San Francisco Real Estate Properties

One’s perception of the San Francisco market is a bit deceiving without looking “behind the numbers” today.  No one has had to really look “behind the numbers” when there is high demand and low inventory.   One can gauge the market by how quickly properties sell (looking at the DOM - days on market). 

 

As in any market, if two comparable properties come on the market in a particular neighborhood at the same time and one sells and the other one doesn’t….it is pretty easy to determine that either the marketing, the price, the terms, and/or the condition attracted the buyer(s) to one property vs. the other. 

Without looking beyond the graphs, the averages, and the medians, one is unaware the number of properties that are selling quickly from those that are taking their sweet old time.

To understand which market a seller is in and/or buyer is looking in, one needs to separate the days on the market, not by price range but by speed. 

You can imagine “How’s the roof?” would be a common question I would receive during a rainy Sunday Open House. 

 

Unlike other parts of the world, San Francisco’s rainy season is considered from October through April with an average annual rainfall of 20.4 inches per year. During the rest of the year, our San Francisco streets may be wet in the early morning, although we just call that “fog dew”

 So selling homes in San Francisco during the winter may be considered as the perfect time of year to test if the roof is currently leaking or not by looking for the tell tale signs of discoloration on the ceiling, around skylights and windows.  Inherently a “good” roof can leak if the gutters, scuppers, and downspouts are clogged and water finds its way in.   I like to remind Sellers that prudent Buyers will locate those areas on the exterior before walking into an Open House.   As the agent holding the Open House (and especially if it is raining), I customarily have the San Francisco Sellers’ Disclosures out in plain view for Buyers to review.   

I highlight the six questions in the disclosures asking the Seller to disclose his knowledge of any present or past water inclusion; even leaks have been repaired and/or stopped.  Below are two of the six questions about water inclusion:       

As in any time of the year, I recommend to Sellers to have their homes staged and rooms freshly painted before the property goes on the market.  Areas of past leaks will most likely be concealed, so it is extremely important for Buyers to not just look for leaks and read the Seller’s disclosures. 

Of course, for Sellers and Buyers to really understand what they are selling and/or buying, it is always prudent to have an expert do a written physical inspection of the property. If the report states the roof is near the end of its useful life or shows signs of present or past leakage, I always recommend to get a further inspection from the best roofer in town whether I am the Seller’s agent or the Buyer’s agent to really know, “How’s the roof?” 

As we begin January 2008, the numbers of homes on the market in San Francisco are far greater than there were this time last year.  Now don’t read too much into this statistic just yet. 

  

During the last half of the 4^th Quarter, San Francisco Sellers are notorious for taking their properties off the market just before Thanksgiving if their property had not sold.  Many of these Sellers would rather wait until the New Year to put their property back on the market than to become stale on the market during the holidays.  Between November 1^st and December 31^st in 2006 152 homes and 284 condos/co-ops/lofts/TICs were withdrawn from the market and during this same time in 2007, 175 homes and 353 condos/co-ops/lofts/TICs were withdrawn from the market in hopes of re-surfacing in 2008 as fresh new listings.

During this same time, every year there is another group of San Francisco Sellers that dare to put their property on the market in November and December to find their properties snatched up by “holiday” Buyers eager to own a property before the end of the year.  In 2006, 69 single family homes and 79 condos/co-ops/lofts/TICs come on the market and closed between Halloween and New Year’s Eve.  This past year in 2007, 39 single family homes and 55 condos/co-ops/lofts/TICs came on the market and closed in less than 60 days. 

Both years, the Buyers that stayed in the market may have had less competition than those Buyers that took some time off during the holidays, yet  not surprisingly the single family dwellings and the condos/co-ops/lofts/TICs  sold 103% and 102% respectively above their asking prices (with three having undisclosed selling prices).

With all that said, generally speaking, the 4th Quarter 2007 was a bit different than in 2006 as more Sellers were unwilling to play that game of withdrawing their property from the market during the holiday season and losing their property’s exposure. 

The “New Year” Buyer will come back from the holidays (after getting in some snow-time on the slopes) to see some familiar homes still on the market and I suspect, a few more will slowly be coming back on the market as well.

After finding your dream home on the internet in your price range - the one with lots of pretty pictures, you are ready to take that “Grand Tour” of the neighborhood.  

After all, you need to check out the curb appeal and whether or not you could really live on that side of the street and/or that end of the street on that block in that neighborhood.   Without checking out the neighborhood, how else are you going to find out how far is it to the nearest bus stop when you are running late in the morning and how far a walk to the neighborhood commercial area to get a latte in the morning or where you would walk the dog?.  

In a recent post “One Way to Buy Real Estate in San Francisco”, I suggested driving a neighborhood has its advantages of spotting properties that may be coming on the market and probably have not yet hit the internet.

Case in point - I took this picture in the Marina originally on September 25, 2007 with the moving truck and workers in front of the house where the arrow points for my October 4^th post.

On Friday, October 5^th, this 4 bedroom with 4.5 baths home came on the MLS for $3,495,000.

