| Airplanes and Fairy Tales | May 31st, 2006 |
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As a major spokesperson for CAR, Appleton-Young is known for her pithy quotes in the newspapers. She was the one who coined the term “soft landing” when predicting a dip in the number of sales we could anticipate for 2006. Last week, she stretched the airplane analogy a little further and described the landing as “harder than anticipated.” Looking back, the slowdown actually started in the last quarter of 05 after having peaked last summer. Today, we have a higher supply of inventory and fewer buyers. Some believe the changing balance of demand is an indication that prices will start to drop in San Francisco, the same way that they have been in some Central Valley and Delta communities. Appleton-Young’s catchy name for where we stand now is “The Goldilocks Economy.” With a steady growth in GDP, inflation in check, solid (if unspectacular) job growth, and a low unemployment rate, we have a ‘not too hot, not too cold, but just right’ economy. She did not think there would be a significant drop in prices. Economic indicators simply don’t support this scenario. Severe downturns in real estate markets (like the one we had in the early 90s) have always been tied to recessions or big job losses. On both a local and national level, we are experiencing neither event. Job growth is perking along at 1.5%, Gross Domestic Product growth is sitting steady at 3.5% and productivity gains and globalization are curbing inflation. According to Appleton-Young, three major factors are creating the current slowdown in real estate sales: Rising interest rates, changing consumer expectations and the urgency of investors and speculators who now want to get out of the market. This shifting demand ultimately creates even more inventory as Sellers become anxious to sell while the market is still hot and developers want to move their product as quickly as possible. By the end of 2006, she predicts that California home prices after slipping up and down will wind up 10% higher than last year. This will be in spite of rising mortgage rates, which she sees going as high as 6.7% for a thirty-year-fixed. One thing I disagreed with Appleton-Young about is her prediction about a steep rise in foreclosures as rates jump for those with 1-year, 2-year and 3-year ARMs. I believe that the mortgage industry will be able to respond to consumers trapped by rising interest rates with refi options that incorporate even more creative loan products, like 40-year terms or rates tied to lower indexes. Because San Francisco is rife with condominiums, Appleton-Young’s observations about condos piqued my interest. Essentially, the two major markets for condominiums right now are first timers and baby boomers. These radically different kinds of buyers are served by different kinds of products. For those seeking to get a toe-hold on the market, modest town homes and apartments in new developments like Shipley Square or Broderick Place are perfect options. For the older demographic that can afford more square footage of a higher quality, the Ritz Carlton and the Watermark are offering units with big square footage and luxury amenities. The main types of people buying (and not buying) today? Less active in the market are families who would be trading up—for now they choose to stay put while the market makes price corrections (unless personal circumstances like a relocation or financial reversal force them to move). In the meantime, we’re seeing lots of empty nesters, second home buyers, singles (a rapidly growing share of homebuyers), and multi-cultural and immigrant buyers. To illustrate the strength of the ethnic market, she showed us a chart that listed the most common surnames for Bay Area home buyers in 2005. The top three were “Nguyen,” “Lee” and “Garcia.” Want to know more about the market in your neighborhood? I have all the stats right at my fingertips. Just call me and I’ll send you the information right away. And remember, I can make a real estate purchase or sale easy and fun—so please remember me to your friends and associates who are thinking of buying or selling. |
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Hello My Favorite People! Last week Paragon agents were invited to a luncheon where speaker Leslie Appleton-Young, Chief Economist for the California Association of Realtors (CAR), offered up her real estate market update. What follows are some highlights of her talk, along with my personal opinions of what she had to say and how it relates to our San Francisco market.| Take Me Out To The Ball Game (And Down Third Street) | May 20th, 2006 |
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This colorful slice of San Francisco is set at the base of Potrero Hill’s East side. Its rough borders are Illinois, Indiana, Mariposa and 23rd.. The architecture is a pleasant mix of old workman’s cottages and Victorian flats interspersed with turn of the century brick factories, warehouses and the occasional condominium loft building. I like Dog Patch because of how the neighborhood sits between Potrero Hill and the Bay. The broad streets and topography create clean, wide open spaces with a tang of salty air coming in from the shoreline. The neighborhood’s spine is the Third Street corridor, which runs all the way out to the City’s southern border. Lining each side is a variety of small light industrial businesses along with the occasional coffee shop, restaurant or sports bar. Some of the area’s best known businesses are the Hard Knox Café (awesome soul food) on Third at 22nd; Café Cocomo (outdoor tropical bar and night club) on Indiana at 18th ; and the Just For You Cafe on 22nd at Third. Because the area feels deceptively remote, you can get a little more bang for your buck out here on a loft condominium, with asking prices averaging $650/square foot (compared to $690 in SOMA). A recent check on inventory uncovered units in the $575-650K range for lofts that ranged from about 775-1100 square feet. This is also a good place to look for a set of flats or a small mixed use building. Paragon just had a good-looking set of flats with parking on Third for sale with five rooms up and a tenant