Archive for December 2010 | Monthly archive page

2011 FHA Loan Limits

By Kelli Galippo • Dec 21st, 2010

These are the Federal Housing Administration (FHA) single family residence (SFR) loan limits, effective January 1, 2011. Actual loan limits are established for each county, depending on whether they are considered a high-cost or low-cost area.

For high-cost areas (regions where the loan limits may exceed $417,000), the maximum loan limits are:

$729,750 for one unit;
$934,200 for two units;
$1,129,250 for three units; and
$1,403,400 for four units.

For low-cost areas, the minimum loan limits are:
$271,050 for one unit;
$347,000 for two units;
$419,400 for three units; and
$521,250 for four units.

County Name One unit Two units Three units Four units
ALAMEDA $729,750 $934,200 $1,129,250 $1,403,400
ALPINE $547,500 $700,900 $847,200 $1,052,900
AMADOR $443,750 $568,050 $686,650 $853,350
BUTTE $417,000 $533,850 $645,300 $801,950
CALAVERAS $462,500 $592,050 $715,700 $889,450
COLUSA $417,000 $533,850 $645,300 $801,950
CONTRA-COSTA $729,750 $934,200 $1,129,250 $1,403,400
DEL NORTE $417,000 $533,850 $645,300 $801,950
EL DORADO $580,000 $742,500 $897,500 $1,115,400
FRESNO $417,000 $533,850 $645,300 $801,950
GLENN $417,000 $533,850 $645,300 $801,950
HUMBOLDT $417,000 $533,850 $645,300 $801,950
IMPERIAL $417,000 $533,850 $645,300 $801,950
INYO $437,500 $560,050 $677,000 $841,350
KERN $417,000 $533,850 $645,300 $801,950
KINGS $417,000 $533,850 $645,300 $801,950
LAKE $417,000 $533,850 $645,300 $801,950
LASSEN $417,000 $533,850 $645,300 $801,950
LOS ANGELES $729,750 $934,200 $1,129,250 $1,403,400
MADERA $425,000 $544,050 $657,650 $817,300
MARIN $729,750 $934,200 $1,129,250 $1,403,400
MARIPOSA $417,000 $533,850 $645,300 $801,950
MENDOCINO $512,500 $656,100 $793,050 $985,600
MERCED $472,500 $604,900 $731,150 $908,650
MODOC $417,000 $533,850 $645,300 $801,950
MONO $529,000 $677,200 $818,600 $1,017,300
MONTEREY $729,750 $934,200 $1,129,250 $1,403,400
NAPA $729,750 $934,200 $1,129,250 $1,403,400
NEVADA $562,500 $720,100 $870,450 $1,081,750
ORANGE $729,750 $934,200 $1,129,250 $1,403,400
PLACER $474,950 $608,000 $734,950 $913,350
PLUMAS $417,000 $533,850 $645,300 $801,950
RIVERSIDE $500,000 $640,100 $773,700 $961,550
SACRAMENTO $580,000 $742,500 $897,500 $1,115,400
SAN BENITO $729,750 $934,200 $1,129,250 $1,403,400
SAN BERNARDINO $500,000 $640,100 $773,700 $961,550
SAN DIEGO $697,500 $892,950 $1,079,350 $1,341,350
SAN FRANCISCO $729,750 $934,200 $1,129,250 $1,403,400
SAN JOAQUIN $488,750 $625,700 $756,300 $939,900
SAN LUIS OBISPO $687,500 $880,100 $1,063,850 $1,322,150
SAN MATEO $729,750 $934,200 $1,129,250 $1,403,400
SANTA BARBARA $729,750 $934,200 $1,129,250 $1,403,400
SANTA CLARA $729,750 $934,200 $1,129,250 $1,403,400
SANTA CRUZ $729,750 $934,200 $1,129,250 $1,403,400
SHASTA $423,750 $542,450 $655,700 $814,900
SIERRA $417,000 $533,850 $645,300 $801,950
SISKIYOU $417,000 $533,850 $645,300 $801,950
SOLANO $557,500 $713,700 $862,700 $1,072,150
SONOMA $662, 500 $848,100 $1,025,200 $1,274,050
STANISLAUS $423,750 $542,450 $655,700 $814,900
SUTTER $425,000 $544,050 $657,650 $817,300
TEHAMA $417,000 $533,850 $645,300 $801,950
TRINITY $417,000 $533,850 $645,300 $801,950
TULARE $417,000 $533,850 $645,300 $801,950
TOULUMNE $437,500 $560,050 $677,000 $841,350
VENTURA $729,750 $934,200 $1,129,250 $1,403,400
YOLO $580,000 $742,500 $897,500 $1,115,400
YUBA $425,000 $544,050 $657,650 $817,300

Loans limits for Fannie Mae and Freddie Mac will remain unchanged from 2010. General loan limits for 2011 are:

$417,000 for one unit;
$533,850 for two units;
$645,300 for three units; and
$801,950 for four units.

