TIC Owners Await Condo Conversion Legislation Outcome

I’ve been contacted recently by many TIC owners, inquiring about my thoughts on what the legislation will mean for resale value related to their individual situations—which can vary widely. Some have been in the condo lottery for many years, others have rented out their TIC interest, and others have recently purchased an interest in a three-unit building but haven’t even entered the lottery yet.

The condo conversion legislation was initially introduced last year by Supervisors Scott Wiener and Mark Farrell. In response, tenants’ rights supporters voiced their opinions, which has led to Supervisors David Chiu and Norman Yee recently proposing several amendments designed to help reach a compromise.

The most current version of the legislation is fairly radical, in the sense that it offers current TIC tenants lifetime leases, potentially suspends the condo lottery for a decade following the initial slew of conversions, and would eventually limit condo conversion to buildings with no more than four units. The expectation is that the legislation will be finalized in some shape or form in the next couple of weeks, after which it will be ready for a vote from the Board of Supervisors.

Until legislation actually passes, it’s a challenge to say what the implications will be for TIC owners and tenants. My recommendation is to read through the legislation details, and also look at both sides of the issue. And for that, I think it’s helpful to read TIC specialist/attorney Andy Sirkin’s explanation of the legislation. Also useful is KQED/Sam Harnett’s recent condo conversion story.

What You Can Buy: SF Houses

There are many neighborhood and property options in San Francisco. Today we take a look at four new single-family homes listings in different price points and areas. For those kicking off a house hunt who aren’t terribly familiar with the many neighborhoods in the city, this is a great way to start getting a sense for what’s out there:

754 Monterey Blvd

2BR/1BA, 1124 sq ft
Built 1924
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Featuring an updated kitchen and bath, formal dining room and a lovely garden, 754 Monterey has lovely 1920s period details. Monterey Boulevard has four lanes of traffic, so if you’re very sensitive to noise, this may not be the best choice. But the location is convenient to 280, two bus lines, BART, City College, Safeway and more. The property last sold in 2009 for $633,000.

243 Romain
Twin Peaks

2BR/1BA, 952 sq ft (as per tax records)
Built 1908
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The big selling point for 243 Romain is the floor-to-ceiling windows and deck that overlook the city skyline and homes in the background, as well as the secluded, landscaped yard. The house is definitely on the small side, but having those views really opens things up. At the corner is a footbridge that lets you cross Market Street, and drops you down into the Castro. Weather in Twin Peaks is generally cooler, foggier and windier in the afternoon, but the neighborhood is great for clearing your head and appreciating a more quiet environment. The house last sold in 2008 for $899,000.

770 4th Avenue
Inner Richmond

4BR/2BA, 2652 sq ft
Built 1914
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770 4th Avenue is great for buyers who need a lot of bedrooms and space, as well as those who are looking for a property to update and make their own. All the details are there, from a living room with a fireplace and built-ins to wainscoting and wood molding. The 700 block of 4th Avenue is right off Golden Gate Park, and is one of my favorite streets in the Inner Richmond because it’s tree lined and has a lovely feel to it. 770 4th Avenue has been owned by the same family since 1973, and we’re told that they took great care of the property.

3110 Buchanan
Cow Hollow

2BR/1BA, 1066 sq ft (as per tax records)
Built 1900
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An excellent condo alternative for buyers who are serious about living in Cow Hollow, 3110 Buchanan is s small Victorian house with a lot of charm in the form of bay windows, high ceilings, French doors and crown moldings. One of the bedrooms is half of the double parlor, and there’s a large eat-in kitchen that looks out on to the patio. Decent-size parking space, as well as washer/dryer hookups and storage. 3110 Buchanan is one and a half blocks from the heart of Union Street, and about five blocks to the Chestnut Street retail area. The block itself loses points in the charm department, as you’re adjacent to a motel. But the location is convenient, particularly for North Bay commuters.

Good Value in Behind-the-Scenes Home Improvements

I meet with new buyer clients frequently who tell me they’re okay with “doing some work” and not paying for another owner’s remodel. And many times, that’s a sound plan when it comes to kitchens and bathrooms. After all, these renovations are typically pretty straightforward, and they provide an instant bang for the buck. Buy a house with a tired, 1940s kitchen and bath, tart them up, and you’ve added immediate value.

