These are truly historic times. Last week, Barack Obama was elected as America’s first African-American president. I don’t envy his new job. He faces as great a challenge as FDR did in the 30’s. All of America, no matter whether you voted for him or not, is now dependent on what he does as he assumes the presidency on January 20th. I know all of us wish him well as he leads us out of our current economic crisis.
It is too early to tell what it will mean for the housing market. However, the declines on Wall Street and the focus on the election have slowed most segments of the local housing market over the last couple of weeks. Financial uncertainty, the fear created by a protracted recession and declining home values, has made buyers reluctant to move forward.
Believe it or not, there are bright spots. Although housing prices have declined, so too have inventories. In addition, the number of units closed over the last several months has increased over last year during the same period. These gains, however, have been in the lower price ranges. With the decline in median price first hitting in these same ranges beginning at the end of 2006, we are now seeing declines in areas that have been immune previously i.e. San Francisco.
The numbers from the month of October clearly demonstrate these trends. Where we have seen the most significant price declines year over year (the lower price ranges), we have also seen both the largest reduction in inventories and the greatest gains in homes sold year over year. Where there were few, if any, multiple offers in the lower price ranges last year, they currently represent the majority of multiple offers.
Both Contra Costa (-44%) and Solano (-37%) counties, which have some of lowest median prices, saw the greatest declines in price. They also had the largest increase in unit sales over last October---Solano (+242%) and Contra Costa (+185%). On the other end, the counties with the highest median sales prices have had the smallest declines in price---San Francisco (-10%), Marin (-25%) and San Mateo (-25%), but also had either a decline in units sold or much smaller increases in units sold over last October---San Francisco (-20%), Marin (+12%) and San Mateo (+17%). The rest of the counties were as follows (the first number is decline in price and the second is increase in units sold): Alameda (-35/+75%), Santa Clara (-33%/+35%), Napa (-32%/+58%) and Sonoma (-32%/+122%).
All but one county (San Francisco) declined in months supply of inventory over last year. The greatest percentage declines in supply occurred in those counties with the biggest declines in median price. The most dramatic decline was in Solano County, which has the lowest median price in the Bay Area. It went from a 22.4 months supply last year to a 5.4 months supply this year. The rest of the counties are as follows (the first number is October 2008 months supply of inventory and the second is October 2007): Sonoma (4.4/12.7), Contra Costa (4.7/15.1), Alameda (4.9/10.1), San Francisco (5.2/3.5), San Mateo (5.3/6.0), Solano (5.4/22.4), Marin (6.0/6.7), Santa Clara (6.4/9.0) and Napa (8.5/15.7).
The number of days on market has declined in counties with the lowest median prices, while they increased in the counties with the higher priced homes. The changes in percent in the number of days on the market are as follows: Napa (-27%), Solano (-20%), Sonoma (-20%), Contra Costa (-16%), Alameda (+15%), Marin (+17%), Santa Clara (+29%), San Mateo (+32%) and San Francisco (+44%).
The higher price counties remained healthy through most of last year while the lower priced counties took the brunt of the sub-prime fiasco. This year the higher price counties have not been immune. The worsening economy has now affected all income levels. What the lower end market experienced in the end of 2006 and all of 2007, the higher priced markets are experiencing now. We are beginning to see prices stabilize in some of our lower end markets. The recovery always starts at the bottom. The pace of the recovery will depend on many factors---most notably is how protracted a recession we will face. To be sure, the man who we elected President last Tuesday will have a profound effect on the housing market.
Tuesday, November 11, 2008
Saturday, October 11, 2008
Just Listed- Edward II Inn and Suites-Hotel for Sale
Property Description:Own a historic corner of San Francisco, in the tourist heavy Marina District. The 3 story boutique hotel was originally constructed in 1914 to accommodate visitors to the Panama Pacific International Exposition of 1915. Licenced for 32 tourist units, the inn currently operates 29 rooms in the main building (fee simple), all with beautiful Edwardian detail; and 2 large suites on the northeast corner of Lombard (leasehold interest), which allows for prime signage on both northwest and southeast sides of the street. Ground floor has a charming corner lobby with high ceilings, licenced Bloomers Pub with bath , guest breakfast area, kitchen, 2 offices, 3 suites with jacuzzi baths. Second and third floor have 26 additional rooms, double glazed windows, stained glass. Five off-sight leased parking spaces may be delivered.This hotel has been operated as a bed and breakfast. It enjoys a prime corner location and 50' frontage on Lombard Street and a depth (on Scott Street) of 68.75 feet. Walk to restaurants and shops on Lombard and Chestnut streets. One of the closest hotels to the Golden Gate Bridge. Property history shows strong occupancy and great future room revenue potential.
Location Description:The subject site is located on the southwest corner of the intersection of Lombard and Scott Streets in the City of County of San Francisco, California. Its dual civic address is known as 3151-55 Scott Street and 2401-05 Lombard Street. The subject is identified as San Francisco County Assessor' s Parcel Number 937-001.The subject property is located in a neighborhood identified as the Marina District. The neighborhood may be more specifically identified as that area east of the Presidio, bordered to the north by the San Francisco Bay, to the west by Van Ness Avenue, and to the south by Union Street. The neighborhood can be generally characterized as one of the better quality residential areas in the city of San Francisco. Transportation through the neighborhood is considered good. Two main arteries run east/west through the neighborhood including Lombard Street and Marina Boulevard. Both these streets intersect with U.S. Highway 101 to the west, which provides access to the Golden Gate Bridge and north.
Location Description:The subject site is located on the southwest corner of the intersection of Lombard and Scott Streets in the City of County of San Francisco, California. Its dual civic address is known as 3151-55 Scott Street and 2401-05 Lombard Street. The subject is identified as San Francisco County Assessor' s Parcel Number 937-001.The subject property is located in a neighborhood identified as the Marina District. The neighborhood may be more specifically identified as that area east of the Presidio, bordered to the north by the San Francisco Bay, to the west by Van Ness Avenue, and to the south by Union Street. The neighborhood can be generally characterized as one of the better quality residential areas in the city of San Francisco. Transportation through the neighborhood is considered good. Two main arteries run east/west through the neighborhood including Lombard Street and Marina Boulevard. Both these streets intersect with U.S. Highway 101 to the west, which provides access to the Golden Gate Bridge and north.
