Market Mood Swings: Pacific Heights

Two recent sales in Pacific Heights exemplified buyers’ extreme purchasing activities. It just goes to show you that buyers really will determine market value.

First up is 68 Presidio at Jackson:

The 4BR/3.5BA home was originally listed in March for $3,750,000. It sat on the market until this month, when the property changed hands for $3,382,500. It pays to wait around sometimes in the luxury market. Last sold for $2,750,000 in 2007, it’s nice to see that the sellers might have made a profit.

At the other end of the spectrum was the sale at 2440 Vallejo at Pierce:

The 5BR home was listed in early July for $4,750,000, and closed escrow in mid August for $5,250,000. In 18 days. So when you ask your agent how the market is doing, and whether most buyers are lowballing sellers these days, the answer is “no.”

Valencia Street Update, SF Home Tours & Latest Sales

The latest MarketTracker report features an update on the ever-changing scene on Valencia in the Mission, along with the deets on the upcoming AIA SF Home Tours. Plus, the big news at 5800 3rd Street in Bayview and a look at the most recent San Francisco sales.

It’s all here in the Zephyr MarketTracker.

Just Sold: Hot Mission Loft

How good  is life when you have a great living space in a cool building—and are located around the block from Flour + Water? My lucky client just purchased the 1BR/1BA loft at 2301 Harrison #301 at 19th Street, and he’s stepping into that life.

I previewed the unit on broker tour when it first came on the market, and called my client immediately to schedule a showing. We were in contract within five days, and it definitely paid to move quickly. He got what I consider to be a very good deal on a property in a smaller, 13-unit building with very reasonable HOA dues. And besides being near Flour + Water, he’ll be one block from Cafe Gratitude and a few minutes from the 16th and Potrero shopping center.

The unit was listed at $499,000, and closed for just over asking. If you know of anyone looking for this type of home, give me a shout. I’d be happy to help!

Wanted: Cash Buyer for Mission Dolores Units

I walked through the three-unit building at 3883-3885 20th Street yesterday on broker tour. This is a vacant, 3,280-square foot building with two main units and one housekeeping unit that fronts the south end of Dolores Park. Listed at $1.3M, the sale will include approved plans and permits to remodel and legalize the property as a two-unit building with yard, roof deck, and parking.

The lower unit has a dead-on view of Dolores Park, but no real kitchen to speak of. And the upper unit faces the leaves from the tree outside, so you don’t get much of a view. The upper unit is also pretty much down to the studs in most of the rooms. So a regular loan requiring an appraisal won’t fly. But for someone with cash or access to a construction lor rehab oan, this is a cool project. The J Muni line runs behind the house, so that may put off a few buyers. And you’d have to be okay with having Dolores Park in your front yard, which means 24/7 activity. But for the size and scope of the building, this property will definitely work for more than one buyer (as long as the funds are available).

State of the TIC Market: August 2011

The tenancy-in-common (TIC) market in San Francisco has seen its share of ups and downs. I’m happy to say that this market is alive and well—and actually thriving—despite economic uncertainty.

That’s because the rise of fractional loans has enabled buyers to purchase a building together without having to be on the same loan. The latter has always been the inherent huge risk in a TIC situation. The goal of purchasing an interest in a 3+ unit building was always that of converting the building to condos down the line. However, given the constraints of doing so, buyers have given up on that goal. They’ve been happy purchasing a TIC that will provide more space than a condo can offer in a central neighborhood in the city. And they can live without the threat of losing their building in the event one of their TIC partners on the group loan experiences financial hardship.

A total of 198 TIC interests sold from January-July 2011, at an average of $696,622. The least expensive unit was a tenant-occupied, 1BR/1BA garden TIC in a three-unit building in Lone Mountain that changed hands for all cash at $115,000. At the other end of the spectrum was the 4BR/3.5BA two-level townhouse in a five-unit building with massive views in Pacific Heights that sold for $3,185,303. So clearly, even buyers on the high end are realizing that purchasing a TIC may get them the space and location they need.

There are currently 125 available TICs on the market, and about 59 in contract. Most involve fractional loans, and the market for TICs with group loans is not a very popular one. Again, economic uncertainties are giving buyers pause when it comes to stepping into a group loan. As a result, existing TIC groups are attempting to refinance into fractional loans if they can afford to do so.

The most popular neighborhoods for TICs year to date have been Nob, Russian and Telegraph Hills; Noe and Eureka Valleys; NoPa; Pacific Heights and the Mission. These neighborhoods have many multi-unit buildings and continue to be the most likely bets for TIC inventory. They’re also some of the most desirable areas in San Francisco, which is a plus for buyers who want proximity to public transportation, shops, cafes, and parks.

