Thursday, November 14, 2013

Pulse of the Market

Our bi-weekly look at early trends in the San Francisco real estate market:

Total number of new listings for single family homes was down as was the percentage of those listings that went into contract within two weeks.  New listings of condos was essentially flat and then percentage that went into contract within two weeks was down slightly.

Friday, November 1, 2013

Fall Back

Just a reminder if you're staffing or planning on attending an open house this on Sunday:

Wednesday, October 23, 2013

Pulse of the Market

Here's the latest edition of our look at new listings that go into contract within 14 days.

We use this statistic go help confirm our own observations and anecdotal evidence about whether the market is heating up or slowing down.  It gets us much closer to the point of decision making than most other statistics, including our own, that rely on sales prices that only become available after the property closes escrow.  In a normal market the decisions about offer and acceptance are made as much as six to eight weeks before the sales price is reported.

Wednesday, October 16, 2013

Interest Rates and Purchasing Power

"For every 1% rise in interest rates, home prices must fall by 10% in order for you to maintain the same monthly mortgage payment. And at the end of the day, that's what matters, the monthly payment. So take advantage of low rates; they add much more buying power to your purchase than low prices."

Dave Ness of Denver's Thrive Real Estate Group

Wednesday, September 11, 2013

The Pulse of the Market?

We spend a lot of time looking at statistics in this business as do our clients when they're in the market either as buyers or sellers. We look for trends and hints as to where the market is heading.

The problem is most reports are way out of date in a fast moving market such as San Francisco has seen over the past few months. Statistics (including ours) that discuss sales prices, numbers of sales, median prices, days on market etc. all show the results of decisions made weeks earlier. Even in our fast paced market, most closings take 30 days or more after the decision to make an offer was made. ("Days on Market" only takes into account the number of days between listing date and pending status.)

Most sales reports are done on a monthly basis including ours which is just posted over on our web site

We wait until the second week of the month to pull together our numbers since many brokerages and agents aren't always as prompt as they should be in updating information in the MLS.  So, by the time monthly reports are posted, they represent decisions made as much as 30-60 days earlier.

We get more timely anecdotal reports from our colleagues informally and at our regular sales meetings.  And occasionally other brokerages report some of their findings (see Redfin's post on bidding wars in various markets including San Francisco).

We've found what we think may be a more current and reliable indicator of the "heat" for our specific market.  Our MLS publishes a hot sheet of new listings that covers the 14 days prior to the report.  It also shows how many of those listings are already in contract.  Take a look and let us know if you find this useful.  As you can see we've only started collecting data so it's a bit early to be drawing major conclusions.

But this apparent trend of a slight cooling off in both single family homes and especially condos is consistent with our own recent market experience.

Saturday, August 17, 2013

Volume of Sales and Seasonal Variations

Well, we haven't published these graphs recently and given the current market conditions this might help put some of it in perspective:

This shows the total number of single family homes and condos/TICs sold during the first seven months of the year.  It's easy to see we're back to and surpassed the volumes of 2006 and 2007, prior to the housing and economic meltdown.

This second graph, while very busy, also explains some of the seasonality of the San Francisco market.

(Click on the graph to see a larger version.)  As in many real estate markets, San Francisco generally experiences two sales peaks each year. The most pronounced is the so-called spring market where sales peak in May or June.  A second, less pronounced peak usually happens in October.

One important fact to keep in mind with these graphs and numbers -- "Sales" are recorded as of the day escrow closes.  The decision to buy was generally made 30 days prior to close of escrow.  So the peak in June represents sales where the decision to buy (go into contract) was made in May.  The opposite is also true -- the dip in sales in September represents a lack of buying activity in August.

(These statistics are taken from the San Francisco Multiple Listing Service).

Wednesday, July 17, 2013

Distressed Properties mostly in the rear view mirror

PropertyRadar (formerly Foreclosure Radar) reports that San Francisco has the smallest percentage of distressed properties (foreclosures and short sales) of any county in California.

Compared to the same time last year the percentage of distressed properties has dropped by ten points from 34.8%.

Four of the five counties with the lowest percentage of distressed properties are in the Bay area:  San Francisco, San Mateo, Marin and Alameda.