However, there are certain property upgrades that should be appreciated and valued more than I think they are in San Francisco. A chef’s kitchen with a CaesarStone counter and a slick, high-end soaking tub in the master suite are all fine and good. But what about an upgraded foundation–or a substantially repaired one? Or a new furnace/ductwork; roof; seismic upgrades; repaired dry rot/termite damage; upgraded plumbing and electrical? Though you can’t necessarily see these sorts of repairs in slick marketing photos, they’re important building components that need periodic attention.

A good portion of the aforementioned items can be fairly expensive. For example, the foundation repair/improvement work being done on my own two-unit building is so not cheap. We found a leaking drain pipe under the concrete that wouldn’t have been addressed had we not opened up the ground. And the seismic upgrades we’re doing at the front & rear of the building will also contribute to a more solid footing. Sure, we have a remodeled kitchen and bath in our unit, which is great, but future owners will most likely not have much else to do in light of the work we’re doing.

I’ve seen some good buildings sit on the market a while because owners were trying to recoup all the money they spent on certain structural items. It’s difficult to quantify how much money you can expect to recover on, say, the $20,000 roof you installed, or the $10,000 on plumbing and electrical upgrades. These items will certainly add value, but how much value will be up to buyers. In general, they’re the type of items you address as part of long-term property maintenance. And hopefully, the buyer who likes your house will be savvy enough to appreciate the upgrades and repairs.

Just Sold: Golden Gate Heights View Home

This is only part of the view my clients now have from the living/dining rooms and kitchen of their 2BR/1BA home at 2085 14th Avenue. You can look out at the expansive Pacific Ocean, as well as all the hills and streets in between.

Listed at $749,000, the house is three blocks north of Taraval, with its Muni line and shops, and another five blocks or so to the West Portal retail area.

Nob Hill’s Marlow Launches Condo Pre-Sales

I visited the sales office for Marlow, the 98-unit condo development currently under construction at the corner of Van Ness and Clay in Nob Hill. The building will be move-in ready in early 2014, but the sales office has started selling units and already has ten units under contract.

Marlow is a mix of one- and two-bedroom units, as well as three-bedroom townhomes across eight stories. Floor plans include either units with or without dens, which is the main distinction.

Finishes include white quartz countertops, natural walnut cabinets, porcelain backsplashes and tiling, and stained maple floors. (Refrigerators, microwaves, and washer/dryers are not offered in the purchase prices.) The kitchen counter features a media station for charging your electronic devices:

Bathrooms have equally nice finishes:

Amenities include independent parking for each unit, bike storage (but no additional storage), three carshare spaces, air conditioning (in San Francisco, no less), and half of the homes have some sort of balcony for outdoor space. Windows are “double-, triple- and quadruple-paneled,” as per the sales office. And the common area is “Marlow Park,” which is an open space on the ground level that will feature a bocce court, grill, and firepit. There’s no roof deck.

Pricing is at a premium, ranging from $922-$1200/square foot. Units being offered now range in square footage from 671-1267 square feet, with the least expensive condo being a 746-sq foot 1BR + den on the second floor listed at $689,900, and the most expensive being a 1231-sq foot unit on the fifth floor listed for $1,232,900. Monthly HOA dues are $540-$667.

Buyers who want first pick of the available units will have to be content making their decisions based on floor plans and depicted views and other details via the sales office’s touch screen display. Those ten buyers already in contract are betting that Marlow’s condos will be worth current prices when the building is finally ready for occupancy in early 2014.

I like Marlow’s design and amenities, and believe that the units facing north, east and south will be the best ones. West-facing units that front Van Ness are the ones with the quadruple-paned windows, no doubt, and will require buyers who are less sensitive to noise—or ones who’d be happy running air conditioning and keeping the windows closed. The location is extremely central to the Polk Street corridor’s shops and restaurants, and is in walking distance of the Financial District. Given the limited new development opportunities in the well-established neighborhoods of Russian/Nob Hills, Marlow offers a good opportunity for buyers looking for shiny, new finishes in a convenient location.

If you’re interested in independent representation at Marlow, please contact me and I will schedule a visit to the sales office for us. The sale process in new construction is unique, and I can use my experience in this area to help you make the right decisions, as well as navigate all the ins and outs of the process.

