The Goldman Report- Weekly Bay Area Real Estate Market Report

The Bay Area housing market had a lift in October. Guess you didn’t read that one. With few exceptions the number of pending and closed sales in Bay Area counties was up in October over September. In most counties sales prices were up or slightly down when compared to last October. Some were extraordinarily up due to the upper ends of the market doing quite well. The counties with the lowest median and average prices took the biggest decreases. Months supply of inventory dropped from Sept. to October in every county. The good news is that some buyers are just ignoring the headlines.

Robert Toll, Chief Executive one of the country’s largest luxury home builders finally said it best in the NY Times last week. He stated the housing market is horrible in most parts of the country—he fears it won’t get better until newspapers stop saying how bad it is. Mr. Toll said this because of the large number of cancellations of contracts in his developments not due to any reasons related to obtaining financing or buyers homes not selling. He goes on to say “that they (buyers) read one too many Times articles deciding now is not the time to buy.”

Can’t wait to read how the local papers will handle the news that closed sales are up from Sept. to October. These stories won’t be written for a few weeks. I am sure they will find a way to turn positive news into a negative.

Half of our offices had at least one multiple offer. In San Francisco a third of our transactions were involved in multiples. We are not seeing the wild over-bidding. These homes sold slightly over, at or slightly under list price. Those that are in multiples are priced exceedingly well as evidenced by an Oakmont listing in Santa Rosa that sold immediately while their neighbor’s home, who has had their house on the market for a good period of time, waits for an offer. I was told that our seller shared with our listing agents that they were chosen because they were honest with their suggested pricing. Sellers need to hear the truth.

I have attached an article by Jonathan Clements that appeared in the Wall Street Journal on November 7th. It clearly illustrates the importance of pricing if a seller wants to sell in this market. It delineates the costs of not selling in a reasonable amount of time. Many sellers become stuck in the value of their home at the peak of the market. Mr. Clements points out that prices across the country on average have only dropped 4.5% from their peak in July of 2006. He also states that the average time to sell a home is 10 months nationally. That means only 10% of the listings sell per month. Those that do sell are the ones that are value priced.

Here is how each county fared for the month of October. The numbers are based on sales of single family homes and condos. As I stated above sales prices for the majority of counties did well. I will give both the median and average sales price percentages. The first number will be median and the second average. San Mateo county lead with +14%/+18.7%, Marin +8.4%/+15%, Santa Clara +7%/+11% and San Francisco +5.4%/+11%. All these counties have the highest prices in the Bay Area. This shows the strength of the upper end markets. There is a great deal of wealth in the Bay Area due to the tech industry, venture capital and export/import businesses. Alameda county (+8%/+4%) although down on median was up on average again reflecting part of the influence from the expense markets in No. Alameda county. Three counties were down Napa slightly at -2%/-.5%, Sonoma
-8.6%/-10.6%, Contra Costa -10.6%/-2% and the hardest hit county Solano at -18.5%/-23%.

Number of closed sales was off significantly year over year for October; however seven of the nine counties were up month over month. The first number given is year over year for October and the second number is month over month Sept. to October. The leader in being least off from last year is San Francisco -11%/+21.5% followed by San Mateo -33%/-1%, Marin -34%/+21%, San Mateo -38%/+9%, Sonoma -40%/+2%, Napa -44%/+31%, Alameda -46%/+8%, Contra Costa -48%/-3% and Solano -56%/-13.5%.

Months supply of inventory (MSI) gives us a picture of the type of market each of our counties are in---seller’s, balanced or buyer’s market. Three months and under is a seller’s market, 4-6 months a balanced market, 6-10 months a buyer’s market and over 10 months a strong buyer’s market. MSI is higher in every county this year compared to last year. I will note that San Francisco and Marin counties were only slightly higher than last year’s supplies. All counties were down in MSI Sept. compared to October which is a positive sign. The only county still considered in a seller’s market is San Francisco at with a 3 MSI. Only San Mateo county at 5.2 MSI is in a balanced market. Santa Clara 7.5 and Alameda 8.7 MSI are in a buyer’s market. Sonoma 10.2, Napa 13.4 and Solano 15.1 MSI find themselves in a strong buyer’s market. As a reminder these are county-wide figures. Within each of these markets there can be diversity. Meaning that in a seller’s market county you may have specific markets that have higher inventories and conversely within a buyer’s market you may find specific markets that have smaller inventories.

Like other financial markets there will continue to be volatility. We have a broad variety of markets. One trend is clear, that our first time buyers markets are most challenged and that our upper end markets appear to have strong resilience. This market offers great opportunity for buyers in those markets with large inventories. There is still plenty of mortgage money out there; however qualifying for loans will be stricter. Actually we will be going back to a more normal qualifying criterion.

It will be a wild ride. The future is difficult to predict, but we have been through real estate cycles before and somehow came through them just fine as we will with this one.

The Goldman Report- Weekly Bay Area Real Estate Market Report

The newspapers called it “Gray Friday” as the stock market dropped 360 points this past Friday on the 20th anniversary of “Black Friday” when the stock market dropped 23% in one day. I think I would have called Friday’s drop “Silver Friday” (like silver lining). Those 360 points represented only a 2.6% decrease. I would have expected a larger drop given the downgraded earnings reports for the 3rd quarter combined with the on-going sub-prime dilemma.