occupied unit down that had possible zoning for office or small business use. Listed for $799,000, it sold very quickly.. My favorite loft building in Dog Patch is 701 Minnesota, a brick warehouse conversion with a lush central courtyard. Two blocks away, another brick building that originally housed a wine cellar (and served as the Esprit Clothing headquarters), is slated for condominium conversion. Plans right now are to turn the property into 142 new condominiums. Another large project is underway on Illinois between 19th and 20th. One great reason to keep an eye on Dog Patch is the new light rail system which is slated to open later this year. Once completed, Muni trains will roll you swiftly right into the CalTrain station at Townsend and 4th. The new line is also beautifying the neighborhood, with broad median strips and new curbside landscaping. But don’t expect Dog Patch to become the next South Beach. In spite of the cosmetic changes, the City is committed to keeping this stretch zoned light industrial. It’s unlikely that Third Street will become a real pedestrian district offering goods and services within easy walking distance. Wanna know more about lofts in Dog Patch and the surrounding neighborhoods? Call me and I’ll answer all your questions. And keep me in mind when you’re ready to make a move! Cece Blase |
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Hello My Favorite People: With all the chatter about Mission Bay and the new housing on Berry and King Streets, it’s easy to overlook the changes afoot just south across the Lefty O’Doul Bridge,in a neighborhood best known as “Dog Patch.”| Should You Have Bought Last Year? | May 15th, 2006 |
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At our last sales meeting we studied how the San Francisco real estate market has fared for the first four months of this year when compared to the first four months of last year. Here’s what we found: Single Family Homes – In the first four months ’05: -There were 834 single family home sales -The average selling price of a San Francisco single family home was $1,108,521. -It 32 days to sell and sold for 112% of its asking price. In the first four months of ’06: -There were 707 single family home sales -The average selling price of a San Francisco single family home was $1,155,507. -It 40 days to sell and sold for 102.05% of its asking price. ************************************ Condos – In the first four months of ’05: -There were 831 condominium sales. -The average selling price of a San Francisco condominium was $831,170. -It took 30 days to sell and sold for 109.32% of its asking price. In the first four months of ’06: There were 786 condominium sales. The average selling price of a San Francisco condominium was $832,819. -It took 45 days to sell and went for 100.3% of its asking price. **************************************** 2-4 Units— (also known as “residential income”) In the first four months of ’05: There were 261 residential income sales The average selling price of a residential income property in San Francisco was $1,257,516. It took 43 days to sell and went for 106.22% of its asking price. In the first four months of ’06: -There were 217 residential income sales -The average selling price of a residential income property in San Francisco was $1,385,226. -It took 53 days to sell and went for 100.94% of its asking price. *************************************** I am not including TIC’s as part of this study. If you would like info on how the TIC market has fared, please call or email me. This is only part of the data we studied. I also have on hand median prices, and what the highest and lowest prices were within each category. Plus, we have this new killer statistical program that can churn out all kinds of flow charts showing how the market performs in different ways from year-to-year. If you have a specific question about statistics or raw data for your neighborhood, please ask. I can probably get the answer for you pretty quick. Know anyone who is thinking of buying or selling in San Francisco? I can make a real estate transaction easy, painless, rewarding and even fun! So tell your friends. . . . Thanks! Cece Blase |
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Hello My Favorite People:| Pied A Terre Anyone? | May 6th, 2006 |
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Are pied-a-terres good Investments?? Between 2000 and 2004, the annual number of second homes purchased in the United States doubled. Vacation homes and pied-a-terres now represent 14% of the total housing market. Second homes have also enjoyed an average 55% appreciation over that same period. There are some fine tax advantages to second home ownership. Provided you spend enough time there each year, the mortgage interest is tax deductible. The property can also become your principle residence and qualify for your $250,000 ($500,000 for married couples) capital gain exclusion when it comes time to sell. And second homes can diversify your portfolio if you need to round it out with more real estate. I’m not a tax expert, but I can send you some links to a few great articles about the tax benefits of second home ownership. One article, “Playing the Gain Exclusion Game” is a fun read, if you want to fantasize about owning several second homes and then selling them off at a handsome, nearly tax-free profit. What about a pied-a-terre in San Francisco? In San Francisco the demand for pied a terres has grown significantly over the past few years. Small condos in premium neighborhoods used to be the ideal first home. Now these units are more often sold to empty nesters or professionals who are in and out of the City for business. It’s an interesting market transition to watch as people sell the place they call home over to Buyers who plan to live there only part-time. For those of you interested in San Francisco pied-a-terres, here is a handful of building that offer good values and an ease of living. These options represents just a fraction of buildings that serve the pied a terre market. If you’re in the market for something special, let me know and I ‘ll tell you what else is available. This list only includes full service buildings with 60+ units. My