Home(s) of the Week: A Tale of Two Houses

The first house is done to the “9s” in dwell-magazine perfection and presented with professional panache.  The 2nd house is smaller and in somewhat dated condition and presented with underlit photos and so-so marketing.  They are a block apart and both 3 bedrooms, 2.5 bathrooms.

Guess which one sells for more?  The smaller, less polished one.  In fact it sold in 8 days on the market, while the other home took nearly six months before garnering an acceptable offer.  Why? I’ll get to that.  But first, so you can be even more amazed, take a look at the houses (click on the pictures to view more photos):

House #1 – 701 3rd Avenue:  Larger and Stylish

House #2 – 726 4th Avenue:  Smaller and Dated

In this case, it all came down to pricing strategy and a realistic attitude on the part of the sellers.  The first home was priced 17.25% higher than the price it actually sold for. The 2nd home was also over-priced, but by just about 5%. The first home was marketed for a full 2 months at a whopping $1,885,000 before it was reduced by 90k to $1,795,000. Then 2 months later it was reduced by another 100k to $1695,000 before finally selling 2 months after that for about 135k less ($1,560,000). By the time it finally sold, the phrase “motivated seller” was on all the marketing materials. This is a tragic story of a seller’s failure to listen to what the market is telling them and potentially, the failure of their agent to forcefully tell them. They likely would have gotten one of their intermediary prices if they had only started there in the first place. In any event, anyone who’se ever had their house on the market knows how hard it is to live always at the ready for a showing.

The story of the 2nd home is much happier. It was initially priced at $1,649,000 and accepted an offer six days later for $1,566,000. This shows that the seller was accepting market facts, like the fact that the average sale price for a 3br home in the neighborhood was $1,430,857 in that time frame. And the fact that if you get an offer or two in your first two weeks of marketing, these are likely to be as good as it gets.

Although our example doesn’t perfectly fit, houses that sell quickly are closing, on average, for a little over asking price. (Quick-selling Condos & TICs average 98% of asking.) As time on market increases, the discount off original list price grows dramatically. Interestingly, whatever the time on market, homes sell on average within about 4% of final list price (after price reductions) – indicating that buyers generally won’t make offers on homes they consider significantly overpriced.

If you would like an estimate of your home’s value and my analysis of how to price it to get it sold for the highest possible price, please just let me know. Paragon has the highest performance statistics for original list price to sale price of any major brokerage in San Francisco, and I am proud to be part of that team.

Opportunity Knocks: Stager’s Warehouse Sale!

Kind of a bad news/good news situation: A local stager is closing down and clearing out all their inventory. Very bad news for them, but for those of you with homes to furnish it could be a really great opportunity to get some stylish, up to date furniture at bargain prices. For more information, go to http://www.lushinteriorssf.com/lush/Welcome_Home.html.

Update on “Decline from the Peak”

We have a lot to be thankful for in San Francisco. We have largely survived this real estate downturn without the enormous declines we are seeing on the news. However, they have been significant. Anyone in the market today on the seller side certainly can tell you that.

I thought it was a good time to check in and update the article from earlier this year “How Much Have San Francisco Home Values Declined Since their Peak?” Thankfully, many neighborhoods have not had a change since April, when values were even lower than in February, and some have even climbed a percent or two.

Below is an analysis of San Francisco neighborhoods comparing Average Dollar per Square Foot ($/sqft) at what is estimated to be peak value, to the average for sales occurring 10/15/08 – 4/1/09 (the market period right after the 9/15/08 financial markets meltdown), and then to the average for more recent sales occurring 5/1/09 – 10/30/09 (as home sales volume – and financial markets – surged again).

Different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales included were chosen to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high end and the ultra low end, which often distort averages.

Dollar per square foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, or exterior spaces. These figures are usually derived from appraisals, tax records or condo maps, but are sometimes unreliable (especially for older homes) or unreported altogether. There are often surprisingly wide variations of value within neighborhoods, and averages may be distorted by one or two sales substantially higher or lower than the norm. They may also be distorted by confidential sales, which are not uncommon at the upper end of the market. (For confidential sales, the list price, and not the sales price, is used for the calculation.)

Key to Estimated Peak-Value Period for the Chart Below:
*             Peak values estimated to have been reached 1/1/06 – 6/30/06
**           Peak values estimated to have been reached 1/1/07 – 6/30/07
***        Peak values estimated to have been reached 1/1/08 – 6/30/08

Changes in Average Dollar per Square Foot Values
for Selected San Francisco Neighborhoods & Property Types

