Posts Tagged ‘affordable’

San Francisco Market Overview: October 2015

 

As we begin the last quarter of the year, change is in the air!

First, a surge of new listings hit the market last month — there’s more inventory in San Francisco now than there’s been at any time this year. Just over 40% of those properties for sale are priced under $1M (on par with Zillow’s recent valuation of homes across the city — see how your neighborhood stacks up). Certainly buyer demand is persisting, however competition for any given property is generally letting up… for now. The consensus among forecasters is that prices in the Bay Area will rise through 2016 with regional employment playing a critical role.

Second, there seems to be a shift in buyer demand as higher priced homes linger and take price reductions while relatively more affordable ones attract interest. The median sales price of properties in SF fell slightly last month to $1,150,000 and the number sold is down dramatically year-over-year. To further this point, the generally less expensive East Bay, for example, is experiencing an increase in number of sales from last year, and median prices in some cities — like Berkeley — continue to climb. [Those in SF’s ultra-high-end market still have plenty to choose from including these 3 Most Expensive.]

From now thru the end of the year — before the Spring 2016 selling season begins — should prove an opportune time for prospective buyers to make a move, and it may well be the best time to borrow money in recorded history.




 

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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 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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Million Dollar Affordable Housing. Only in San Francisco.

 

No San Francisco neighborhood has so squarely positioned itself at the epicenter of opposition to rising housing costs than the Mission District. Of course, housing un-affordability is but one of many rapid changes in the neighborhood, and seeking legislative action is but one response (sidebar: remember when protestors were blocking tech shuttles?) — and median home prices have soared 76% citywide since 2011! For now, let’s take a focused look at some of the real estate sales dynamics in the Mission.

August 2007, at the peak pre-recession height of local real estate, a TIC at 901 Guerrero Street (below) sold for $955,000. The 3-bed and 1.5-bath Edwardian was purchased for 12.5% more that its list price and in 26 days on the market.

 

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Earlier this year, in February 2015, I represented the buyer of 901 Guerrero Street sold for $1,650,000. This time, the property returned favorable to the market with a fresh coat of paint, a successful condo-conversion on the record, and convenient proximity to “every tech bus.” The winning bid (of course there were competing offers!) after only eight days on the market came in at 18% over asking. The San Francisco Chronicle even wrote about it.

 

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Given that 901 Guerrero did have a significant value-adding improvement between 2007 and 2015, consider still that its 2015 price is nearly 75% higher than at the previous peak. It’s not uncommon for properties to be improved from one sale to the next, and it makes sense that those properties will sell for higher prices, all else equal. Couple that with record-low inventory and cash investors, and now not even techies (let alone teachers) can compete as homebuyers. Since 901 Guerrero Street sold, I’ve seen comparable properties in the neighborhood sell for even higher. What’s a city like San Francisco with its economy supercharged by the high-tech boom to do?

There appears to be a “try everything” approach in the works for the Mission.

First, a ballot initiative calling for an 18-month moratorium on new market-rate residential developments in the Mission has been approved for the November 2015 ballot. If passed, the effect of the moratorium on neighborhood home prices can be debated. Because the overwhelming majority of housing in the Mission is market-rate which is favored by homebuyers, constraining supply could drive prices of existing homes higher. Alternately, negative attitudes toward an influx of affordable housing could lead residents to leave for other neighborhoods and influence homebuyers to buy elsewhere, ultimately hurting market-rate resale values.

Second, the city is feeling pressure to build more affordable housing units right now. Such developments, like 490 South Van Ness at 16th Street, are permanently reserved for low-income, median-income and moderate-income residents. Below Market Rate housing is purchased for a fraction of market value– not a single unit has sold in the Mission since March 2014 (and a 2-bedroom BMR condo in the Inner Mission is listed right now for just under $450,000). Plus, projects like these can take a year or more to construct once ground is broken, meanwhile the price of affordable housing continues to rise with $15 minimum wage.

Lastly, flood the market with new housing units of all kinds to help meet demand and stabilize prices as quickly as possible. There are 26 residential developments planned for the Mission and a few have begun construction (see the entire pipeline of residential projects in San Francisco here). Still, the pace of new units coming to the market pales in comparison to the city’s growth of employed residents (yes, people can afford to relocate to San Francisco even with housing costs as they are). Some sites available in the Mission could be bought by the city for affordable housing, and the proposed moratorium would give it enough time to organize and fund the investment.

 

A 2015 Yale School of Management survey of recent home buyers found that a quarter of San Francisco respondents has the extravagant expectation for annual home price increases of 10% or more annually for the next 10 years. Although more likely be closer to 5%, it could happen. In 20+ years working locally in real estate, I’ve learned to never underestimate the voracity of the San Francisco market. I’m of the opinion San Francisco median price trends are headed the direction of Tokyo, Sydney and London toward $3,000 per square foot. Before we get there, though, we may find ourselves asking sooner rather than later: When does an affordable housing unit cost a million dollars?

 

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

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