Archive for February, 2009
February 27, 2009
We’re sure it comes as no surprise to most of you, but did you know that interest rates have a direct affect on what one can afford? A colleague of ours put together some numbers to show just how much purchasing power is lost with interest rate increases. Here is the math*:
Current Rate (2/09)
- Interest rate – 5.25%
- Desired monthly mortgage payment – $4,418
- How much home can you afford? $1,000,000
Let’s say rates go up 1%. How does that change the scenario?
- Interest rate – 6.25%
- Desired monthly mortgage payment – $4,418
- How much home can you afford? $896,922
Let’s say rates go up 2%. What can you shop for now?
- Interest rate – 7.25%
- Desired monthly mortgage payment – $4,418
- How much home can you afford? $809,541
You can see that if rates go up just one percent, your purchasing power decreases by $103,078. And if rates go up two percent, your purchasing power goes down $190,459! Two hundred grand is a lot of house.
Many economists and industry professionals are predicting an upward trend in interest rates. Those waiting for the market to bottom out could negate any savings by paying higher rates in the future. Just something to think about if you’re currently playing the sidelines and are planning to own long term.
Another thing to consider if you’re playing the sidelines is this: When the first signs of a recovery become known, you won’t be alone in getting into the market. Right now buyers have top pick at the properties they want. But when everyone comes rushing back in, buyers will be back to settling on their 2nd and 3rd choices.
Are we saying now is the time to buy? Not necessarily. It all comes down to your individual situation. But as this article mentions, and as we’ve alluded to in past articles, buyers with a little cash saved up who are planning on holding their property long term have it pretty good right now.
Lots of would-be buyers are waiting the sidelines right now.
*Based on down payment of 20% on a 5/1 P&I jumbo ARM with one point.
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Posted in Home Buying, Tips | Tagged buyers, interest rates, market timing, purchasing power, san francisco, san francisco real estate, sidelines | 1 Comment »
February 27, 2009
One of our favorite streets in the entire City is Baker between Jefferson and North Point. It’s pretty rare that one of the amazing homes that line these blocks hits the open market, but boy do we have a beaut to report on here.
3520 Baker Street just hit the market. This 4-bedroom, 3.5 bath Mediterranean home has living space on 3 levels and architectural details that wow at every turn. We would’ve chosen some different interior paint colors, but that’s easily rectified. The home features a large deck, brick patio with fountain and lush greenery in the back. Coupled with dead-on views of the Palace of Fine Arts from many of the rooms, this home is one of our faves. List price? $3,500,000
3520 Baker Street
A palace outside your window
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Posted in Marina, Neighborhood Info, Public Listings | Tagged 3520 baker street, homes for sale, listing, Marina, palace of fine arts, san francisco, san francisco real estate | Leave a Comment »
February 27, 2009
Where were our pocket listings this week? Just wanted to update you all – we’re fresh out at the moment but you can click HERE to view pocket listings from weeks past. Many are likely still available.
We're fresh out!
Posted in Pocket Listings, Tips | Tagged Pocket Listings | Leave a Comment »
February 26, 2009
All right now, get those dirty thoughts out of your heads. What we’re referring to here is the power that buyers have over the market right now. Let’s take a look at some interesting phenomena we’re seeing out there :
1) In any given market you’ve got a batch of sellers. Which ones are the truly motivated ones? Most of the time it is tough to tell. Present market conditions have created a grand exposé. The curtains are now pulled back and buyers have more insight than ever into who the eager sellers are.
2) Sellers generally have a bottom price in mind when they list their homes. They usually list their homes above that bottom to build in a little cushion to negotiate. That bottom figure is top secret. They play their cards very close to their vests and you usually never know what bottom is for them until you begin negotiating. This comes as no surprise. However, what we’re seeing play out in the marketplace lately is sellers are feeling increased pressure from falling prices, rising inventory, and the lowest consumer confidence levels on record. This is causing more sellers (particularly the smart ones) to cut to the chase and list their homes at levels that will attract attention.
Buyers are now able to peek behind the curtains.
3) The typical seller is currently challenged by chasing a moving target. The market has changed so dramatically over such a quick period that finding the true market value a home ain’t all cotton candy and ferris wheels. It’s become a major headache for sellers, who have desperately been trying to find that number with price drop after price drop, causing even more apprehension on the part of buyers. This leads to a vicious cycle.
