Stocks Vs SF Real Estate the past 10 yrs...

This chart illustrates the difference between an investment made on January 1, 2000 in one of the major U.S. stock indices and one made in either a San Francisco house or condominium. It's simply a sample analysis to show how real estate usually appreciates over the longer term: numbers may change dramatically according to the period used in the calculation.

Since it is based upon an all-cash purchase, if one made the calculation based upon a 20% or 25% down-payment, the return on investment on real estate purchased would soar into the hundreds of percent.

Even in periods when the stock markets generate a good return on investment, one should note that significant capital gains taxes apply to stocks, but primary residences occupied for a minimum period of time, are exempt from capital gains taxes for the first $250,000 - $500,000 of gain depending on whether the purchaser was one or two persons.

San Francisco real estate has usually proven to be an excellent investment over the longer term due to the advantages of leverage, the incredible tax benefits of home-ownership in the United States, and local demographic and appreciation trends.

We'll have to wait until 2017 to see how the stock markets fared vs those who purchased homes during the 2007 peaks in real estate prices...

1st Time Homebuyers Tax Credit revised to help SF purchasers

The $8,000 credit was scheduled to expire on Dec. 1 2009 but will now be in effect through the end of June 2010. Homebuyers must sign a contract before April 30 and close by June 30, 2010. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

The bill also made more homeowners eligible to claim the credit on their taxes. First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate, which was previously mostly useless for San Francisco due to the previous income cap of $75,000 (which put most out of the running for a minimum SF purchase). However now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

Federal Housing Tax Credit [NAHB]

Bong Su on the Auction Block

Well, technically it's not being 'auctioned' off - but it is for sale, minimum bid $50,000 (and a base annual rent, not for the amateur restaurateur, at $227,160 through 2020). To this day, Bong Su remains one of my favorite Soma restaurants - albeit a delicious memory now. Great food, on par with Slanted Door, easy to get in - obviously part of the problem - fantastic decor. Ok it was on 3rd Street but I for one miss it tremendously...now if I could just get my hands on some of their imported sandstone carvings, mysteriously missing from the Equipment list...

Update: from Marsha over at Tablehopper Osha Thai soon to take over the venue...

311 Third St [Johnson Hoke]
the Chatterbox Oct 13th [Tablehopper]

Revamped SFOpenHomes.com now Live

Per yesterday's post I recieved a couple of requests from readers looking for more info regarding SFOpenHomes.com. Since the site has JUST been revamped and is just in the beginning phase of being heavily promoted I thought it was a good time to let you know what this site can do that makes it different from SFGate (the online web companion to the Open Home section of the Chronicle).

The rebuilt site offers a plethora of new features some of the features incorporated into the new site include:

~ A new, consumer-focused look and design;
~ One-click open home reports (open homes this weekend and open homes this Sunday);
~ New search interfaces (quick search and an intuitive advanced search);
~ Easy-to-use flash-based map search;
~ Google map-view reports, in addition to more standard report layouts;
~ Search 2-unit buildings separate from 3- to 4-unit buildings;
~ Search for REOs, short sales;
~ Search for probates;
~ Search for green-certified properties.

I haven't spent as much time myself checking out the new features as I probably should have, but anything is an upgrade from the search filters at SfGate. Sorry Chron but it's bad...

Open Homes Listings in San Francisco [SFOpenHome.com]

2009/2010 Property Tax Appeals Close August 28th 2009

If you believe your home may be eligible for a reduction in property taxes based upon a decline in value, there are two ways to go about it. An informal review by the Assessor's office and/or a formal appeal with Assessment Appeals Board. The formal appeal, can be a complicated and time consuming but may be worth the effort for the savings in property taxes. Typically, the Assessor's "valuation date" is January 1, 2009 and any sales comparables submitted must have closed before March 31, 2009.

Very generally (it all depends on the neighborhood and other details), homes purchased 2006 through mid-2008 probably have the best case for property tax reduction. The less affluent areas of the city typically peaked in value around 2006 and the more affluent in 2007 - 2008. Declines from peak value generally run in the 10% to 30% range, with the less affluent southern neighborhoods being hit with the largest reductions.

If your appeal is successful, the reduction in assessed value only applies to the 7/1/09 - 6/30/10 tax year. A decline-in-market appeal is only good for 1 year, the year for which it is filed. You have to refile every subsequent year.

