Monthly Archives: November 2008

Rocky Reduction on Dolores

Billed as a “Romanesque Victorian,” 1507 Dolores at 28th is a 3BR/3BA with a family room on the garage level.

The property hit the market back in December 2005 at $1,325,000, was withdrawn for the holidays and the current owners purchased it for $1,310,000 in early 2006. Most recently, 1507 Dolores came on earlier this month at $1,350,000, only to reduce the price late last week to $1,295,000. That $55,000 discount should give you a head start on the faux stone removal, don’t you think?

Is Anyone Buying Property in San Francisco?

Despite the low November sales volumes and poor economic outlook, many people did enter into purchase agreements last week in San Francisco.

Fifteen single-family homes went into contract from 11/17-11/21, according to the San Francisco Multiple Listing Service (MLS). The average list price was $995,000, and the homes ranged in price from $359,000 for a one-bedroom property in the Excelsior, to $2,749,000 for a four-bedroom home in Sea Cliff. Average days on market? 47.

On the condo front, 14 units went into contract, with an average list price of $718,000. The units ranged in price from $438,000 for a SoMa one-bedroom foreclosure sale on Clementina (which received seven offers—four of which were over the asking price) to $1,495,000 for a new-construction, three-bedroom unit on Filbert Street in Cow Hollow. The average days on market for these 14 units was 57.

Finally, the tenancy-in-common (TIC) market showed signs of life, with eight TIC interests going into contract. Average list price was $628,000, and the most expensive unit was listed at $1,000,000 for a two-level, remodeled TIC in a two-unit building in the Central Richmond. The average days on market for these eight TICs was 44.

The past week’s activity kind of sums up things for San Francisco real estate these days: Buyers are out there, but they’re taking their time writing offers. However, there is still plenty of time for buyers to do their due diligence, work through loan approval, and complete a property purchase before December 31st.

SF Sales Volumes Dip Dramatically

I know I’m supposed to be all rah-rah when it comes to the San Francisco real estate market, but the sales numbers for the time period of November 1-20th demonstrate the impact the economic downturn has had on our market.

Just in terms of units sold, there were only 76 single-family homes sold vs. 121 in the same time period of 2007. On the condo front, 47 properties changed hands this month, compared to 119 sales in 2007. And TIC sales really dropped, with four TICs selling this month vs. 29 in 2009.

Yes, there are sales pending, and a bunch of properties have gone into escrow this past week. But really, the only buyers out there now are the ones who have been looking and are qualified to buy. I am working with a few such individuals, and am out to get them the best deals possible. It’s nice to be in the driver’s seat with buyers, for the first time in a while.

The Artani Goes Rental

I wrote recently about my visit to The Artani, a new high rise on Van Ness Avenue with high-end finishes. Well, after several weeks of poor sales results, The Artani’s developer has decided to rent the units until the market recovers a bit. For your Van Ness corridor residential needs, there’s still Symphony Towers, a mid-range high rise that’s recently slashed its prices. You can get a 1BR with parking in the high $400,000s. Not too bad. If you can put up with the busy location, but focus on the fact that Hayes Valley and San Francisco’s cultural center are short walks away, renting or buying on Van Ness may work—at the right price.

My Millennium Tower Tour

I recently took a hardhat tour of the Millennium Tower, a luxury high rise on Mission at First Street. The building is still under construction, and none of the units are actually finished yet. Our tour mainly included viewing the penthouse and upper-level spaces, as well as a few of the units in the second, less expensive building. Move-in dates are not expected to be until May or June of 2009.

To give you a sense of pricing, a 3300-square foot unit on the 26th floor in the “Grand” residence building was listed at $5.7M and is in contract. It has a dead-on view of Treasure Island, and features two bedrooms, two bathrooms, and an area that could be used as an office. Another 1652-square foot unit on the same floor is listed at $2.1M, but that mainly had buildings for an outlook.

I also had the opportunity to see the 57th-floor penthouse, which was literally a shell—and already in contract. The unit didn’t have the drywall up at that point. Listed at $12M, the penthouse is almost 6,000 square feet. Its new owners will be paying to finish the unit themselves; at a typically $500-$800 per square foot renovation average, that means adding another $2M or so.

Over at the “City” residences in the second, lower-scale building, a third-floor, one-bedroom unit with a “flex” space and 1,395 square feet is listed at $1.4M. And another 1778-square foot, one-bedroom unit on the same floor with ten-foot ceilings is listed at $2,170,000.

