Archive for August, 2015

Stock Market Volatility & San Francisco Real Estate

With all the current drama in world stock markets, it’s not unreasonable that a person will want to step back and see what happens – and trying to convince someone otherwise is a losing proposition. Based on current economic activity and conditions in the U.S., there is very little chance of a U.S. stock market crash occurring in the near future (though the scale of an “adjustment”, if such happens, is unknown) and it’s quite possible the current dramatic volatility may soon become a distant and irrelevant memory, as other short-term economic events often have.  And besides U.S. economic conditions, there are the existing boom economic conditions in the Bay Area, which means our housing market may react differently. In any case, concerned home buyers and sellers should wait and see how things shake out. It may well be one of those blips that mean little and impacts the San Francisco market very little. Generally speaking, over the past 30 years, it has taken a literal stock market crash to severely impact our market values.

Of course, nobody has a crystal ball to know what the stock market will do. Also, where we are vis a vis what will eventually turn out to be the top of the market in our current cycle is totally unknown.  

Housing prices typically don’t react at all to short term ups and downs in the stock market, though depending on how dramatic they are, they can temporarily slow activity as buyers wait to see if something really serious, with long-term ramifications, is developing. It is generally the more affluent who step back and wait, since 1) they have much more wealth in financial investments (stocks), and 2) they’re much more tuned into financial market movements. Housing prices are not a liquid bid-ask market – we sell small numbers of relatively unique homes in San Francisco, not millions of uniform shares of stock – and sellers always react more slowly to economic downturns since they don’t want to reduce prices if they don’t have to, and no one can make them sell. Also, of course, there’s a built-in delay in sales between offer negotiations and closed transactions, so it takes a while for price movements to clarify.

Generally, all market segments react to big, sustained, macro-economic events as can be seen in the 3 S&P Case-Shiller charts below for the low, mid an high-priced tiers of the Bay Area home markets. However, it is interesting that when the dot-com bubble burst, only the mid- and high-price tiers’ home prices were affected (and then, briefly), and the high-priced tier was impacted more than the mid-tier. The buyers in the high tier were much more affected in their wealth by the crash in the Nasdaq, especially in the Bay Area, and the most affluent buyers drew back the most as they waited to assess the shake out.

For what it’s worth, in the last cycle, our more expensive San Francisco neighborhoods were the last to peak in value in early 2008, and the first to recover in late 2011/early 2012.  San Francisco was generally much less impacted by the bubble’s crash than the rest of the Bay Area, state and the country, though some neighborhoods were more affected than others. Generally speaking, San Francisco’s housing market has since appreciated well beyond its previous peak values.

In the last bubble and recession, lower priced homes surged much higher and crashed much more dramatically than higher priced ones, but that was not because of the stock market, but because of the subprime loan situation which led to massive foreclosures in the lower end (with buyers who couldn’t afford the home they were buying in the first place). Subprime lending played a very small part in higher priced home purchases (which dominate in San Francisco), whose buyers also tended to be more financially savvy (and weren’t targeted by predatory loan brokers and generally didn’t buy homes they couldn’t afford).

I’ll start out with our updated chart on the S&P 500 so one can compare the stock market to the various Case-Shiller Index Bay Area home price tiers. Again, different price tiers had bubbles and crashes of different magnitude due to the subprime financing (and refinancing) fiasco. And please note that while the latest stock market decline is indicated, other short-term fluctuations will not show up in year to year figures.

It’s interesting to note that all 3 Bay Area housing price tiers, according to Case-Shiller, are now showing a uniform 117% appreciation rate since year 2000.

This chart below tracks the appreciation that has occurred in the high-price-tier market – which most of San Francisco’s housing is in – since the recover began in 2012.

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Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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San Francisco Market Overview: August 2015

 

It’s been an uncommonly busy summer for real estate in the Bay Area. In fact, more single-family homes sold in the region last month than in any July since the housing bust! Even with median prices for homes and condos alike in San Francisco exceeding $1,000,000 for the 6th consecutive month and inventory at its lowest since January, the number of property sales recently has kept on pace with the spring months.