Informal Review
The Assessor's Office is now accepting, through 8/28/09, "Requests For Informal Review Of Assessed Value" for tax year 2009/2010. This applies only to single-family dwellings, residential condominiums, townhouses, live-work lofts and cooperative units. The SF Assessor's website offers information regarding Decline-in-Value Informal Reviews:
SF Assessor's Office Forms and FAQs


Formal Appeal
The next open formal appeal filing period for San Francisco will be July 2, 2009 to September 15, 2009 -- to appeal the 2009/2010 assessed value of your property. A formal appeal can be made for multi-unit and commercial properties, as well as for houses, condos & cooperative units.These 2 websites offer details regarding the filing of a formal appeal - the instructional videos are highly recommended for those who wish to proceed:
SF Assessment Appeals Board
Informational Videos on Property Tax Appeals


Warning on Scams
There are a number of property-tax-appeal service companies, who have been sending out their solicitations on stationery that suggests a government agency affiliation. SF Assessor-Recorder Phil Ting has stated the following:"We've received reports from dozens of taxpayers who have received a letter from companies offering to facilitate the property tax reassessment for $179 [or more]. This is unnecessary and deceptive. Taxpayers can fill out a simple, one-page application for a review of their property in my office, free of charge, starting on April 15. There is no need to pay for this service." Many of the solicitations received by San Francisco homeowners may be illegal. More on this subject:
Home Reassessment Scams a

Apply for Informal Review of Assessed Value for 2009-2010 Tax Year [SFGov.org]
Peak Value vs Current SF Value Feb 2009 [SFHomeBlog]
Revised: Peak Values vs. Current SF Prices - Single Family Homes [SFHomeBlog]

Voter Approved High Speed Rail - It's coming to SF

South of Market Residents have a new reason to lose their cars - as well as yet another major construction project planned for the hood. Just like the Bay Bridge retrofit, this one promises to be delayed, long, debated and probably pretty cool once it's complete.

As real estate agents, we're being advised to take this into consideration when selling properties in the surrounding area...

On November 5, 2008, California voters approved Proposition 1A authorizing funding of a high-speed rail transportation system linking various cities in the State. Both the location of the proposed rail system and the possible effect that the construction and operation of that system will have on residential areas has been the subject of concern and debate. Some news reports have indicated that, depending upon the location of the high-speed rail system, it may have a negative effect on some properties in the San Francisco Bay Area. It is anticipated that construction is
likely to begin as early as 2011.

Precisely what impact, if any, the proposed high-speed rail transportation system will have on any given property is unknown either before, during or after construction. The construction and/or use of the transportation system may affect people differently. Real estate agents are not experts in this area and buyers are advised to satisfy themselves with regard to this issue during their inspection contingency period.

www.CAHighSpeedRail.ca.gov [California High Speed Rail Authority]

Property Owners in Haight/Cole Valley/Inner Sunset Let Your Voice Be Heard

Property Owners in District 5 are encouraged to attend a community outreach meeting on Tuesday March 31st at 7pm at Park Branch Library, 1833 Page to help weigh-in on San Francisco's housing element of the general plan which, updated every five years, guides overall San Francisco policy regarding housing.

The City is embarking upon a Citywide outreach campaign for the 2009 Housing Element update. The Planning Department and the Mayor’s Office of Housing have been working closely with a Community Advisory Body to develop initial ideas for that update. We’d like to hear about your needs related to housing, so that we can adequately incorporate policy ideas that address these needs. The Housing Element is the component of the City's General Plan that provides a five year vision for housing. San Francisco, along with all the municipalities, is required by state law to update the Housing Element of the General Plan every five years. The State requires that a complete and approved draft be submitted by June 26th, 2009...[more]

Objectives (From the previous Housing Element of the General Plan adopted May 13th 2004)

This second part of the Housing Element sets forth objectives, policies, and implementing programs to address the critical housing needs identified in Part I. In the last decade, San Francisco's population grew while new housing construction failed to keep pace. San Francisco households grew an average 2,400 annually, yet addition to the housing stock averaged just about 1,000 a year. Vacancy rates plummeted and even middle-income householders found themselves paying 50% or more of their income to rents.

The State Department of Housing and Community Development (HCD), with the Association of Bay Area Governments (ABAG), has estimated that San Francisco needs to build over 2,700 new units a year to meet its share of the region's projected housing demand. As recent production fell short of this annual target, 3,200 new units a year must be built between 2001 and 2006 to meet regional housing goals. At least 40% of these new housing construction should be affordable to low and very low income households, and 32% affordable to households of moderate means.