Asking Price: $6,000,000.
For more information please call: Oron Maher (415) 378-5464
October 22 Meeting will feature Bill Whalen of Wachovia
Meeting Location: Fort Mason, Room C230
Time: 6:30 - 8:30pm
Please join us for our next real estate meetup. While we are still in the process of confirming a second speaker- we are very pleased to have Bill Whalen address our group on October 22nd. Mr. Whalen, who is a Managing Director at Wachovia, will give us an inside analysis on real estate capital markets and an economic forecast for the coming year. Come learn from the industries best, and network with other like-minded real estate minds.
Mr. Whalen is a Managing Director and Regional Executive in the San Francisco office of Wachovia's Real Estate Division. Mr. Whalen manages Wachovia's real estate platform for the Northwest Region. Mr. Whalen is responsible for managing a team of real estate bankers who provide a full suite of capital solutions to institutional and middle market real estate investors. Mr. Whalen has closed over 6.0 billion in commercial real estate transactions since opening the San Francisco office for Wachovia Securities (First Union) in 1998.
Mr. Whalen has twenty years of corporate banking and commercial real estate finance experience and has worked in Wachovia's Real Estate platform for the past ten years. Prior to joining Wachovia, Mr. Whalen was a Vice President and Senior Underwriter at Wells Fargo Real Estate Capital Markets in San Francisco. At Wells Fargo he was responsible for underwriting and structuring commercial real estate mortgages intended for securitization. Prior to Wells Fargo, Mr. Whalen was Vice President at First Interstate Bank of California where he served in various capacities in its Real Estate Division. Mr. Whalen graduated with a B.A. in Economics and Political Science from the University of New Mexico.
For more information please call: Oron Maher (415) 378-5464.
Time: 6:30 - 8:30pm
Please join us for our next real estate meetup. While we are still in the process of confirming a second speaker- we are very pleased to have Bill Whalen address our group on October 22nd. Mr. Whalen, who is a Managing Director at Wachovia, will give us an inside analysis on real estate capital markets and an economic forecast for the coming year. Come learn from the industries best, and network with other like-minded real estate minds.
Mr. Whalen is a Managing Director and Regional Executive in the San Francisco office of Wachovia's Real Estate Division. Mr. Whalen manages Wachovia's real estate platform for the Northwest Region. Mr. Whalen is responsible for managing a team of real estate bankers who provide a full suite of capital solutions to institutional and middle market real estate investors. Mr. Whalen has closed over 6.0 billion in commercial real estate transactions since opening the San Francisco office for Wachovia Securities (First Union) in 1998.
Mr. Whalen has twenty years of corporate banking and commercial real estate finance experience and has worked in Wachovia's Real Estate platform for the past ten years. Prior to joining Wachovia, Mr. Whalen was a Vice President and Senior Underwriter at Wells Fargo Real Estate Capital Markets in San Francisco. At Wells Fargo he was responsible for underwriting and structuring commercial real estate mortgages intended for securitization. Prior to Wells Fargo, Mr. Whalen was Vice President at First Interstate Bank of California where he served in various capacities in its Real Estate Division. Mr. Whalen graduated with a B.A. in Economics and Political Science from the University of New Mexico.
For more information please call: Oron Maher (415) 378-5464.
Sunday, October 5, 2008
Oron Maher Represents Unique Marina District Bed & Breakfast Inn
San Francisco, CA – October 7, 2008 – Romantics, celebrities, historians and San Francisco visitors alike love the European-style Edward II Inn and Suites. For nearly 100 years, this one-of-a-kind Marina District bed and breakfast inn and pub has successfully paired old world charm with 21st century amenities, earning the title as one of the three Best Romantic Hotels in San Francisco by City Search. The ideally located property at 3155 Scott Street (@ Lombard) is now on the market, represented by listing agent Oron Maher of Pacific Union GMAC Real Estate. Price is available upon request.
“This inn is a tremendous and hard to obtain piece of San Francisco history as well as a successful bed and breakfast and English pub which are offered for sale at a time when San Francisco tourism and occupancy rates are at an all time high,” said Maher, who works from Pacific Union’s Presidio headquarters. “It also contains star appeal. The movie Beaches with Bette Midler was partially filmed in the hotel.”
On a historic note, the exquisite three-story inn was originally constructed in 1914 to accommodate visitors of the Panama Pacific International Exposition in 1915 which was held at what is now the Marina Green. With 11,754 square feet, the Edward II Inn and Suites features 31 rooms, four suites, Bloomers Pub and charm galore. Ideally situated at the corner of Scott and Lombard streets, the Edward II is all about location. It is just minutes from many popular Marina District shops and restaurants, the Presidio and Fort Mason, and attractions like Fisherman’s Wharf and Ghirardelli Square.
“This inn is a tremendous and hard to obtain piece of San Francisco history as well as a successful bed and breakfast and English pub which are offered for sale at a time when San Francisco tourism and occupancy rates are at an all time high,” said Maher, who works from Pacific Union’s Presidio headquarters. “It also contains star appeal. The movie Beaches with Bette Midler was partially filmed in the hotel.”
On a historic note, the exquisite three-story inn was originally constructed in 1914 to accommodate visitors of the Panama Pacific International Exposition in 1915 which was held at what is now the Marina Green. With 11,754 square feet, the Edward II Inn and Suites features 31 rooms, four suites, Bloomers Pub and charm galore. Ideally situated at the corner of Scott and Lombard streets, the Edward II is all about location. It is just minutes from many popular Marina District shops and restaurants, the Presidio and Fort Mason, and attractions like Fisherman’s Wharf and Ghirardelli Square.