Agents and brokers should make themselves and their colleagues aware of this data for the coming year. FHA-insured lending is set to remain at around 40% of loan volume, until the government determines FHA programs need to be restricted again to first-time homebuyers (by lowering the limits), and private mortgage insurance (PMI) and lenders agree to get back into the market full tilt.

It is coming, and faster than we have anticipated. Lenders are eager to get in on the huge profit spreads now available to them, thanks to the Federal Reserve (Fed) maintaining what are basically 0% interest rates for lenders at the moment.

Re: “2011 FHA Maximum Loan Limits” from the Department of Housing and Urban Development (HUD)

Confirmation of Conventional Loan Limits for 2011” from Fannie Mae

Loan Limits” from Freddie Mac

Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

Competitively Pricing Your Home [FARM Version]

By Kelli Galippo • Dec 13th, 2010 •

Many sales factors are to be considered when setting the most competitive asking price for a home. A well-considered asking price for a home is a price carefully based on market conditions.

Be realistic about the sales price you are actually willing to accept for your home today so you are prepared when an offer is received. A common mistake homeowners make is setting expectations about the price they feel they should get for their home at what they believe will be its future value, or even what they might have gotten years prior, called dollar illusions.

Don’t forget that the present value of a home to a buyer is directly, though inversely, tied to interest rates. Sellers will only get a price for their home in direct correlation to the amount of financing available to buyers generally, and that is based on interest rates and mortgage payments equal to roughly 31% of the buyer’s monthly income.

When interest rates increase, as they will at some point in this recovery after jobs pick up, the amount of money lenders will lend a buyer decreases. Thus, the amount of loan funds available to the buyer to assist in the purchase of a home, plus the down payment limits their selection of a home to those priced by sellers to accommodate this shift.

Pricing your home is less about its value as perceived by the seller, and more about what the market conditions allow. If interest rates rise even half a percentage point, a buyer is then able to borrow less money than before — tens of thousands of dollars less for more expensive homes.

A proper asking price for your home is initially the most effective step for selling a home quickly, and voluntary transparency about the physical condition, possible hazards and security aspects of your home will hasten that sales process.

Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

Increasing Renter Populations Drag Neighborhoods Down

By Kelli Galippo • Dec 15th, 2010 •

California communities with a high volume of foreclosures are struggling to maintain the appearance of their neighborhoods as the influx of renter-occupants invests less time in the upkeep of their homes.

When investors buy up foreclosures and rent them out, the increased renter-to-homeowner ratio means neighborhoods are occupied by fewer homeowners motivated to spend time mowing their lawns and making repairs. Even worse, many foreclosures become vacancies, without even a tenant to hold accountable for overgrown or dead lawns.

Those remaining as long-time residents in foreclosure-plagued neighborhoods are legitimately concerned the increase in rentals will lead to a decrease in the community’s curb appeal — resulting in lower home values for everyone.

The percentage of non-owner occupied homes in various regions across the state ranges from 10% to 50%. Neighborhoods experienced a similar increase in rentals in the early 1990s during the previous economic recession.

Those who purchased during the Millennium Boom and watched the value of their homes drop to devastating lows are now overwhelmed with distrust for the real estate market. Many are nursing a bruised credit score. They will at some point get out from under their upside down homes, and the employed among them will remain in their jobs in California and rent for a decade or so before regaining the confidence to borrow and buy a home again.

In the current market climate, households transitioning via strategic default and foreclosure find they can rent a larger home for a monthly payment much lower than their previous monthly mortgage payment. When so many are unsure about the future value of real estate and the integrity of mortgage lenders, renting a home becomes a pretty sweet deal.

Those scorned by lost jobs and guttered home prices will most likely find renting a more favorable alternative to plunging back into debt and homeownership. [For more information regarding consumer confidence in homeownership, see the June 2010 article, Consumers say they prefer renting to buying and the May 2010 article, Homebuyers feel ready and willing to buy, but not financially able.]