Objectives and policies are general in nature and serve as the framework for decision making and priority-setting. They address specific needs and are followed by related implementation actions. For these implementation actions to succeed, three major prerequisites must be met:

• An adequate supply of land must be identified; 
• Regulatory and other impediments must be removed while incentives are identified and provided; and 
• Adequate financing must be available for both private and non-profit housing development. [more]
• 
  

If you've ever wanted a say in how the city uses it's valuable resources, now is the time to speak up and let your voice be heard.  While this meeting is set up specifically for property owners in District 5, there are plenty of ways to get involved including if you can't make this meeting.

Join the Mailing List

Take the Housing Survey

Host your own Community Conversation- Contact:Abigail.kiefer@sfgov.org or call 415.575.9065

Housing Element 2009 Update [SF Planning Dept]
General Plan SF Housing Element [SF Gov]
District 5 Map PDF [SFGov.org]
Housing Elements Community Calender [SFPlanning.org]
Park Branch Library 1833 Page [Google Maps]

How Not to Sell your House

In getting ready to head out for my work day, holding an open house is in the mix, I find myself still amused by this list one of my friends in the business compiled regarding what NOT to do when selling your home. 

I have to admit to having more than a few 'stranger than fiction' moments over the years myself.  Showing up to do a pre-arranged photo shoot in a very high-end condo only to be left with the aftermath of last nights escapades in the bedroom. The photographer began in the living room while I did triage in the bedroom, all the while appreciating a new-found respect for Las Vegas housekeepers. Or the time I innocently opened a top drawer in a kitchen looking for a pen only to find my very conservative clients were into bondage - or they had a really good supply of gag gifts - I never found out which. 

So without further ado feel free to enjoy, add to, and even more so heed the advice contained herein if you are planning on or currently selling your home.

1. Don’t think we can’t smell your pets.  I’ve walked into homes where the first thing I thought was, “Cat.” Then I go into the bathroom and think, “Oh man! So Cat!” And then, in the tub behind the shower curtain, (always) is the kitty litter box. Pet odor is also a substantial liability: I’ve heard that buyers sue over cat pee more than anything else.

2. Don’t cook a big Indian meal right before your open house. Or eggs and bacon. Or something with lots of garlic.

3. Don’t think people won’t open your drawers. I was at an open house once where I opened a drawer in a television cabinet and found it loaded with porn videos. I was terribly embarrassed, and walked around the rest of the time with my arms plastered to my sides.

4. Don’t leave your furniture arranged as it is so people can see how much you can fit into a room. When I’m in a hurry touring property on a Tuesday, I don’t want to run an obstacle course around your stuff. When our Sellers need to remain in the home during the marketing period, we usually recommend putting half their furniture and accessories in storage.

5. Don’t leave all your very favorite art up on the walls. I showed a home once where the entire living room wall was covered with snapshots of male body parts. It was highly entertaining, but a day later I couldn’t remember anything else about the house.

4. Don’t leave a joint and roach clip on your bedside table. This is another house where I remember hardly anything except that the guy’s bed had a great sunset view of Twin Peaks.

6. Don’t play your favorite Madonna music on a boom box in the kitchen. Some people might think this gives their house a cool aesthetic, but I’d go for something a little more neutral, like classical. Boring, I know, but very safe.

7. Don't make sure everyone knows your cultural and political preferences.  You may love your Obama poster.  I may love your Obama poster.  But we're trying to appeal to the masses here, and you don't want your place to be remembered by a Republican as the 'Obama Poster House.'

How Not to Sell your House [SF Real Estate Buzz]

Voluntary Refinance Best Bet for Bay Area Mortgage Relief

As reported on CBS news, and most recently in the SF Chronicle, the Housing Rescue Plan is expected to widely bypass most Bay Area homeowners. What's the primary reason?

"Only a small percentage of Bay Area mortgage holders meet the criteria for the low-cost refinances being offered to help stabilize the housing market. To qualify, loans must have been for less than $417,000 if issued more than a year ago, and homes cannot be underwater by more than 5 percent...But that initiative is only available to people who took out so-called conforming loans of less than $417,000 and whose homes are not more than 5 percent underwater - meaning what they owe is not more than 5 percent greater than their home's value. For instance, someone with a home now worth $300,000 who owes $315,000 could qualify for the refinance - but would be barred if the home's value dropped further." Read the full story here.