There was a time when the housing market and the stock market tracked in opposite directions. Actually economists had a word for it----“disintermediation”. When the stock market went up the housing market went down as investment dollars poured into stocks. And conversely when the stock market went down the housing market increased. All that changed about 25 years ago. In fact in the last great run up of the NASDAQ we tracked the rise of housing prices to the rise of the NADAQ and unbelievably the curve tracked perfectly with the two variables. It also tracked perfectly after the dot.com bomb in the opposite direction when prices declined. Obviously the wealth made with rising company values in the NASDAQ, particularly in the Bay Area, fueled the escalating prices during the run up in the late 90’s to 2000. The reason I mentioned this is that housing prices in the past moved quite slowly. Since this change of the markets running in similar patterns, the housing market has acted much like the stock market in being more vulnerable to wider swings and being influenced more by emotion and conjecture on the future of the economy.

As the stock market goes so does the housing market---instability in the stock market follows with instability in the housing market. And I should also
comment that housing from 2002-2005 played a significant role in driving the economy with the dramatic increase in new home building and in resale transactions. Certainly supply and demand plays its card and more recently easy qualifying sub-prime mortgages, but today more than ever the housing market is tied to the vagaries of the investment markets and visa versa.

Given the fragility of the stock market and the ever incessant drone of the media highlighting the demise of the housing market I am amazed our local market is doing as well as it is. During the reporting week our SF Presidio office had 31 sales and we saw a bit of resurgence in the wine country with sales doubling from previous weeks. However all parts of the Bay Area markets do not run together. The point is that in spite of all the negative news homes are still selling.

Part of the reason is that you can’t sleep in your stocks. First and foremost buying a home is part of the American Dream and a place to raise our families. Secondly it is one of the very few tax deductions left to most Americans. Thirdly, over the long term, it has proved to be an exceptional investment. The positive news in this course-correcting market is that interest rates are still historically low.

The demand is out there. Although open house traffic has slowed, the best of the properties are still attracting good numbers of buyers. Buyers today feel there is no sense of urgency. The caution is created by uncertainty in economic conditions and the prospect of housing prices continuing to drop. This condition has impacted the lower and middle price ranges of markets. The upper end seems to be doing just fine as indicated by two $12 million sales in SF and seven sales over $ 3 million. Let me add we had another sale in Ross over $ 6 million with multiple offers. What do the wealthy know that others do not? Obviously they feel confident in holding real estate.

Until the uncertainty in our economic future and the sub-prime fiasco unwinds itself the housing market continues to be sluggish in areas of first time buyer homes and those overloaded with inventory. There is some bright news. Unemployment is still at 4.7 nationally. In the Bay Area we are a bit under the national average at 4.4%. We still have job growth. Also on the bright side regarding the sub-prime situation Citigroup, JPMorgan and B of A are setting up a $75 billion fund to purchase mortgage securities and other distressed debt. This fund is designed to stave off any threat to financial world markets. The G7 nations met to strategize on limiting any further damage the credit crisis. All these efforts should have a positive effect over the long term to stabilize the credit markets.

The most important factor is the one I had talked about in several other reports and that is that recessions are created by consumers changing habits. The more the media focuses on negative events without balancing there stories will create a downward spiral among consumers that will impact their buying patterns. This is not just my theory, Robert Shiller of The New York Times wrote an article last week succinctly pointing out that the last recession was shaped by such a pattern. Right now he sees the economy as having the sniffles whether it turns into the flu will be based on whether or not the “salient, emotion-arousing narratives lead people to change in their spending habits.” He goes on to say, “the housing crisis and the credit crunch have people talking about ‘foreclosures and failures of financial institutions’. If that downbeat conversation continues the economy’s aches and pains may well turn into full-blown flu.” Words and thoughts are powerful. I don’t mind the media reporting on the facts, just make sure you balance it with all the facts.

So for my part I am going to focus on the positive elements of our economy and spread the word that there are great buys out there in the market (which there are). It is kind of like taking a flu shot to protect against the ill effects of the flu. If more of us do this, it will be a good antidote against the economy getting the flu.

The Goldman Report- Weekly Bay Area Real Estate Market Report

Let me start with the good news---homes are still selling---they are just not selling at the pace they were 3 months ago. What a difference 90 days makes. Much has changed since the start of the sub-prime and liquidity crisis. It disrupted financial markets, made obtaining jumbo loans more difficult and most importantly changed the confidence factor among potential buyers.

As we review the month of September certain trends (based on residential single family and condo properties) become evident. With few exceptions median and average sales prices have not changed much from last year at this time. The big winners are Marin, San Francisco, San Mateo and Santa Clara counties with gains both in median and average sales prices compared to last September. They have been buoyed by the upper end of those markets being the most active of price ranges. Alameda, Contra Costa and Sonoma counties were off 1-4%. It was Solano that has been hit the hardest with prices down by 12%. Prices have held surprising well.

Absolute inventory numbers vary widely compared to last September. Marin (-13.5%), San Francisco (-5%), and Contra Costa (-6%) were all down from last year at this time. Probably the cause for San Francisco and Marin prices doing well. Sonoma county was flat. Alameda (+8%), San Mateo (+9%), Santa Clara (+12%) and Solano (+11%) were all up compared with last September.