Edward II Inn and Suites voted among top three Most Romantic Hotels in San Francisco
For more information about the hotel, or to request a showing, contact Oron Maher at 415.378-5464, realtylaw@gmail.com.
For more information about the hotel, or to request a showing, contact Oron Maher at 415.378-5464, realtylaw@gmail.com.
Thursday, September 18, 2008
Pacific Sales Comes to San Francisco
Pacific Sales Comes to San Francisco
Kitchen and Bath Retailer Expands into Northern CA
Southern California-based Pacific Sales Kitchen, Bath & Electronics signed a 10-year lease for the entire building at 955-975 Bryant St. in San Francisco. The tenant will take the former Copenhagen Furniture space in January next year. The 30,000-square foot retail building was built in 1928 in the Showplace Square submarket. It received renovations in 2000. The lease is part of Pacific Sales' expansion into Northern California.
Kitchen and Bath Retailer Expands into Northern CA
Southern California-based Pacific Sales Kitchen, Bath & Electronics signed a 10-year lease for the entire building at 955-975 Bryant St. in San Francisco. The tenant will take the former Copenhagen Furniture space in January next year. The 30,000-square foot retail building was built in 1928 in the Showplace Square submarket. It received renovations in 2000. The lease is part of Pacific Sales' expansion into Northern California.
Monday, September 15, 2008
San Francisco Real Estate Meetup
Please join us for our next meetup group on Wednesday, September 24, 2008 at 6:30 pm at Pacific Unions office. To RSVP for this event, please call Oron Maher (415) 378-5464 or email: realtylaw@gmail.com. Our speaker is Jeremey Paul. Here is a little more information about Jeremy:
Jeremy Paul and his associates at Quickdraw Permit Consulting have been getting improbable projects approved in San Francisco for more than 19 years. The office specializes in difficult smaller projects; including change of use and occupancy, residential demolitions and alterations, legalization of odd units and strange uses in unlikely locations, unit mergers, entertainment permitting, new construction, and staring down unreasonable and capricious plan checkers. Quickdraw is noted for a uniquely creative and persistent approach to neighborhood conflict resolution and permitting of new and environmentally sensitive architecture. They are responsible for the first horizontal axis windpower generator installed in a residential neighborhood in any city in the country.Mr. Paul is a nearly weekly feature at the San Francisco Board of Appeals and Planning Commission where he is noted for well crafted powerpoint presentations laden with enough humor to awaken sleeping commissioners. San Franciscan's with far too much time on their hands often approach him in restaurants to ask if he's that guy they see all the time on the City Hall cable TV channel. Jeremy uniformly denies knowing what they're talking about . . . Mr. Paul will speak on the current atmosphere towards Real Estate development and alteration in San Francisco and hopes you will come with questions both specific and general about our Building and Planning codes.
Jeremy Paul and his associates at Quickdraw Permit Consulting have been getting improbable projects approved in San Francisco for more than 19 years. The office specializes in difficult smaller projects; including change of use and occupancy, residential demolitions and alterations, legalization of odd units and strange uses in unlikely locations, unit mergers, entertainment permitting, new construction, and staring down unreasonable and capricious plan checkers. Quickdraw is noted for a uniquely creative and persistent approach to neighborhood conflict resolution and permitting of new and environmentally sensitive architecture. They are responsible for the first horizontal axis windpower generator installed in a residential neighborhood in any city in the country.Mr. Paul is a nearly weekly feature at the San Francisco Board of Appeals and Planning Commission where he is noted for well crafted powerpoint presentations laden with enough humor to awaken sleeping commissioners. San Franciscan's with far too much time on their hands often approach him in restaurants to ask if he's that guy they see all the time on the City Hall cable TV channel. Jeremy uniformly denies knowing what they're talking about . . . Mr. Paul will speak on the current atmosphere towards Real Estate development and alteration in San Francisco and hopes you will come with questions both specific and general about our Building and Planning codes.
Monday, May 12, 2008
The Goldman Report- Weekly Bay Area Marketing Report
The Bay Area forecast is loaded with microclimates. Meaning that as usual San Francisco is still bright and sunny, Marin, Alameda, and Contra Costa are cloudy with breaking sunshine, while Sonoma and Napa are still rather cloudy. Even within each county we find areas that continue with rain storms mixed with bright sun. You can even find a rainbow or two.
The overriding theme is plenty of buyers circling, with many still trying to figure out the long term weather pattern. The majority of homes open for the first time are attracting ample crowds of between 10-40 potential home owners. The best and most attractive listings are drawing numbers in the high double to triple digits, like the Piedmont 3 bedr./3 ba. home that was visited by 140 guests and the SF Noe Valley listing priced at $2.095 mil. that garnered over 200 buyers. Buyer traffic drops off significantly after the first open home as buyers are constantly looking for the newest eye-catching listing. Usually the only exception is when a property has a noteworthy price reduction.
Those that are jumping in are doing so with gusto. Nearly 30% of our transactions during this period were involved in multiple offers (29% to be exact). The majority of these transactions are drawing between 2-4 offers and selling at asking or 2-6% over list. There are exceptions such as the Noe Valley listing in SF priced at a bit under $ 1 mil that did go over by 10%. The upper end of the market is still healthy in San Francisco and appears to be coming back in Marin. As evidenced by the multiple offer on a $4 mil. home in Tiburon and another Marin listing at $3.9 mil. that also went into escrow. Contra Costa is also seeing resurgence in their upper end where a $2.075 mil. home in San Ramon sold. The Oakland/Berkeley area is seeing a different pattern where listings between $1 – 1.5 mil are selling, but those over that level are being more challenged. Napa and Sonoma are experiencing the bulk of their activity in the lowest and highest ends of their market. As you can see, the weather is quite variable.
