Archive for Real Estate Sellers

San Francisco Real Estate Report

Here are some data that might be useful.  This information is as of September 10, 2008 brought to you by an analyst…

Current Available Listings of ALL homes 2,061
QTY (not $) of all homes sold in past 30 days 393
Months of Inventory (based on above data) 5
Average DOM for ALL homes 62
Est monthly % rate of decline (if applicable) 4%

For the month of Aug 2008, the market has fallen 3.5% in price (Aug = $633/SF vs July = $656/SF) and 19% in sales volume (Aug = 393 sold vs July = 486 sold). The days on market increased by 19% from 52 DOM (July) to 62 DOM (August). These statistics are consistent with seasonal market trends. July has traditionally been the most active time for Real Estate in SF. Of the 2061 units available, 912 are SFRs and 1149 are condos/TH/TICs.  Although SFRs represent a smaller share of the market, there are more REOs than Short Sales for SFRs. Of the 912 SFRs, 43 are REOs and 84 are Short Sales. 13.9% of the SFRs are distressed listings. Of the 1149 condos/TH/TICs, 29 are REOs and 27 are Short Sales. Distressed listings only represent 4.8% of the condo/TH/TICs market. Overall as a county and city, only 8.9% of the market is represented by a distressed listing. These statistics do vary amongst the 10 sub-districts of San Francisco.   District 10 is the most severely hit with 24.9% of all active listings being a REO/Short Sale (354 Listings and 86 REOs/Short Sales).  District 7 is among the least hit with 0.03% distressed listings (132 listins and 4 REOs/Short Sales). As we approach the fall season, one can expect to see continued price and volume decline.

What do you think?  Do you agree or disagree?

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How are energy prices impacting real estate values…

Here is a post that I thought was important so I decided to share it.  It’s actually something posted by Lisa Michelle Galley & Our Green Journey…

So I was at the Annual Fisher Center Real Estate Conference today, where the focus was “the state of real estate” from both an academic and practitioner point of view. The slant was residential, with high quality data and insights. A good bit of the perspectives  highlighted themes that are spurring the rise of interest in green development.

Robert Edelstein, Co-Chair of the Fisher Center, moderated a panel this morning on the state of the housing market. The panelists were James Saccacio of RealtyTrac, Bill Sumski of Paladin Pacific and Scott Ouellette of LandCap Partners. This question from the audience caught my attention:

“Do you think energy prices are impacting real estate values?”

Here’s a composite of the panelists’ responses:

Yes, energy price risk has been already been affecting consumers in significant ways. In the current wave of foreclosures, rising interest rates were the main reason that homeowners lost their homes.  Many people do not know the second reason – that the rising cost of gasoline and home energy also made the cost of homeownership too expensive, forcing people to give up their homes.

Energy prices are also forcing homeowners to reexamine the cost of their auto commutes. A panelist stated that he felt that homeowners are already starting to think that the tradeoff for a longer commute to be way less compelling.

Ken Rosen, of Rosen Consulting, provided his usual in depth economic analysis of U.S. real estate. Some of his comments also drew a thick black connector line between energy price increases and the threat to consumer and business viability. Highlights of his comments:

“Oil price increases are like tax increases. With oil prices at $122/barrel today, this is a huge tax increase on the consumer.”

“A year ago (April 2007), oil was $62/barrel, so its cost to the consumer has basically doubled in the past 12 months. At the same time in 2002, it was $20/barrel, a little over 1/6th of today’s price.”

“Official ‘core’ U.S. inflation is being reported at just below 2% currently. However, U.S. consumers, via buying so many products from abroad, are ‘importing’ a real inflation rate of 4%-4-1/2% p.a.. Part of that rate includes energy price increases. So the actual impact of energy price increases on the U.S. consumer and businesses is far greater than what is being measured and reported via the “official” data sources.”

But wait, (sadly) there’s more:

“For low income individuals, the real inflation rate is 7%-10% p.a. due to their greater exposure to food and energy price increases combined.”

So yes, the opinions were that real estate, including its value, is being directly and indirectly affected by consumers and businesses paying more for energy. This whole discussion did not even touch upon the increased cost of energy consumption of the buildings themselves.