The ground floor will feature a new restaurant by Michael Mina, as well as a resident-only Sports Club L.A. with about 5,555 square feet. There will also be a private dining room, where residents can have Michael Mina cook for their guests, as well as a wine tasting room shaped like a wine barrel.
Homeowners association dues run from $600-$1800, and are lower than some of the other luxury buildings in town because Millennium isn’t connected to a hotel. (Hotels require earthquake insurance, which significantly raises the insurance for the HOA.) Thus far, the Millennium office says that 85% of the buyers they’ve worked with have been from The Bay Area, and 70% are purchasing units as their primary residences.

The bottom line? Millennium is great for those with a portfolio of real estate, and a taste for ostentatious luxury. However, in the current economy, it remains to be seen how many buyers fall into that category. And if they do, would they rather have a nice house in the north part of the city, vs. a unit?

No Shortage of Estate Homes in Noe Valley

When I was first selling real estate seven years ago, I remember looking at my Tuesday broker tour lineup, and noticing that there was actually a house listed at close to $1M. This was a pretty high price for my neighborhood. It hit me today that there’s now a collection of 15 single-family homes currently available for $1.8M+, and one condo for $1,895,000. At the top end of the lineup is 3816 22nd, the renovated firehouse listed at $5,975,000, but the bulk are between $2,450,000-3M.

On the “solds” front, three single-family homes have sold since September 1st at $1.8M or above. The most expensive was 625 Duncan, a 5BR/5.5BA home that closed escrow on November 7th for $5,818,000 in an all-cash transaction.

Buyers in Hiding for SF Hideaway Homes

I stopped in at two very charming and unique cottage properties on a broker tour in mid October, and followed up to see how they were doing. Well, it turns out they’re both still on the market.

22 Bergen is a 3BR/2BA home with one-car parking, listed at $1,250,000. The house is at the end of a cul-de-sac, just off Hyde. The location alone should’ve sold this property by now, and it appears to be in good condition. I thought it was a nice condo alternative for those buyers who want to be in the Russian Hill/North Beach neighborhoods. But at more than $1,000 per square foot, it might be a tough sell.

Also heavy on the charm is 221 Greenwich:

This is a remodeled home listed at $1,975,000 that smacks of classic Telegraph Hill feel. You can only access it via the Greenwich steps, so this is not for someone shy of stairs. Once inside, there are two spacious bedrooms, two baths, and great Bay views from both levels. Though parking is leased one block away, the seller has agreed to pay the cost for one year. Definitely worth checking out. Unfortunately, the very aspects that make the home unique are probably dealbreakers for many buyers. Accessing the home is not easy—especially when carrying groceries or, uh, moving in. Parking is tight in the area. And again, paying $1,103 per square foot is probably prohibitive for most buyers out there right now. That level is typically reserved for new construction.

TICs: Trending Toward Tumult

Popular among first-time home buyers in San Francisco, tenancy-in-common (TIC) ownership traditionally lets two or more individuals share building ownership through a group loan. You don’t technically own your unit in a TIC arrangement–just a percentage of the building. The goal is to ultimately condo convert the building, so everyone can officially own their unit. The conversion process is complicated, lengthy and fairly expensive, so the cons sometimes outweigh the pros in TIC situations.

There’s a fair amount of risk in TIC ownership–especially when dealing with 3-6 units–mostly related to you being tied to other owners with respect to paying mortgage, property taxes & other expenses. And if someone wants to sell his or her TIC interest, the entire group loan has to be refinanced with the introduction of a new TIC partner.

Therein lies the rub in the new lending environment: Everyone has to qualify for the new loan. In the past, this hasn’t been too much of a problem, as loans were easy to obtain for the most part. Now, however, I’m hearing of TIC partners not being able to qualify for a refinanced loan due to tighter lending restrictions. This is a real problem for the TIC interest sellers, as they will have to work with their group to facilitate a new loan. In other words, those partners who can’t qualify for a new loan can’t simply be forced to sell. The seller is on the hook.

I’m shying away from recommending TIC arrangements in 3-6 unit buildings, at least until the loan market shifts toward the positive. It’s increasingly challenging to convert larger buildings to condominium status, so you’re looking at years of TIC ownership before (or if) that goal is ever reached. And though there are widely used “fractional” loans available–wherein TIC partners can obtain individual loans–I have reservations on those in terms of future availability

How’s the Market In: Westwood Park

One neighborhood that gets overlooked by many home buyers is Westwood Park. Located just west of Sunnyside near City College in the southwest part of San Francisco, Westwood Park consists of more than 600 homes built in the 1920s-1930s. The completion of the Twin Peaks Tunnel in West Portal spurred Westwood Park’s development. Many of the homes are bungalow style, and provide very functional and attractive spaces.