The fractional loan market is pretty much run by Sterling Bank and NCB. So you don’t have your pick of lenders. The good news, however, is that fractional loan interest rates are much lower than they were a year ago (6-7%). For example, a five-year ARM with 25% down will likely let you attain a 5.25% interest rate. Yes, fractional loans require at least 20-30% down, substantial cash reserves, good credit scores and are only available in three-, five- and seven-year ARM flavors.

TICs have generally been anywhere from 10-20% less expensive than condos, but that can vary depending on the number of units in the building. For example, a two-unit property really does stand a chance at condo converting fairly quickly in two to three years. But 3+ unit buildings require a very different, very time-consuming path to condo conversion. As a result, you’ll see more of a discount. (And note that Sterling only lends on buildings with a max of 15 units.)

TICs aren’t for everyone, and I typically sit down with my clients and discuss the ins and outs before they even bother with fractional loan preapproval. I’ll also be giving a TIC seminar in September in conjunction with Sterling Bank, so stay tuned for that info. And don’t hesitate to contact me if you’d like to attend. I can follow up with the date and time.

Wanted: Deep-Pocketed Developers in Jordan Park

For all those smaller San Francisco developers looking for a unique, large lot on which to construct a mansion or a multi-unit project, there’s somethin’ goin’ on for ya at 46 Cook. Located on a private cul-de-sac off Geary, the property encompasses the 3BR/1BA Victorian cottage you see above on a triple lot with a 75′ frontage and a 120′ depth. Each lot is zoned for two units, and there is a carriage house at the rear of the lot. The same family has owned it all for the past 50 years.

The buyer will potentially take advantage of “an opportunity to develop an estate with a residence surrounded by lush foliage and shady trees reminiscent of the Great Gatsby,” according to the listing notes. (But keep in mind that Cook off Geary is a long way off from West Egg, Long Island.)

Other buyer possibilities are “a developer who can convert each of the three lots into two units, bringing the property to a total of six units and elevating the potential for easier resale in the future.” And finally, an owner-buyer can take a shot—someone “who requires the flexibility of possibly adding units for rent.”

The one thing any of these buyers needs is the purchasing power to meet the list price: $1.9M. If you know anyone like that, send him or her my way, please.

Highs and Lows of SF Real Estate: House Edition

Part of taking the pulse of San Francisco real estate means noting the least and most expensive properties currently available. So here’s a look at this week’s two single-family home extremes:

Least Expensive: 1881 Oakdale, Bayview    $99,000

Lots of investors—and owner occupiers, as well—have been snapping up property in the Bayview district. This house at 1881 Oakdale is a teardown, as there’s no access to the property and it may not be safe to enter the premises. (It’s the blue home, above.) The sale will be conducted through probate requiring court confirmation. So if you’re a contractor/developer looking for a small project, this may be a good deal. They’ll be looking at offers on August 11th. In terms of location, the property is three blocks from the Third Street rail, and another 14 to the condo complext at 5800 Third Street, where Fresh and Easy grocery store will be opening this month. And a little later in the year, Brown Sugar Kitchen and Limon Rotisserie will be opening. Closer to 1881 Oakdale will be Radio Africa and Kitchen, aiming for a Fall opening at Third and Oakdale.

Most Expensive: 2901 Broadway, Pacific Heights   $45,000,000

It takes time to find the right buyer for an Italian Renaissance hilltop mansion on the Gold Coast of Pacific Heights. And 2901 Broadway has proven to be no exception. On the market since April 2007, the 7BR/7.5BA property was originally listed at $55M, but has come down a bit since those heady days. But the home has some competition; there are three other mansions on the market in Pacific Heights ranging from $25M-$33.9M.

Challenged Pac Heights Vic Closes Escrow After All

First listed back in September 2010 for $2,995,000, the 5BR/3.5BA Victorian single-family home sans garage at 2679 California Street closed escrow last week. That’s 305 days on market (DOM) for this baby, and the road to closing the chapter on this home sale wasn’t exactly smooth.

The property went through multiple price reductions, as well as three stints in contract that didn’t work out. The sellers were obviously sensitive to their ultimate price, as they paid just over $3M for the home in 2008. But it looks like everyone persevered, and the final sales price was $2,335,000.

2679 California is a good example of the type of home that was up against some challenges in the current market. For one thing, not many buyers out there are running around with $3M worth of purchasing power. So those buyers have their pick of inventory. And it may take a while to find someone who’s willing to spend that money on a property that’s located on a busy stretch of road and that doesn’t have a garage (though there is a parking pad, and a bid for a garage installation).

I think that in the end, the selling price reflected those factors.