Neighborhood or District	Property Type Price Range	Avg $/sq.ft. at Peak Value	10/15/08 – 4/01/09	5/1/09 – 10/30/09	Change from 4/1/09	Total Change from Est. Peak Value
Bayview*	House $300k – 800k	$507/sq.ft.	$294/sq.ft.	$280/sq.ft.	- 5%	- 45%
Ingleside/ Hghts / Oceanview*	House $400k – 800k	$580	$449	$444	- 1%	- 23%
Excelsior/Portola*	House $400k – 800k	$600	$457	$450	- 1.5%	- 25%
Central/Outer Richmond **	House $700k – 1.4m	$569	—	$488	—	- 14%
Inner Mission**	Condo $500k – $800k	$621	—	$496	—	- 20%
Central/ Outer   Sunset**	House $500k –  900k	$626	$533	$501	- 6%	- 20%
Miraloma/ Sunnyside**	House $500k – 1m	$677	$598	$550	- 8%	- 19%
Hayes Valley/ Alamo/ NOPA***	Condo $500k – 900k	$684	$602	$559	- 7%	- 18%
SOMA**	Condo $500k – 900k	$689	$553	$562	+ 2%	- 18%
Neighborhood or District	Property Type Price Range	Avg $/sq.ft. at Peak Value	10/15/08 – 4/01/09	5/1/09 – 10/30/09	Change from 4/1/09	Total Change from Est. Peak Value
Bernal Hghts***	House $500k – 1m	$651/sq.ft.	$556/sq.ft.	$567/sq.ft.	+ 2%	- 13%
St Francis Wd/W. Portal/Forest H **	House $800k – 2.5m	$687	—	$585	—	- 15%
Noe & Eureka Valleys***	Condo $500k – 1m	$751	$675	$613	- 9%	- 18%
South Beach***	Condo $500k – 1m	$785	$681	$640	- 6%	- 18%
Potrero Hill**	House $700k – 1.4m	$753	—	$648	—	- 14%
Russian/Nob/ Telegraph Hills***	Condo $600k – 1.2m	$798	—	$692	—	- 13%
Noe & Eureka Valleys***	House $800k – 1.5m	$891	$755	$707	- 6%	- 21%
Pacific Hghts/  Marina (Dist 7)***	Condo $600k – 1.2m	$809	$763	$733	- 4%	- 9%
Most Expensive North SF Areas***	House $1.5m – $4m	$975	—	$797	—	- 18%

Averages are generalities and cannot account for the varieties in location, condition and amenities found in SF homes. Averages may be affected by unusual events or short-term trends, and do not necessarily reflect values for specific properties.  Average dollar per square foot values fluctuate even in a stable price market as they are impacted by individual sales, and changes of less than 3-4% should probably be ignored. All data from sources deemed reliable, but not guaranteed and may contain errors and omissions. Sales not reported to MLS – such as many new condo-development sales – are not included in this analysis.

Home of the Week: When It’s Time For a Tent

As you might have noticed, due to the fanfare around The Big Rumble, last Saturday was the 20th Anniversary of the Loma Prieta Earthquake. Not to get to preachy about the whole thing, but are you prepared?

If anyone reading this does not know how to shut off their gas, please let me know and I will come show you or at least explain it on the phone.  But in addition to that, you might want to think about getting an earthquake preparedness kit together.  These can be assembled or purchased.  Here’s a great source for one stop shopping:  Disaster Survival Solutions.  They make a kit in a weather proof box you can keep outside your home (which is really important if your house falls down…).  If you want to assemble your own, just take a look at what’s in the kit do it yourself.

After you have your tent, sleeping bags and 3,600 calorie food bars, and WATER, you might want to consider making sure you know what to do and how to best help if the big one hits.  The San Francisco fire department offers fantastic free Neighborhood Earthquake Readiness Traning or “NERT.”  Elvis wants me to take the traning to get the free hard hat.  But fashion options aside, it’s probably a good idea, which I hope you will consider.  To find out more click here.

Put on your Poker Face … Or Join me way up in the sky!

A couple of things happening in the next few weeks I wanted to mention.

First, Paragon is having a client appreciation event – and I wish Icould take each and every one of you – at the Millennium Tower.  This is the shining 60 story tower at 301 Mission with the new Michael Minna restaurant RN74 on the ground floor.  Way up in clouds on the 50th floor, there is a newly unveiled decorator showcase and we are having a party there on November 12!  Please let me know right away if you’d like to join me there!

Second, as many of you know, I am a big fan of San Francisco’s public schools and my son, Elvis, goes to Claire Lilienthal.  We are having our 2nd annual Texas Holdem Tournement – and yours truly is one of the sponsors!  So if you like kids and you like Poker (no, there won’t be any kids at the event), come and gamble the night away!  Tickets are $100 in advance and prizes include $3500 worth in value of American Express Gift Cards, Dinners at great restaurants such as Perbacco and Harris’ Steak House, health club memberships, and much, much more!  See evite for details by clicking here.