By Friday, October 19^th, 14 days later, the MLS showed an accepted offer and opened escrow as “Active Continue to Show” which usually means there are some contingencies that need to be met before closing.

By Monday, October 29^th, 10 days into the escrow, the MLS showed the property as “Pending” which usually means that there are no contingencies and the property and the parties are preparing to close escrow.

On Thursday, November 8^th, 20 days into the escrow and a total on 34 days on the market, the property closes for $3,495,000*  - noting there is an asterisk after the sales price.

So, “Who’s Market Is It Anyway?” and “Why An Asterisk After Some Sales Prices in the MLS?” 

To start at the beginning, the asterisk became a term of the sale either as apart of the accepted offer or sometime during the transaction.  Both the Buyer and the Seller agreed that the sales price would not be disclosed to the MLS and would be hidden on the public records at the close of escrow. 

Perhaps the real question is from whom would both parties want to hide the sales price? 

The answer might be to protect one’s privacy from someone  - i.e. nosy family, friends, and/or neighbors, disgruntled ex-spouses or creditors, employers’/employees’ chit chat, the media, etc. etc. (?)

In the real estate world, the reason may have been that the Seller sold the property so high over the asking price that it was a bizarre one time event, or the Buyer bought the property so low under the asking price that it was embarrassing to the Seller and/or so awkward to disclose the real sales price to the unsuccessful bidders (?) 

In any case, without disclosing the real sales price the MLS, Zillow.com and Trulia.com and other’s sales comparable data bases become eschewed and it makes for juicy cocktail “real estate” talk.  After all so far in 2007, there have been 51 MLS sales with undisclosed sales prices.

To hide from curious eyes, one’s sales price from the San Francisco MLS and the public records is actually quite easy to do prior to the close of escrow.

Both the San Francisco MLS and the escrow holder will need mutual instructions from both the Buyer and the Seller:

(1).   The San Francisco MLS needs a letter from the listing agent signed by the Buyer and the Seller stating the sales price is not to be disclosed by the MLS at the close of escrow and naming the sales date and the Buyer’s agent.  The MLS will then enter into their San Francisco MLS database the asterisk to the current asking price as the sale price on the closing date.

(2).   Buyer and Seller will instruct their escrow holder to prepare the Grant Deed for recording at the close of escrow by adding the notation “See tax on separate sheet” to “The undersigned grantor(s) declare(s) the Documentary Transfer Tax is … “.  The City and County of San Francisco’s Recorder’s Office will accept the notation as long as the documentary transfer tax paid on the actual sales price stated on that separate sheet at the time of recording. 

By the way, it may take those curious eyes several years to be able to approximate the actual sales price at time of sale.   When the time comes that the San Francisco Tax Assessor has finally computed the Supplemental Taxes, several tax years have passed.  By that time, the current tax bill will show only the current total assessed value of the property for public to see. 

Question: Would this be a term of sale you would consider or agree to do?

It has always intrigued me how the city of San Francisco had settled and developed. Along a rolling countryside, in the late 1800’s and perhaps into the early 1900’s the favorable sunny weather on this leeward side of an eastern slope was home to farms and stables.  This easterly hillside is still dotted with some large homes on large lots from that era with the best views of the East and South Bay!

This “hidden” neighborhood (highlighted in blue) is named “Portola Extension”, because the homes and the views on these streets are so similar to those to the North that you would think you were in the Portola District of San Francisco.  The Portola District(pronounced by its residents is “Por’-ta-la) is located between Highway 280 to the North and Highway 101 to the East and Mansell Street to the South and the Western side of Mc Laren Park and back down to Highway 280 to the West.

Need I remind you to take your camera with you after sunset this week?

If you recall, last month in my article entitled “Did You Know San Francisco Celebrates the Moon?”, I said that Thursday, October 25, 2007 will once more be the perfect photo opportunity for us to take pictures of the Hunter Moon over San Francisco.

This is the last time this year that we will be able to take pictures at a decent hour from our every own San Francisco neighborhood street corners of the moon.

On Thursday evening, the moon will be rising at 5:51 P.M. while the sun will be setting 6:20 P.M. and dark at 7:17 P.M and a full Hunter Moon at 9:52 P.M.

Have fun. I’ll share if you share.

This is a continuation of “Part Two-Wait and See or Get In Now?”

In any real estate market and especially in San Francisco, the best properties sell first. In fact, the best location in the best condition at the best price sell the fastest and that is why the new mantra “Price, Condition, Location” is king today.   

I may be preaching to the choir when I say in San Francisco no one can ever under-estimate our real estate market, after all some properties don’t come on the market for generations.  This especially is true in the neighborhoods of Noe Valley, Eureka Valley, Presidio Heights, Pacific Heights, Russian Hill, Nob Hill, Cow Hollow, the Marina and North Beach/Telegraph Hill.  If you are a serious buyer in these neighborhoods, some of these properties come on the market and off the market in a matter of days or hours.  When this happens condition and price become secondary.   

