Archive for September, 2006

Permit fast-tracking for green buildings?

From today’s Examiner,

Attention would-be developers: Building a green project can speed up the permitting process.

The Department of Building Inspection, the city agency that issues the necessary permits for all new construction and remodeling, has pledged to give priority to projects that meet national environmental standards.

The directive from Mayor Gavin Newsom’s office is designed to encourage environmentally friendly development, such as buildings that make use of recycled or reclaimed materials, nontoxic paints or carpets made of nonsynthetic materials. The program begins next month. Seven buildings now meet the highest standards, while 29 projects are pending. There are more than 8.3 million square feet of buildings that are registered and qualified as environmentally sensitive in The City, officials said.

The new program, which works in conjunction with the Planning Department, will likely speed up the permitting process by several months for those that qualify, said William Strawn, communications manager for DBI. [more…]

City: Plan green, get permits [Examiner]
First Green Condo Project Breaks Ground in San Francisco [SFHomeBlog]
Who’s going to work for the DBI, now? [SFHomeBlog]

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A veritable collection of crap

So much is being written about how high the inventory levels have risen in San Francisco in the past 8 months, and even more dramatically in the past four weeks.

And many media outlets would have you, the casual observer, believe that this is a sign of a coming apocalypse.

As you might imagine, I just don’t believe that.

And why not?

Because in my eight year career in this town, I have never seen so many crappy (or overpriced) listings on the market.

That’s about the best way I can put it. And it’s providing the appearance that there’s something dramatically wrong with the market.

So for this week, here’s my take on things:

  • Yes, inventory is up. Actually at an all-time high for my career.
  • But so are listings from stubborn sellers who want the highest price ever for a house in their neighborhood. This is where the problem lies.
  • High rise inventory is also up. Why is this a good thing? As much as folks love to argue with me about the existence of a supply/demand influence on this market, you really can’t argue that a higher inventory of unsold condos is good for buyers.
  • Since we can’t get all types of housing built quickly (due to supervisors, moratoriums, and the building/planning department), let’s be happy that at least we have one neighborhood that is seeing a sort of inventory saturation.
  • Good properties are still selling in only a couple of days. Price it right, present it right, hire a good agent, and it will sell. Period.
  • That applies really well to the high rise market, too. The great units in the great buildings with the perfect views are flying off the shelves, and the less-desirable units are sitting a little longer. It’s no surprise that not everyone wants to live in a high rise in SoBe, so where’s the big shocker here? This only sucks if you are trying to resell a high rise unit right now (unless you are in a great building with a great view, of course).
  • What do I define as ‘crap’? It’s really all about pricing, honestly. If some sellers would just realize that their house with one bathroom off the back of the kitchen, which was remodeled twenty years ago, is not the second-coming of the Dwell home-of-the-year, then we’d all be just fine.

    Likewise, when you look at the recent sales (from ’05, for example) and you see that the highest price for a unit in a building was $600k, don’t pretend that your unit is going to fetch $650k, no matter how badly you want it to. Most agents are smarter than that, and so are most buyers.

    At the right price, everything in this town could sell in three days (not all at once, of course). So for buyers and sellers, what should you make of this market?

    Sellers

    1. Hire a good, local agent
    2. Don’t pretend that your stuff is as nice as staging. It’s not.
    3. Learn the comps and don’t pretend you can tell the market what your house is worth. You can’t.
    4. Just because you paid too much for your house in multiple offers last year, you aren’t entitled to anything special this year. And see #3 above.
    5. And if you’ve done your homework and interviewed a couple of agents (or more), then let them do their job. And trust their abilities and information. I know agents rank right above used car salesmen for most people, but some of us actually know what we’re talking about.
    6. If you get an offer in this market, and especially if you get more than one offer, you should seriously consider taking it. There are a few exceptions to this, of course, but there are literally hundreds of sellers out there right now, houses sitting on the market, who turned down their first offer(s) in hopes of something better. And every single one of them is regretting that decision right now.

    Buyers

    1. Hire a good, local agent
    2. Yes, I’ve read the newspapers, too. I know you want a bargain. But you can’t have both the perfect house AND the bargain.
    3. Yes, there is more inventory. Yes, it takes time to look at this inventory. So do your homework, look at as many houses as you can, but always be ready to write an offer if the right house comes along.
    4. If you really like a house, chances are it’s one of those that everyone else is waiting for, too. Don’t be afraid to write an offer the first day something comes on the market. But only if you’re willing to waive your self-imposed right to a bargain.
    5. And don’t think that this inventory will last forever. I’ve already been slammed for stating this, but I’ll say it again. We’ve already seen our new listing inventory peak for 2006, and you won’t see the large number of new listings hitting the market again until next spring. That means that if you’re looking for a bargain, watch some of the overpriced crap that’s sitting on the market now and start negotiating soon. Or someone else might.
    6. The ratio of accepted offers versus new listings will rise from now until the end of year (and perhaps till the end of January). That means that buyers will be more active than sellers. This doesn’t mean ‘seller’s market’, but it does mean that fewer people want to sell their homes in Oct/Nov/Dec than during other times of the year. And if you want that ‘perfect’ house, there’s less of a chance that you’ll see it happen in the fall.

