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Developers have broken ground on Summit 800, a 182-unit development on Brotherhood Way near Lake Merced in San Francisco. The 7.7-acre parcel will have a mix of attached and detached homes, some with yards and a decidedly suburban feel.
Where does San Francisco rank in the United States for the top dog cities? And how much have home prices in the city increased in the past six months? It’s all here in the latest Zephyr MarketTracker!
It can be a challenge to find a 2BR condo with parking in classic San Francisco neighborhoods such as the Marina, Nob Hill, and Pacific Heights. Today we look at three properties that fit into that price range:
1655 Chestnut #302
The Marina
2BR/2BA, 1100 sq ft
HOAs $523/month, 1 pkg
$965,000
The Scoop: One of the few properties that isn’t in a liquefaction zone in the Marina, 1655 Chestnut #302 boasts a top-floor position in an 11-unit building, along with neighborhood views from the living/dining areas. Well appointed with Brazilian cherry wood floors throughout, the unit has a remodeled kitchen with high-end appliances, and skylights. The building has a roof deck, garden/BBQ area, storage, and an elevator.
The Location: 1655 Chestnut is about three and a half blocks from the heart of the Chestnut Street retail area, so you’re out of the fray a bit and don’t have to deal with constant activity outside your door. It’s also an excellent location for North Bay commuters, who can jump on Lombard and head to the bridge. Many bus lines run nearby to downtown, as well.
Background Check: The unit last sold in 2007 for $951,000.
939 Jackson #202
Nob Hill
2BR/2BA, 1088 sq ft
HOAs $397/month, 1 pkg
$939,000
The Scoop: 939 Jackson #202 is perfect for the Nob Hill buyer on a budget. Though you don’t get views, you do get decent space in a newer, 2005-built property. The unit has nice finishes and an open kitchen/living/dining room floor plan. Bedrooms aren’t huge, but are nicely painted. Jackson is right on the cable car line (though the unit is located at the rear of the second floor, so it’s quiet). And there’s a great roof deck with 360-degree views.
The Location: The only problem here is that you may have more house guests than you might want; you’re in walking distance to North Beach, Russian Hill, Chinatown, downtown, and Union Square.
Background Check: #202 just sold in June 2012 for $903,000. #301 in the building is currently in contract with a list price of $949,000; that unit had views from every room and was one floor up.
2315 Divisadero, Unit S
Pacific Heights
2BR/1.5BAs, 1115 sq ft
HOAs $432/month, 1 pkg
$879,000
The Scoop: My favorite of this trio, 2315 Divisadero unit S has newly reinvigorated common areas and gets great natural light. It’s on the top floor of a nine-unit building constructed in 1962, and has an open dining/living area. The kitchen is on the small side and is tucked at the rear of the unit, but it’s totally workable and clean. The master has only a half bath, but it’s better than one bathroom for the whole place. The unit’s hardwood floors have recently been refinished, there’s a wood-burning fireplace, and designer lighting fixtures. And don’t forget about those common areas, they’ve been painted, had carpet replaced and new front doors for each unit installed (with plantation shutters for the hall windows on the way). There’s an elevator in the building.
The Location: Though you’re right on Divisadero, the unit is quiet with the windows shut and you can’t beat the central location.
Background Check: Six of the nine units are rentals, so your choice of lenders will be limited to First Republic. No 30-year fixed loans available, but you can get a 15-year fixed at a low interest rate.
Most buyers in the current San Francisco market learn quickly that most sellers are pricing their homes lower than the price they’re seeking. This is a particularly common strategy in a seller’s market. Multiple buyers become interested and write offers. Sellers then have the upper hand when it comes to selecting the highest and best offer, which often translates into countering multiple buyers and having to negotiate little.
A look at all single-family home and condo sales in the time period from March 13-April 13, 2013 provides a clear window into the current market. Of the 218 single-family homes (median price: $965,000, 43 cash sales) and 264 condos (median price: $855,000, 61 cash sales) that sold, only a handful sold for less or at the asking price.
