty stupid. The market had peaked and was now on a downward slide along with my income since I was a full-time, inexperienced Realtor whose earnings depended on a robust real estate market. In 1989, I saw my income drop to just half of what it had been the year before. The year after that, it dropped by another 50 percent. It’s likely that a manager at McDonald’s was making more money than I was then. I scraped by and hung on while the market made a slow turnaround. By 1993, the adjustable rate on my mortgage had dropped to about 8.25 percent and my rent-controlled tenants had moved out so I could rent out the other two units at market. The building was still worth less than what I’d paid but I’d turned around my business in real estate sales and was making good money again. I also initiated the tedious process of converting the building into three condominiums, so I could hedge my bets against a further drop in the market. While a real estate investor can look stupid or smart in the short term, I believe if they hang on long enough they always wind up looking very, very smart. By 1998, I was looking brilliant. Rates had dropped again to 7 percent and the units were renting for more than ever before. Even better, the building was now worth around $500,000 as an income property and even more as three separate condominiums. In 1998 I sold the top unit, where I lived, for $335,000 and used the proceeds to buy and renovate the property where I am now — a Victorian home in Alameda with two small apartments in back. I paid $288,000. My timing for this purchase couldn’t have been better — the market was just taking off and as it rose it took the value of my little income property with it. In the summer of 2000, when I was specializing in selling lofts and condominiums in San Francisco, I took a client to see some brand new condos at The Brannan– a luxury development near the ballpark. A small one-bedroom there took my breath away. It was the windows I fell for first — they were unusually tall, with dead-on views of the City skyline. I knew that at night it would be like living inside a Christmas tree. Then I swooned when I saw the view from the apartment’s tiny deck, which offered my favorite San Francisco postcard shot of the Bay Bridge. It’s a rare day when I see an exceptional piece of real estate that I want to buy and can afford to buy at the same time. In short order I made arrangements to sell my studio on Grove Street and put the luxury unit under contract for myself. At $465,000 in a hot market it seemed like a good investment, especially when I found my first tenant right after I closed escrow, who happily forked over $2800 a month for the place. Then the dot bomb hit. After the dust settled, I found myself with a condominium that was worth just a hair more than what I paid for it and a new tenant who pays significantly less than what I was getting before. The rent I get can’t cover my carrying costs so I have to come out of pocket each month just to hang onto the place. Since I’m an investor who buys and holds, I probably look pretty dumb right now. That’s ok. In ten years, by the time this ride is over, I’ll look brilliant. Afterword: This article was written in 2003. In early 2005 I sold the Brannan unit for $625,000 and traded it into 4 snappy looking units with parking near UC Berkeley. I paid $825,000 for the new building. It breaks even. |
|
|
|
In my weekly emails to clients, my aim is to always offer useful information about buying and selling real estate in San Francisco.| Best Things On The Market This Week | October 5th, 2005 |
|
What follows runs all over the map, from investment opportunities to single family homes. Beware—the good stuff goes fast. If you want to see any of these properties you need to call me now at 415-738-7040. 4381 25th Street 2832-34 Polk 171 11th Avenue 533 Ashbury Press on if you want to hear about this week’s ‘cheapie-teepies’—the lowest priced listings in San Francisco’s Multiple Listing Service right now (excluding homes exclusively available to Seniors or “Below-Market Units” available only to first-timers within a certain income bracket): Lowest Priced Condo: Turn your nose up at the location, and you turn your nose up at a great value. Diamond Heights has had terrific appreciation over the years, and while the location can get foggy, it has super access to the South-bound commute and a set-up that almost makes you feel like you’re in a tropical resort, with waterfalls, tropical landscaping and a swimming pool and rec room. Lowest Priced TIC I love Prospect— it’s a sweet, tree-lined street in Bernal Heights lined with quaint little Victorians like this one. But please note that this building has been Ellis-acted, which means you can’t rent the unit out for many years—unless you want hell-fire and brimstone raining all over you from tenant activists who do everything short of bed-checks to make sure you don’t cheat. . . I recommend this kind of purchase only for those who seek a second home that they’re ready to keep vacant at all times, or for someone who has their life mapped out for the next decade or so and knows they won’t need to move. Call me if you want to see any of these snappy pieces of real estate. And as always, if these emails bug you, just let me know and I’ll pull you off my list. |
|
|
|
At our sales meeting this week (which is like a think tank of San Francisco’s best and brightest agents) we talked about the ‘hot’ properties we saw yesterday on Tuesday tour. These listings are not exclusive to Paragon—but they are the ‘values of the moment’ at Paragon—the best and brightest on the market with the kind of elements Buyers are looking for.