Even with prices in the area at record highs, there’s opportunity to buy within the six-figure range. Almost 100 sub-million dollar condos have traded hands this year in the Noe Valley / Cole Valley / Corona Heights area alone. This past week, two properties have come on the market with list prices under $500,000: a Victorian TIC in the heart of the Mission, and a Downtown studio condo. Not only may properties like these be great investment opportunities, but shelter from the city’s rent explosion as well.

Right around the corner, Labor Day Weekend marks the beginning of the last big market push before the end of the year. Historically, we see inventory spike in September, and I’m seeing many properties getting prepped right now for the open market. Employment in San Francisco is at a record high, and an interest rate hike is looming on the horizon — all things considered, it could be the perfect storm for a frenzied Q4.

In every market there are always ‘deals’. You just have to know where to look, how to win them and be prepared to act.

 

PS: Here’s a first look at the 67 new condos at the corner of Franklin and Bush, expected to begin selling this winter. Additional information: 1450FranklinSF.com

 

 

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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Top 10 San Francisco Home Sales of 2015

 

 

Nowhere in San Francisco can you find a higher concentration of opulent homes than in Pacific Heights. Here, tech moguls live side by side with movers and shakers of high society — Dianne Feinstein, Gordon and Ann Getty, Larry Ellison, Mark Pincus, Danielle Steel and Nancy Pelosi are but a handful of the tony neighborhood’s ultra high net worth residents. In 2013, the trophy “Billionaire’s Row” property at 2950 Broadway (pictured above) traded hands for $35,000,000, making it the most expensive single-family home sale in the city’s history. Pacific Heights has seen 9 of the 10 biggest real estate sales in San Francisco already this year — two of which sold for no less than $30,000,000 — eclipsing several of 2014’s record sales.

At $6,800,000, Pacific Heights has the highest median single-family home price in the city, nearly five times greater than the city-wide median. While the neighborhood hasn’t seen the greatest property value appreciation in percentage terms since market recovery began in 2011, it’s a completely different story when talking about dollars…

 

 

 

Without further ado: Here are the 10 most expensive home sales in San Francisco year-to-date:

 

1. 2701 Broadway, Pacific Heights, San Francisco – $31,000,000

2701 Broadway

 

2. 2006 Washington #10, Pacific Heights, San Francisco – $30,000,000

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3. 2424 Washington, Pacific Heights, San Francisco – $23,889,000

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4. 2950 Vallejo, Pacific Heights, San Francisco – $16,760,000

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5. 3385 Jackson, Presidio Heights, San Francisco – $13,500,000

3385 Jackson

 

6. 3015 Pacific, Pacific Heights, San Francisco – $12,000,000

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7. 2900 Vallejo, Pacific Heights, San Francisco – $12,000,000

2900 Vallejo

 

8. 2939 Vallejo, Pacific Heights, San Francisco – $12,000,000

2939 Vallejo

 

9. 2010 Jackson, Pacific Heights, San Francisco – $11,500,000

2010 Jackson

 

10. 2342 Washington, Pacific Heights, San Francisco – $11,500,000

2342 Washington

 

Think 2015 could be the year a new record is set for the most expensive single-family home ever sold in San Francisco? Fall selling seasons in nearly upon us and a wave of new inventory is coming…

 

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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Foodie in Paradise: San Francisco Edition

 

San Francisco is — without doubt — a foodie mecca. From Michelin starred and James Beard Award-winning restaurants to plentiful farmers’ markets, the city’s thriving food scene as we know it today has been a long time in the making. In fact, the oldest restaurant in San Francisco (and all of California!), Tadich Grill, opened in 1849 and is still going strong as a local favorite. Tip: If you plan to visit for dinner, expect a wait and enjoy the full bar until your table is ready. Boudin Bakery, opened the same year, struck culinary gold with its famous sourdough now synonymous with San Francisco. (The 10 Oldest Businesses in San Francisco)

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If sourdough isn’t your thing, there are plenty of other San Francisco originals to experience. Cioppino has its roots in the early days of the city when Genovese fishermen would create this hodgepodge stew with leftover fish and shellfish at the end of the day. Tadich Grill is said to be the first restaurant to offer the dish and makes some of the best cioppino around. (Sotto Mare in North Beach and Anchor Oyster Bar in the Castro makes good ones, too!) Moving from surf to turf, the roasted chicken for two — cooked for an hour in a brick oven — at the celebrated Zuni Cafe is legendary. Other San Francisco originals include the famous Mission-style burrito and local Dungeness crab. And you can wash it all down with an Irish Coffee, poured at Buena Vista since 1952… or an Anchor Steam to celebrate Drink Steam Week!