4) Buyers are either sitting on the sidelines, waiting for confidence to build, or are bidding very cautiously. We have seen some homes selling at and above asking, with multiple offers, but nothing on the scale of years’ past. Generally speaking, buyers seem to be in complete control right now.
Why are these points important? Two reasons. First, if you’re a buyer, take full advantage of seeing the other players’ cards right now. If you’re a seller, particularly a motivated one, be realistic about your asking price and know the psychology of the typical buyer before you launch your home into the marketplace. If you’re interviewing listing agents, don’t fall for the one with the highest list price. You’ll want the agent that tells you how it is, despite how tough that pill may be to swallow.
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Posted in Home Buying, Home Selling, News, Tips | Tagged buyers, commentary, home prices, market forces, market trends, prices, san francisco, san francisco real estate, sellers | Leave a Comment »
February 25, 2009
Welcome to The Top 5 Most Expensive Listings in San Francisco! This is always a fun countdown, so let’s jump right into it, shall we?
Time for champagne wishes and caviar dreams!
Number 5 on the countdown…
2601 Broadway, a nearly 10,000 square foot home boasting 7 bedrooms and 6.5 bathrooms, was originally built in 1904. It has since been remodeled down to the studs and includes special features such as a “professionally tuned and air-conditioned theater”, elevator, wine cellar, smart wiring, heated hardwood floors throughout, and original stained glass windows. Located on the Gold Coast, this place is an absolute bargain!
2601 Broadway
List price? $15,500,000
—————
3444 Washington Street comes in at #4 on the countdown. Read the rest of this entry ?
Posted in Countdowns & Rankings, Financial District, Neighborhood Info, Pacific Heights, Presidio Heights | Tagged 2601 broadway, 2845 broadway, 2901 broadway, 3444 washington, billionaire, countdown, gold coast, millionaire, most expensive, rich, san francisco, san francisco real estate, st regis penthouse, top 5, wealthy | 1 Comment »
February 24, 2009
We were perusing through some stats the other day (imagine that!) and happened upon a list of the top 5 states with the newest housing inventory. Here is the list, courtesy of Arun Barman, Research Economist at Realtor.org.
- Nevada – 7.7%
- Arizona – 6.7%
- Florida – 5.4%
- Idaho – 5.4%
- Texas – 5.0%
We’ve long held the hypothesis that run-away development can ruin a real estate market, but we’d yet to really see a macro-level list that corroborated that thought. What of course jumped off the page to us is the top 3. Nevada, Arizona, and Florida all have had major real estate busts.
Where is California, you might ask. California experienced growth in new inventory over the past real estate boom. However the growth in new inventory did not cast a shadow over existing inventory (as it did in the other states) which is why California did not make the list. With development costs in California so high, investors and/or developers are more apt to rehab and flip property than they are to build new. The places where property values have taken the biggest hits in California (and the Bay Area) are the newer suburban and exurban developments. In general, the more established communities have been hit, but not as hard.
Getting back to the hypothesis, it really all comes down to value. The four tenants of values are demand, utility, scarcity, and transferability (remember it as “DUST”). An item (any item) must have all four of these characteristics to have value. When developers go crazy, building anything and everything in a booming real estate market, they put downward pressure on the existing homes in the area. This is because all the new inventory greatly affects the scarcity portion of the value equation.
It is for this reason (we believe) that San Francisco’s market has not imploded the way other markets around the nation have. The lion’s share of San Francisco inventory is old, scarce, and one-of-a-kind. Furthermore, our local government makes it very difficult for developers to build massive structures that send un-welcomed, downward property value pressure throughout our neighborhoods.
Age of San Francisco's Housing Stock - Courtesy of Propertyshark.com (click to enlarge)
This is a big reason why we’re especially cautious when taking clients around the newer parts of the City. We’ve seen what an onslaught of new inventory can do to real estate markets and we’re wary of what it will do here (albeit localized to just a few select pockets within SF).
Do we hate developers? Read the rest of this entry ?