Recent Sales (Over, Under or At ask)

As I mention in my article on volume, more activity puts pressure on prices. As you can see in the table below, the number of transactions where the property is selling for more than the asking price, is sharply up from earlier this year, where even for single family homes, under 20% of transactions were yeilding a sales price over asking. We’re at a whopping 54% of single family home transactions closed in the last two weeks coming in over asking price.  To see more about earlier in the year, click see “Have we found the Floor?” from July 31, 2009

Last 2 weeks’ home sales in SF:
	Over Ask	Under Ask	At Ask	Total
SFD	39	20	13	72
% of sales	54%	28%	18%
Condos/TICs	17	41	13	71
% of sales	24%	58%	18%
2-4 Unit Buildings	2	9	1	12
% of sales	17%	75%	8%
Total	58	70	27	155
% of sales	37%	45%	17%

At Last! Sales Volume Trending Up

In every category, even luxury, the number of homes sold is trending upwards. The charts below are not reflective of the price they are trading at, but generally higher market activity starts to put upward pressure on prices. The charts below show a two year period ending August 30, 2009.  Overall, my reading of these charts is that if you were waiting for the market to bottom out, it has already done so.  Also, it’s still a very good time to buy between 500k and $2MM as those curves have only just started to gently edge up.

Home Sales $500,000 & Under (It must be noted here that one of the reasons the growth in sales is so high is because there were fewer homes as a proportion of the market under $500,000 back in 2007.)

Home Sales $501,000 – $999,000

 

 Home Sales $1,000,000 – $1,999,999

Home Sales $2,000,000 and Above

Home of the Week: Modernist with a Four Bridge View

When I read “four bridge view,” I had to stop and count them… I suppose on a really clear day you must be able to see just a hint of the Dunbarton, which would make five.

In addition to unique, sweeping views, 116 Sugerloaf in Tiburon has a really cool floating fireplace, view bubble with hanging see-thru chairs, an amazing open, indoor/outdoor living design. It was designed by architects Scheidegger & Tobias with construction completed in 2004 by the current owners. A link to the previous listing can be seen here (the pictures are just so fab – kudos to the photographer!). Shown by appointment only – let me know if you or someone you know can’t resist.

Have We Found the Floor?

Yesterday, the Case-Shiller Index — considered the most objective index of US home prices — reported, as pertaining to April to May prices: “10-city and 20-city composites reported positive returns for the first time since the summer of 2006…the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.”

For the SF Metro Area (i.e. greater Bay Area, NOT just SF), C-S reported gains of .6% March to April, and 1.4% April to May. Year over year, C-S reported an overall metro area decline of 26.1%. Read the full article here.

From my own experience, I can happily say that things are picking up. Home of the Week 1617 Fulton went into escrow after just 5 days or so on the market with a pre-emptive offer. My listing at 640 Judah got three offers after just a short time on the market, and buyers who I am working with now are regularly competing in a field of 3 or more offers. To be clear, these deals are all well under the $1MM mark, and activity is definitely being driven by the availability of financing available at very low rates. Homes that are not eligible for these low rates – most TICs and homes requiring a loan over $729k are not moving nearly as briskly (if at all -oh so gorgeous Home of the Week 116 Sugarloaf has been on the market over a year and has been reduced from $7.5MM to a mere $4.5MM).

The below charts show that there has been a substantial increase in sales volume, and about a 20% decrease in homes selling under asking price.  Volume for the two weeks ended July 15 was 172% of what it was for the period ended March 18 of this year.  It is too soon to tell if the decrease in homes selling under asking price (and the commensurate increase in those selling over) means that prices are climbing.  However, my recent market experiences tell me that there has been a shift toward underpricing homes to attract attention (and multiple offers) in the “affordable” sectors of the market.

Well, it’s changes like these that keep things exciting and I am really happy to be participating in these busy times due to the support I get from all of you. Thanks, as always for your referrals and for letting me be your go-to person for your real estate needs.

(All data is from San Francisco MLS)

Does High Cost Living Offer Enough Value?

I’m sure we all have that gut check moment on our commitment to being San Franciscans every month when we pay our mortgages or when we visit friends out of state with really big, nice, cheap houses. Ditto that when you go out to eat or take a taxi. Why does it cost so much to live here, and why are we willing to put up with it? Well, if you believe University of Michigan economist David Albouy, it’s because it’s actually a “good deal.”

Here’s what a recent article in US News & World Report had to say about San Francisco:

“With the fourth-highest quality of life and the highest trade productivity on Albouy’s list, the San Francisco area — which includes Silicon Valley — comes in first on the list of most valuable cities. There are high wages, but even higher housing costs. Albouy found that housing costs are pushed so much above the wage level because San Francisco residents enjoy a premium beyond income, such as great weather, a thriving local arts community, and lively neighborhoods. But the business aspects of San Francisco outshine even the quality of life. Albouy says it’s often thought that small cities where workers earn lower wages, like Boise, Idaho, are where businesses should start because costs like hiring and renting a building are so low there, relative to cities like San Francisco. But low prices also mean low quality. “Boise is a terrible place to do business, and the low wages are a sign of that,” he says. Compared to Boise, “San Francisco has a highly productive workforce,” he says.”

Does this ring true to you? It does to me. I am just not Boise material.  To read the whole article, click here.