What this means for buyers is that it’s very important to know and be at peace with your maximum price point. Particularly in centrally located neighborhoods near public transportation, retail areas and freeways, competition is strong for what little inventory exists. A good rule of thumb is to consider properties priced at a lower number.
And yes, sellers will always prefer cash transactions to those involving a loan. This is because cash offers—accompanied by proof of funds—are much more of a sure thing than a loan. There are typically no appraisers involved, and there’s no underwriting team that can possibly torpedo the transaction. Cash offers also provide flexibility for a fast close, if that’s desired by the seller.
There’s not a conspiracy among sellers to “trick” buyers into thinking they can afford a property that will undoubtedly receive multiple offers. The reality is that sellers see success among homeowners listing low and selling higher, and they simply follow that strategy. (The real estate industry isn’t terribly imaginative, in case you haven’t noticed.)
If a seller decides to buck the trend and list at roughly the price he or she really wants for the house, there’s a likely chance that buyers will dismiss the property because they believe they’ll have to bid higher in order to get the property. So that condo that’s worth around $900,000? The seller who lists at $799,000 will do infinitely better than the one who chooses to go with $875,000.
For now, the list-low strategy pervades San Francisco real estate, and cash offers are popping up with surprising frequency. As the market fluctuates, this will probably change. But it’s important to know what to expect so you can refine your own house-hunting strategy.
San Francisco has a very fast-moving, dynamic real estate market that often doesn’t reflect what’s happening across the country. For example, “hitting bottom” meant lower sales volumes, higher concentrations of foreclosures and short sales that were largely centered in a handful of neighborhoods, and many properties in prime neighborhoods still selling for more than list prices. In other words, it wasn’t exactly a real estate bloodbath in San Francisco.
I’ve recently been asked by a fair number of people whether it’s a good time to buy real estate in the city. The fact that it’s a seller’s market is giving many prospective buyers pause. Ironically, those same buyers may have been hesitant from 2008 to mid-2012—when it was a buyer’s market—because loans were more challenging to obtain, less cash was flying around, and the economy was a bit shaky.
So my response to the question about whether it’s a good time to buy? Well, I think timing has more to do with your financial situation and long-term goals than market conditions themselves. San Francisco is one of those cities that’s extremely desirable for many reasons, which is why our real estate prices are so high. If you have the ability to jump into the market, purchasing what you can afford should be the priority. We’ll never have screaming deals on property, which means that if you sit around waiting for the market to shift in your favor, you could be missing opportunities to own not only a great home, but a great investment.
I helped many clients purchase property over the past couple years amidst our downturn. And most of them could sell their homes for more money now. But many buyers sat on the sidelines, hoping prices would fall to the extent that they could swoop in and snatch up a single-family home or condo in a good area at some sort of discount. Homeowners made sure that didn’t happen, holding off on selling their own homes until prices crept back up to more desirable levels.
Which is where we are now. The scale has tipped back into the seller’s favor. I’m not sure how long this will last, but history dictates that market conditions will inevitably change. Whether it’s a good time to buy really depends on how closely your property goals are aligned with your purchasing power in the current market.
Construction kicked off this week on the 47-unit condo development 8 Octavia, situated at Market and Octavia in Hayes Valley. The Stanley Saitowitz/Natoma Architects-designed project will sit where the Central Freeway once ran, and the site has been vacant since that roadway was torn down in 2002.
Octavia Boulevard was thoughtfully reworked in 2005 to create a more pedestrian-friendly stretch, and having a new residential development will give the area a boost where it’s needed. 8 Octavia will sit in the midst of a very busy intersection that includes motorists heading to the 101 on ramp from Octavia, as well as the usual Market Street traffic and Muni flow.
But DM Development and DDG, the forces behind 8 Octavia, are working to build a sleek, smartly designed building on a pie-shaped slice of land. The goal, according to Saitowitz, is to present the project as a modern-day interpretation of the Victorian-era homes that pervade Hayes Valley. He says that the exterior will feature a fluid, changing facade, units with flexible space and lightwells that will be like urban versions of the traditional yard.