    To wrap this up, I’ll reiterate that for nearly everyone, this is a very good market. Sales prices in general are about where they were last year, and in many cases are up over the previous highs of 2005. But there are also many more opportunities (due to the higher inventory) than there were in previous years.

    So take your pick: nice houses that sell quickly, or bargains on houses with small (or large) defects. There seems to be something for everyone right now.

    And for sellers that bought more than 12 months ago and didn’t pull all of their equity out to take up a second career as a race car driver, they’re all just fine, too.

    That’s my story, and as usual, I’m sticking to it.

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    More Treasure Island development news

    From today’s Examiner,

    The latest blueprints for Treasure and Yerba Buena islands include a fifth high-rise residential tower, 6,000 apartments and condominiums, three ferries and an aggressive incentive plan to get people out of their cars and onto ferries and buses.

    A prior proposal, announced late last year, called for 5,500 housing units, four towers of at least 30 stories and one less ferry to shuttle residents to San Francisco.

    “We need a critical mass of people living on the island” to make it work financially, said Michael Cohen, of the Mayor’s Office of Base Reuse and Development.

    The redevelopment plan calls for providing at least 1,800 affordable units and a 338-acre park.

    Under the $1.19 billion proposal that’s still being hammered out, all parking would come at a price, residents would have to buy public transportation passes and cars driven off the island during rush hour would pay an extra fee, Treasure Island Development Authority members learned Wednesday.

    “This is a land plan that makes it easy to walk,” said Chris Meany, of Wilson Meany Sullivan, a development firm. “With the carrot and the stick, you encourage people to do the right thing.” [more…]

    Islands’ redevelopment plan takes shape [Examiner]

    Treasure Island development plan [SFGate]
    Buried treasure [SFBG]

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    Circle Bank and creative financing

    Looks like nothing more than a canned press release written by Circle Bank, but they ran it in the SF Business Times, so I’ll pass it on…

    Circle Bank of Novato has created a series of unique loan products to help finance residential and commercial real estate throughout the Bay Area.

    The products include a deferred payment program, fractional tenant-in-common loans for both residential and commercial property and a real estate retirement program that extends loans for investment real estate in self-directed IRAs and 401(k) plans.

    Fractional residential TIC loans are an increasingly popular way for a group of buyers to acquire a multi-family residential property. Circle Bank is financing all phases of TIC transactions, from acquisition financing to conversion to fractional TIC loans for the separate buyers.

    “This unique lending program,” the bank said, “makes it easy for apartment building owners to convert their properties to tenant-owned residences without having to deal with the restrictive fees, permits and inspections often required for condominium conversions.”

    The financing tool is also an effective means to skirt local laws, like those in San Francisco, that severely restrict the number of apartments that can be converted into condos.

    Circle Bank is also extending fractional TIC loans to finance commercial real estate such as office condos. [more…]

    And perhaps coincidentally, I had a reader comment on an old post about their bad experience with Circle Bank…

    Circle Bank’s fractional-TIC loans should be avoided if at all possible. They refuse to provide a copy of their Note and Deed of Trust for review by your attorney saying that it is PROPRIETORY INFORMATION then slip it under your nose at the title company for signing. It took them 112 days to fund from initial application and the rate originally quoted went up when the rest of the market was going down. They also changed indexes and increased spreads without notice.

    I have worked with clients who used Circle Bank, and have had good experiences with them, but I have not been involved in any fractional TIC financing.

    Circle Bank offers new ways to finance real estate [SF Business Times]
    Circle Bank starts controversial fractional-TIC loans [SFHomeBlog]
    Bank of Marin to be first to offer individual TIC loans? [SFHomeBlog]

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    Tenderloin developer puts down $5.5 million on site for 80 units

    From today’s San Francisco Business Times,

    Tenderloin Neighborhood Development Corp. is snapping up a Mission Street parcel for $5.5 million and plans to develop 80 units of affordable family housing there.

    The 15,000-square-foot site, 1036-1040 Mission St., sits between Sixth and Seventh streets, a long-depressed part of the Mid-Market neighborhood that has seen considerable investment over the past two years. It was owned by Skyline Investments, a company owned by the Lembi family, which is being sued by the city for violating housing laws.

    Nick Griffin, a senior project manager with nonprofit TNDC, said it’s getting increasingly difficult to tie up development parcels for below-market projects. In addition to the SoMa Grand, a high-end 22-story highrise AGI Capital and TMG are developing at Mission and Seventh streets, national developers Crescent Heights and Forest City are looking at condo developments in the neighborhood.

    “It’s competitive and sites are scarce,” said Griffin. “We feel that when someone like Skyline gives us the opportunity to tie up a site, we don’t have the luxury to dicker around with it. We need site control as quickly as possible.”

    About 20 percent of the project will be set aside for the formerly homeless. The project will include 13 one-bedroom, 50 two-bedroom, and 15 three-bedroom units. Rents will be pegged at 30 percent of median income. [more…]

    Tenderloin developer puts down $5.5 million on site for 80 units [SF Business Times]
    Tenderloin Neighborhood Development Corporation (TNDC) [official site]
    New Housing Complex Offers Positive Change For The Tenderloin [SFHomeBlog]
    Construction to begin on Tenderloin center [SFHomeBlog]
    Condos, offices drive Mid-Market ‘revitalization’ [SFHomeBlog]
    SOMA Grand [official site]

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