Investors purchasing homes in buy-to-let programs over the next 18 to 30 months are certainly going to notice the pick-up in prospective tenants as the jobs return, foreclosures remain high, and rentals become a California fad. Brokers and agents have already used gross revenue multipliers (GRMs) to sell single-family residences (SFRs) to investors, and have definitely taken note of the best rent-to-price ratios since the early 1970s. [For more information regarding GRMs, see the June 2010 article, Renting vs. buying: the GRM.]

California’s fast-dropping homeownership percentages show no sign of stopping, and a growing California population of younger people will only perpetuate the trend.

Re: “Rise of rentals pulls others down” from the Press Enterprise

Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

FDIC Reports High Volumes of Delinquent Construction Loans

FDIC Reports High Volumes of Delinquent Construction Loans
By Kelli Galippo • Dec 13th, 2010

Nationally, one out of every six dollars of construction and development (C&D) loans issued by banks, roughly 16% of all C&D loans, are at least 90 days delinquent as of September 30, 2010. Another 2% are 30 to 90 days delinquent.

Fourteen percent of all C&D loans in the 12th Federal Reserve District (Alaska, Washington, Oregon, California, Idaho, Nevada, Utah, Arizona and Hawaii) are more than 90 days delinquent. 3.7% of all types of bank loans in California are more than 90 days delinquent.

This trend in delinquencies has remained largely unchanged in the last three months. The rate of delinquency on C&D loans is eight times greater than the rate of delinquency for any other type of real estate or personal loan.

The volume of C&D loans held by banks nationally has decreased by 28% since 2009, from $493 billion to $385 billion at the end of the third quarter of 2010.

Vacancies and unemployment continue to plague the Golden State, leaving many newly-built or recently-improved commercial properties burdened with sizeable C&D loans with no way to pay them back.

Consider the following example: at the end of 2007, a bank lends a business funds to construct an office or warehouse (or improve an existing property) and collects prepaid interest for 18 to 36 months so the business can be up and running and able to generate income. The Millennium Boom peaks and ushers in the Great Recession. The economic condition that existed when the loan was entered into no longer exists, and the business is not able to generate sufficient revenue, trapping it without the means of paying back the loan. [For more information regarding office vacancy, see the August 2010 article, Office vacancies deliver rock-bottom leasing rates.]

Along with high vacancy rates, employment shows no sign of any significant pick up in the near future although an upward trend seems to be underway. As a result, businesses and speculative developers are taking a crippling hit to their revenue and are unable to pay back their C&D loans. Low additional monthly employment gains (California is down 1.4 million jobs since the peak in 2007) translate to listless consumer spending, which means a smaller portion of business income and generally lower profits are available for loan payments. [For more information regarding employment, see the November 2010 Market Factor, Jobs move real estate.]

While C&D loan delinquency is presently a flat but bleak spot in the broader economy, analysts are observing a rise in entrepreneurial start-ups that will help lead California to an organic economic recovery — an optimistic sign for the future. The rate of entrepreneurial activity in 2009 was the highest it’s been in 14 years.

While many start-ups lack the financial reserves necessary to build their own commercial property, or lease property from another business, it is in the best interest of both the property owner (and by extension, the entrepreneur) to fill vacancies. Innovative real estate professionals will look for ways to negotiate rent in the form of stock-options, percentage lease arrangements or other profit-sharing alternatives. [For more information regarding how California agents can ride the entrepreneurial wave, see the November 2010 article, Entrepreneurs may “start-up” the recovery and the November 2010, The demographics forging California’s real estate market: a study of forthcoming trends and opportunities – Part II.]

Re: “Overdue C&D Loans Continue to Plague Banks” from ProSales Online

Copyright © 2010 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

Robust Pending Sales Activity Presages a Stronger Housing Market for San Francisco

Robust Pending Sales Activity Presages a Stronger Housing Market for San Francisco
Posted on December 19, 2010

SAN FRANCISCO–Pending sales activity in the San Francisco housing market jumped 22 percent from November 2009 to 2010, according to the latest Market Focus report, published jointly by the Rosen Consulting Group and the San Francisco Association of REALTORS®.

“Robust pending sales activity should lead to a rebound in closed sales activity in the coming months in San Francisco”

Of these sales, 48.1 percent were single-family homes priced at less than $700,000—a significant increase when compared with November 2007, when 26.7 percent of pending home sales were in this price segment.

