Home ownership in “the best place on earth” is a solid investment even in shaky economic times. The median price for single family homes and condos in San Francisco jumped from $780,000 to $810,000 between March 2006 and March 2008.  

Like any real estate market, we have month-to-month fluctuations. But compared to other markets across the country, we clearly have a continued historical strength and resilience in our local market.  And San Francisco continues to be one of the most coveted real estate markets in the country.

There’s lots to choose from, interest rates are low and San Francisco continues to be one of the best performing areas in the entire country. If you can afford it and are ready for the ‘five year hold rule’ it’s a great time to buy.
 

Posted in Investors, Market Conditions | No Comments »

Our business development guru loves to sift through statistics. Here is some information he found about prices going up and down in certain neighborhoods.  The District numbers he refers to come from our Board of Realtors Map.

District 5 reached a new high in median home price in March 2008: $1,125,000Districts 3 & 10 posted their lowest median sales prices in the past 2 years–District 3 is down $123,000 from its median in 3/06; its median sales price is now $566,000

District 3 combines more expensive neighborhoods with sketchier ones– like tony Lakeshore (as in Lake Merced) and Pine Lake Park (near cute part of Ocean Avenue between 19th and Junipero Serra). Some lower-end locales in District 3 are Oceanview and Ingleside Heights– please keep in mind that in any edgy neighborhood you get the good mixed up with the bad. I know solid folks who have lived in these areas for many years on quiet tidy blocks with neighbors that truly care about their homes. Alas, these neighborhoods tend to be in fog belts.

District 10 neighborhoods swing towards the Daly City border. They are: Bayview, Crocker Amazon (which has some lovely architecture and tree-lined streets), Excelsior, Outer Mission, Visitacion Valley, Portola (some great views here), Silver Terrace, Mission Terrace (which also has some nice curved blocks and 1920s-30s architecture), and Hunters Point.  These neighborhoods are a mix of sun and fog– Bayview tends to be quite sunny, and Silver and Mission Terrace can be more socked in.

Posted in Market Conditions | No Comments »

Dorian Sarris of Americorp Funding delivers this update on the mortgage front:

The Fed lowered the rates by .25 point yet again, which is not terribly exciting to buyers seeking a new loan or owners wishing to refi. While any kind of rate cut is a good thing, it rarely has an immediate impact on mortgage rates.

Some good news is that lenders are loosening their requirements a bit and that 90% loans with decent rates are available from some lenders. We have a great lender now who can do 80% limited doc on interest only for 5 years to well over $1,000,000. So call us for specifics. I hope you are having fun out there, and we look forward to helping you and your clients, as always.

Dorian can be reached at 415-544-2609.

Posted in Mortgage Meltdown | No Comments »

In case you’ve been wondering why high-end real estate markets continue to perform relatively well:  One out of every 10,000 American families has an annual income greater than $10.7 million, according to two university professors who study the super-rich.  By their tally, there are some 15,000 Americans who fit into that category.  These individuals also are getting an increasing share of the economic bounty:  In 2006, the super-rich possessed 3.89 percent of total income, up from .87 percent in 1980 and the highest level since 1916.

Posted in Market Conditions | No Comments »

Urban real estate markets like San Francisco which feature short commutes fare better than those suburban neighborhoods where homeowners drive significant distances to work.  It seems that the longer the commute, the greater the drop in existing home prices. Investors who believe the cost of gas will continue to rise may want to focus on neighborhoods close to the City’s core– or explore areas well-served by public transit in and out of the City (think BART and CalTrain).

With gas prices skyrocketing, more buyers are taking driving distance and the time they spent commuting into consideration when they look for a home.  Maybe this is why the new construction in San Francisco continues unabated. Our new housing is also meeting demand from the growing market of empty-nesters and younger singles.  With the percentage of couples with children declining, the trend toward suburban living is expected by some to continue to moderate even after the housing market recovers.

I also see a correlation between close-in locations and higher rents– highrise buildings within walking distance of the Financial District (like 199 Montgomery, 246 2nd and The Metropolitan at 351-355 1st) command some of the highest rents per square foot in the City.

In the meantime, those who decided to “drive until they could buy” and purchased in places like Antioch and Brentwood are suffering a double-whammny with an expensive daily commute on top of their declining home values.