Tuesday, July 2, 2013


A potential client recently asked the following:  "Is the area around 1080 Potrero Ave. safe?"

Here's the essence of my response:

This is a tough question to answer not just about this particular address but in general. Your definition of safe is not likely to be the same as mine.  Your background and circumstances will define what you consider "safe" as much as crime statistics.

And, compared to what? What's your frame of reference?  Do you currently live in San Francisco or the Bay area.  Are you moving here from elsewhere?  Urban, suburban, rural?

There are several tools available on the web that try to characterize and/or quantify the level of crime in a particular area.

Trulia has one under "Community Info" that's a good start: 
(Plug in the zip code for the address in question.)

There's also another great tool: 
(Plug in an address or just click away. You can see what's been reported to the local police department around an address.   Then look at a different address for the same time period.)

Here's some other ideas to consider:

  • Spend some time in the neighborhood.  Visit at different days of the week and hours of the day, evening and night.
  • Talk to the local police station staff.
  • Contact the San Francisco SAFE organization that works with the police department to organize neighborhood watch groups.  Ask if there is a group where you're considering moving and, if so, have them put you in touch with them. 

And keep this in mind:  real estate agents are generally reluctant to give an opinion about the safety of a neighborhood because it's all too easy to run afoul of the Fair Housing Act which requires us to avoid "steering" buyers away from or toward a neighborhood based on race, color, or other protected categories.  This is a situation where you really need to do your own research and reach your own conclusions.

Monday, July 1, 2013

New Highest Price for Residential Property on Potrero Hill

You may recall in an earlier post I mentioned a property on the market that had negotiated an easement with their neighbor that would protect their view (something of a rarity in San Francisco).

Well, that property just closed escrow for the highest price ($3,660,000) for a residential property since records have been kept by our multiple listing service.  The property is located at 827 De Haro Street.  (Click the link for more photos and listing information).

The sales price is approximately 15% over asking.

Technically, the property is a two-unit building.  Here's the agent's public description from the MLS.  (I get a kick out of the lack of vowels.  It reminds me of when we paid for advertising by the number of characters in the ad.  Or, a more current reference, a text message version of the description.  The truth is more mundane -- our MLS still limits the description field to 750 characters -- this is just two shy of the limit).
1-of-a-kind custom Potrero Hill VIEW hm blt in 2005. 4 bdrms/3.5 baths incl 1 bdrm legal unit. Elev to every lvl, incredble VWS from every lvl & unsurpassed finishes thruout. Top lvl includes huge LR w/expansive City & Bay views, fireplac, 2 patios, open flr plan w/ dining area, all great for indoor-outdoor entertaining. Kitchen has all the bells & whistles w/ a center island. Mster ste feat a prvt patio w/ views & hot tub, huge walk-in. 3 bdrms on middle flr w/one perf suited for home office w/flr to ceiling blt-ins. Garden legl unit is an open flr plan w/2-tiered living/dining area, firepl & direct access to yd, also w/spectac views. The spectacular views north are protected by a recorded view easement restricting ht of neighbor's hm.
Although not included in the MLS, tax records say the building has over 5,000 sq. ft. of living space.  So, on a price per sq. ft. basis, this would be considered "a bargain" compared to most single family homes in this price range selling for upwards of $900/sq. ft.

Thursday, June 13, 2013

Snapshot of Today's Market

One of the agents in our office just concluded a transaction where he represented the buyer of a one bedroom, one and a half bath condo in the Brannan.  The Brannan is a full service, premier condo building in a great South Beach location with lots of amenities.
Units there are always in demand.

This most recent sale closed at $850,000., 6% over asking.

The property had been listed back in 2010 asking $679,000 and, after 160 days on the market with no buyer, the property was withdrawn.

The most recent previous sale of the unit was in early 2007 when it closed escrow with a purchase price of $729,000.

The number of days on market went from an average of 46 in 2002, down to 19 in 2007, up to 85 in 2010 and now we're back down to 34.

We're seeing this scenario duplicated in all parts of the city.