Floor plans include junior one bedrooms and one-, two, and three bedrooms. There will also be three 3BR penthouses and one 2BR townhome. Among the available floor plans at 8 Octavia is a “pod” concept, designed to maximize living space by containing the kitchen, bath and washer/dryer within a single efficient module. The “flex space” floor plan offers a living space that can be portioned into multiple rooms by sliding movable wall panels.
Innovative features at 8 Octavia include keyless entry into the building and individual homes via smartphones. The building also features user-controlled window louvers to modulate solar heat and privacy. Residences include efficient lighting and appliances alongside finishes that include wood flooring, European cabinetry and floor-to-ceiling windows.
There will reportedly be approximately 24 parking spaces for the residences, and 26 bike stalls. Two ground-floor retail spaces will be included.
For buyers looking for a central location near the Castro, downtown, Duboce Triangle, Civic Center and the mid-Market district, 8 Octavia is an excellent option. I’m thinking the design may trump other more cookie-cutter condo developments which are on the way.
Two-unit buildings in San Francisco that are eligible for one or two owner occupiers are one of the most desirable multi-unit property types in San Francisco. Two buyers interested in partnering up and living in both units while they pursue a fast-track condo conversion are great prospects for such a building, as is an owner occupier who wants to reside in one unit and rent out the other. (The latter doesn’t allow that owner to circumvent the condo lottery, but it can be an excellent way to afford a home that you otherwise may not have been able to purchase without factoring in rental income.)
I wanted to highlight three two-unit buildings that I think are great prospects. If you’d like further details on any of these properties, or would like to talk more about the ins and outs of purchasing two units, please contact me. I’ve owned my two units in Noe Valley for many years, living in one unit and renting out the other. So I can tell you firsthand about the ins and outs.
Here are my two-unit picks at the moment:
2583-2385 Greenwich Street / Divisadero
Cow Hollow
$1,379,000
This is an excellent opportunity to purchase a pair of flats which will be delivered vacant, as the owner resides in one unit and will be moving. There are two 2BR flats with a combined square footage of 2240. This is the first time 2583-2385 Greenwich has been on the market in 30 years, so you can expect a need for cosmetic updates—not a bad way to increase value right away. The property has its original 1930s detail intact, from a large fireplace to crown moldings. There’s a three-car garage that provides three independent spaces, one of which is rented. For buyers seeking outdoor space, this isn’t the property for you, as the building takes up the entire lot. But you can certainly look into the possibility of adding a roof deck, which would pave the way to Bay, Golden Gate Bridge and Alcatraz views. This location is central to Union and Chestnut Streets, North Bay commutes, and Muni lines.
17-19 Ford/Sanchez
Eureka Valley
$1,785,000
17-19 Ford is a prime two-unit building in a great Eureka Valley location. Each flat has 2BR/1BA, and are roughly 1500 square feet each. The property has been improved with refinished floors, double-paned windows, new electrical and plumbing and seismic upgrades. Kitchens in each unit have been remodeled with new appliances. There are southern views from the bedrooms, plenty of storage, large bonus rooms, and both units will be delivered vacant. This is an excellent fit for two TIC partners looking to condo convert—and who’d rather not be bothered doing their own renovations. Though the location is technically Eureka Valley, Ford is only a block and a half to Dolores Park, three blocks to Castro Street, and is an easy stroll to the heart of the Valencia corridor.
1027-1029 Washington/Powell
Nob Hill
$1.2M
1027-1029 Washington is a two-unit building that will be delivered vacant and could use updating, so this is another one perfect for TIC partners looking to condo convert. There are two 2BR/1BA units that are around 1,000 square feet each, and a one-car garage. The building is situated in a busy part of Nob Hill/Chinatown, about two blocks from the top of Nob Hill and three blocks from the Financial District. So that makes it a good prospect for buyers who work downtown and want to be able to walk everywhere. There’s also plenty of public transportation nearby.
I do appreciate when sellers of desirable properties situated in white-hot neighborhoods like the Mission bring their homes on the market for a price that at first seems aggressive, but on second glance, is actually probably dead on. In other words, why list low when you’re confident there are enough buyers out there looking for the type of home you have for sale—and willing to pay top dollar to beat out their competition?