The most significant trend is that pending and sold properties have declined sharply compared to last September. Pending sales by county were off anywhere from 19-43% and closed sales varied from 30-56% off from last September. This was a deep slide given that absolute inventories had not increased hugely and in some cases decreased from last year. Here are the numbers by county—first number is percentage off on pendings and the second is by closed sales: Alameda (-42%/-56%), Contra Costa (-45%/-51%), Marin (-34%/-41%), San Francisco (-19%/-30%), San Mateo -30%/-34%), Santa Clara (-40%/-46%), Solano (-43%/-61%) and Sonoma (-34%/-42%). As Sam Zell, the billionaire property developer and owner said, we don’t have a liquidity crisis we have a confidence crisis. The confidence crisis has had a meaningful effect on our markets. As noted above it usually takes large increases in inventory to prompt sales to fall drastically. This was not the case this time around.

With fewer sales, months supply of inventory has swelled. Most counties find themselves in a buyers’ to a strong buyers’ market environment. Only San Francisco at 4 months supply is still in a balanced market. Marin (6.9) and San Mateo (6.3) counties are on the edge of a balanced and buyers’ market. Alameda (10.7) and Santa Clara (9.1) are in a buyers’ market. Contra Costa (15.3), Solano (18.3) and Sonoma (12.3) find themselves in a strong buyers’ market. Cities within these counties can vary widely. There are number of examples of cities or areas within counties that could still be in a sellers’ market when the overall county finds itself in a balanced or buyers’ market. Or conversely a city or area could be in a strong buyers’ market when the county market is balanced. These numbers could change quickly if a number of sellers decide to take their homes off the market or fewer sellers decide to go on the market to replace listings that have been sold. These numbers have gone up quickly over the past 60 days. As we head toward the end of the year my guess is they will subside.

In spite of the current conditions nearly thirty percent of our sales the past week were involved in multiple transactions. The majority of the multiple offers received two offers. There were two notable transactions, one in the Central Sunset area of San Francisco that received six offers and went 7% over and another in Sonoma listed at $1.395 mil. and garnered 4 offers and went well over list. Again price is critical. In both of these cases the homes were priced exceptionally well. In the case of the Sonoma property, the seller between the time the property was listed and the broker’s open, reduced the price by $100,000. They would not have been in a multiple had they not changed their pricing strategy. Most properties selling in today’s environment are selling shortly after they come on the market or after significant price reductions. The others listings are just sitting.

Open house traffic has slowed. Attractive new listings are still seeing good numbers of buyers. A 3 bedr/1 ba. listing in the Cow Hollow area of San Francisco had a 100 groups through. It has been reported recently that many of the buyers visiting open homes are just beginning their search. This bodes well for the new year as many of these buyers will be prepared to buy.

Hopefully, with more good stories about the economy like the one at the end of last week reporting that employers actually added more jobs in August than previously reported; that there was positive job growth in September; and that unemployment is still at a low 4.7% will bring a greater degree of confidence that we are not slipping into a recession. It will take a while to unwind the damage of the sub-prime fiasco. The good news is that the economy is moving forward and a good deal of the bad weather has passed.

The Goldman Report- Weekly Bay Area Market Report

I do hear a pulse. It may not be everywhere, but a couple of our markets are showing renewed vigor. The media continues to pound with negative stories. Economists everywhere are jumping on the bandwagon behind Mr. Greenspan’s comments of a few weeks ago. Despite the S.O.S. warnings regarding the housing market, buyers continue to make the leap of faith. This is particularly true in the upper end of our marketplaces. In San Francisco, Marin and the Piedmont/Montclair/Berkeley markets have had some strong sales in the upper end of their price ranges. A Piedmont listing priced at $5.85 mil. received two pre-emptive offers (before the listing actually hit the MLS). In Marin a home in Ross listed at $6.5 mil. received multiple offers after a significant price reduction. What do the wealthy know that the rest of the buyer population doesn’t.

The most active marketplaces continue to be San Francisco and the Piedmont/Montclair/Berkeley marketplaces. Nearly half of the 17 sales in our Montclair office were involved in multiple offers. Twenty-five percent of the transactions in our San Francisco offices were multiples. Again the trend of fewer offers and lesser amounts over asking and in some cases multiple offers going at or under list price continues. There are exceptions like the SF Miraloma Park 3 bedr. 2 ba. that received nine offers and went over asking by 15%, but they are few and far between.

One pronounced trend is that if homes are on the market more than 30 days without an offer or a price reduction they have little or no chance of selling. This is evidenced by numbers out of our Montclair office. Seventy-eight percent of the sales for September were on the market for less than 30 days. Seventy-five percent of those that sold after 30 days had price reductions. Buyers have a hyper-sensitivity to value. For sellers who are unwilling or unable to meet current market pricing should consider taking their homes off the market and return when their pricing needs more realistically match what buyers are willing to pay.

The wine country has slowed once again. Only the most desirable properties are attracting attention. Once such property was a 4 bd./3.5 ba. Glen Ellen listing priced at $1.395 mil on a little over an acre with pool and barn which garnered two offers and sold over asking. What we are seeing are more short sales, exchanges and seller carry back financing. This is reminiscent of past course-correcting markets. In Contra Costa the action in Lamorinda seems to be in the entry level. A fixer in Orinda priced at $749K received four offers and sold over asking. Another Orinda home listed at 949K sold in less than a week with 2 offers at asking price.

The buyers are out in force at the most popular listings. An incredible 305 people came through a 2 unit building priced at $1.349 mil. in the Cole Valley area of SF. And a 100 groups came through a 3 unit building in Pacific Hts. listed at $2.595mil. A Tiburon listing priced a little over $2 mil. had 45 visitors. Traffic at new listings is the most active.