“Robust pending sales activity should lead to a rebound in closed sales activity in the coming months in San Francisco,” says John Lee, president of the San Francisco Association of REALTORS®.

Despite this harbinger of a strong housing market ahead, the report points out that a decline in closed sales during recent months has caused housing inventory levels to rise, with 684 single-family homes on the market at the end of November 2010—a 21.1 percent rise from November 2009. Median sale prices, however, have remained stable.

Stronger confidence among both home buyers and sellers could be the reason for rising pending sales. But, the Rosen Consulting Group believes that ongoing concerns regarding job security, the pace of the economic recovery and stringent lending practices, could cause many qualified buyers to delay home purchases.

Regardless, Lee believes that growing optimism fueled by increasingly positive economic data, the Federal Reserve’s monetary stimulus and the income tax cut extension is likely to drive buyers back into the market—and may have already done so as evidenced by the recent increase in pending sales.

The report blames the expiration of housing tax credit as the likely reason for a 32.9 percent drop in closed condominium sales in November 2010 in comparison to November 2009. But despite of this precipitous decline, it is noted that the median condominium sales price increased by 6.1 percent year-over-year to $679,000. While closed sales remained weak, pending sales activity for condominiums rose by 9.1 percent during this time, following the same pattern as single-family homes.

While Lee concedes that there is volatility in San Francisco’s housing market, he says, “Decade-high housing affordability rates and the historically low interest-rate environment still make it an ideal time for financially-stable households with a long-term perspective on the market to enter the for-sale market. Despite the housing market’s weak performance through the second half of the year, 2010 will be a positive year for the market and a stepping stone to a more robust recovery in 2011.”

Real estate data in Market Focus is provided by Terradatum. Market Focus is written by the Rosen Consulting Group. For additional information on the real estate market or Market Focus.

Source: San Francisco Business Today

The Market – By Neighborhood

San Francisco City Overview

Alamo Square

Anza Vista

Bayview

Bayview Heightsv

Bernal Heights

Buena Vista Park

Central Waterfront

Clarendon Heights

Cole Valley

Corona Heights

Cow Hollow

Crocker Amazon

Diamond Heights

Dolores Heights

Downtown

Duboce Triangle

Eureka Valley

Excelsior

Forest Hill

Forest Hill Extension

Forest Knolls

Glen Park

Golden Gate Heights

Haight Ashbury

Hayes Valley

Ingleside

Ingleside Heights

Ingleside Terrace

Inner Richmond

Jordan Park / Laurel Heights

Lake

Lake Shore / Lakeside

Marina

Merced

Midtown Terrace

Miraloma

Mission

Mission Bay

Mission Dolores

Nob Hill

Noe Valley

North Panhandle

North Waterfront

Ocean View

Outer Mission

Outer Sunset

Pacific Heights

Parkside

Parnassus / Ashbury Heights

Pine Lake Park

Potrero Hill

Presidio Heights

Richmond

Russian Hill

Sea Cliff

Sherwood Forest

Silver Terrace

South Beach

South of Market

St. Francis Wood

Sunset

Telegraph Hill

Tenderloin

Twin Peaks

Van Ness / Civic Center

Visitacion Valley / Portola

West Portal

Western Addition

Westwood Park

Paragon Market Update Reports are powered by Altos Research, Copyright 2009 Altos Research LLC, all rights reserved. More information is available at www.altosresesarch.com.

The San Francisco Real Estate Market: December 2010 Update

Despite mostly negative reports from other parts of the country, the San Francisco home market has performed relatively well since the autumn market began after Labor Day. Indeed, the number of listings accepting offers in November was well above last year’s and the median home price is at its highest since the April tax-credit crush. Typically the market slows down dramatically from mid-November to mid-January, but so far it is slowing far less than usual.

Generally speaking, 30-40% of San Francisco new home listings accept offers within 30 days of going on market (i.e. quickly). They are perceived as good values, often attract multiple offers, and the sales prices for such homes are still, on average, slightly above the list price. (Houses perform better than condos, and condos perform better than TICs and multi-unit buildings.) Another 20% of new listings sell after 1 or more price reductions: on average, they’re on the market for over 100 days before offer acceptance, and sell at a sales price to original list price percentage that is 10-14% lower than that of homes selling quickly. And then 30-40% of listings expire without selling, typically due to being perceived as overpriced. The San Francisco home market is active, but buyers aren’t buying everything (as it seemed they did in the bubble years) – they’re buying only those properties they consider fair or, better yet, compelling values.