Case in point: 736 Valencia #201, a 2BR/2BA condo with 1365 square feet, listed late last week for $1,550,000. The unit features an additional 1,000-square feet of outdoor space, and is situated in an eight-unit building constructed in 2010. The property is located right in the heart of the Valencia stretch at 20th Street. Boasting a spacious chef’s kitchen and other high-end finishes, 736 Valencia #201 has one-car parking and HOA dues of $436/month.
The current owner purchased the unit new in 2010 for $1.2M, and is now seeking a price that clocks in at $1135/square foot. This may seem eye popping. But if you’ve been closely been following the Mission market and new construction in San Francisco, prices are roughly $1000-$1200/sq foot, depending on the exact location, quality of finishes and overall amenities. Yes, 736 Valencia was built in 2010, and if this seller could get $350,000 more than he paid for it, props to him. But I won’t be surprised if someone pays that price or more, particularly with the continued low inventory in the Mission. There doesn’t seem to be any shortage of buyers willing to throw money at desirable properties in the neighborhood.
The 3BR/1BA single-family home at 52 Bonview is back on the market, literally less than a month after it sold for $1,210,000 on April 5th.
Situated at the northwest base of Bernal Hill, the house has great views but is a hike from Cortland and is relatively small, with only about 1100 square feet and one bathroom. Kitchen and bath finishes are fairly mid range. Views are excellent. The story here is that 52 Bonview came on the market listed for $799,000 on March 20th. A swarm of buyers materialized, apparently driven by the aforementioned attributes. 16 offers later, the winning buyer purchased the property for $1,210,000.
The buyer was reportedly an investor who never moved into the house but now wants to pursue another opportunity out of state, and wants out. This owner now has re-hired the original listing office, and 52 Bonview is back for $1.1M.
It will be interesting to see whether any of those 15 buyers who wrote offers only a few weeks ago will step up and make a play for this house. These days, there always seems to be at least one outlier who’s willing to throw a ton of money at a property, and if that happens here again, I’m guessing that waiving an appraisal contingency will be required.
A much anticipated condo development on the Mission Dolores/Duboce Triangle/Castro borders is 200 Dolores, which has been in the works for some time.
200 Dolores offers 13 elegantly appointed condos. Three of the units are located within the historic Victorian home that’s been moved and renovated, and the other ten units were constructed on the adjoining parcel and surround a central courtyard. Features include gas fireplaces, built-in television cabinets, recessed lighting, radiant heat floors, Ann Sacks tiling throughout and Wolf/Sub-Zero/Bosch appliances. There is an elevator in the building, as well as garage parking for all units.
Here’s a breakdown of the units, as per listing agent Anne Herrera at Sotheby’s International Realty:
One 1BR/1BA, approximately 680 square feet
Two 2BR/2BA, approximately 1015 and 1180 square feet (lower and middle units in the Victorian)
Nine 2BR/2.5BA, approximately 1095-1540 square feet, some with private roof decks.
One 3BR/3.5BAs approximately 2000 square feet (upper unit in the Victorian).
The project is expected to be complete at the end of May, with tours kicking off after the units are complete and showing at their best. Pricing will be approximately $1000 per square foot, subject to a final discussion with the developer as the units get closer to market.
I am a huge fan of this development and location. Of all the projects being constructed in San Francisco, I believe 200 Dolores will have the most “neighborhood” feel, given that it’s off Market Street and will provide a more peaceful environment than projects located at busy Market Street intersections. It’s also one block from the new Whole Foods that will be in the 2001 Market rental building (currently under construction), as well as Safeway. You can walk to the 16th & Mission BART station from here, as well as catch the Muni rail or bus lines along Market.
Give me a shout if these units are in your price range and you’d like to initiate a loan preapproval so you’re in position to make a purchase. At the risk of sounding like a used car salesperson, these condos will most likely sell out very quickly, so the more prepared you are, the more likely you’ll be able to beat out the competition.
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.