experience with pied a terre buyers is that they generally want something “turnkey” that they don’t have to worry about when they’re out of town. The links will take you to information about actual units available in the buildings now. Please note: When I emailed this information to my Buzz subscribers, they got direct links to online presentations of these properties. If you want more in-depth info it’s always better to sign up for The Buzz.Some pied-a-terre options in San Francisco The Hamilton Apartments - 631 O’Farrell. Studios and 1-Brs starting at $325,000. This downtown location near Union Square used to be considered pretty scrappy. Now it’s best known for its great proximity to theater, shopping and transportation. The Hamilton has elegant 1920s styling with an ornate lobby that makes you feel like you’ve walked right into a Dashiell Hammett novel. Since The Hamilton used to be a hotel, most of the units are small efficiency studios, with plaster walls, high ceilings, arched doorways and clever built-ins. You can’t beat the prices or the association fees. Studio sales have been in the $325-375K price range over the last six months. Prices are view dependent—the higher priced units offer spectacular views to the west and south. One of the most recent listings available at the Hamilton was #1104, listed by Paragon. Please email me if you would like more information. Alas, the Hamilton offers no parking. *********************************************************** The Brannan 219-229-239 Brannan – 1-brs starting at $625,000. I like to say that people who live at the Brannan in South Beach think they’re really smart and people who buy at The Brannan think they’re really lucky. There are buyers who think this development is so special that they refuse to look at anything else in the City. It’s easy to see why— a gracious rotary entrance, quality finishings, fantastic staff, and a swimming pool in a setting that evokes shades of a tropical resort. Again, prices at The Brannan are view-dependent– some units offer dramatic vistas of downtown, the Bridge, and/or the Bay. No view and the prices for a 1-br can hover in the low to mid-$600’s. Some view and they jump into the high $600’s. Lots of view and they top $700K. If you want more than one bedroom, the price jumps again into the $900’s and moves all the way up to nearly $2M. I have a jewel of a pied-a-terre at The Brannan listed for $729,000—this is an amazing value for a place with some a-m-a-z-i-n-g views. Email me and I’ll send you more information. The average price per square foot for view units at the Brannan right now is $1,150.00. We’re coming in a good notch below that, at about $1,000/sf. *********************************************************** Opera Plaza - 601 Van Ness - Studios starting at $355,000. Opera Plaza is so big (455 units) that there’s always plenty to choose from here. People buy here because of its easy freeway access and good public transit. Many of the second home buyers here are using their places as landing pads for when business brings them to the City and they don’t want the hassle of staying in a hotel. One of the best things about Opera Plaza is that it’s self-contained with lots of goodies to enjoy right on site. Max’s Diner is here, along with a great independent movie theater. You can also grab a Peet’s coffee or hang out at A Clean Well-Lighted Place, one of the City’s best book stores. Opera Plaza also benefits from its proximity to the San Francisco Ballet and the San Francisco Opera, as well as the burgeoning Hayes Valley neighborhood with all of its cool little boutiques and restaurants. Built in 1982, Opera Plaza is not what I’d call a ‘sexy building’ but it does give you great bang for your buck. A 522-sf studio just closed in February for $355,000 and 1-brs are for sale under $500,000. Email me about Opera Plaza and I can send you info on what’s available with interior and exterior shots. Opera Plaza homeowner’s dues run from about $450-$575/month depending on your square footage. Some of the units are lovely, large town homes with 1200+ sf). Parking is leased at $250/month (if you’re only here part-time you might want to consider renting by the day). *********************************************************** The Bellaire Tower 1101 Green – 1-brs starting at $650,000 (when they come up). The Bellaire is an Art Deco wedding cake building set high atop Russian Hill at the corner of Green and Jones. I always get a lump in my throat when I stand at this intersection. Sometimes I even go park there just to play my Tony Bennett CD and hear him sing about the “cable cars climbing halfway to the stars” (shhh! Don’t tell anybody). Each of the building’s 17 stories has 4 apartments on each floor (except the penthouse floor which is presently occupied by our startlingly attractive mayor, Gavin Newsom.) The apartments all have roughly the same lay-out – about 925 square feet with corner windows, one bedroom, one bath, and a formal dining room. Lots of lovely 1930s trim—tile, hardwood, mullioned windows. People love it so much here that stuff rarely becomes available. According to MLS, there have only been 3 sales in this 65-unit building in the past year. Right now there is just one for sale, #303 listed for $749,000. It has some decent water views. Email me and I’ll send you more info. *********************************************************** Show me more! This is just a taste of what’s available to the pied-a-terre buyer. There are tons of other locations to consider— The MLS reveals over 60 different addresses when you search one-bedrooms under $1M in better neighborhoods (north side and South Beach). Each place is a little different and I can tell you about every one of them. So call if you have questions about a particular building or location. I plan on doing quick reviews of another dozen or so pied-a-terre buildings in future “Buzz Exclusives” available only by email. Let me know if you would like to see specific buildings covered. See you next week! |
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This posting covers the topic of San Francisco pied-a-terres and talks about a handful of buildings that I think offer good pied-a-terre options.