Wednesday, June 12, 2013

Potrero Hill Vacant Land in Contract

Five vacant lots in the cul-de-sac 900 block of Kansas went into contract recently.  The list price for all five lots is $1,249,000.
According to the MLS listing, the lots are zoned RH-2 and could be developed into as many as 10 units.

In checking this out I was surprised to see there are 39 other listings for vacant land within the City ranging in price from $64,000 for a single lot on Bache St. on the southern crest of Bernal Hill to $5,000,000 on 6th Street just south of Folsom which could hold as many as 38 units.

Friday, June 7, 2013

Protected Views?

Over and over again you'll hear the mantra that views are not protected when it comes to real estate in San Francisco.  If your fabulous view of San Francisco Bay from your living room window (for which you paid a premium when you bought the house) gets blocked by the neighbor across the street who legally adds an additional story to his house, you're out of luck.

But there is an exception.

As noted in the new listing for 827 De Haro Street, "The spectacular views north are protected by a recorded view easement restricting ht of neighbor's hm."

You get an idea why this is important from this Google Street view:

View Larger Map

Click here to see the MLS listing.

So, if you can strike a deal with your neighbor, the potential view blocker, you can protect your view.  Unfortunately, there's no indication as to how much that view easement cost.

Wednesday, June 5, 2013

Crazy Season?

A modest 3 bedroom, 2 bath single family home (less than 1600 sq. ft.) on the south side of Potrero Hill with an asking price of $649,000 just closed escrow for $1,050,000 -- 62% over asking!  

View Larger Map

It went on the market middle of April , went into contract two weeks later and immediately went "pending" so we're assuming an all cash deal.  It was being sold "As Is" and there had been a death on the premises two years ago.

Wednesday, May 29, 2013

The Spring Garden

We've had a great growing season so far this year (if you ignore the fact our rainfall this season has been only half of normal).  Just check out this graph of actual high temperatures this year vs. average:

And here's the result of Frank's hard work:

Saturday, May 25, 2013

Foreclosures Decline Further

In what is probably the ultimate acknowledgement that the foreclosure crisis is largely behind us, the web site ForeclosureRadar has changed its name to PropertyRadar.

Their latest report of foreclosure filings in San Francisco for emphasis:

Foreclosure Filings

This has been a trend in San Francisco for some months now.  But, statewide, the same thing is happening:

In April distressed-property sales fell 39.4 percent year-over-year.  In contrast, non-distressed sales increased by 36.6 percent year-over-year.  While the year-over-year increase in April non-distressed sales was impressive, the gain was not enough to push overall market activity higher.  Distressed sales have been declining steadily as a percentage of total sales since the beginning of 2012.  In January 2012 distressed sales were 61.6 percent of total sales and ended the year at 44.8 percent of sales.  In April 2013, distressed sales were 34.2 percent of total sales, down from 36.6 percent in March.   Over the same time period, non-distressed sales started 2012 at 38.4 percent of total sales and ended the year at 55.2 percent of total sales.  In April 2013, non-distressed sales were 65.8 percent of total sales, up from 63.4 percent in March.

Friday, May 10, 2013

A Different Kind of Shadow Inventory

The San Francisco Examiner has reported on a study produced by the Asian Law Caucus focusing on the Excelsior district that reminds us how many "illegal" units there are in the city.  (There are lots of euphemisms for these units including "in-law", "non-permitted" and "unwarranted" -- but the important factor is they are not approved by the city as legal dwelling units). According to the ALC, one out of every three homes in the Excelsior has such a unit.

Back in the mid '90s estimates were that there are as many as 30,000 illegal units city-wide.

As many as 5-6% of single family homes listed in the MLS (sold in 2012) describe some sort of "unwarranted" condition in the marketing or agent remarks.

There are lots of implications to this number of "shadow" living units  (read the Examiner story and the Asian Law Caucus report).  From a pure real estate perspective, the presence of an illegal unit  is something to consider carefully, especially if there is an in-place tenant.