The majority of buyers are still lacking a sense of urgency. However, buyers do know value and when they see it; do not hesitate to make their move. Volume of sales was well off last year comparing first quarter 2007 to first quarter 2008. The pattern changed in April, where in a number of counties open sales were actually up over 2008. This is a positive trend if it holds for May and June.
We will continue to see volatility in our market, just as we have seen in the stock market. Inventories continue to shrink and new home building has pretty much come to a standstill in the Bay Area. At the same time buyer demand is increasing. At some point the pressure will have to release itself. Although this time it should come in a measured release rather than with hurricane force as it did in 1999/2000 and again in 2004/2005.
I am attaching two articles that acknowledge that the worst is behind us and that the repair has begun. One is by a hedge fund manager, Cyril Moulle-Berteaux and the other by George Soros the billionaire investor. These articles are significant because they are the first national articles that are beginning to look at recovery rather than continuing to dwell on the rubble in the rear view mirror. We will still experience the on-going fall out from the sub-prime debacle, but like after shocks from an earthquake they do diminish over time.
The overriding theme is plenty of buyers circling, with many still trying to figure out the long term weather pattern. The majority of homes open for the first time are attracting ample crowds of between 10-40 potential home owners. The best and most attractive listings are drawing numbers in the high double to triple digits, like the Piedmont 3 bedr./3 ba. home that was visited by 140 guests and the SF Noe Valley listing priced at $2.095 mil. that garnered over 200 buyers. Buyer traffic drops off significantly after the first open home as buyers are constantly looking for the newest eye-catching listing. Usually the only exception is when a property has a noteworthy price reduction.
Those that are jumping in are doing so with gusto. Nearly 30% of our transactions during this period were involved in multiple offers (29% to be exact). The majority of these transactions are drawing between 2-4 offers and selling at asking or 2-6% over list. There are exceptions such as the Noe Valley listing in SF priced at a bit under $ 1 mil that did go over by 10%. The upper end of the market is still healthy in San Francisco and appears to be coming back in Marin. As evidenced by the multiple offer on a $4 mil. home in Tiburon and another Marin listing at $3.9 mil. that also went into escrow. Contra Costa is also seeing resurgence in their upper end where a $2.075 mil. home in San Ramon sold. The Oakland/Berkeley area is seeing a different pattern where listings between $1 – 1.5 mil are selling, but those over that level are being more challenged. Napa and Sonoma are experiencing the bulk of their activity in the lowest and highest ends of their market. As you can see, the weather is quite variable.
The majority of buyers are still lacking a sense of urgency. However, buyers do know value and when they see it; do not hesitate to make their move. Volume of sales was well off last year comparing first quarter 2007 to first quarter 2008. The pattern changed in April, where in a number of counties open sales were actually up over 2008. This is a positive trend if it holds for May and June.
We will continue to see volatility in our market, just as we have seen in the stock market. Inventories continue to shrink and new home building has pretty much come to a standstill in the Bay Area. At the same time buyer demand is increasing. At some point the pressure will have to release itself. Although this time it should come in a measured release rather than with hurricane force as it did in 1999/2000 and again in 2004/2005.
I am attaching two articles that acknowledge that the worst is behind us and that the repair has begun. One is by a hedge fund manager, Cyril Moulle-Berteaux and the other by George Soros the billionaire investor. These articles are significant because they are the first national articles that are beginning to look at recovery rather than continuing to dwell on the rubble in the rear view mirror. We will still experience the on-going fall out from the sub-prime debacle, but like after shocks from an earthquake they do diminish over time.
Thursday, March 6, 2008
Client Testimonial....
I just had to post this client testimonial......
Oron: Now that we're truly finished with my sale, I wanted to give you a final thanks for the outstanding job you did. Frankly, it's astonishing that someone your age is able to conduct business in such a seasoned, mature manner. (And, you showed advanced-level patience with me.) In any case, you brought the caliber of professionalism and polish I was hoping that choosing you would bring to the transaction. I think you struck the perfect balance between getting me a good deal and working with my somewhat challenging time line. I am especially grateful for the extra help you provided around my move-out. It would have been a major ordeal without your assistance.I hope you consider the sale a success and that it earns you further business at Gramercy Towers. You did a great job and should be proud of yourself. I would be happy to give you the highest recommendation or most positive reference if ever needed. I'll keep you posted as things progress for me in NY, and please keep me updated on your journey to becoming a lawyer.Best of luck,Christopher
Oron: Now that we're truly finished with my sale, I wanted to give you a final thanks for the outstanding job you did. Frankly, it's astonishing that someone your age is able to conduct business in such a seasoned, mature manner. (And, you showed advanced-level patience with me.) In any case, you brought the caliber of professionalism and polish I was hoping that choosing you would bring to the transaction. I think you struck the perfect balance between getting me a good deal and working with my somewhat challenging time line. I am especially grateful for the extra help you provided around my move-out. It would have been a major ordeal without your assistance.I hope you consider the sale a success and that it earns you further business at Gramercy Towers. You did a great job and should be proud of yourself. I would be happy to give you the highest recommendation or most positive reference if ever needed. I'll keep you posted as things progress for me in NY, and please keep me updated on your journey to becoming a lawyer.Best of luck,Christopher
Monday, February 11, 2008
The Goldman Report- Weekly Bay Area Real Estate Survey
Mirror, mirror on the wall who can tell us where we fall? Will the market get off the dime or will it linger until summer time?
Here is what we know. Pending sales in December 2007 were off 29% from December 2006. Closed sales in January 2008 were off 39.6% from January 2007 and pending sales were off 24%. What this tells us is that it is taking longer to close transactions and that we are having more transactions falling out of escrow. On the positive side, months supply of inventory has decreased in every county from December 2007 numbers. However, absolute inventories are up in every marketplace from January of 2007, except Marin county.