Statistics are generalities, often subject to surprising fluctuations due to a variety of reasons. Median prices may be affected by other factors than changes in value. Averages may be distorted by a small number of sales substantially higher or lower than the norm, especially where the sample size is small. New-development condo sales not reported to MLS are not included in this analysis. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted.

Homes Accepting Offers
Paragon Real Estate Group
The number of SF homes – houses, condos, TICs & 2-4 unit buildings – accepting offers is remaining generally stable. Though the market typically starts to slow markedly in November, this has not occurred this year, and the number of listings accepting offers in November was only slightly reduced from October, and was 17% above November of 2009, and 90% above November 2008 (the market crash era).

Median Sales Price
Paragon Real Estate Group
The Median Sales Price is that price at which half the properties sold for more and half for less. The median price for all home types in San Francisco was $775,000 in November which is its highest since April. However, median price is a very general statistic, which can be affected by a number of factors (such as an increase in high-end home sales), and it’s not unusual for it to fluctuate up and down by month. It’s certainly too early to conclude SF home values are on a sustained upward trajectory.

Median Price: Distress vs. Non-Distress Sales
Paragon Real Estate Group
A distress sale is a bank-owned property sale (usually pursuant to foreclosure) or a short sale (the lender must reduce the loan amount to allow the sale to close). The cross-hatched and solid bars delineate the median prices of distress property sales and non-distress homes respectively: in SF, distress properties have a much lower median sales price than non-distress sales — in November, $435,000 vs. $802,000. This is due to 3 reasons: firstly, the majority of distress sales in the city occur in the least affluent neighborhoods and housing costs less there anyway; secondly, distress properties often look distressed, and thirdly, buyers expect major discounts on a such sales. (Otherwise, they wouldn’t bother with the considerable hassle of dealing with the bank sales departments.) Of the 43 distress home sales in November, only 2 were above $750,000. September and October each has 11 distress home sales over $750,000.

Homes for Sale
Paragon Real Estate Group
The number of listings actively for sale declined significantly in November, but is still running 17% above November of last year. The cross-hatched section of the bars delineates the number of distress properties actively for sale: in November, they totaled 483 or about 18% of all active listings. Again, though these sales occur throughout the city, most of them are clustered in specific neighborhoods. San Francisco has been much less impacted by foreclosures and short sales than most other California counties.

Luxury Homes Accepting Offers
Paragon Real Estate Group
In this analysis, luxury homes are defined as houses and condos listed at $1,500,000 and above. October was the strongest month for luxury home sales in the past 25 months, and November was not far behind. Such sales in November of 2010 were 61% above those in November of 2009, and 350% above November of 2008 (the nadir of the market, right after Lehman Bros.).

New Listings
Paragon Real Estate Group
As is typical for this time of year, the number of new listings crashes in November (and December), and then revives again in January. The cross hatched portions of the bar delineate new distress-home listings, which at 129 in November, are at the second highest number of the past 25 months. (The average number of new distress-home listings over the past year was 116 per month.)

Average Days on Market (DOM)
Paragon Real Estate Group
This chart measures the average number of days between going on market and accepting an offer for all home types: at 58 days in November, it was the lowest, by a few days, of the past 25 months. Breaking it down further, houses had an average DOM of 52 days, condos were at 67 days, and luxury homes ($1.5m and above) were at 57 days. Those homes that do sell generally sell relatively quickly.

Months’ Supply of Inventory (MSI)
Paragon Real Estate Group
MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: generally speaking, the lower the MSI, the greater the demand. MSI for all SF homes was 3.8 months in November, which is moderately low. However MSI varies widely by property type: for houses, the MSI was lower at 3 months; for condos, it was 3.9 months; for TICs, 6.3 months; and for 2-4 unit buildings, 5.2 months of inventory. The MSI for luxury homes was 3.8 months.

Expired/Withdrawn Listings
Paragon Real Estate Group
On one hand, the SF home market has been stable both in regards to buyer demand and to property values – and November was an excellent month in sales activity – but on the other hand, quite a few listings expire without selling, typically because they are perceived as overpriced. November had the highest number of expired/withdrawn listings since last December – December generally being the highest month as properties are withdrawn for the holidays, often to be re-listed in January (not unusually at reduced prices).

