September Sales Results



1 bedroom, 1 bath condos, San Francisco

 We've just posted September sales reports for San Francisco and Marin counties.  These are the reports we do each month.  We focus on specific configurations of homes and condos that are representative of the market as a whole.  Our survey covers roughly 60% of all residential properties in the two counties.

Generally, average sales prices continued their upward trend while the number of properties sold in September is lower compared to the last three months.

You can get the full reports on our web site:  www.boldsf.com and click on "Statistics" where you'll find other reports as well.

Foreclosures Sharply Down

Notices of Default, the first step in the foreclosure process, are down sharply the last two months:

CA - Foreclosure Filings

For San Francisco county the trend is the same:

06075 - Foreclosure Filings

Similar declines in Notice of Default filings can be seen in all of the immediately surrounding counties (Marin, Contra Costa, Alameda and San Mateo) at the Foreclosure Radar site.

Will this have any bearing on the election?

The California Association of Realtors put out the following yesterday.  (The link at the bottom is to the original Trulia press release)

(Click here to see the map from the Washington Post)

Asking prices up year over year in six out of seven swing states
Asking prices on for-sale homes increased 2.5 percent in September, according to the latest findings in the Trulia Price Monitor. Excluding foreclosures, year-over-year asking prices rose 3.5 percent. Meanwhile, asking prices rose 1.6 percent nationally quarter-over-quarter, seasonally adjusted, and 0.5 percent month over month, seasonally adjusted.

Nationally, rent gains continued to outpace home price increases in September, rising 4.8 percent year-over-year. Among the largest 25 rental markets, year-over-year rents rose the most in Houston and Miami, where they climbed more than 10 percent. Strong job growth has pushed up rental demand in Houston. Rent increases have cooled most in San Francisco, from 14.5 percent in June down to 7.2 percent in September.

More info

Shuttle Endeavour

Lots of people turned out today in San Francisco to see the last flight of the shuttle Endeavour.  After a low level tour of the Bay area Endeavour, mounted on top of her 747 carrier headed for a final landing in Los Angeles where she will go on display at the California Science Center.

NASA wisely delayed the flight by an hour to give any of our notorious fog time to burn off but it turned out to be an unnecessary precaution.  We had beautiful weather from early in the morning providing for stunning photo opportunities.

As can be seen in some of the photos, people lined the Marin Headlands, all the vantage points along the north edge of the Presidio, as well as Crissy Field, Marina Green and many other locations around the Bay.

Tax Relief on Short Sales Expires in December ...

... unless, of course, Congress and our state legislature both take action.  Here's the situation as summarized recently by the California Association of Realtors in a recent newsletter:

Tax relief on forgiven debt set to expire Dec. 31, 2012
Unless Congress and the California State legislature take action, a break for mortgage principal forgiven in loan modifications or short sales will expire at year’s end.

The mortgage debt forgiveness issue is only one of approximately 60 expiring tax provisions that Congress appears unable to extend prior to its recess for the November elections.  Congress is pushing the extension of any expiring tax provision to the lame duck session, along with any increase in the debt ceiling, and any serious attempts to prevent the mandatory budget cuts agreed to during last year’s debt ceiling deal.

California's tax treatment of mortgage debt relief income generally aligns with federal law, and both the California and federal laws are set to expire at the end of 2012. For debt forgiven on a loan secured by a "qualified principal residence," borrowers are exempt from both federal and state income tax consequences, but only until Dec. 31, 2012.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to pay off a previous loan that would have qualified.

However, these tax breaks apply only to debts discharged from 2009 through 2012. It may be that Congress will take action to extend the federal exemption before year-end, but we will have to wait and see. If the federal law is extended, it is likely that California would follow in due course, as in the past, but it is not guaranteed.  The last time the federal tax exemption was extended, California did not conform its tax law until well into the next year.