Posted in Appraisal 101, Home Buying, Home Selling, Macro-Level Info, Nerdy RE Analysis, New Developments, Tips | Tagged arizona, developer, florida, housing development, housing stock, markets, nevada, san francisco, san francisco real estate, value, year built | 5 Comments »
February 23, 2009
It’s time to narrow in on a San Francisco neighborhood again! This time we’ve chosen Potrero Hill and are putting the condo market under the magnifying glass. We looked at median sales prices for condos over a 14-year history and have compiled the findings here for your convenience.
The City as seen from Potrero Hill
To see all the stats and trends, continue reading –> Read the rest of this entry ?
Posted in Appreciation and Hold Times, Getting Granular, Micro-Level Info, Neighborhood Info, Nerdy RE Analysis, Potrero Hill | Tagged appreciation, condominiums, condos, depreciation, potrero hill, sales, san francisco, san francisco real estate, trends | 1 Comment »
February 22, 2009
This news is a few days old, but we’ve been waiting for the Federal Housing Finance Agency (fhfa.gov) to update their county-by-county loan limit spreadsheet. Since they haven’t, we’ll go ahead and post now with an update later. The $729,750 conforming loan limit has been re-established for San Francisco county. If you are a borrower, you’ll now benefit from not having to go “jumbo” on anything below the threshold. This is great news (especially for people who are shopping in the $900K + range). In case you weren’t aware, loans that are considered “jumbo” (which are loan amounts above $729,750) are charged more interest, which can cost the borrower many thousands in the long run.
The $729,750 limit is in effect for “high cost areas”, of which San Francisco County is one. The loan limit was dropped to $625,500 from $729,750 late last year, but has now been reinstated with the Obama Administration’s Economic Stimulus Package.
We’ll link the loan limit spreadsheet for every county in the US as soon as FHFA updates their site.
*To clear any confusion from a post the other day, the limit will be $729,750, not $727,000 as was mentioned in an email from the National Association of Realtors.
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Posted in News | Tagged 729750, conforming, fhfa, high cost area, loan limits, san francisco, san francisco real estate | Leave a Comment »
February 22, 2009
The NAHB (National Association of Home Builders) and Wells Fargo have just published their Q4 2008 rankings of least and most affordable metro areas in the United States (also known as the “Housing Opportunity Index”).
10 Least Affordable Metro Areas Over 500K in Population
1. New York-White Plains-Wayne, NY-NJ
2. San Francisco-San Mateo-Redwood City, CA
3. Nassau-Suffolk, NY
4. Los Angeles-Long Beach-Glendale, CA
5. Miami-Miami Beach-Kendall, FL
6. Santa Ana-Anaheim-Irvine, CA
7. El Paso, TX
8. Newark-Union, NJ-PA
9. Honolulu, HI
10. Seattle-Bellevue-Everett, WA
10 Most Affordable Metro Areas Over 500K in Population
1. Indianapolis-Carmel, IN
2. Warren-Troy-Farmington Hills, MI
3. Youngstown-Warren-Boardman, OH-PA
4. Detroit-Livonia-Dearborn, MI
5. Grand Rapids-Wyoming, MI
6. Syracuse, NY
7. Dayton, OH
8. Akron, OH
9. Cleveland-Elyria-Mentor, OH
10. Scranton–Wilkes-Barre, PA
No huge surprises with these lists but definitely interesting.
Google Maps Mash-up by Adam P (click to enlarge)
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Posted in Countdowns & Rankings | Tagged cities, least affordable, metro areas, most affordable, nahb, rankings, san francisco, san francisco real estate, top 10 list, wells fargo | 2 Comments »
February 20, 2009
This is a very important question, as many new developments have sprung up over the years, particularly in parts of the city south of Market Street. The answer is yes, it is okay to buy in a new development, but keep in mind the following tips:
The area south of the financial district has seen rapid condo inventory growth.
1) Always bring an agent. You have to have your agent with you during your first visit to any given sales center if you plan on using one. Very few developers will allow you to visit alone, and later come back with an agent to represent your best interests. This is a developer custom that has evolved over the years, because like all sellers, they pay your agent’s commission. Fortunately, having an agent represent your interests costs you nothing.
2) Why use an agent? There are countless reasons, but an important one with regard to new developments is that good agents know how soft prices are at each development. Some make concessions, some are taking low offers (in some cases VERY low offers) and some are throwing in goodies such as hardwoods and appliance packages. Conversely, some are not making any concessions. A good agent will know what’s going on at each development and how to get you more for your money.