San Francisco is still the healthiest of markets with only 3.9 months supply of inventory. Also on the bright side is Solano and Contra Costa counties which had been hit the hardest of all Bay Area counties due to the amount of new home growth over the last several years and the number of sub-prime loans taken to finance them. Solano was off only 9.4% and Contra Costa county was off 16% in pending sales versus last January. Could this mean we are getting close to the bottom of this cycle? If this trend continues it would be safe to say we are flattening out.
As I stated in my last report, the housing market is seeing the same kind of volatility as the equity markets. In the last reporting period sales activity had waned. In this report period, sales activity picked up in almost every market. Multiple offer activity also picked up with 20% of our sales being involved in multiple offer transactions. One interesting note is that an REO (foreclosure) property in Napa listed at $397,750 received 13 offers. Buyers today are seeking great value and when the see it, they leap. We are not out of the woods, but at least there is a glimmer of light.
Buyers are still out in good numbers even on the Super Bowl weekend. A SF Lone Mountain 3bedr/ 3ba listing priced at $1.649mil. had 50 groups on Sat. and 40 groups on Sunday and a SF Potrero Hill 3 bedr. /1.5ba home listed at $1.149mil had 60 visitors. Overall open house traffic averaged between 10-20 groups. Buyers remain cautious and are taking their time before writing offers.
Globally most economic news is not encouraging. The stock market took another downward swoop this past week on news of unemployment figures and continuing negative news in the financial sectors. With all the pessimistic chatter, it is difficult to hear or find signs that would point to a change in direction. Last week I shared the good news about the NY Giants winning the Super Bowl. The market just hasn’t caught up with the win---they will.
However on another front there is some heartening news. For the first time in 13 years U.S. company senior executives bought more shares than they sold as reported last week in the Financial Times. Insider purchases by these executives and directors totaled $663 million while sales tallied at $475 million. In the past, periods of net buying by executives and directors have been a signal that the market will rise sharply in the ensuing 12 months.
According to Jim Paulsen, chief investment strategist at Wells Capital Management, “insider buying and selling figures have historically been a good indicator of how the market will perform in the future”.
The last time this occurred was in January 1995. During that year the S&P rallied 34.1%. The last year of the housing down cycle in the 90’s was 1995. The most recent up cycle began in 1996 and continued through 2005 with a short correction in 2001. This year could be the most opportunistic market for buyers in the past 12 years. Just like predicting a recession, by the time it is proclaimed, the economy is already heading in another direction.
Mirror, mirror on the wall will this year be the fairest of them all?
Here is what we know. Pending sales in December 2007 were off 29% from December 2006. Closed sales in January 2008 were off 39.6% from January 2007 and pending sales were off 24%. What this tells us is that it is taking longer to close transactions and that we are having more transactions falling out of escrow. On the positive side, months supply of inventory has decreased in every county from December 2007 numbers. However, absolute inventories are up in every marketplace from January of 2007, except Marin county.
San Francisco is still the healthiest of markets with only 3.9 months supply of inventory. Also on the bright side is Solano and Contra Costa counties which had been hit the hardest of all Bay Area counties due to the amount of new home growth over the last several years and the number of sub-prime loans taken to finance them. Solano was off only 9.4% and Contra Costa county was off 16% in pending sales versus last January. Could this mean we are getting close to the bottom of this cycle? If this trend continues it would be safe to say we are flattening out.
As I stated in my last report, the housing market is seeing the same kind of volatility as the equity markets. In the last reporting period sales activity had waned. In this report period, sales activity picked up in almost every market. Multiple offer activity also picked up with 20% of our sales being involved in multiple offer transactions. One interesting note is that an REO (foreclosure) property in Napa listed at $397,750 received 13 offers. Buyers today are seeking great value and when the see it, they leap. We are not out of the woods, but at least there is a glimmer of light.
Buyers are still out in good numbers even on the Super Bowl weekend. A SF Lone Mountain 3bedr/ 3ba listing priced at $1.649mil. had 50 groups on Sat. and 40 groups on Sunday and a SF Potrero Hill 3 bedr. /1.5ba home listed at $1.149mil had 60 visitors. Overall open house traffic averaged between 10-20 groups. Buyers remain cautious and are taking their time before writing offers.
Globally most economic news is not encouraging. The stock market took another downward swoop this past week on news of unemployment figures and continuing negative news in the financial sectors. With all the pessimistic chatter, it is difficult to hear or find signs that would point to a change in direction. Last week I shared the good news about the NY Giants winning the Super Bowl. The market just hasn’t caught up with the win---they will.
However on another front there is some heartening news. For the first time in 13 years U.S. company senior executives bought more shares than they sold as reported last week in the Financial Times. Insider purchases by these executives and directors totaled $663 million while sales tallied at $475 million. In the past, periods of net buying by executives and directors have been a signal that the market will rise sharply in the ensuing 12 months.
According to Jim Paulsen, chief investment strategist at Wells Capital Management, “insider buying and selling figures have historically been a good indicator of how the market will perform in the future”.
The last time this occurred was in January 1995. During that year the S&P rallied 34.1%. The last year of the housing down cycle in the 90’s was 1995. The most recent up cycle began in 1996 and continued through 2005 with a short correction in 2001. This year could be the most opportunistic market for buyers in the past 12 years. Just like predicting a recession, by the time it is proclaimed, the economy is already heading in another direction.
Mirror, mirror on the wall will this year be the fairest of them all?
Sunday, January 13, 2008
Elegant Balcony Unit on Top of Nob Hill. Asking Price: $675,000
The Gramercy Towers is a prestigous full-service building located on top of coveted Nob Hill. This elegant balcony unit has been upgraded with a contemporary flair. Enjoy eastern views of the bay, Huntington Park and Grace Cathedral. HOA dues include 24 hour doorperson, pool, exercise gym, parking, storage and utilities. Upscale restaurant/bar located downstairs. Walk to local favorites such as Nob Hill Cafe and Top of the Mark. Convenient to Downtown and Financial District.
This unit is a 1 bedroom, 1 bath approx. 756 square feet.