It's not all bad news. The new Housing Rescue plan is reportedly dedicating $75 billion to help encourage lenders to cooperate with voluntary refinancing of existing loans that are not eligible for traditional refinancing. The most common reason I'm seeing for that is appraisals that are not penciling out for a new lender. Additionally, a reported $200 billion is dedicated towards helping Fannie Mae and Freddie Mac keep new loans flowing and mortgage rates low.

Bottom line - if you are looking to take advantage of the current interest rates and cannot refinance traditionally - be prepared to spend some time on the phone. There are companies that have sprung up all over the state offering to negotiate with your bank on your behalf, for a fee, but there are just as many people who are falling victim to fraud by such companies. I personally cannot recommend trying that route.

My best advice is to be patient, stay persistent, and if you get a jerk on the line, stay calm and call back to talk to someone else who is either better at their job, or just a more helpful person. I never cease to be amazed how well that works...

Pay to By-Pass Condo Lottery?

I was thrilled to read a proposal today of what could be the most exciting news for TIC owners here in San Francisco....

From The San Francisco Chronicle:

Waiting to go condo is San Francisco's version of waiting for Godot.

Building owners can spend years vying for one of 200 condo-conversion slots awarded annually via a lottery. But this year San Francisco is considering letting people skip the line, offering a one-time chance to the hundreds of folks on the lottery list to go condo now - for an extra fee. The goal is to generate more revenue for the cash-strapped city and to create building-industry jobs, because condo conversions generally require some construction work to bring buildings up to code.

"We're investigating many revenue options to help solve the city's budget deficit; condo conversion is one of them," e-mailed Joe Arellano, a spokesman for Mayor Gavin Newsom.

A proposal to expedite condo conversion would require approval by either the supervisors or the voters - no easy task in a city where housing issues are famously contentious. Tenant advocates say the practice hurts renters who get evicted when buildings convert to tenancies in common, the step before going condo. Previous proposals for increased condo conversions have failed miserably.

Supporters say the sour economy could change the dynamics this time around.

"What's different this year is that the city is in such a financial hole, this is a way to help," said Mike Sullivan, board chair of Plan C San Francisco, a moderate civic organization that supports the idea. "If all the city did was grandfather in the 1,500 people waiting behind the lottery, just doing that would help the city's budget."

Supervisor Sean Elsbernd, the proposal's instigator, said the extra fees would directly benefit affordable and supportive housing, as a way to remediate the plan's impact on the rental housing market. [More...]

So maybe the downturn in the economy could benefit those waiting to win the lottery?

A total of 2,030 individual units are entered into this year's lottery, which takes place Friday. Also on that day, Plan C is organizing a demonstration at City Hall to protest the lengthy wait for condo conversion. [More...]

Yes, it's exciting for those TIC owners, but you can expect there will be a fight against this happening as is evident further in the article.

Ted Gullicksen, director of the San Francisco Tenants Union, said the proposal ultimately would hurt renters.

"We need to preserve our rental housing," he said. "The easier we make it for tenancies in common to become condominiums, the more TICs will be created. The larger issue is that people are creating TICs to get around the condo conversion law" that provides more tenant protections.

Miguel Wooding, executive director of the Eviction Defense Collaborative, agreed.

"The condo conversion law has been around for a long time and has been an important protection for preserving rent-controlled housing stock," he said. A one-time mega conversion "sets up expectations of the possibility of increasing TIC conversions in the future. You have an increased motivation to increase evictions (to create TICs) if you have that possibility."

So all you Tic owners, it's time to join Plan C (you can even join for free) and start marking your voice heard on this issue. I used to hear that the back log on the lottery system was 12 to 15 years, but lately I hear that it's estimated at between 15 to 20 years. This could be a real opportunity!

Remodeling Costs for San Francisco Real Estate Jobs

The 2007 Cost vs. Value Report establishes cost-to-construct benchmarks for a set of common remodeling projects, then estimates how much of that investment will be recouped at resale in the current market.  It's a must read for those needing more space, like many of my clients with growing families, but are weighing the risk/reward for selling and upgrading in this kind of market.