3) Above and beyond negotiation, another thing a good agent will do for you is keep you away from developments that are fledgling or are headed for big trouble. There are developments (both new and existing) that I wouldn’t let my clients touch with a ten-foot pole. Mismanaged HOA’s, annual budget deficits, lots of REO’s, poor construction quality, and law suits are just the tip of the iceberg. Beware the agent that says all these developments are perfectly good investments. They’re not.
Four more great tips if you continue reading –> Read the rest of this entry ?
Posted in Financial District, Home Buying, Home Selling, Neighborhood Info, SoMa, South Beach, Tips | Tagged condominium, condos, high rise, inventory, new developments, san francisco, san francisco real estate, soma, south beach, Tips, trends | 2 Comments »
February 19, 2009
The numbers are in and we’ve got a list of the Top 5 Mortgage Lenders in the country from last year:
- Wells Fargo & Co. – Originated $230 billion in loans. Acquiring Wachovia (aka “Watch Ova Ya”, or “Walk All Ova Ya” towards the end of the year helped push Wells to #1 on the list.
- JP Morgan Chase & Co. – Originated $185.3 billion in loans and ranked #2 on the countdown. The acquisition of WaMu in 2008 helped drive numbers upward.
- Bank of America Corporation – Just edged out, BofA came in at #3 with $181 billion in loans originated for 2008.
- Countrywide – Originated $132 billion in loans before its acquisition by BofA.
- Citigroup – Ranked #5 with $104.3 billion in originations.
Overall, originations were down 36% from 2007 to 2008.
Source: Charlotte Business Journal
Portfolio lender, Corleone Cash, LLC, just missed the list last year. Heads are gonna roll!
We're glad the Don is one of our clients. He's been extremely effective at acquiring real estate, as seen in this chart.
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Posted in News | Tagged bofa, citigroup, countrywide, don corleone, jp morgan, lenders, loan origination, mortgage companies, san francisco, san francisco real estate, wells fargo | Leave a Comment »
February 19, 2009
If you are currently seeking a mortgage or just thinking about it, we ran across 5 good tips that could help you know what to expect. The biggest take-away from this info? Take note of the credit thresholds that lenders use. For example, did you know that if your credit score is 719 (versus 720), you can count on an additional eighth of a point added to your mortgage? This could cost you thousands over the long haul.
This brings me to another piece of advice (might as well, since I’m thinking about it). If you’re thinking of buying a home, be sure you inspect your credit reports NOW. If there is an error, or you need something altered, it can take the bureaus around 90 days to reflect changes you request today. Always get your credit ironed out first before jumping in! A few simple tweaks to your credit can save you some big time cash.
Here are the 5 tips, courtesy of the Chicago Tribune:
- Down payments are critical. Borrowers should expect to put down at least 10 percent for a “conforming loan” – a mortgage that Fannie Mae and Freddie Mac will purchase. [Editor's Note: We are seeing 20% in most cases. Also, the more you borrow, the more down payment you will need. TIC's are requiring higher down payments as well.]
- Credit scores count. A 720 [Editor's Note: we think they mean 740 here] on the 850-point FICO rating scale will get a borrower access to the best rates. Rich Bira, branch manager of FCM Direct Lender in Chicago, says: “A score between 720 and 739 gets 0.125 percent added to the rate, a score between 700 and 719 gets 0.375 percent added to the rate, and a score between 680 and 699 gets 0.5 percent added to the rate.”
- Consider VA and FHA. Borrowers without down payments or with less than stellar credit scores should consider these government-insured loans offered through the Federal Housing Administration or the Veterans Administration.
- Unearth the records. Before applying, borrowers should organize tax, banking and other records that prove income, savings and debts. They should also expect to be patient about what may seem to be endless requests for information.
- Get rid of debts. Limiting debts, including what borrowers expect to pay for the mortgage, to less than 43 percent of gross income is important.
Source: Chicago Tribune, Mary Umberger (02/15/09)
Just like basketball, one measley point can make ALL the difference!