For more information please contact: Oron Maher 415-345-3173
New Listing- Inner Richmond Duplex with Cottage: $949,000
Amazing value on this Inner Richmond 2 unit building. Each unit is 2 bedrooms/1.5 bath. The property also contains a detached, studio cottage in the back. Units are in good shape and show well. Upper is rented for $1,800 (lease expires Jan. 08) and lower is $1,500 (month-to-month). 3R report shows some permiting history for back cottage. New Safeway one block away is slated to open in the coming months. One block to GG Park and De Young Museum.
The Goldman Report- Weekly Bay Area Real Estate Market Report
Happy New Year!!! Welcome to 2008---Recession---No Recession---Recession---No recession. Not a day goes by (or for that matter an evening) without the same mantra from the media. The year begins with the same economic uncertainties as it ended with.
If we look closer there still is much to be happy about. Unemployment which is up, is still reasonable (95% of America is working); job growth is still on the plus side, although anemic; food and fuel prices are out of sight, although inflation is still manageable; and as far as the Fed is concerned, rates will come down. Most important for real estate here is that there is still demand. The only issue is the demand is reluctant to exercise itself. Why do you blame buyers, all they hear is wait, the prices will drop.
Traffic through open houses tells the story. Usually January tends to be slower. Not the case this year, particularly in those markets that were the strongest in 2007. In San Francisco the traffic at last Sunday’s opens was brisk. The open houses averaged 18-35 groups with some notable exceptions. A Cole Valley duplex listed at $1.349 mil. had 300 groups through and a Pacific Hts. triplex listed at $2.595 had over 100 visitors. It wasn’t just SF. In the East Bay, a Crocker Highlands listing in Oakland, experienced 300 buyers. It was listed a bit over $1.6 mil. . We are still seeing good numbers of buyers in all areas. What this early activity indicates is that there is still plenty of pent up demand.
This year is reflecting the similar trends as last. The upper end of the market is the most prolific. This year started off with a $6.45 mil sale in Ross and a $5.3 mil sale in St. Helena. There would be more, if the inventory was there on well-priced unique properties. The appetite for these upper end listing is certainly evident.
All markets depend on momentum. In summarizing last year it was a year of momentum----both halves of it---up and down. The Bay Area market was a tale two markets-----the high average sales price counties---SF, Marin, San Mateo and parts of Santa Clara were going extremely well through mid July. The counties with the lower average sales prices---Solano, Napa, Sonoma, Alameda and Contra Costa---struggled from the beginning of the year. There were exceptions in Alameda and Contra Costa counties---Berkeley, the north part of Oakland, Piedmont, Albany and the Lamorinda (Lafayette, Moraga and Orinda) areas looked more like SF and Marin.
Once the sub-prime debacle hit, the momentum in the first half of the year began slowing to a point that by December all of the Bay Area markets were off from last year on a month over month basis. This is best demonstrated by comparing the year over year (06 vs. 07) with 4th qtr. over 4th qtr. (06 vs. 07). This gives the clearest picture of how momentum can be affected by financial calamities. Each county will have two percentage numbers, the first being year over year and the second will reflect 4th quarter over 4th quarter. The comparisons are based on units for both single family residences and condos.
San Francisco -9.69% -19.11%
Marin -12.0% -29.0%
Sonoma -23.26% -39.04%
Napa -25.13% -42.02%
Solano -40.02% -48.43%
Alameda -27.53% -42.91%
Contra Costa -29.30% -42.89%
You can see the dramatic effect of momentum. Just to highlight how the briskness of upper end markets can have a positive effect on a market even if units are tending down we can look no further than SF and Marin counties. Although units were down about 10% in SF, the volume of sales was down only 4.23% and in Marin units were down 12%, however the total dollar volume was only down 1.22%----so much for broad brushing a market place.
Given those numbers above you would think sales price would be significantly impacted. Think again. Yes, in those markets with the highest variances from last year, median sales prices have been affected. The majority of our markets have not gone appreciably and in some they have actually gone up.
Here is a look at median sales prices. I will give both year over year and 4th qtr. over 4th qtr.
San Francisco +3.25% +4.3%
Marin +4.15% +4.4%
Sonoma -5.91% -13%
Napa +.84% +1%
Solano -8.13% -17.2%
Alameda +1.0% -3.36%
Contra Costa -1.0% -14.35%
Prices in SF and Marin counties have not only held, but have accelerated. This is a testament to the strong activity in the upper end. Even Alameda and Napa counties have held well. This again reflects the strength in the upper price ranges. Solano and Sonoma have been the hardest hit with prices dipping even further in the 4th qtr. Contra Costa did well for most of the year until the 4th qtr. What these three counties have in common is that there was tremendous amount new home building over the last several years. The swollen inventories due to new homes and foreclosures have led to these price declines.
Let’s take a look at inventories. Housing like any other commodity is influenced by supply and demand. We will look at months supply of inventory December 2006 vs. 2007. The first MSI will be 2006 and the second 2007 and then the variance.
San Francisco 2.3 4.1 +1.8
Marin 4.8 5.7 +.8
Sonoma 8.1 12.0 +3.9
Napa 14.6 14.7 +.1
Solano 9.5 15.9 +6.4
Alameda 4.7 10.9 +5.2
Contra Costa 7.7 13.7 +6.0
Every county is up from last year. What is obvious is that in the counties with the smallest increases in inventory supply, median prices have held or gone up. Alameda is the only exception and that could be due to the strength of prices in northern Alameda county where inventories are close to those in SF and Marin.
Looking at the current inventories only Marin and San Francisco would be considered balanced markets. A balanced market is one with 4-6 months inventory----far lower than the national average of 10.7 months. The rest of the Bay is in double digits which is a strong buyers market. What does this mean going forward? If inventories increase there will be further pressure on prices. My view is if we look at the trends in the fourth quarter we can gain some insight into the future of inventories.
Let’s view the months supply of inventory October through December by county.