San Francisco Job Costs:

"What the Numbers Mean

When comparing cost estimates for actual projects, remember that averaging tends to have a leveling effect on "Job Cost" data from the 2007 Cost vs. Value Report. And as always, seemingly small differences in size, scope, or quality of finishes can dramatically affect final project cost.

It's also important to consider whether a remodeled space reduces the perceived number of rooms or available square footage. For example, carving a half-bath out of unused storage space under a stair case is an obvious gain in usable space. But converting an existing bedroom into a master bath, while a positive development in many respects, may reduce the total number of bedrooms below the minimum expectation of typical prospective buyers."

The full article can be found here on the Handley Wood Remodeling website, and is quite the interesting read. (The 2008/09 numbers are due out soon).

SF is finally 'officially' a Buyer's Market

Despite month's of negative news regarding real estate, San Francisco has proven amazingly resilient to price decreases (southern neighborhoods such as South of Market not withstanding) that is, until quite recently.

Below is an analysis of Inventory Supply in San Francisco, compiled by Patrick Carlisle , showing a sharp change occurring in the market since September. The changes are particularly dramatic in several neighborhoods that have been very strong sellers’ markets heretofore.

By nature, these analyses are snapshots, which can sometimes change dramatically from month to month. Months-Supply-of-Inventory (MSI) & Days-on-Market (DOM) Analysis
Opinions vary but roughly speaking 4-6 months supply of inventory is considered a “balanced” market between buyers and sellers; less than 4 months is considered a sellers’ market; and more than 6 months is considered a buyers’ market.

By these definitions, for the first time in years, the home market in probably most of San Francisco’s neighborhoods can now be considered a buyers’ market – a time when buyers can usually secure substantially better deals than in the past. Good agents should be particularly aggressive on their buyers’ behalves, and ensure that their sellers understand the change in market dynamics. Important footnotes below chart...


To view a map of individual neighborhoods broken down by district numbers go here...

IMPORTANT: As this analysis was done on 12/1/08 regarding November 08 activity, the Months-Supply-of-Inventory figure is probably skewed somewhat higher than it should be since a number of offers accepted – probably a relatively small number considering the amount of activity during a typical Thanksgiving week – occurring in November may not have yet been reported to MLS. An extreme example of this is District 7 houses: since only 2 reportedly went into contract in November, if 2 more offer acceptances occurred in November but have not yet been reported, the MSI would decline from 20 months to 10 months – still very high by historical standards. District 5 only reported 8 houses under contract out of 112 available as of 11/30/08. A few more unreported offer acceptances would reduce that MSI from 14 months to 8 – 10 months (still very high by historical standards).

The only districts showing a decline in MSI year to year are Districts 3 & 10 – where sales activity has picked up markedly in recent months, probably due to foreclosure sales (and rapid declines in median sales price). Many other districts saw a doubling, tripling, quadrupling or more of MSI comparing 11/08 to 11/07.

Note the very high average-Days-on-Market (DOM) figure for “For Sale” homes. Average DOM has increased significantly for both sold and under contract homes (sometimes doubling year over year), but the “For Sale” DOM increase is particularly dramatic. Many properties are sitting on the market for much longer periods of time. Subsequently, the number of price reductions has soared as well. AVERAGE DAYS ON MARKET (DOM) is defined as: The average number of days it took all of the properties that went under contract during the period to accept a first position offer. MONTH’S SUPPLY OF INVENTORY (MSI) is a measure of how long it would take, in months, to sell the existing inventory at the current sales rate for the specific neighborhood and property type. MSI is defined as: The number of active properties on the market for one day or more during the month, less the number of properties that have been withdrawn or expired, divided by the number of properties that have gone under contract during the month.

All data is derived from Agent Metrics, may contain errors and omissions and is not guaranteed.

To Rent Control or Not to Rent Control - That is the Question - Prop 98 Heats Up

From today's SFGate,

Proposition 98 was written as a restriction on eminent domain that would prohibit the government from taking property for the benefit of a private party. Opponents say it would do far more: define "private" and "take" in terms so broad as to effectively overturn the state's approach to managing development and affordability.

The clause attracting the most attention is one that would ban government-imposed limits on what landlords can charge tenants. The change wouldn't affect existing leases, but once renters move out, property owners in cities with rent control laws, such as Berkeley, Oakland and San Francisco, no longer would have to limit price increases on those units. [more...]


Differing views on measure to end rent control [SFGate]
How Rent Control Drives out Affordible Housing [CatoInstitute]