A central thesis behind high-performance building is that the way a building gets built and is operated can lower its risk and preserve its value. Today I heard energy price increases  being called a direct tax on consumers and businesses. So to the extent real estate investors are tolerating energy inefficiency within their control, then they are also accepting a tax on their own return and forcing it on their tenants and shareholders. And this type of cost has a direct impact on a building’s ability to maintain or grow in value.

A green building may not totally eliminate the “energy tax”, but the methodology goes a long way in helping owners and tenants get smarter about operating and managing their real estate in a way to minimize negative impacts on their cash flows and property value.

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Who’s who in real estate?

It takes many players to put a real estate deal together and take it from contract to closing. As a buyer/seller in real estate, it’s helpful to familiarize yourself with each of these players so that you become more educated regarding the buying or selling process, but also know that many of the roles in a real estate transaction are managed by your Realtor.
Appraisers
A professional who estimates the value of a home to be purchased. In the purchase of a home, the appraiser is usually hired by the mortgage lender to determine whether the price paid is in line with fair market value and therefore justifies the mortgage amount.

Buyer’s Agent
A Realtor who represents the buyer(s) in a real estate transaction and help the buyer purchase a home.

Home Inspector
Most purchase contracts allow a buyer to have a home inspected within five days of signing the purchase contract. A home inspector performs an inspection of the home to be purchased on behalf of the buyers in the transaction. The inspector examines the home for structural soundness and identifies recommended repairs in his or her report. Depending on the area of the country where you sell, common practice may include other types of inspections, including a termite inspection and a radon inspection.

Insurance Agent
A person who sells insurance policies, such as homeowners’ and automobile insurance. Typically, homebuyers need to show proof of homeowners’ insurance before or at the time of closing on the purchased property. Without this, some closings can’t move forward as planned. If you represent buyers, make sure they have secured a homeowners’ policy prior to closing.

Loan Officer
An employee of a mortgage lender who helps borrowers secure financing for a home purchase.

Mortgage Broker
An independent contractor who helps bring borrowers and lenders together by originating residential and/or commercial loans offered by multiple wholesale lenders.

Mortgage Lender
A mortgage loan company that originates, services, and sells loans to investors or purchasers.

Seller’s Agent
The seller’s representative to help sell a home (also often known as “listing agent”).

Title Companies
Once the purchase contract on a property is completed, terms are agreed upon, and financing arrangements have been made, the lender orders a title search of the property to be purchased. Depending on the region, a title company or practicing attorney can conduct this search. A title search is the examination of public records to determine that the person selling the property has the right to sell it and the buyer is getting all the rights to the property. The title search seeks to uncover any liens or other problems with the title. The title company then works to fix any problems with the title before issuing lender’s title insurance, or the loan policy. The loan policy protects the lender’s interests in the property. Buyers also may obtain an owner’s policy to protect their interests.

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How much is Transfer Tax and who pays for it in SF?

The Transfer Tax on Real Property is based on the total value or consideration for the property.

$100 to $250,000: $2.50 per $500 of value.
$250,000 up to $1,000,000: $3.40.
$1,000,000+: $3.75.

Who pays the Transfer Tax?

Most often in San Francisco the seller pays the Transfer Tax. Two exceptions are if you purchase property through probate or in a new development.

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How is dollar devaluation impacting real estate?

With the dollar down and home prices falling, U.S. residential property is attractive to overseas buyers.  The International Herald Tribune said that there’s been 4%  increase in overseas buyers  purchasing homes in the Unites States over the past 2 quarters.

So where are they buying?   Their survey claims…

  • 26% of overseas buyers purchased a home in Florida.
  • 16% bought in California.
  • 10% bought in Texas, with the Gulf Coast being popular.
  • 6% purchased in Arizona.
  • 4% bought in New York.
  • 3% snagged a home in Colorado.

Of those buyers, 33% were from Europe, 24% hailed from Asia and 16% came from Latin America!

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What is the overall California housing market outlook in 2008?

California experienced a year of weaker than expected home sales in 2007. Sales of existing detached single-family homes, which declined 23.6 percent for the year 2006, were projected to decrease another 26.0 percent to 353,200 homes for the year 2007.   However, sales fell steeply in the last quarter of the year as the liquidity crunch severely constrained availability of funds for mortgage loans.  Monthly sales fell below 300,000 units on a seasonally adjusted and annualized basis, levels that had not been seen in over 20 years.