Return on Investment
Paragon Real Estate Group
Comparing stocks with homes is like comparing apples with hardboiled eggs, but it’s still interesting. This chart is based upon all-cash purchase (no leverage). Stock performance does not include dividends and real estate performance does not include value of housing provided or potential rental income. Real estate appreciation is calculated on changes in median sales price for 2 & 3 bedroom houses and 2 bedroom condominiums in a sampling of SF districts. (Appreciation based upon changes in average dollar per square foot was 59% for houses and 64% for condos.) The chart does not adjust for transactional costs or for the $250,000/ $500,000 capital gains exclusion for primary residence sales. All numbers should be considered approximations.

2-4 Unit Buildings Accepting Offers
Paragon Real Estate Group
November was reasonably active for the sale of 2-4 unit residential buildings – one of the top 5 months of the last 25. Changes in financing conditions, tenant eviction law and the TIC market have affected this market in the past 2 years.

TICs (Tenancies-in-Common)
Paragon Real Estate Group
This chart shows the number of TICs for sale vs. the number sold in any given month. Due primarily to major changes in TIC financing conditions, the number of TIC sales in the city has fallen dramatically as compared to the period before September 2008. In November, there were 269 TIC units for sale, 39 new listings, 30 accepted offers, 16 sold (closed escrow) and 50 listings expired.

Paragon Performance
Paragon Real Estate Group
This chart shows the average percentage of sales price to original list price when acting as listing agent for luxury homes of $2,000,000 and above. Of the major city brokerages, Paragon consistently achieves the highest Sales Price to Original List Price percentage and lowest Days on Market for luxury homes (and indeed for all home sales as well). Homes that are priced correctly, prepared to show in their best possible light, and marketed comprehensively unsurprisingly achieve the highest sales prices in the shortest amount of time. Since September 1st, Paragon’s percentage market share for luxury homes is up over 47% year over year, we are currently the #2 luxury home brokerage in the city by unit sales for homes $1,500,000 and above.

Weekly Market Charts

The below charts are by week through December 12th for San Francisco houses, condos, TICs and 2-4 unit buildings.

In the period since September 1st, Paragon has cemented its place as the #3 broker by dollar volume sales. Our percentage market share has increased 11.3% for all home types, and by 66.2% for homes selling for $1,500,000 and above. We are also #3 in dollar volume sales for luxury homes, a large shift from previous years. Paragon continues to have the highest SP to original LP percentage and lowest Days on Market figure for both all homes and luxury homes of the largest SF brokerages, when acting as listing agent.

Homes Accepting Offers: though activity is reduced from November, it is surprisingly strong for December. Last year a total of 293 homes went under contract in December; through December 12th of 2010, approximately 190 homes have gone under contract already. (In December 2008, right after Lehman Bros. only 218 went under contract during the entire month.)

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Homes For Sale: declining rapidly as we get closer to the end of the year, but still higher than last year at this time.

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Median Sales Price: median prices have jogged up and down a little over the past six months (weekly fluctuations are the norm and are not particularly significant), and for the week ending 12/12/10, the median was almost exactly the average median for the entire 6-month period. This speaks to a general price stability in the SF home market.

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New Listings: as typical, a large decline as we get closer to the end of the year, though considering buyer activity this might not be such a bad time to bring on a new listing if it¹s well priced. Typically, we will see a new burst of new listings (and re-listed listings) in January.

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Listings Sold vs. Expired Listings: for the past 6 weeks, more listings have expired or been withdrawn than have closed escrow ­ so though market activity is relatively strong, lots of homes are still not selling. December is usually the month with the largest number of expired listings.

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Percentage of Listings Accepting Offers by Week: at slightly over 5% of listings accepting offers in each of the past two weeks (after the Thanksgiving week dip), activity is well above the average for the past 6 months, and speaks to the continuing deal-making activity going on in December. Only 1 week in the past 6 months has registered a higher percentage of listings accepting offers, and that was in the 3rd week of November.

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Best American cities to invest your real estate dollars in 2011

On Tuesday we started with the doom and gloom by showing you the predicted worst places to invest in real estate in the coming new year. In the spirit of bad news first, here’s the good news. Experts also predict some “best” places to invest, American cities where the housing market is expected to a) rebound, b) stay strong, and/or c) improve. And this time, San Francisco proper is on the list. In fact, it tops the list.