Sellers who have transactions closing after Dec. 31, 2012, need to speak to their own legal counsel or tax advisors about the impact of the expiration of these laws and their potential tax liabilities, including the applicability of other exemptions from debt relief income tax.

Department of Good News

A couple of recent reports are bolstering the anecdotal stories that the San Francisco Bay area real estate market is improving:

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According to a report from Chapman University's Anderson Center for Economic Research, the consumer confidence level of Californians is the highest it's been since before the beginning of the recession in late 2007:

Chapman University, California Consumer Sentiment, 9/10/12

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Foreclosure Radar reports that foreclosure filings (notices of default and notices of sale) were down sharply in August.  This continues a mostly downward trend over the last year.

06075 - Foreclosure Filings

The same trend, although not as dramatic, is seen in the statewide numbers as well as the surrounding counties (Marin, Contra Costa, Alameda, San Mateo and Santa Clara).

Proposed Kaiser Development for Potrero Hill

As with almost any proposed development, there's controversy in our neighborhood over a new Kaiser complex targeted for 16th St. and Mississippi.  On our neighborhood web site as well as other such as www.socketsite.com and http://savelowerpotrerohill.com/ you can find most of the pro/con arguments.  One of the posts included a rendering and asked:  "Another view, for our discussion. Is it better than what we have now?"

I've taken a Street View from Google Maps of 16th & Mississippi and overlayed the appropriate rendering in Photoshop.  I can't guarantee the perspective is perfect but it will give you an idea: (Click for larger views.)

Number of Sales Continue to Rise

Despite the often heard complaint from many of us about the lack of inventory holding back the local market, the number of residential real estate sales in both San Francisco and Marin counties have continued to increase:

April sales of residential properties in San Francisco were the highest they've been since 2007.  The last three months have shown the same kind of growth.

The same trend is evident in Marin county:

More Signs of Recovery

Sales results in San Francisco for the first quarter of 2012 is one of the strongest starts since the height of our Real Estate Market back in 2006-7.  And, after two consecutive years of year-over-year growth in the number of sales, it appears that 2012 could be the third year in a row -- which most analysts consider to be a trend.   

The explosion in demand which started in February caught almost everyone by surprise and has continued through March and the first part of April.  Inventory which normally begins to build in February and March has failed to keep up with the unprecedented buyer demand and the resulting shortage of inventory has driven multiple offer situations and, ultimately, prices.

 

Looking at the current active listings for single family homes and condos/TIC illustrates just what buyers are facing.  Of the 1,790+ listings as of today, 438 of them are under contract having been on the Market for less then 2 weeks (they still have conditions remaining and some may well fall out of contract).  502  are "pending" (no contingencies remain).  This leave only about 740 listings for buyers to select among.  This is less than 2 months of inventory, a far cry from what we hear about in many other markets around the country where 6-12 months is more the norm!

If one studies certain categories of residential property and compares the highest average selling prices which were reached in 2006-7 to the average selling prices in the first quarter of 2012, it becomes rather revealing!  One of the largest declines in average selling prices was for 2bed/1bath single family homes, generally considered to be an entry-level home purchase. Having reached an average high in 2007 of $755,000 and fallen to an average price of $536,000 in the First Quarter of 2012, a decline of about 29%. On the other hand average selling prices for  1bed/1bath condos in 2007 reached $697,000, compared to first quarter 2012 at $631,000 a decline of only about 9%.  If our Market continues to have low inventory and high demand, one would logically expect for almost every category of property in San Francisco will regain value, probably an additional 10-12% by year’s end.

More signs of a trend ...

The San Francisco Real Estate Market exploded two weeks ago and while most thought it would be another solid year of sales, the shear quickness and intensity of Buyer demand was not anticipated. Inventory has been unusually low and it appears it has not been building as fast as most years. Since March 1 there have been 180 new condos and 170 new single family homes appearing in the San Francisco MLS. 88 of the condos (about 49%) are now under contract with an average DOM of 14, and 87 of the single families (about 51%) are now under contract. Shades of '05 and '06!