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Posted in Home Buying, Tips | Tagged credit report, credit score, down payment, fico score, mortgage, san francisco, san francisco real estate | Leave a Comment »
February 18, 2009
What is a pocket listing? A pocket listing is a home that is not being advertised to the general public through the MLS or a listing that will come on the market in the future but right now is still a secret. Many homes in San Francisco sell while off the open market, so pocket listing culture is a big deal. Every week, we’ll be sharing info about pocket listings that we know about. Information on pocket listings is sparse and secretive, so pardon us if we seem short on details for the purposes of our blog. If you are interested in learning more, you can click HERE to contact us. Without further adieu, here are this week’s pocket listings:
- Out of our pocket and over to you
To see this week’s pocket listings, continue reading –>
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Posted in Pocket Listings, Tips | Tagged homes for sale, not on mls, off market listings, Pocket Listings, private listings, san francisco, san francisco real estate | Leave a Comment »
February 17, 2009
This morning we took a pulse reading of the local market to see the distribution of the 1,484 homes for sale in San Francisco. Homes included in our analysis include condos, TICs, lofts, stock co-ops, and single family residences. Keep in mind, homes not advertised on the MLS (such as pocket listings, FSBOs, and new developments) are not reflected in this data.
Current Inventory Distribution by asking price (click to enlarge)
- Listings asking over $1 million account for exactly one quarter of all homes for sale in San Francisco.
- Listings asking $500,000 to $999,999 account for over half (53.77%) of all homes for sale in San Francisco.
- Listings asking $500,000 to $749,999 account for 31.60% of all actives. This is the largest category when breaking the market down in $250,000 increments.
- The next largest is the $750,000 to $999,999 category, posting 22.17% of all actives.
- Listings in the ultra-luxury market (above $4 million) account for 1.82% of all homes for sale in San Francisco.
- There are more homes for sale over $1 million [378] than there are under $500,000 [308].
- Want a home for less than $250K? Good luck. Less than 1% of all homes for sale in San Francisco fit the bill. It’s twice as easy to find something over $4 million!
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Posted in Macro-Level Info, Market Check Up, Nerdy RE Analysis | Tagged 2009, active listings, analysis, distribution, homes for sale, market trends, Public Listings, san francisco, san francisco real estate | Leave a Comment »
Show me your bottom!
February 26, 2009All right now, get those dirty thoughts out of your heads. What we’re referring to here is the power that buyers have over the market right now. Let’s take a look at some interesting phenomena we’re seeing out there :
1) In any given market you’ve got a batch of sellers. Which ones are the truly motivated ones? Most of the time it is tough to tell. Present market conditions have created a grand exposé. The curtains are now pulled back and buyers have more insight than ever into who the eager sellers are.
2) Sellers generally have a bottom price in mind when they list their homes. They usually list their homes above that bottom to build in a little cushion to negotiate. That bottom figure is top secret. They play their cards very close to their vests and you usually never know what bottom is for them until you begin negotiating. This comes as no surprise. However, what we’re seeing play out in the marketplace lately is sellers are feeling increased pressure from falling prices, rising inventory, and the lowest consumer confidence levels on record. This is causing more sellers (particularly the smart ones) to cut to the chase and list their homes at levels that will attract attention.
Buyers are now able to peek behind the curtains.
3) The typical seller is currently challenged by chasing a moving target. The market has changed so dramatically over such a quick period that finding the true market value a home ain’t all cotton candy and ferris wheels. It’s become a major headache for sellers, who have desperately been trying to find that number with price drop after price drop, causing even more apprehension on the part of buyers. This leads to a vicious cycle.
4) Buyers are either sitting on the sidelines, waiting for confidence to build, or are bidding very cautiously. We have seen some homes selling at and above asking, with multiple offers, but nothing on the scale of years’ past. Generally speaking, buyers seem to be in complete control right now.
Why are these points important? Two reasons. First, if you’re a buyer, take full advantage of seeing the other players’ cards right now. If you’re a seller, particularly a motivated one, be realistic about your asking price and know the psychology of the typical buyer before you launch your home into the marketplace. If you’re interviewing listing agents, don’t fall for the one with the highest list price. You’ll want the agent that tells you how it is, despite how tough that pill may be to swallow.
To share this post, continue reading–> Read the rest of this entry ?
Posted in Home Buying, Home Selling, News, Tips | Tagged buyers, commentary, home prices, market forces, market trends, prices, san francisco, san francisco real estate, sellers | Leave a Comment »