Trulia, a top real estate site for buyers, sellers, and renters, has identified the 10 cities the site’s data and analysts thereof consider best positioned to thrive in 2011.

10 Real Estate Markets that Will Thrive in 2011

1. San Francisco, CA
2. Austin, TX
3. Madison, WI
4. Raleigh-Durham, NC
5. San Antonio, TX
6. Oklahoma City, OK
7. Des Moines, IA
8. Salt Lake City, UT
9. Fort Collins, CO
10. Omaha, NE

But, wait! We know San Francisco, real estate value-wise, has done fairly well, compared not only to a large portion of the Bay Area, but also to a large portion of California and the nation. However, the city is budget crunched, raising the cost of living, and dealing with historic high unemployment. Where does Trulia come up with such a sunny outlook? When asked, Trulia’s experts responded with these points, some of them very solid, and others perhaps debatable (and debate you will, in the comment section):

San Francisco, CA

1. Important note: many articles stating SF is struggling consider Bay Area (SF, San Jose and OAK) together, rather than looking at the city individually

2. 9.7% unemployment, but job growth in the high income/skill sectors required to buy a home there (one of the lowest in Calif., against 12% unemployment rate for CA)

3. Job growth over the decade: # of high-tech computer jobs in SF have doubled from 8,000 to more than 16,000 (SF Center for Economic Development) # of life sciences jobs in SF has grown 5X to 2,750, up from 500 in 2004.

4. Venture capital dollars invested into SF during the recession: over $6.3 B has been invested in software/computer and bio-tech – just in 2010

So what do Bay Area residents themselves expect? We’re interested in educated reader predictions as much as we are in educated real estate professional predictions because, after all, one may have a bias….. while the other may not.

Source: SFGate.com

The San Francisco Real Estate Market – December 2010 Update

The San Francisco Real Estate Market – December 2010 Update

Despite mostly negative reports from other parts of the country, the San Francisco home market has performed relatively well since the autumn market began after Labor Day. Indeed, the number of listings accepting offers in November was well above last year’s and the median home price is at its highest since the April tax-credit crush. Typically the market slows down dramatically from mid-November to mid-January, but so far it is slowing far less than usual.

Generally speaking, 30-40% of San Francisco new home listings accept offers within 30 days of going on market (i.e. quickly). They are perceived as good values, often attract multiple offers, and the sales prices for such homes are still, on average, slightly above the list price. (Houses perform better than condos, and condos perform better than TICs and multi-unit buildings.) Another 20% of new listings sell after 1 or more price reductions: on average, they’re on the market for over 100 days before offer acceptance, and sell at a sales price to original list price percentage that is 10-14% lower than that of homes selling quickly. And then 30-40% of listings expire without selling, typically due to being perceived as overpriced. The San Francisco home market is active, but buyers aren’t buying everything (as it seemed they did in the bubble years) – they’re buying only those properties they consider fair or, better yet, compelling values.

Statistics are generalities, often subject to surprising fluctuations due to a variety of reasons. Median prices may be affected by other factors than changes in value. Averages may be distorted by a small number of sales substantially higher or lower than the norm, especially where the sample size is small. New-development condo sales not reported to MLS are not included in this analysis. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted.


Homes Accepting Offers
The number of SF homes – houses, condos, TICs & 2-4 unit buildings -accepting offers is remaining generally stable. Though the market typically starts to slow markedly in November, this has not occurred this year, and the number of listings accepting offers in November was only slightly reduced from October, and was 17% above November of 2009, and 90% above November 2008 (the market crash era).


Median Sales Price
The Median Sales Price is that price at which half the properties sold for more and half for less. The median price for all home types in San Francisco was $775,000 in November which is its highest since April. However, median price is a very general statistic, which can be affected by a number of factors (such as an increase in high-end home sales), and it’s not unusual for it to fluctuate up and down by month. It’s certainly too early to conclude SF home values are on a sustained upward trajectory.


Median Price: Distress vs. Non-Distress Sales
A distress sale is a bank-owned property sale (usually pursuant to foreclosure) or a short sale (the lender must reduce the loan amount to allow the sale to close). The cross-hatched and solid bars delineate the median prices of distress property sales and non-distress homes respectively: in SF, distress properties have a much lower median sales price than non-distress sales — in November, $435,000 vs. $802,000. This is due to 3 reasons: firstly, the majority of distress sales in the city occur in the least affluent neighborhoods and housing costs less there anyway; secondly, distress properties often look distressed, and thirdly, buyers expect major discounts on a such sales. (Otherwise, they wouldn’t bother with the considerable hassle of dealing with the bank sales departments.) Of the 43 distress home sales in November, only 2 were above $750,000. September and October each has 11 distress home sales over $750,000.