With two consecutive year-over-year growth years behind us and the first quarter of 2012 about to show very strong numbers, 2012 should be the third year of year-over-year growth. Most analysts and prognosticators usually consider three in a row to be a TREND. As the Bay Area goes so goes California, and as California goes so goes the Nation, let's hope the old saying holds this year!

Sellers are finding that if you generally list your property consistent with the most recent comparable sales, 1 in 3 are finding a willing and eager group of buyers, pre-qualified and able to close in 30-45 days. These buyers are anxious to WIN even if it means offering a little over asking -- in some cases with a 5 to 10% premium.

It is quite confusing to buyers, especially first-time buyers, to understand this hectic market pace since national news outlets are still talking about a sluggish real estate market. Buyers who are new to the area often remain in denial for their first two or three offers. It's gratifying for SF agents when they begin to listen to educated advice.

Seller's had just about been convinced that premium pricing was not working unless the property truly reflected premium quality. This might just make it more difficult to convince them that over pricing can still leave a property languishing on the market.

In taking a closer look at the data, it appears that this phenomenon is showing up in properties ranging from $400K to $1.5M+ and includes most of the 10 MLS districts in San Francisco. Also, Mill Valley in Marin and some South Bay Communities are experiencing similar demand.

Anecdotes do not a trend make, but ....

Several items in the news and my own experience as an agent converged today that says a good deal about the current housing market and, maybe more importantly, the mindset of potential buyers:

1. The National Association of Realtors reported that sales of existing homes rose again in January, the third time in the last four months.  This is entirely consistent with what we've been reporting for a while regarding our local San Francisco market where sales of existing homes in 2011 rose compared to the previous year and was the third year in a row of sales increases.
2. The San Francisco Chronicle reported in it's "On the Block" blog that there has been a recent spate of sales in the peninsula communities of Palo Alto, Menlo Park and others where buyers, often in multiple offer situations, are paying all cash and waiving contingencies!
3. Working with several buyers recently we've experienced first hand several properties we had some interest in go into contract within a few days of hitting the market.  And there we have begun to see the return of offer dates on listings.

Sales Rates

Here's some interesting statistics that give some clues about the state of the San Francisco real estate market.
First, for the full year 2011, the number of residential sales increased again for the third year in a row. 

More properties (single family homes, condos, TICs and co-ops) were sold last year than any year since 2007.

Sales for January, 2012, also showed strength:

Although slightly fewer sold this January than January, 2011, overall the trend is positive since the low of downward trend that started after 2007.

Foreclosure Activity

ForeclosureRadar is one of the most widely quoted companies on real estate foreclosure activity nationally.  They also break down their data by county and zip code.

Here's their most recent graphs summarizing foreclosure activity in San Francisco for he last year.  Notice the significant fall off in Notices of Default and Notices of Sale in December compared to November and also compared to last December.  Maybe it's just a gesture acknowledging the holiday season, or maybe not.

06075 - Foreclosure Filings

There's also a noticeable uptick in Cancellations and a small but steady decline in the number of properties that ended up Back to Bank.

06075 - Foreclosure Outcomes

Consistent with the above, there's a noticeable decline in properties in the Preforeclosure stage as well as those Scheduled for Sale compared to last month and compared to December last year.

06075 - Foreclosure Inventories

These trends are not universal in the surrounding counties where, for example, Notice of Sale seems to be sharply up and Cancellations are mostly down.

San Francisco Year-end Statistics

The number of sales of single family homes and condos/TICs in San Francisco continues an upward trend since hitting a low in 2009.  We're at about 89% of total sales compared to 2007 and 80% compared to 2006.  Selling prices are not showing an increase yet but, even in San Francisco, laws of supply and demand generally work.  (See following post).

As in most years, the number of sales was down slightly compared to November but, generally, monthly sales in 2011 followed the normal seasonal fluctuations.  (Sorry for the "busy" chart).