Cash Sales All the Rage in San Francisco

Cash sales became commonplace in San Francisco in 2012, and they show no signs of slowing down this year. (See “Cash Sales Soared in 2012.“)

A look at all the reported cash sales from January 1-April 8, 2013 reveals that almost a quarter of all single-family home and condo sales were cash transactions. That’s a somewhat stunning percentage, and makes a huge statement about where people are putting their money.

Most condo cash transactions took place in neighborhoods such as Pacific Heights, Russian Hill, downtown, and the more urban enclaves of Mission Bay, South Beach and SoMa. Sixteen of the 131 condo cash sales in the aforementioned timeframe sold for more than $1.5M, but 73 sold for up to $1M.

Most of the 114 single-family cash sales occurred in the Excelsior, Bayview, the Sunset, Noe Valley and Bernal Heights. Eighteen sold for more than $2M, and five sold for more than $4M. A total of 69 houses closed escrow for up to $1M.

Even TICs got in on the act, with one Mission Dolores 3BR TIC in a six-unit building on a group loan closing escrow for $2,050,000.

All of this cash activity is all fine and good for sellers, but it unfortunately can wreak havoc with comparable sales from a buyer perspective. Because many cash buyers aren’t having appraisals done, they’re more willing to throw money at a desirable property because they don’t have to worry about an appraisal coming in low and jeopardizing a loan. For example, one 3BR/1BA, 1100-square foot house on Bernal’s north slope listed for $799,000 recently received 16 offers and ultimately closed escrow in a cash transaction, with a $1.2M+ selling price. There’s no way this property would appraise were the buyers getting a loan. But with no appraisal required, such buyers are going for broke so they don’t miss out on a property they like. And a new comp is born.

Indeed, single-family home and condo buyers with all cash paid an average of 5.5% and 4.4%, respectively, over the list price. The old adage of getting a discount by paying cash apparently doesn’t ring true in San Francisco real estate.

Seller’s Market Continues in San Francisco

The real estate market in San Francisco has been bouncing off the walls since late 2012, and we’re officially in a seller’s market. Buyers are pulling their hair out in multiple-offer situations, and sellers are wondering if prices will increase as 2013 wears on.

We now have three months’ worth of sales to analyze, and that data indicates that prices are up as much as 6% over the past 180 days, particularly in the single-family home and condo markets. Indeed, the average price for a house in the city was $1,163,261 in the first quarter of 2013, and $897,278 for a condo. TICs sold at an average of $758,244 per interest.

Cash sales are continually popping up, especially in extreme multiple-offer situations. It’s gotten to the point at which buyers with loans, contract contingencies and reasonable offer prices don’t have much of a chance in a 10+-offer scenario.

But fortunately for buyers, Spring will bring with it more inventory. I’ve been selling real estate for more than ten years, and it never fails that inventory rises when the weather gets nicer. Homeowners who are wary of making a move without knowing where they’ll go next are considering short-term, furnished rentals as pit stops, or consulting a lender to see if they can qualify for what’s called a “bridge” loan that will allow them to buy first and sell second.

We’ll also be seeing many new condo developments start to sell their units this year, which will appeal to those looking for housing in prime, centrally located and transit-rich neighborhoods. (However, buyers can expect pricing for these units in the $900-$1,000/sq foot range, and only half the units in a given building will typically have a deeded parking space.)

If you’re an intrepid buyer heading out into San Francisco real estate waters, make sure you complete a solid preapproval so you’ll be ready when you unexpectedly see the home that you’re meant to buy. And if you’re a seller who’d thinking of putting your home on the market later this year, now is a good time to start consulting with your Realtor so you can put your plan in motion.

Update: ICON’s Floor Plans, VIP Loan Preapproval

One of the more anticipated Market Street condo developments at 2299 Market, ICON, is now welcoming loan preapprovals for its units. Though the sales office is not yet open and the project is still under construction, you can complete a preapproval with the development’s in-house lender. This will certainly launch you to the top of the VIP list when it comes to purchasing one of the 18 one- and two-bedroom condos that will be available.