San Francisco 3.2 3.6 4.1
Marin 5.5 5.8 5.7
Sonoma 12.3 11.6 12.0
Napa 15.9 14.9 14.7
Solano 18.4 15.5 15.9
Alameda 9.2 10.2 10.9
Contra Costa 14.0 13.6 13.7
If the fourth quarter is any indication of what the first part of 2008 will look like, it could signify that we are at the bottom of this cycle. Inventories have not moved up much and in some cases have moved down. If this trend continues we could be looking at a flattening out and then it is just a matter of time before the market returns to equilibrium. It will still take some time for those markets in double digit inventories to recover, but before you go down you have to stop going up.
For buyers it is a time of immense opportunity in some markets, certainly those that have inflated inventories. These opportunities are like windows they open and close. For the savvy buyer the opportunity is now. Interest rates are at the lowest they have been in several months and could drop a bit lower, but will then rise once again.
Buyers also need to be aware that not all markets are created equal. Even in this current market we are still seeing multiple offers. They may not be going well over asking, but nonetheless they are occurring. I have attached a column by Carol Lloyd that illustrates that point. All markets are not the same even within the same city. For buyers interested in the most desirable areas in the Bay Area they may find themselves competing with others for their dream home.
Sellers need to be aware that this is not a market to try and obtain your price. I think by now most sellers are conscious that today’s world is different from that of 2005. We are in new territory. This is a market that sellers should have a reason to sell. It is not a time to test the market. It is well beyond that. A seller must price accurately and prepare their home to stand out among the competition. In spite of the times there are still opportunities for sellers, particularly the move up seller. That seller that is moving up to a higher priced home. Even if they have to take less on the home they are selling the discount in absolute dollars on the home they would be buying would be larger (i.e. if the market is off 5% the discount on a $600,000 home would be $30,000---if the home they are buying is $1,000,000 that same 5% is worth $50,000—a plus to the move up seller of $20,000). This is not a new concept. Many move up sellers benefited from this during the early 80’s and 90’s. If sellers are thinking of selling this year it is better to come on earlier to avoid the rush of listings in the second quarter. It cuts down on your competition. If the past is any indicator, best to come on not later than April. The sooner the better.
If a listing has been on the market several months it is likely it will be difficult to sell in the current market. Buyers in today’s world are looking at new listings that are coming on and those listings that have had price reductions. The best advice I could give is either reduce the current list price to adjust for the market along with making any needed improvements or withdraw the listing and wait for a more opportune market.
Back to recession vs. no recession----who cares. Most recessions aren’t called for several months after they have actually happened. If in fact we are in or going into a recession, this one should be mild, at least for the Bay Area. The Bay Area is the strongest segment of the California economy much due to the diversity of its economic base----technology, bio-med, financial, media and export/import. The positive news on the dollar is that American goods globally are more affordable, including real estate. We will see more foreign investment both from Europe, Canada and Asia. There still is a great deal of wealth in the Bay Area. Plus it is no denying, there aren’t many better places in the world to live.
As someone once said “perception is everything”. We saw how quickly the market changed this summer once the consumer began losing confidence in the economy. Until the majority of consumers begin to regain confidence it may be slow sledding for the first quarter of the year. Momentum is a two street. Lest us not forget it is a Presidential election year. It is always interesting to observe how an economy perks to life as we get closer to election. Look forward to better times beginning in the second quarter or perhaps even sooner.
If we look closer there still is much to be happy about. Unemployment which is up, is still reasonable (95% of America is working); job growth is still on the plus side, although anemic; food and fuel prices are out of sight, although inflation is still manageable; and as far as the Fed is concerned, rates will come down. Most important for real estate here is that there is still demand. The only issue is the demand is reluctant to exercise itself. Why do you blame buyers, all they hear is wait, the prices will drop.
Traffic through open houses tells the story. Usually January tends to be slower. Not the case this year, particularly in those markets that were the strongest in 2007. In San Francisco the traffic at last Sunday’s opens was brisk. The open houses averaged 18-35 groups with some notable exceptions. A Cole Valley duplex listed at $1.349 mil. had 300 groups through and a Pacific Hts. triplex listed at $2.595 had over 100 visitors. It wasn’t just SF. In the East Bay, a Crocker Highlands listing in Oakland, experienced 300 buyers. It was listed a bit over $1.6 mil. . We are still seeing good numbers of buyers in all areas. What this early activity indicates is that there is still plenty of pent up demand.
This year is reflecting the similar trends as last. The upper end of the market is the most prolific. This year started off with a $6.45 mil sale in Ross and a $5.3 mil sale in St. Helena. There would be more, if the inventory was there on well-priced unique properties. The appetite for these upper end listing is certainly evident.
All markets depend on momentum. In summarizing last year it was a year of momentum----both halves of it---up and down. The Bay Area market was a tale two markets-----the high average sales price counties---SF, Marin, San Mateo and parts of Santa Clara were going extremely well through mid July. The counties with the lower average sales prices---Solano, Napa, Sonoma, Alameda and Contra Costa---struggled from the beginning of the year. There were exceptions in Alameda and Contra Costa counties---Berkeley, the north part of Oakland, Piedmont, Albany and the Lamorinda (Lafayette, Moraga and Orinda) areas looked more like SF and Marin.
Once the sub-prime debacle hit, the momentum in the first half of the year began slowing to a point that by December all of the Bay Area markets were off from last year on a month over month basis. This is best demonstrated by comparing the year over year (06 vs. 07) with 4th qtr. over 4th qtr. (06 vs. 07). This gives the clearest picture of how momentum can be affected by financial calamities. Each county will have two percentage numbers, the first being year over year and the second will reflect 4th quarter over 4th quarter. The comparisons are based on units for both single family residences and condos.