Homes for Sale
The number of listings actively for sale declined significantly in November, but is still running 17% above November of last year. The cross-hatched section of the bars delineates the number of distress properties actively for sale: in November, they totaled 483 or about 18% of all active listings. Again, though these sales occur throughout the city, most of them are clustered in specific neighborhoods. San Francisco has been much less impacted by foreclosures and short sales than most other California counties.


Luxury Homes Accepting Offers
In this analysis, luxury homes are defined as houses and condos listed at $1,500,000 and above. October was the strongest month for luxury home sales in the past 25 months, and November was not far behind. Such sales in November of 2010 were 61% above those in November of 2009, and 350% above November of 2008 (the nadir of the market, right after Lehman Bros.).


New Listings
As is typical for this time of year, the number of new listings crashes in November (and December), and then revives again in January. The cross hatched portions of the bar delineate new distress-home listings, which
at 129 in November, are at the second highest number of the past 25 months. (The average number of new distress-home listings over the past year was 116 per month.)


Average Days on Market (DOM)
This chart measures the average number of days between going on market and accepting an offer for all home types: at 58 days in November, it was the lowest, by a few days, of the past 25 months. Breaking it down
further, houses had an average DOM of 52 days, condos were at 67 days, and luxury homes ($1.5m and above) were at 57 days. Those homes that do sell generally sell relatively quickly.


Months’ Supply of Inventory (MSI)
MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: generally speaking, the lower the MSI, the greater the demand. MSI for all SF homes was 3.8 months in November, which is moderately low. However MSI varies widely by property type: for houses, the MSI was lower at 3 months; for condos, it was 3.9 months; for TICs, 6.3 months; and for 2-4 unit buildings, 5.2 months of inventory. The MSI for luxury homes was 3.8 months.


Expired/Withdrawn Listings
On one hand, the SF home market has been stable both in regards to buyer demand and to property values – and November was an excellent month in sales activity – but on the other hand, quite a few listings expire without selling, typically because they are perceived as overpriced. November had the highest number of expired/withdrawn listings since last December – December generally being the highest month as properties are withdrawn for the holidays, often to be re-listed in January (not unusually at reduced prices).


Return on Investment
Comparing stocks with homes is like comparing apples with hardboiled eggs, but it’s still interesting. This chart is based upon all-cash purchase (no leverage). Stock performance does not include dividends and real estate performance does not include value of housing provided or potential rental income. Real estate appreciation is calculated on changes in median sales price for 2 & 3 bedroom houses and 2 bedroom condominiums in a sampling of SF districts. (Appreciation based upon changes in average dollar per square foot was 59% for houses and 64% for condos.) The chart does not adjust for transactional costs or for the $250,000/ $500,000 capital gains exclusion for primary residence sales. All numbers should be considered approximations.


2-4 Unit Buildings Accepting Offers
November was reasonably active for the sale of 2-4 unit residential buildings – one of the top 5 months of the last 25. Changes in financing conditions, tenant eviction law and the TIC market have affected this market in the past 2 years.


TICs (Tenancies-in-Common)
This chart shows the number of TICs for sale vs. the number sold in any given month. Due primarily to major changes in TIC financing conditions, the number of TIC sales in the city has fallen dramatically as compared to the period before September 2008. In November, there were 269 TIC units for sale, 39 new listings, 30 accepted offers, 16 sold (closed escrow) and 50 listings expired.


Paragon Performance
This chart shows the average percentage of sales price to original list price when acting as listing agent for luxury homes of $2,000,000 and above. Of the major city brokerages, Paragon consistently achieves the highest Sales Price to Original List Price percentage and lowest Days on Market for luxury homes (and indeed for all home sales as well). Homes that are priced correctly, prepared to show in their best possible light, and marketed comprehensively unsurprisingly achieve the highest sales prices in the shortest amount of time.

Since September 1st, Paragon’s percentage market share for luxury homes is up over 47% year over year, we are currently the #2 luxury home brokerage in the city by unit sales for homes $1,500,000 and above.