Monthly Statistics - the fine print

To answer some questions about how we go about creating our monthly reports, here's a little background:

  • Reports are based on sales and inventory reported in the San Francisco MLS. Although the vast majority of listings and sales are found in the MLS, private sales and some sales of new construction properties are not.
  • We look at five specific configurations of single family homes (2 bedrooms, 1 bath; and 3 bedrooms, 2 baths) and condos (1 bedroom, 1 bath; 2 bedrooms, 1 bath; and 2 bedrooms, 2 baths). This makes averages and comparisons more meaningful. Those five configurations represent 60% of condos sold in April and 36% of single family homes or, combined, 50% of all sales reported in April.
  • Condo statistics include TICs and Stock Cooperatives, although those types of properties are a relatively small percentage of the total.
  • By "sold" we mean closed escrow. The actual decision to buy and the signing of the sales contract between the buyer and seller typically happens at least 30 days prior to close of escrow. So, for example, when you're looking at April sales, those decisions to buy were most likely made in March and reflect conditions at that time.
  • "Active" listings are surveyed generally on the 8th day of the month. These are listings not yet in contract.
  • We update prior month's sales periodically since, for a variety of reasons such as late reporting or rescinded transactions, the number of sales goes up or down slightly well after our initial report.
  • "Days on Market" is the number of days from the day the listing first appears as "active" until the day the listing status changes to "pending". The MLS defines "pending" as a transaction which has no more contingencies outstanding (such as inspection or finance). There is an intermediate status for most transactions called "active contingent - show" which means the property is in contract but there are contingencies which haven't been cleared and, technically, the property is still available to show. There can still be a considerable number of days between when the property is "pending" and when it actually closes. In most transactions, that time is taken up by the lender getting loan documents prepared for signing at the escrow office but there can be other reasons such as a negotiated closing date where the buyer and seller agree on a specific closing date.
  • We include short sales, REO and BMR (below market) properties.

Thursday, May 9, 2013

Monthly Sales Report

We've posted our monthly sales reports for San Francisco and Marin counties. Below is a graph showing that prices in San Francisco for the five categories of single family homes and condos we study every month have fully recovered back to levels before the downturn that began at the end of 2007.

The only exception is two bedroom, one bath single family homes which reached a high of $755,000 in 2007 and are currently averaging $673,000 so far this year.

Other items of note:  two categories of condos are now more expensive than a comparable or larger single family home.

  • The average cost of a two bedroom, one bath condo is more than for a two bedroom, one bath single family home.  This has been true since the beginning of the recession in 2008.  
  • More recently, the cost of two bedroom, two bath condos has overtaken the average selling price of a three bedroom, two bath single family home.

Thursday, May 2, 2013

The Business of Real Estate

The San Francisco Association of Realtors MLS has quietly introduced new "new lease property types for single family, apartment, and commercial listings. The new lease property types will also include a variety of listing price styles such as per month, per week, per day, as well as per square footage."

Properties for lease, especially residential properties, are common in the MLS that serves north bay communities but this is the first time I know of  that the SFMLS has allowed them.

For commercial leases, this begins to infringe on what has been until now almost the exclusive territory of LoopNet.  While both LoopNet and the SFMLS have carried listings of commercial properties for sale, LoopNet has been the only widely available database of commercial properties for lease.

On the residential side, since landlords already have Craigslist to post their rental/lease residential properties and many landlords won't pay real estate agents a commission for finding a tenant, it will be interesting to watch whether these new categories of listings have any real effect on how the residential rental market works.

Thursday, April 18, 2013

Continuing Decline in "Distressed" Property Sales

Continuing and widening a trend we've been seeing for some time now in San Francisco, ForeclosureRadar is reporting the lowest number of sales of distressed properties (i.e. REO and short sales) in California since 2008.

The caption below the graphic indicates some confusion on their part as to the cause.  At least here in San Francisco it's pretty simple:  
(low inventory) + (high demand) + (lowest unemployment rate since 2008) = rising sales prices, rising property values, and more people able to keep up with their mortgage payments.

Wednesday, April 17, 2013

Multi Million Dollar Hill

In the last two weeks, two single family homes on Potrero Hill have each sold for over three millions dollars!