Financing is having an effect on buyers under $2 mil. Lenders are qualifying buyers more stringently. It is more challenging for buyers to stretch their buying ability. This situation should be short lived. When the financial markets experience volatility due to the lax in qualifying, as recently illustrated by the sub-prime debacle, the pendulum swings to the conservative and then modulates as it swings back to the middle.

Just Listed in Eureka Valley.

A charming condominium in the heart of Eureka Valley. Located in a wonderful neighborhood, close to many shops and restaurants. Period detail with modern upgrades, this three bedroom condominium is a classic San Franciscan residence. Excellent hardwood floors and partial carpet throughout. A very functional layout with formal living room, dining room, butler's pantry and kitchen. Shared garden with pond. Separate and private storage space below.

Listing Agent: Oron Maher (415) 345-3173

The Goldman Report- Weekly Bay Area Real Estate Market Report

They had a party on Wall Street when the Federal Reserve lowered the fed funds and the discount rate by a half percent. What did it do for the housing market? Answer ????? Although the stock market swings widely when the Fed makes major moves; the housing market does not react in the same way. The swings are more elongated. It takes months (or sometimes longer) to move directions. The mortgage markets always anticipate a move in rates and with the recent move by the Fed rates dropped a bit under 7% for jumbo loans. How much lower will they go is anybody’s guess. There is money available for jumbo loans not in the quantity it once was, but certainly enough for current demand. The only thing that has changed is that it is taking longer for approvals and lending criteria has tightened. So what---we have been in a very loose lending environment for 2-3 years. The pendulum has swung back to a normalcy. This is positive for the market as it will prevent against future overheating of prices.

Momentum has picked up since the end of August. Not a huge lift, but certainly moving in the right direction. The number of multiple offers has slowed; still 40% of our offices had at least one multiple offer transaction. The Lamorinda (Lafayette, Orinda and Moraga) area did see a doubling of sales this week compared to last. San Francisco also seems to be picking up speed.

Buyers are still looking for the right property and when the find it, they move quickly. In Larkspur a 1200sq. ft. home priced at $917,000 received 7 offers and went substantially over the list price. In San Francisco, a Central Richmond 3 bedr. 1 ½ ba. home listed at $1.295 received 2 offers and went slightly over asking and in Mission Dolores at two unit building priced at $1.525 mil. garnered 3 offers and went 8% over asking. A pre-emptive offer was accepted on a $2.5mil. Marin property before it hit broker’s tour. The upper end is doing just fine. A unique Piedmont listing priced at $7.8 mil. sold in the first week with 3 buyers circling and one quickly going into escrow.

Buyers are waiting for the newest hot properties. Most open home traffic was tepid. This is particularly true for listings that have been on the market before Labor Day. The best of the new listing inventory coming on after Labor Day experienced heavy traffic as exemplified by a new SF Marina listing that had a 100 groups or a new Mill Valley listing priced at $1.569 mil. being attended by a also 100 groups or the SF Glen Park listing seeing 125 visitors over a two day period.

The buyer demand has not subsided. However, their willingness to make offers has slowed appreciably except for the best priced and staged properties. It is like the tide is out and we are waiting for the tide to rise once again. It won’t be a tsunami. But until buyers feel confident in the economy, the housing market will be in a period of inertia. As with any market, the best time to buy is when others are not. Those buyers that dive in will be rewarded in the long term as sellers are more willing to negotiate and give favorable terms.

Most offices are showing an increase of activity during the second week of Sept. If this activity continues we could see a good solid fall market. The next two reports should give us a good sense on what kind of a note the year will end on.

Multi-Family Residential (Apartment Buildings) Property Stats for San Francisco Third Quarter

As we begin approaching the last quarter of 2007, the apartment building market has began taking some interesting twists. The following data is compiled for sales of
6+ unit apartment buildings that have sold in San Francisco from January 1, 2007 unitl September of 2007.
This information has been obtained from the San Francisco Multiple Listing Services and from tax records. Neither Oron Maher nor Pacific Union take responsibility for the accuracy of this information.

Sales Price:

The range of sales prices is between $995,000-$19,000,000. The average sales price is $3,600,228. Total sales price is $446,428,277. The total number of sales is 124.

Units:

The range of number of units sold is between 6 and 114. The average number of units/building is 15.81. The total number of units sold is 1,961.

Price/Unit:

The range of price/unit is between $87,710 and $3,125,000. The average price/unit is $281,184.

Gross Income:

The range of gross income for buildings sold is between $55,464 and $1,333,369. The average gross income is $228,397. The total gross income for all buildings sold is $28,321,278.

GRM:

The range of GRM (gross rental multiplier) is between 8.8 and 28.6. The average GRM is 16.4.

Square Footage:

The range of square footage is between 1,900 and 68,575 square feet. The average number of square feet per building is 11,695.64. The total number of square footage sold this year is 1,450,259.

Price/Square Foot:

The range of sales price per square foot is between $138/ft and $635/ft. The average price per foot is $317/ft.

Price/Room:

The range of price for bedroom sold is between $38,281 and $154,545 a bedroom. The average price for a bedroom is $82,617.

Net Income:

The range of net income earned from sold buildings is between $27,464 and $800,021. The average net income earned is $147,335. The total net income earned from all buildings combined is $18,269,592.

Cap Rate:

The range of cap rates for buildings sold is between 1.8 and 6.8. Average cap rate is 4.2.