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Why not venture out to one of the city’s more than two dozen farmers’ markets (full list) and cook up an original of your own? The Ferry Building Farmers’ Market is renowned throughout the country, visited by 25,000 shoppers each week, including some of San Francisco’s best known chefs and most famous farmers. Starting select Sundays this September, look for new pop-up markets in the city’s Mission Bay neighborhood at The Yard at Mission Rock. With fresh produce in hand, you don’t have to look far for culinary inspiration– Check out these recipes from our very own AL’s Place and Rintaro, just named to Bon Appétit‘s Top 10 Best New Restaurants in America.

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Home cooking? How about some hometown favorites? One of the many great examples of diversity in this city of transplants is the availability of iconic food from around the United States (and world!). Whether you’re craving a Philadelphia-style cheesesteak, NoLa-style po-boys, or Baja-style fish tacos, you can find them right here in San Francisco. With a generous 4.44 restaurants or grocery stores per 1,000 residents (the highest in the country), there’s something for all paletes here.

My current favorite San Francisco treat is a relative newcomer: State Bird Provisions. Four years, two James Beard Awards and a Michelin Star since SBP opened, there’s a line out its door every night of the week. Reservations are made 60 days in advance, and your best chance at getting in for the 5:30pm first seating is to arrive at least an hour early to hold your place. Believe me, it’s worth it! Tip: If you’re a party of one or two, try for a seat at the chef’s counter to enjoy first pick at all the delectable small plates.

Cheers!

 

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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San Francisco Real Estate on a < $1Million Budget

 

There’s the notion that a million dollars is the price you have to pay if you want to play in San Francisco’s red hot real estate market. After all, the most expensive properties get a lot of media attention– But if the median price is $1,160,000, that means almost half the properties on the market are selling for under $1 million.

Of those sub-million dollar properties, the majority are neither Below Market Rate units nor fixer-uppers, instead livable turn-key homes (search homes here). Socketsite recently published news of a double-digit uptick in the number of six-figure single-family homes for sale. Just this week, this two-bedroom single-family home in San Francisco’s Excelsior neighborhood sold for $630,000. The property is already occupied by an unprotected month-to-month tenant agreeable to paying market rent, making this a positive cashflow investment for the non-occupant buyer:

 

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Year to date, Excelsior has in fact had the most six-figure single-family home sales of any neighborhood:

 

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Last week, this two-bedroom two-bathroom condominium at the amenity-rich Telegraph Landing in San Francisco’s North Waterfront neighborhood sold for $950,000. It’s one of the almost 200 two-bedroom condos that have sold in 2015 so far:

 

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First-time homebuyer, investor, mom & pop… a million dollars is a lot of money to almost everyone, and opportunities do really exist beyond the hype of million dollar listings. Sure, prices have been reaching new peaks month after month, climbing to daunting highs. But actually San Francisco real estate is still more affordable now than at the height of the market in 2007, thanks to low mortgage interest rates:

 

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The frenzy that exists in San Francisco’s real estate market right now may be attributed to many factors: a booming local economy, low inventory, very few new residential developments, consumer confidence, credit availability, etc. As the city continues to stake its place as a world class destination, I believe prices will continue to rise — perhaps up to $3,000 per square foot, on par with Tokyo, Sydney and London. With that in mind, it may be only a matter of time before sub-million dollar home sales in the city are a thing of the past. Never underestimate the voracity of the San Francisco market!

 

Meredith Martin is a Broker Associate at Paragon Real Estate Group and can be reached at Meredith@OpeningDoors.me

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