You can hear more on this story at NPR

Posted in Miscellaneous | No Comments »

As ARMs reset, little of the expected chaos is coming to fruition.  Worries that subprime mortgages would sideswipe borrowers with giant monthly payment increases have been reduced by Federal Reserve rate cuts and other steps to stimulate the nation’s credit markets.  In fact, some borrowers with resets occurring today are finding their monthly payments staying much the same.

A little background for first-timers or those just sticking their baby toe into the real estate market:  Back in the day when real estate prices skyrocketed and money grew on trees, many Adjustable Rate Mortgages (ARMs) started with absurdly low introductory rates that were scheduled to jump at the end of a one-or-two year introductory period. The new rates were generally tied to a  Treasury or London Interbank (Libor) index, with the mortgage rate typically set at 2 to 6 percentage points above that index rate.  Thereafter, the rate is scheduled to adjust annually.

The good news is that Libor rates have been stable, thanks in part to the actions of the Federal Reserve to lower interest rates.   For example:  Let’s say a borrower in Spring 2006 obtained a mortgage indexed at five points above Libor (then at around 5 percent).  That would have meant an indexed rate at that time of 10 percent.  However, a two-year introductory rate capped the payment at 8 percent.  As of last week, Libor was at 3.08 percent, which means this fictional mortgage would reset at 8.08 today – only a slight change for the borrower.

You can read the full story in SFGate.

Posted in Mortgage Meltdown, Investors | No Comments »

With prices falling in many parts of the country and the number of foreclosures rising, a small yet growing number of bargain-hunting buyers are seeing an upside to the real estate market. Here are three categories of buyers who see silver linings in all these thick clouds of foreclosures.

First Time Buyers - Beyond the Bay Area and California’s borders there are happy stories about first-time homebuyers who used to be frustrated by the pricey market of yesteryear. Today, they are among those most attracted to real estate today.  In November 2007, 39 percent of buyers nationwide were first-timers, up from 36 percent in 2006, according to NAR. 

In San Francisco, first-timers on a budget head to neighborhoods in what we call “District 10″ — places like the Bayview, Portola and Silver Terrace neighborhoods. (See my sale in the Bayview for an example of the kind of deal you can get in these neighborhoods today).  Within San Francisco, these neighborhoods have the highest foreclosure rates (although they are not nearly as bad as other parts of the country).

International buyers are also jumping into the market. In San Francisco, we hear all the time about Pacific Rim buyers snapping up the high-end units in luxury buildings like the Infinity or the Millennium.  Foreign investors also looking at opportunities in the U.S. real estate market because their Euro goes so much further– declines in the value of the dollar against other currencies and lower prices translate into a discount of up to 30 percent for some foreign buyers.

Investors also cross state borders, seeking bargains in those markets hardest hit by the real estate downturn.  Some even buying properties sight-unseen for conversion to rentals until the market heats up again – a risky proposition, according to some observers.

You can read the full story in USA Today–

Posted in Buying Strategies, Investors | No Comments »

This email message was forwarded to me from Dan Baker of Countrywide (yes Countrywide was sold to BofA, but the complete transition hasn’t happened yet). It comes from Tony Machado of RC Appraisal.

As many of you know I have been saying for quite a while now the housing market is showing some momentum in the right direction and the purchase market without a doubt is picking up.  What I am tired of is listening to the Media who are constantly putting out a negative message.

In my business alone more than 50% the assignments in Q-1-2008 have been purchase transactions.  To give you a comparison, in Q-4-2007 purchase assignments were less than 10% of my business.

Just this morning I completed a market analysis in Antioch showing that in 2007 based on the subject CMA (comparative market analysis) there were a total of 3 sales in all of 2007.  In Q-1-2008 based on the same criteria there have been 9 sales which translates to a 300% increase!  By the way a CMA analysis is based on just a 1 mile radius of the subject property and only criteria which fit the subject parameters.  I could analyze the whole City but you get the point.

I’m certain that Tony’s appraisals aren’t coming in nearly as high as they were before the mortgage (and market) meltdown of last summer, but higher sales activity translates into higher demand, which will ultimately draw down the oversupply. Low supply/high demand means a gradual increase in prices.

Of course all this hinges on a decline in foreclosure sales so that less inventory come on.

Posted in Mortgage Meltdown, Market Conditions | No Comments »