If you have any questions about the muti-unit/ apartment building market in San Francisco or are thinking about purchasing or selling investment property in San Francisco, please call Oron Maher at (415) 345-3173.

-Oron Maher

The Goldman Report- Weekly Bay Area Market Report

If you read the SF Chronicle’s Business section Friday you would think Governor Schwartzenegger should declare a state of emergency and apply for FEMA funds for sellers---the headline read Home sales in Bay Area plunge to 15 year low----lines like “a credit crunch that is quashing home shoppers’ ability to buy”. I thought this is supposed to be news reporting not prose. With a bit of a fizzle Kelly Zito states the median price rose 4% but had to add it was down 1.7% from the peak. Just a little history, Kelly has been predicting a bubble since May 2003. Finally, now that the market has cooled due primarily to the sub-prime fiasco, she is having her day---well at least for the moment.

These kinds of stories create an uncertainty among consumers by focusing only on one side of the story instead of giving a balanced presentation. I am not saying newspapers don’t give another view. The do at times, but those stories end up on page 4 at the bottom of the page, like Kenneth Harney’s column in this Sunday’s real estate section. It gave a picture of the mortgage situation quite different than one that has been portrayed by regional newspapers over the last several months. It was entitled “National view of mortgage mess is not so disastrous”. The overall theme was that delinquencies and foreclosures are very localized and are not a national threat. He pointed out that 97.4% of outstanding mortgages are paying on-time and that in 34 states foreclosures actually decreased. Even in California sub-prime borrowers outperformed those nationwide.

Bottom line buyers have become more cautious and reticent to write offers. The outcome was the market has slowed which is reflected in the declining numbers. What it doesn’t mean is that the market has come to a standstill. Yes, fewer sales, but still good activity for well priced homes in desirable areas. Open home activity has begun to increase now that we are past Labor Day. This is particularly the case in San Francisco, Berkeley, Piedmont and in parts of Oakland. A Berkeley listing priced at $1.475mil had 100 groups through and requests for 4 disclosure packets. A Piedmont listing had over 150 groups through and requests for 6 disclosure packets. A Berkeley listing in the Claremont area priced at $1.150mil. saw 150 groups through and requests for 8 packets. A listing in the Sequoyah view area of Oakland listed at just under a million had 40 groups through and an offer being written. This is not our entire market, but it shows that in spite of the media harbingers there is still lively demand. Whether that demand exercises itself is a function of price, condition, and inventory.

A good example of how pricing plays a significant role in a sale was demonstrated by a Montclair home that went into escrow during our report period. The home originally came on the market in June priced at $1.997mil. It sat without an offer and was taken off the market at the end of July to do some touching up and would come back on the market after Labor Day. It was brought back on the market at $1.849mil. received 3 offers and sold over asking. Buyers have done their homework and will not pay a penny more. When they see value they leap like they did with a “fixer” Lafayette listing priced at $900k that garnered 5 offers and sold over asking.

Mortgage rates have begun to decline and are now at a 4 month low and lower than they were a year ago. All signs point to the Fed lowering rates at their next meeting. This is both good for potential borrowers and those they may need to refinance. If the stock market continues to settle itself down, the economy does not hit any speed bumps, rates continue to drop, and the newspapers have some other tragedy to report on other than the housing market---buyers will regain their confidence in the future and be more willing to move forward. The demand is there, financing is available, we just need the boat to stop rocking.

Just Listed- 135 15th Ave- Lake District Edwardian Home $2,495,000

Remarkable Lake District residence located on much sought-after block. Formal living, dining and family room with large outdoor deck make for a very inviting floor plan. This home shows much pride of ownership and has been impressively upgraded. All four bedrooms, including master bath are located on the second level. Basement level has additional room and bath. Great backyard space with many flourishing greens. Close to Presidio trails, Mountain Lake Park and convenient to Golden Gate Bridge.

For more information please contact Listing Agent: Oron Maher 415-345-3173.

Just Listed 700 Fell St #7- Alamo Square Condo

Very Hip and Spacious corner unit condo located in historic Alamo Square. This 2 bed/2 bath unit has an abundance of natural light. Enjoy downtown and southern views from its many windows. Stylishly remodeled with new kitchen, bathrooms, hardwood floors and in-unit laundry. Only 8 units in this building with common roof deck and garage parking. Close to trendy Hayes Valley shopping, Alamo Square Park, NOPA restaurant and Divisadero shops.

For more information please call Oron Maher 415-345-3173

The Goldman Report- Weekly Bay Area Market Report

Call off the dogs. We are in the dog days of summer. That time when many families take their last vacation and many children start preparing to go back to school. This year we had a few more dogs. A new breed called the sub-prime Chihuahua---its bark is bigger than its bite and the jittery stock market terrier—a nervous little bugger. This was enough to keep more buyers at bay.

Sales activity has slowed since the sub-prime fiasco hit which sent reverberations through the financial communities and rippled through the stock market. Where are we two weeks later? The Fed doused the conflagration with $100 billion dollars of liquidity. The flames have subsided for the moment. The stock market has been buoyed by the latest economic indicators that reflect the economy is still on solid footing.

Although the media screams there is no money available for financing and one deal after another is falling apart---the reality is far from their myopic reporting. Transactions are closing even if buyers have to go to find new lenders---a small segment of transactions will not close, but this is far from the majority.