Despite the decline in sales, the statewide median home price set a new record of $597,640 in April and remained near record levels for much of the year. This was partly due to the downward stickiness in prices in a slowing market, but also had to do with the mix of sales in 2007 compared with prior years. While low- to moderately-priced markets suffered throughout the year, the high end of the market, such as San Francisco and other major urban cities, was somewhat more resilient and propped up the statewide median price. However, with the onset of the liquidity crunch later in the year, that market segment saw weakness both in sales and prices and forced the statewide median price below $500,000 in October and November for the first time since early 2005.

In general, lower-priced markets experienced large sales declines and weaker home prices as compared to higher-priced markets in 2007. Sales through August for homes valued below $500,000 declined 24.6 percent year-to-date, and sales of homes between $500,000 and $999,999 fell 24.2 percent when compared to 2006. By comparison, sales of homes priced $1 million and above declined only 0.5 percent from the same period of last year. However, the liquidity crunch choked off sales beginning in September, with the $500,000 to $999,999 market experiencing year-to-year sales declines in the range of 50 percent through the end of the year, and the market over $1 million market showing year-to-year declines of roughly 25 percent.

The housing market is unlikely to see significant recovery in 2008. A further six percent decline in sales is expected for the year 2008. Peak to trough, annual sales are expected to decline 47 percent from peak levels of approximately 625,000 homes in 2004 and 2005 to 332,000 homes in 2008. Meanwhile, the statewide median price will show its first decline since 1996, with a projected 5.5 percent annual decline in 2008 to $536,500.

As the economy remains in the late stages of expansion with many mixed signals, economic growth for 2008 is expected to be positive, but will be below the potential GDP growth rate of 3 to 4 percent. The California economy should grow on a par with the national economy, with non-farm job growth increasing 0.9 percent, and unemployment rate approaching 6 percent in 2008.

Current market problems have their roots in financing, not in weakening economic conditions. As such, this is not like the situation in the 1990s. Market weakness will continue to be driven in part by the ongoing problems in the subprime arena. Subprime mortgage payment resets are expected to peak in late 2007 and early 2008, so defaults and foreclosures should crest later in the year before easing as the year draws to a close. This will continue to put downward pressure on home prices, particularly in parts of the state that had a lot of new home building. Improvement in market conditions is more likely in the latter part of the year, as mortgage problems begin to subside and as buyers and sellers sense that home prices may have stabilized.

(datasource: California Association of Realtors Report)

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Housing Market-What is really going on in San Francisco?

Lately due to the sub-prime and the slowdown of the market, many people are wondering just what is really going on with the “MARKET” in San Francisco.

Unfortunately, there is really no short and definitive answer, because in San Francisco, each house is different, each block is different, each neighborhood is different. And for those of you who live in the city, you can be sure to attest that what I am saying is very very true.

That’s not to say that I am arguing that things are rosy in San Francisco either. There are signs of slowdown in many circumstances. I can say that inventory is staying on the market longer, and under circumstances where the seller needs to get out, prices are lowered. I’ve also seen many sellers try to test the market to try to off-load “IF THEY CAN STILL MAKE A PROFIT”, but decide not to when the momentum is not there. So overall, strangely but surely, this is the illustration of why people say around the world that “San Francisco” is one of the most amazing and sought after cities in the world!!! Ah… We are very lucky to be here.

So… What does this mean to buyers and sellers…

1. Buyers should be on the look out. You should actively take the time to shop around because now you are the kings and queens right now. And if you are like me, you would balance “what you like” and “the value” you are getting when you purchase a property. Right now you can find some really good values if you look hard. But it takes time and repeated open house visits to understand this.

2. Sellers should be especially selective of your agents. You should not list your home with someone who doesn’t have enough experience in the field. When I say that, I mean someone who has never been through a slower market. The last 5 years were a breeze for real estate agents. Anyone who breathes could do it simply because of the craziness of the market, but now Realtors are going to be put to the test. If you want any advise on what to look for, you can call me at 415 420 4888. I can give you a few pointers.

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