San Francisco's A Buyers' Market - Update

I revisted my chart from 'SF Officially a Buyers' Market' post from last week due to several late reported sales which have altered, albiet slightly, the numbers originally reported.  I also  was reminded by a fan of the blog that it might be helpful to put those numbers in some kind of perspective; so I have included a reference to the Months Supply of Inventory (MSI) in 2007 for comparison purposes.

As you will see, MSI in many areas of the city, has doubled or tripled from one year ago.

In light of the recent Buyer's market, the NY Times recently published an article suggesting now might be the time to jump back in. http://www.nytimes.com/2008/12/06/business/yourmoney/06money.html?em. 

Of course I cannot say we are witnessing the bottom of the real estate market, that unfortunately is reserved for hindsight.  My personal opinion is we are most likely bouncing along what is close to a bottom, and probably will continue to do so until about June of 2009, (most recessions last an average of 18 months).   

What I can say is there is a huge benefit to negotiating with sellers now, while there is still so much uncertainty about the economy, and there appears to be quite a bit of evidence there is a fair amount of money sitting on the sidelines.  When that money does finally start to flow, it likely will pick up steam fairly quickly.   

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.

Divisadero Farmer's Market to remain open till Dec 28th

Gotta assume that the organizers are happy with the turnout at the Divisadero Farmer's Market on Divisadero @ Grove Street in NoPa, as they just announced that they'll remain open through the fall, until December 28th!

Divisadero Farmer's Market [official site]
NoPa Farmer's Market begins trial run on July 13th [SFHomeBlog]

Pfizer moves to Mission Bay

It’s a good sign for all the new developments in Mission Bay that Pfizer just announced the corporate headquarters for their Biotherapeutics and Bioinnovation Center are moving from South San Francisco to the Mission Bay.

"This move to be next door to U.C.S.F.'s Mission Bay campus will position Pfizer's Biotherapeutics and Bioinnovation Center for success in the aggressive pursuit of the most exciting and innovative science and the recruitment of the very best scientists," said Corey Goodman, Ph.D., President of the Pfizer Biotherapeutics and Bioinnovation Center.

Our mayor Mr. Gavin Newsom is quoted in classic politico speak as saying that it is ‘…a clear indication that Mission Bay is one of the nation’s premier life science centers’ and I for one hope that turns out to be true. More people to support some of my favorite arts, the Ballet, Symphony and Opera, plus interesting intelligent clients to work with, count me in.

Assuming Pfizer becomes the first of many 'anchor tenants' if you will ….the question becomes what buildings will emerge as the front runners in the Mission Bay development housing game? My early money is on Esprit Park. New idealistic developers, run by an experienced, detail-oriented agent who knows what sells and what is the ‘right’ thing to do. Great location - across from a park and a block from a Blue Bottle Coffee serving Café…a short decent walk to Potrero shops and Café Mama – I endorse. Ok so they are a bit ‘off’ on their delivery dates. You cant rush perfection – let’s hope it is perfect by the time it’s done.

I looked but was unimpressed with my preview of the Radiance (warning irritating music on web site), - but they do throw a great party. With the exception of the water facing units, which will be nice, and rare in their own way, the building felt too….I dunno…vanilla. The fire pit overlooking the water was also a possible serene outlook, but a little too open to all the other units for my liking – nice to overlook I suppose if they keep it lit.

Sometimes it’s hard to tell what a building will shape into until it’s occupied. My worst bet early in my career was pooh poohing the Oriental Warehouse - which although the sound transferrance is abysmal - has maintained some impressive resale values and continues to be one of the most highly sought after South Beach conversion loft buildings.

I’m also hearing good initial responses from the Arterra (see note about music on the Radiance) – it ‘smells nice’ which counts for much in this world of toxic building and chemical sensitivities. I’m thinking despite the location that building will also hold it’s value in years to come.

I’m starting to like the look of Mission Bay, and may I say it’s been a L O N G time coming….let’s see what happens. Biotech Alley…urban density and a cure for cancer - how can it be a bad thing?

Feng Shui for Architecture Design and Environment

Feng Shui often gets a bad rap among conservatives, mostly in my opinion, for good reason. The little chimes and Ba-Gua's most people use are nothing more than superstition, although the information they attempt to mimic is rooted in science that has been studied....well, for a long long time.

Why did I start to pay attention to Feng Shui?  Because as a real estate agent, I noticed, after a while - that certain properties, seemed to go on the market every year or two, repeatedly.  To me that was an indication that for whatever reason, it was impossible for the occupants to get comfortable and settle in.  

Even within the same Condo complex, certain units will constantly change hands while others stay settled - and that is true even for units with identical floor plans and finishes.  Unit 1 will change hands 3 times in a five or seven year period, while Unit 2 (same floor plan flipped) stays put for years.   