The conforming market, those loans under $417,001, has not been affected at all, as they have a secondary market to sell to. Yes, the jumbo side of the market has been affected by some larger mortgage companies that have not been able to fund loans because of their inability to find a market to fund their loans. But by no means is this a cataclysmic event. There are financial institutions that portfolio loans that have plenty of money to lend. Yes, qualifying criteria has changed. The days of loosey-goosey qualifying are over. The companies that have gone out of business and those that now find themselves in financial trouble and the investment brokerages that packaged the risky sub-prime funds have no one to blame but themselves. They are the ones that set the qualifying criteria. We are now back to basics insuring that those with poorer credit histories, stated income loans with a wink and loans that can put people in harms way will not put the whole system at risk. The after shocks will continue for a while. We even see a few more lenders re-entering the market at excellent rates as there are plenty of credit-worthy buyers who need loans.

It is more important than ever that buyers go with solid mortgage companies and professional and experienced loan officers. It is taking longer to qualify and sellers need to be cognizant of the environment. Sellers should make sure that the buyers are pre-approved by the lender who is actually funding the loan not just the mortgage company. Both buyers and sellers need to do their homework.

There has been much brouhaha made about foreclosures. It is true there are some areas in the Bay that have significant increases. The counties of Napa (particularly American Canyon), Sonoma, Solano and parts of Alameda and Contra Costa (east and west CC) have been impacted. However Marin, San Francisco, San Mateo and most of Santa Clara county are even or lower than last years numbers. According to Realty/Trac.com one out of every 333 households received a notice in July that it was in some stage of foreclosure----that is about 1/3 of 1%. I wouldn’t call that an alarming number. Everything has to be put in perspective. Headlines shout disaster, but reality speaks differently.

We are experiencing fewer multiple offers and fewer numbers of offers in multiple offer transactions. Only 40% of our offices reported having a multiple. Still amazing given the state of the financial markets. The upper end still is showing strength as that part of the market is less dependent on financing. A new Ross listing at $7.195 mil. received an offer in less than a week. A Marin listing priced at $1.7 mil. received a pre-emptive offer and went over by $100K.

Open house activity was mixed. Overall the buyer flow has been slowing. However in San Francisco and other more active markets like Central Marin and Montclair/Berkeley/Piedmont areas still are seeing positive buyer activity. A Greenbrae listing priced at $1.75 mil. had 100 people through (of course a number were neighbors). A San Rafael listing priced at $870K had 30 buyers through and is expecting 4 offers. A two unit building in the Potrero area of SF had 70 buyers through and a 3bedr./2ba. home in the NOPA (north of the Panhandle) had 40 groups. The wine country (Napa and Sonoma counties) and Contra Costa have slowed appreciably.

For the most part the listings currently on the market have been around for awhile. As sellers reduce prices to market levels these homes are beginning to sell. What we are hearing is that there are a number of well-priced and attractive listings coming on the market after Labor Day. Those buyers searching now have a unique opportunity as they have less competition and sellers who are motivated to sell their homes. Just like in the stock market you want to be buying when others are not.

July 11th Meetup Group

Adam Skarsgard, Esq. of Asset Exchange Company will speak on Real Estate Tax Advantages.

When: Wedneday July 11th from 6:30-8:30.

Where: 57 Post St (4th Floor), San Francisco, CA

Adam will speak on the following topics:

Real Estate Tax Advantages/Issues
- Depreciation Tax Deductions
o How it works (commercial vs. residential)
o Depreciation Recapture Tax (and how to avoid it)
o Cost Segmentation – What is it, when to use it?
- Passive Losses due to Depreciation
o What is a Passive Loss
o Passive Loss Rules (Real Estate Professional vs. Normal Person) http://www.wwlaw.com/realtorp.htm
- Mortgage Interest Deductions
o Rules
o Limitations on the deduction
- Deductible Business Expenses
o Travel to and from, etc
- Capital Improvements vs. Expenses
- Home-owners Exemption
- Combo of 1031 Exchange and Homeowners Exemption

For more information on this event please contact: Oron Maher 415-345-3173.

June 6th Meetup Group + other updates

Our June 6th Meetup Group was a huge success. Our guest speaker was Al Florida, CEO of Realty Information Systems, the largest foreclosure aquisition company in the Western United States. Mr. Florida spoke about strategies for purchasing foreclosures at 50-70% below market value. He spoke for approx. 45 minutes and had an enganged audience. If you would like to contact Al Florida or learn more about his company, please visit his website www.realtyinformationsystems.com . We had approx 35 people in attendence at this meeting. I gave a quick market update on the 5+ unit apartment building market in San Francisco. Leonard Spotto chaired the meeting which was sponsored by North American Title Company, Daniel Burnham Ct. branch.

Please join us for our next meetup on the first Wednesday of July. This group is gaining momentum rapidly and I would love to see it continue to grow. Every person in attendance has an opportunity to introduce themselves to the group, and is then followed by opportunities to network with one another. For more information please give me a call or email at the numbers listed below. Thanks, Oron

New Listing: Lake District Home

154 15th Ave- 5 bed/ 2.5 bath home with 2-level Cottage in Rear. Approx. 3912 sq ft. Located between Lake and California Streets. Asking $2,400,000.

Spacious Lake District Home with Large Two-Level Cottage in rear. This three-level home has an abundance of charm and with a new remodel can become the jewel of the neighborhood. Main level features a large living room, formal dining room, large kitchen and sun room which leads to a large backyard deck. Second level has 3 bedrooms and bath, Third level has two nice sized bedrooms and a bath. Partially developed unwarranted in-law in basement. Rear cottage can be guest or housekeeping quarter.