And while we’re at it, here’s a look at a few newly released floor plans, courtesy of the development’s marketing team of Suzanne Gregg and Jason Gorski at Paragon Real Estate. I’m liking the separation between the bedrooms in the two-bedroom plans:

If you’re interested in getting in before the masses, please contact me and I can help you navigate the preapproval process via the ICON in-house lender. Please note that I am not part of the ICON sales team, but can work with you in the event you’d like independent representation.

New Condos on Tap for Potrero, Dogpatch

Potrero and Dogpatch are the sites of two new condo developments currently under construction—Onyx and Millwheel North. Both are situated in very different locations, and have unique appeals:

1717 17th Street / Carolina
The Homes: Phase 1, 20 units, divided among one-, two- and three-bedroom plans
The Scoop: “Onyx” is located in a great part of Potrero, within walking distance to Whole Foods, World Gym, restaurants, cafes and bars. It’s across the street from Jackson Playground, so you get some green to look at. You can expect high-end finishes that will command top dollar, as well as parking for each unit and commercial spaces on the ground level. There will reportedly be 21 more units coming in Phase 2 of this project next year.
Buy If: You want a home in the heart of Potrero, as well as in proximity to Mission Bay and the freeways.
Developer: Paragon
Sales Begin: Spring 2013

1275 Indiana/1260 Minnesota
The Homes: 39 condos, mix of one-, two-, and three bedrooms for sale
The Scoop: Millwheel North follows the success of Millwheel South, which sold out rapidly in 2012, and is located right next door. Similar to Millwheel South’s layout, the North building will have addresses on Indiana and Minnesota, and both buildings will be linked by a common courtyard. A bulk of the units will be two bedrooms. There will be parking for each condo. The Indiana building faces 280 and a public green area, and the east-facing Minnesota side will be quieter. You’ll be in proximity to the Third Street rail, freeway and a healthy walk to the Dogpatch restaurant and cafe area on 22nd Street.
Buy If: You’re looking for a spacious condo with high-end finishes in a constantly developing neighborhood.
Developer: R Group, Inc.
Sales Begin: Late 2013/Early 2014

If you’re interested in taking a look at any of these condos, please let me know and we can schedule an appointment or get your loan preapproval going as soon as the sales office is in place. I can only assist you if I accompany you on your first visit to the sales office, and am happy to arrange for that at your convenience.

SF Property Taxes Due This Week!

You’re trying to juggle all the moving parts in your life, and suddenly you realize that your property tax bill has been sitting in a pile in the office for the past several weeks. Yikes.

Because the second installment of San Francisco property taxes is due by 5PM on April 10th. If the city doesn’t receive your payment by then, you’ll be considered delinquent.

You can pay your property taxes online, but keep in mind there’s a 2.25% fee. So if you cut that check this week and postmark it by midnight on April 10th, you’ll be safe.

If you’re a new homeowner, you should be aware that there’s no foolin’ around when it comes to property taxes. If left unpaid, they quickly become a lien on your home.

For more on paying your property taxes, visit the Office of the Treasurer’s Web site.

Short-Term, Furnished Rentals Good Seller Pit Stops

I’ve met recently with a number of homeowners who are considering selling their properties, but don’t know where they’ll be able to buy next. Though they know they’ll do extremely well in the current market with the sale of their property, they’re nervous about competing with buyers to purchase their next place.

Here’s a suggestion that will work for these potential sellers: Rent a short-term, furnished rental. There are actually quite a number of these available at any given time, in all parts of The Bay Area. (Short-term, unfurnished rentals are more of a challenge to find, given the demand for long-term apartment leases.)

Just hit Craigslist for the area in which you’re interested in moving; it’s best to be in geographical proximity to your destination. Type in “furnished” or “short-term” in the “apts/housing” section, and a host of entries will pop up.

I recently spotted two-bedroom, short-term/furnished apartments in the Sunset ($1800/month), Marina ($3800/month; Mission Dolores ($3900/month) and a Noe Valley one bedroom ($2550/month) on Craigslist that could totally work as seller pit stops.

These rentals aren’t cheap. However, you’re able to put your belongings in storage and then move them to your new home once you purchase it, negating the need to move twice. You also won’t get too mired down in a rental, because both the price and the lack of your own possessions will keep you motivated to find the home that’s right for you.

And best of all, you’ll eliminate the possibility of making decisions under pressure, allowing you to think clearly and ultimately make the right purchasing decision for the long term.