San Francisco -9.69% -19.11%
Marin -12.0% -29.0%
Sonoma -23.26% -39.04%
Napa -25.13% -42.02%
Solano -40.02% -48.43%
Alameda -27.53% -42.91%
Contra Costa -29.30% -42.89%
You can see the dramatic effect of momentum. Just to highlight how the briskness of upper end markets can have a positive effect on a market even if units are tending down we can look no further than SF and Marin counties. Although units were down about 10% in SF, the volume of sales was down only 4.23% and in Marin units were down 12%, however the total dollar volume was only down 1.22%----so much for broad brushing a market place.
Given those numbers above you would think sales price would be significantly impacted. Think again. Yes, in those markets with the highest variances from last year, median sales prices have been affected. The majority of our markets have not gone appreciably and in some they have actually gone up.
Here is a look at median sales prices. I will give both year over year and 4th qtr. over 4th qtr.
San Francisco +3.25% +4.3%
Marin +4.15% +4.4%
Sonoma -5.91% -13%
Napa +.84% +1%
Solano -8.13% -17.2%
Alameda +1.0% -3.36%
Contra Costa -1.0% -14.35%
Prices in SF and Marin counties have not only held, but have accelerated. This is a testament to the strong activity in the upper end. Even Alameda and Napa counties have held well. This again reflects the strength in the upper price ranges. Solano and Sonoma have been the hardest hit with prices dipping even further in the 4th qtr. Contra Costa did well for most of the year until the 4th qtr. What these three counties have in common is that there was tremendous amount new home building over the last several years. The swollen inventories due to new homes and foreclosures have led to these price declines.
Let’s take a look at inventories. Housing like any other commodity is influenced by supply and demand. We will look at months supply of inventory December 2006 vs. 2007. The first MSI will be 2006 and the second 2007 and then the variance.
San Francisco 2.3 4.1 +1.8
Marin 4.8 5.7 +.8
Sonoma 8.1 12.0 +3.9
Napa 14.6 14.7 +.1
Solano 9.5 15.9 +6.4
Alameda 4.7 10.9 +5.2
Contra Costa 7.7 13.7 +6.0
Every county is up from last year. What is obvious is that in the counties with the smallest increases in inventory supply, median prices have held or gone up. Alameda is the only exception and that could be due to the strength of prices in northern Alameda county where inventories are close to those in SF and Marin.
Looking at the current inventories only Marin and San Francisco would be considered balanced markets. A balanced market is one with 4-6 months inventory----far lower than the national average of 10.7 months. The rest of the Bay is in double digits which is a strong buyers market. What does this mean going forward? If inventories increase there will be further pressure on prices. My view is if we look at the trends in the fourth quarter we can gain some insight into the future of inventories.
Let’s view the months supply of inventory October through December by county.
San Francisco 3.2 3.6 4.1
Marin 5.5 5.8 5.7
Sonoma 12.3 11.6 12.0
Napa 15.9 14.9 14.7
Solano 18.4 15.5 15.9
Alameda 9.2 10.2 10.9
Contra Costa 14.0 13.6 13.7
If the fourth quarter is any indication of what the first part of 2008 will look like, it could signify that we are at the bottom of this cycle. Inventories have not moved up much and in some cases have moved down. If this trend continues we could be looking at a flattening out and then it is just a matter of time before the market returns to equilibrium. It will still take some time for those markets in double digit inventories to recover, but before you go down you have to stop going up.
For buyers it is a time of immense opportunity in some markets, certainly those that have inflated inventories. These opportunities are like windows they open and close. For the savvy buyer the opportunity is now. Interest rates are at the lowest they have been in several months and could drop a bit lower, but will then rise once again.
Buyers also need to be aware that not all markets are created equal. Even in this current market we are still seeing multiple offers. They may not be going well over asking, but nonetheless they are occurring. I have attached a column by Carol Lloyd that illustrates that point. All markets are not the same even within the same city. For buyers interested in the most desirable areas in the Bay Area they may find themselves competing with others for their dream home.
Sellers need to be aware that this is not a market to try and obtain your price. I think by now most sellers are conscious that today’s world is different from that of 2005. We are in new territory. This is a market that sellers should have a reason to sell. It is not a time to test the market. It is well beyond that. A seller must price accurately and prepare their home to stand out among the competition. In spite of the times there are still opportunities for sellers, particularly the move up seller. That seller that is moving up to a higher priced home. Even if they have to take less on the home they are selling the discount in absolute dollars on the home they would be buying would be larger (i.e. if the market is off 5% the discount on a $600,000 home would be $30,000---if the home they are buying is $1,000,000 that same 5% is worth $50,000—a plus to the move up seller of $20,000). This is not a new concept. Many move up sellers benefited from this during the early 80’s and 90’s. If sellers are thinking of selling this year it is better to come on earlier to avoid the rush of listings in the second quarter. It cuts down on your competition. If the past is any indicator, best to come on not later than April. The sooner the better.
If a listing has been on the market several months it is likely it will be difficult to sell in the current market. Buyers in today’s world are looking at new listings that are coming on and those listings that have had price reductions. The best advice I could give is either reduce the current list price to adjust for the market along with making any needed improvements or withdraw the listing and wait for a more opportune market.
Back to recession vs. no recession----who cares. Most recessions aren’t called for several months after they have actually happened. If in fact we are in or going into a recession, this one should be mild, at least for the Bay Area. The Bay Area is the strongest segment of the California economy much due to the diversity of its economic base----technology, bio-med, financial, media and export/import. The positive news on the dollar is that American goods globally are more affordable, including real estate. We will see more foreign investment both from Europe, Canada and Asia. There still is a great deal of wealth in the Bay Area. Plus it is no denying, there aren’t many better places in the world to live.
As someone once said “perception is everything”. We saw how quickly the market changed this summer once the consumer began losing confidence in the economy. Until the majority of consumers begin to regain confidence it may be slow sledding for the first quarter of the year. Momentum is a two street. Lest us not forget it is a Presidential election year. It is always interesting to observe how an economy perks to life as we get closer to election. Look forward to better times beginning in the second quarter or perhaps even sooner.
Subscribe to:
Posts (Atom)