I have a confession, I have not yet had my home 'Feng Shui'd' if you will.  The reason is simple, a Feng Shui master is expensive and VERY hard to come by which is why the true masters end up working for the high end homes and corporate clients. 

If you are interested in learning a little more my favorite web site is maintained by an architect friend of mine, Simona Mainini, located in LA county.  For most people flying her up to consult on their home will be too cost prohibitive, but her newsletter is free and full of interesting facts and information.

FengShuiArch.com  

For those who are just curious, like myself...

NoPa Farmer's Market begins trial run on July 13th

From The Tablehopper:

...a ~NEW DIVISADERO FARMERS' MARKET~ begins a three-month trial period on Sunday July 13th! Rad. It's through the Pacific Coast Farmers Market Association, who also do the weekly Fillmore market. The NoPa market will be hosted in the parking lot at Divisadero and Grove—yes, the lot by the old Brother-in-Law's BBQ pit, and the medical Mary Jane trailer. (Now you can get a different kind of herb.) Everyone in the neighborhood, and nearby, please come out and support this market! Sundays 10am–2pm. Divisadero St. at Grove.

The neighborhood has been working on this for quite some time now (it was originally going to be in the Panhandle @ Ashbury Street, but too many folks complained about potential traffic and parking problems- imagine that!).

Congrats to the organizers for getting it done, and I wholeheartedly echo Marcia's sentiment: please support this farmer's market, and it'll be more likely to return next summer!

Discussion Tuesday on Proposed Divisadero Transit Changes

One of the transportation elements, and possibly the most controversial (due to the parking restrictions) of the very impressive Divisadero Streetscape Renewal is up for discussion this coming Tuesday. The city is inviting anyone with an interest to come hear the proposal and weigh in - or forever hold your peace.

Improving transit service along the street is one of the goals of this project. The 24 Divisadero bus line currently averages only 5.4 mph in this area due to traffic congestion, so part of the overall proposal includes a part time transit lane in the southbound direction from Fulton Street to Oak Street. To create space for this lane, which can also be used by taxis and right turning traffic, no parking would be allowed Monday to Friday on the west side of the street from Fulton to Hayes between 4 and 7pm. The existing tow-away lane from Hayes to Oak would be extended one hour.

The proposal is to install the transit lane this year to see how it works before the streetscape improvements occur in 2009. We will monitor how the change affects transit and traffic, and feedback w ill be solicited from people in the area so that the design can be modified and improved as necessary. We understand that there are tradeoffs involved with this proposal and want to work with you to determine the best design.

We invite you to a meeting to discuss the details of the proposal and to answer any questions you may have.

The meeting will take place at:
Club Waziema, 543 Divisadero Street
Tues June 10, 5pm to 6:30pm

SFMTA Notice [SFGov]
Divisadero DPW Great Streets project and MTA Traffic Study Update [SF DPW]
Divisadero Streetscaping to begin in Spring 2009 [SFHomeBlog]

The Giant Pool of Money - The Hands-Down Best Explanation of the Credit Crisis

I've read more articles and descriptions of the Sub-Prime Mortgage Mess and current 'credit crisis' than I care to admit.

It wasn't that I was looking for answers myself, per se. And I always felt I had a fairly good handle on what went down from having witnessed it, more or less, from my front row seats.

Really, I kept looking because I was searching for someone, intelligent - neutral and capable of telling the story in its entirety in order to better explain the situation to my clients. Mostly because they were getting a lot of sound bites with very little substantive answers.

There was a Money magazine editor who tried - and he did a pretty good job. A NY Times article came out last year that was also really good, a bit technical, but fair I thought. Almost all the blog postings I came across that attempted it ended up with extreme views on either side, 'greedy mortgage broker' this and 'evil stock broker' that, fueled by the 'always deceptive real estate agents'...

...(Cue the angel music)- then along came Ira Glass. My hero!

All joking aside - this week's free download of This American Life narrated by Ira Glass, entitled 'The Giant Pool of Money', single-handedly explains, in layman's terms, what happened, why it happened, and how it affects everyone - not just those who are homeowners or those who are facing foreclosure. I have to say, there wasn't any description or story included that I disagreed with, and more to the point I learned several things that I previously did not know.

I highly recommend taking the time to download and listen - you can also subscribe to the podcast for free at the iTunes Store where they post a new podcast every Monday. It is well worth the time regardless of whether you are a past, present, future or never-to-be homeowner.

And ultimately, the current credit crisis has ended up impacting everyone. More so than I even realized before listening to this podcast myself.

Read more about the episode here.

Download the MP3 of the podcast here.

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]