Coming Soon- Not Yet on MLS

The following properties will be posted on the MLS in the next week. Please call for any more information or pictures.

1714 48th Ave (Moraga and Noriega). This an approx 1100 sq ft. TIC unit in the Outer Sunset. Features 3 beds/ 2 baths, 1 car parking. Recent remodel and some Ocean views from this unit. Asking: $599,000.

333 1st St #N1006- Studio unit at The Metropolitan approx 520 sq ft. This is a tenth floor unit in a 2004 building in great South Beach location, close to Financial District. Building features a 24 hour doorman, swimming pool, movie room, business room, amongst it's few amenities. One car parking. Asking $499,000. Sellers will pay 6 months HOA dues for new buyer.

For more information on these listings, please call: 415-345-3173
www.pacunion.com/oronmaher

1350 California #307

Offers will be reviewed May 14th by 5:00 pm. Listed at $789,000.

The California Court is a modern-style building located in Nob Hill along the cable car line route. This unit has been remodeled with high-end upgrades in the kitchen, bathrooms, bedrooms, and living room and shows very nicely. Enjoy a working fireplace, private patio, deeded parking and a common area courtyard. Close to many novelties including Grace Cathederal, Fairmont Hotel, Nob Hill Cafe, Cala Foods, and Polk Street

666 Post St #602

Offers will be taken on this listing on May 14th, 2007. Listed at $490,000.

The Crown Terrace is a classic 1920's art-deco style building located in the restaurant/hotel district of San Francisco. This charming co-op unit has a nice corner location, northern views, fireplace, breakfast nook and spacious living room. On-sight building manager during business hours, common area roof deck with solarium and fabulous city views, social room, laundry & storage. Walk to financial district, theatre district, restaurants and nightlife

Meetup Group Update

Our first meetup group was a big success. We had about +/- 30 people in attendance. Our guests included investors, lenders, title escorw/ professionals, 1031 experts and real estate agents. I spoke for about 30 minutes about the ins and outs of purchasing commercial or investment property. If you would like a copy of my power point slide please contact me at the number listed below. Leonard Spotto then spoke for about 30 minutes on 1031 exchange strategies. Each participant had an opportunity to introduce themselves and talk about their investment goals. The group decided to meet every first Wednesday of the month. Everyone is welcome to attend, please call for more info....

New Listings Not Yet on MLS

Nob Hill- 2bd/2bth Condo $789,000- this listing will be on the MLS in one week, but I can show it early to my blog subscribers. For more information, call Oron Maher, Listing Agent 415-345-3173

"The California Court"

1350 California St #307. This is a very nicely remodeled 2 bed/ 2bth condo, approx 1161 sq ft. Open floor plan unit with all high-end finished located on California St (Between Hyde and Leavenworth). Comes with one-car deeded parking and storage. Low HOA dues. Walk to Polk St shopping and dining, Grace Cathederal, Nob Hill cafe and all the other amenities of this high-end neighborhood.

Downtown- 1 bedroom Co-op Unit in Hip Downtown Location- $490,000

Again, not on the MLS for another week. Still need to stage, photograph, etc... but I can show it or give you info on it early by subscribing here or calling 415-345-3173- Oron Maher, Listing Agent.

"The Crown Terrace" 666 Post St #602. Located in the restaurant/hotel district of San Francisco, this large (approx 800) sq ft. 1 bedroom unit is on the 6th floor of a famous art-deco building. This unit is a co-op which requires 10% downpayment and buyer interviews prior to purchase of property. Great northern view from living room and bedroom.

Nob Hill Development Opportunity- Back on Market (as of this morning)

Opportunity to develop units or single family in high-end neighborhood, 1.5 blocks from Fairmont Hotel. RM-3 zoning allows for 1 unit per 400 sq ft. of lot; +/- 1700 sq ft. gross per foot. Height limit 65 ft. Prospective upper units could have views from Angel Island to Transamerica Building. There is a 693 square ft. cottage in rear of property. Lot is 2221 sq ft. Can't go wrong with this location. Call regarding offers- no exceptions. 415-345-3173.

The San Francisco Bay Are Real Estate Investment Meetup Group

For all of you in the commercial property game, here is a really hot new networking group that will feature some big movers and shakers in the real estate game. Should be very infomative with new topics of interest every month.

To sign up to be a part of the monthly meetup group go to

www.meetupgroup.com

When: Wednesday, May 2, 2007, 6:30 PM 2007
Where:
Mechanics Institute Building57 Post Street 4th FloorSan Francisco , CA 94104

Info/Map
Description:
The SF Bay Area Real Estate Investment Group offers investors continuing education seminars and workshops taught by top real estate professionals in the Bay Area.
The May 2nd meeting will feature presentations by Leonard Spoto of Asset Exchange Company and Oron Maher of Pacific Union Investment Brokerage. The topics covered will be "Real Estate Investment and 1031 Exchange Strategies".
Future classes being offered include:
- Investment Property Financing - Tax Planning for Investors - Insuring your Investment - Inspections and Disclosures - Estate Planning for Real Estate Investors - Property Management - Financial Strategies - Appraisal Issues - Commercial and Multi Unit Properties - Out of State Opportunities - Go Zone Opportunities - Triple Net Properties - Commercial TIC?s - Introduction to Foreclosure Investing - Short Sales

To RSVP please call Oron at 415-345-3173

Printer-friendly summary

135 Wetmore St, San Francisco, CA $1,600,000 (Currently in escrow after about 10 days on the market). Great Nob Hill location on this one- great opportunity.
Opportunity to develop units or single family in high-end neighborhood, 1.5 blocks from Fairmont Hotel. RM-3 zoning allows for 1 unit per 400 sq ft. of lot; +/- 1700 sq ft. gross per foot. Height limit 65 ft. Prospective upper units could have views from Angel Island to Transamerica Building. There is a 693 square ft. cottage in rear of property. Can't go wrong with this location. Call regarding offers- no exceptions.