Ocean Avenue is the southern border of Westwood Park, and is the closest retail strip to the neighborhood. Not far away is the Balboa Park Muni/BART station, and there’s easy access to nearby 280.

You’ll get more for your money in this more suburban enclave. The average single-family home was just under $1M, in the time period from June-September. The homes are larger than, say, Victorians, and have garages and front/rear yards. As is typical in the more western part of the city, the fog is more prominent. But Westwood Park’s idyllic environment does a good job of keeping your mind off the fog.

Pocket Listings Get Popular

Now that our San Francisco market has softened, sellers and the listing agents they hire are trending toward a new strategy: pocket listings. This is a listing that does not get advertised or put into the Multiple Listing Service, and is only marketed to agents in a quiet way. Pocket listing properties are only typically shown by appointment, and there are no open houses or broker tours.

Pocket listings are a great way to test the waters in a non-public way. If the property doesn’t sell at the seller’s desired price, well, the public never knew about it, and the seller can evaluate whether to move ahead with a regular marketing plan—at a potentially reduced price.

Over the past week, I have been privy to at least five pocket listings. One was for a 2BR house in Upper Noe Valley for which the seller wants $1.4M. This seemed like a very high price for today’s market. But pocket listings may also be a good opportunity for the buyer who writes an offer that may be less than the seller wants. The seller may initially reject the offer, but could come back to the buyer later, and a mutually acceptable price and terms may be worked out.

The Luxury 1BR Market

Every once in a while, an email passes through my inbox that makes me do a double take. Today, I received one about a one-bedroom, Nob Hill coop pocket listing (not on the Multiple Listing Service) for $2,895,000. The coop is located in the 1200 California building. For this price, you get a 1,435 square foot unit on the 25th floor with a separate library/office area and interior parking.

Since recent two-bedroom coops on the 12th and 15th floors in 1200 California have topped out at $2.3M, they are seriously valuing the 25th floor position. And there’s competition over at The Millennium Tower on Mission Street. You can get a 1779 square foot one-bedroom condo for $2,225,000.

Big Changes in the SF Market

I’m seeing substantial changes in the San Francisco housing market that I wanted to share with you:

Buyers postpone purchases. Many buyers seem to be delaying decisions until after the election; they are also watching the impact of the bailout program. Such behavior is reflected in open home activity, which has fallen off in most Bay Area markets (with some exceptions). The bulk of open homes are seeing fewer visitors. There are the anomalies like the San Francisco Lake district duplex listed at $1M that garnered 50 groups, and the Cole Valley duplex priced at $1.85M that received 26 visitors.

Multiple offers are down. The number of multiple offers has declined, particularly in the lower price ranges. Those homes receiving multiple offers are either priced well below the competition, or presented exceptionally well. A good example of this trend is the Inner Richmond 2BR/1BA Edwardian flat listed for $765,00 that received five offers and sold for well over asking. Other multiples include those in highly desirable areas, such as Forest Hill. A 4BR/3.5BA home priced at $1.795M received three offers.

Price reductions are up. These are more commonplace, as motivated sellers are being forced to adapt to current market conditions. Even in areas that have been solid this year (i.e., Noe Valley), we are beginning to see more listings coming down in price.

Third-Quarter Stats to Thrill You

I’ve always found it helpful to gain some perspective on the market by checking out sales activity each quarter. It’s particularly useful now, amidst all the economic gloom and doom.

We’ll start with a two-year, third-quarter 2008 comparison for single-family homes. The median price is down 6%. It was $835,000 in 2006, and is now $782,000. Days on market in Q3 2006 was 34, and it’s now 44.

On the condo front, the median sales price is actually flat. It was $738,250 in Q3 2006, and is now $735,000. Days on market was 41 in 2006, and has gone up to 53 in 2008.

I believe that for qualified buyers, there is a greater chance of having an offer accepted between now and the end of the year. This means less hardcore, multiple-offer situations, flexibility on price, and more favorable terms for buyers in general.

Cutting Up on Ashbury

I’m all for creating as much opportunity for homeownership as anyone. But when a perfectly fine, single-family home is completely chopped up into three overpriced TIC units, it’s time to stop the madness.

That’s the deal over at 1096 Ashbury, where there are now three one-bedroom units where a probable four-bedroom home once stood. If you’re up for it, you can offer $545,000, $645,000 or $695,000 for one of these units. And then you can wait another 15 years to condo convert.

Update: #1 sold for $541,000 and #2 sold for $519,000 in Sept 2010. #3 appears to have been withdrawn.

Get in touch:

Eileen Bermingham

Zephyr Real Estate


BRE# 01352627

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