With that aside, in this San Francisco market two things are emerging that Buyers that have been on the fence need to know now: (1) Our inventory for sale is increasing steadily. (2) We have just moved into a Buyers market for the first time all year. 

Both San Francisco’s Sngle Family Homes and Condo, Co-ops, and Lofts for sale inventory are mounting with the summer’s left over inventory and the seasonal new fall inventory are now outpacing the number of fall sales.   For the first time in years, Buyers are able to pick and choose what they want to buy and ultimately negotiate the best possible price with more and more motivated Sellers with properties not selling.

 

The above chart illustrates how the number of Single Family Homes listed for sale have been growing (Year-to-October 20, 2007) in San Francisco.

Now see how the Condos, Co-ops, Lofts, and TICs combined have been steadily inching up throughout the year, as well.

 

The above chart illustrates how the number of Condos. Co-ops, Lofts, and T.I.Cs on the market have been increasing (Year to October 20, 2007) to give Buyers more selection of properties to buy in San Francisco. 

Now, a quick look at one way to spot “the windows of opportunities” using the Market Action Index (MAI). 

The MAI charts illustrate the balance between supply and demand using a statistical function of the current rate of sales versus current inventory (similar to absorption rate).  A MAI value greater than 30 typically indicates a “Seller’s Market” (A.K.A. as a “hot market”) because demand is high enough to quickly gobble up available supply. A “hot market in San Francisco” will typically cause prices to rise and/or cause Buyers to anticipate multi-offer scenarios and they will write their offers over asking thus giving Sellers’ their highest possible price. MAI values below 30 indicate a “Buyer’s Market” (a.k.a “Cold Market”) where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A “cold market in

San Francisco” will typically cause prices to fall and/or cause Buyers to be able to negotiate with motivated Sellers to get their best possible price at or below theSeller’s asking price.

Each of the MAI charts (below) are shown by quartile to demonstrate how different price points react to the MAI.  Each quartile is 25% of the properties on the market.  Most expensive 25% of properties are in the first quartile, the upper- middle 25% of properties are in the second quartile, the lower-middle 25% of properties are in the third quartile and the least expensive 25% of properties are in the fourth quartile.

 

Both the San Francisco Single Family Home for sale inventory (see chart above) and the Condo, Co-ops, Lofts, and TICs for sale inventory (see chart below) have been trending down into a Buyer’s Market (below 30 on the chart above) in the last several weeks that puts Buyers in the driver’s seat for the first time all year.  

San Francisco Buyers are suddenly realizing that by sitting on the fence they will be missing out on this terrific “window of opportunity” to get into the San Francisco real estate market before the end of the year while interest rates remain at near-historic lows and finally, they can be choosy and maybe even a bit more commanding (?).

If the steady stream of visitors at my Open House on Sunday on Telegraph Hill in North Beach 

was any indication of how the real estate market is in San Francisco, maybe Buyers are finally realizing that it may be a really good time to get back in .

The old adage “Location, Location, Location” has now been replaced by “Price, Condition, Location”.  And the Buyers out on that warm sunny afternoon checking out the inventory knew the new mantra. 

 

Maybe these potential Buyers all came up the Hill to see me on Sunday at my Open House because of reading the Ben Stein article Gloom Sayers Should Look Up in the Sunday New York Times while slipping a café latte out in front of Caffé Greco  before strolling up to  Caffé Trieste  to chat with the die hard locals over an espresso.     Maybe it was then that these potential Buyers on that Sunday morning thought to themselves, “Let’s give it one more try.”  If they were really going to be a part of this neighborhood, they wanted to own apart of it too.   

So I imagined, out in front of Caffe Trieste, they got down to business circling the open houses in the Sunday Chronicle’s Open Home Guide.  Having done this drill before, these Buyers knew to look under both North

Beach and Telegraph Hill in the Guide before heading out by foot to find their dream home in paradise on another wonderful sunny afternoon. 

In the North Beach section of the Guide, there were 8 properties that were open for viewing that ranged in prices from $539,000 for a one bedroom condo to $1,799,000 for 2 units on  Washington Square.  

And in Telegraph Hill section of the Guide, there were 7 properties open that ranged from $419,000 for one bedroom Tenants-In-Common (also known as a TIC, I’ll explain this type of ownership in another article) to one of those “ essence of San Francisco” view homes that I was holding open for $3,695,000 (4+ bedrooms and 4.5 baths with a rare 2 car garage on Telegraph Hill) with fabulous views of Nob Hill, Russian Hill, and the Golden Gate Bridge (similar to the view I have in one of my sanfranciscorealestateproperties.com website’s rotating header pictures). 

Continue on to “Part Two- Wait & See or Get In Now?” to determine what is right for you. 

Here is a way to start a buzz in the neighborhood and to attract Buyers that are already looking for a home in your neighborhood. 

This “Coming Soon” rider on a For Sale sign was posted on October 9th.  Today, behind this sign, a 5 bedroom with 4.5 baths Marina home hit MLS for $7,950,000.

While you are preparing your property for sale, take advantage of all the commotion out on the street as my post “One Way to Buy Real Estate in San Francisco” also points out.