1637 16th Ave, San Francisco, CA $1,100,000 (currently in escrow, has had 5 offers over a period of time). Golden Gate Heights neighborhood.
Big Price Reduction. Charming traditional style home with breath-taking 180 degree ocean views, located on coveted block of Golden Gate Heights. This 3-level home is filled with natural light--perfect for entertaining! Recently upgraded hrdwood floors, 2 fireplaces, formal living and dining rooms, front and large backyard, Separate enterance to downstairs level. Major curb appeal on this detatched home! Separate laundry room and tons of storage space. Truly a wonderful opportunity!


1332 Scott St #C, San Francisco CA $635,000 Sold 4/20/07. This property was part of the Mayors Office of Housing Program. Was on the market for about 30 days and the City had a 45 day first right of refusal (hence longer escrow). Western Addition neighborhood.
Hip, two-level townhome with 3 beds/2 baths located in an enchanting gated community, and near Japan Town, public library, St. Mary's Cathedral, shopping and public transporation. This unit has an abundance of natural light! Main level has a formal living room, dining room, one bedroom/bath, kithchen and closet space. Upstairs is two bedrooms, large bathroom, large patio and in-unit laundry. One car parking. Truly one of the best values San Francisco has to offer!

Depreciation for Commercial and Residential Property

Depreciation - What you need to know... Of all the benefits of owning investment real estate, one of the least understood is the benefit of depreciation. Depreciation is a method for matching the costs of acquiring property over the properties estimated economic life. Some key things to remember:
Using the straight-line method, residential income properties, four units or less, are depreciated over 27.5 years. Commercial property, or 5 units or more, are depreciated over 39 years.
Land is not depreciable.
Depreciation is an "intangible expense" that reduces the taxable rental income produced by a property.
Selling a property will result in a 25% depreciation recapture tax.
The depreciation recapture tax can be deferred via a 1031 Exchange.
For more detailed information about depreciation and how it works, please click here.

All in the family... You can't choose your family, but you can choose if you want to pay taxes or not when dealing with your family. Some key things to keep in mind regarding intra-family real estate dealings:
Adding a family member (or anyone for that matter) to title may result in a gift tax. Don't ever add your son/daugther/mother/daugther/etc. to title without speaking with your tax advisor.
Renting a 1031 Exchange property to a family member is allowed; just make sure the family member is paying market rents.
Selling a 1031 Exchange property to a family member is allowed, provided the family member then owns the property for at least two years.
Buying replacement property from a family member is usually not allowed. There are some exceptions. Contact Asset Exchange Company as soon as possible if you are considering acquiring replacement property from a family member.

Asset Exchange Company
Asset Exchange Company leads the industry by offering:
$499 Exchange - With Asset Exchange Company there are never any hidden fees, layered costs or miscellaneous service charges.
Attorney Guarantee - Asset Exchange Company is the only firm in the industry that guarantees that all exchange documents are prepared and reviewed by a licensed attorney.
Funds Security - Exchange funds are deposited into FDIC insured trust accounts with leading financial institutions. Client exchange funds are never commingled with operating funds and Asset Exchange Company also carries substantial Errors and Omissions insurance and maintains a Fidelity Bond for added protection.

Great News Out of Washington for Homebuyers
If lawmakers get their way, Private Mortgage Insurance (PMI) will become tax-deductible for home loans originated after January 1, 2007. PMI is a requirement for most home loans in which borrowers make a down payment of less than 20%.
The bill has already been passed by Congress and awaits the President's signature before it becomes law.
While the new deduction is restricted to homebuyers whose annual household income does not exceed $100,000, the legislation could impact nearly 50% of all homebuyers, according to a SMR Research study of homes financed in 2005.
Up until now, many homebuyers have used "piggyback" loans in order to avoid paying PMI. A piggyback loan is where the homebuyer obtains two mortgages, a first mortgage for 80% of the purchase price, and a second mortgage for the remaining funds required, outside of the down payment.
Since many homebuyers have chosen a Home Equity Line of Credit (HELOC) as their second mortgage, their required monthly payments have increased significantly as a result of the actions of the Federal Reserve. Today, many homebuyers with a HELOC are now paying more than they would have if they had chosen PMI with their original mortgage.
What does this legislation mean to you?
Under the law, homebuyers will have more financing options available that offer greater tax deductibility and lower monthly payments. This means a homebuyer could potentially afford a more expensive home! In addition, homebuyers could qualify for traditional mortgages rather than the more expensive options they were forced to pursue in the past.
Contact me immediately to determine how you can put this information to use, and get off to a great start in 2007!

Oron Maher

Oron Maher

Sales Associate

San Francisco, Presidio One Letterman Drive Building C, Suite 300 San Francisco, CA 94129 Phone: 415-929-7100 Fax: 415-929-0427

Email:	omaher@pacunion.com
Phone:	415-345-3173
Fax:	415-929-0427
Web Profile:	http://www.pacunion.com/OronMaher