901 De Haro (immediately next door to the Potrero Hill Neighborhood House) was listed for $3,179,000 and closed escrow for $3,180,000.  The listing agent's description:  "Situated on the desirable North Slope of Potrero Hill, 901 DeHaro is a spectacular panoramic view home with careful attention to design and architectural detail. This 3 level, 4 bedroom, 4 bath home is a rare find in one of San Francisco's most popular neighborhoods and in San Francisco's warmest micro-climate. Built with a separate in-law and media room, with its own entrance and direct access to the garden, this is the perfect family home and retreat. The well landscaped level garden gives way to an additional studio that can be used as a home office, art studio, or gym. Huge pano roof area, seemless indoor and outdoor living spaces, radiant heat throughout, solid oak flooring, gourmet kitchen w/Leicht cabinetry & style."

 761 Kansas just closed escrow yesterday for a reported price of $3,195,000 -- same as the listing price in a mere 19 days and the buyer paid cash!  From the listing agent's description: "Modernism at its finest on Potrero Hill! North slope custom-designed residence by owner/architect & sculptor. Open, entertainment style floorplan ideal for displaying art, throwing parties, or just relaxing. Huge windows let in refreshing sunlight & sweeping views of SF, Bay & both bridges! 4BR/3.5BA, 2-car gar on 3 levels. Kit designed by former restauranteur w/ Italian oak cabinetry, Thermador gas range & fridge, Miele DW & huge island, Bfast bar, Broan hood, wine fridge. Casual den off kitchen w/ views. Curved staircase passes atrium w/ 37-foot tall bamboo forest. Mas suite w/ priv deck, huge views & luxe Japanese-inspired bath. Vermont maple floors thruout, two fireplaces, solar, sound sys. Yard w/stone oven. Near WholeFoods & shopping."

For the record, the most expensive single family home to sell on the hill according to MLS records was 752 Carolina which sold for $3,300,000 in May, 2011.

Prices Much Higher

We've just published our monthly report of sales in March and, confirming what we've noted anecdotally that compared to a year ago inventory is way down, the number of properties selling is up, and therefore prices are up significantly.

The detail is available on our web site (PDF file).

Overbidding is rampant -- last month the average sales price of a 2 bedroom, 1 bath single family home was 14% higher than the listing price.  Some of this can be explained by deliberately setting the listing price lower than market value.  But mostly it comes down to many more buyers chasing fewer properties.

Also on our web site is our quarterly report tracking the same five configurations of single family homes and condos.   One point,  -- the average selling price of a 2 bedroom, 1 bath condo has been higher than the average selling price of a 2 bedroom, 1 bath single family home during each of the last five quarters. Quarterly report (PDF).

Monday, April 8, 2013

Real Estate business

Warning -- for real estate geeks only.

There's a report compiled by "first Tuesday journal online" that compares the growth (or decline) of the 60 largest brokerages year over year by number of agents.  Our brokerage, Pearson Properties which does business as Prudential California Realty was number 9 overall with year over year growth of 11%.

We're #1 for brokerages with significant residential business in the Bay Area:

While we're not the biggest real estate brokerage in the Bay Area, we're growing faster than any other.  Agents want to work with us and our broker-owner Gretchen Pearson.  From the graph you can figure out what brokerages agents have decided to leave.  Not only is this important for agents, it's a piece of information worth considering by clients as they decide who they want to represent them.


It seems like every real estate agent attaches the "top producer" tag to their business.  Like most brokerages, ours has a variety of annual awards and we have been recognized with one of the more meaningful with the grand name of "Leading Edge Society".  The criteria for this award puts us in the top 2% nationally of Prudential real estate agents for 2012.  It's determined by number of transactions and gross commission -- the ultimate numerical measure of an agent's success.

However, we've always believed that the real measure of an agent's success is the satisfaction of their clients and how many of those clients return to work with that agent more than once.  However, these are a rarely, if ever, reported.  I'm very humbled to say that more than half of our transactions last year were with clients who have worked with us in the past.

Thursday, April 4, 2013

New Construction and Developments

Unless you've been inside for all of the last 6-12 months and don't read any local blogs or newspapers, you must have noticed at least some of the many new residential construction projects dotting our 7x7 city.  It's hard to keep up with them.

To help our clients, we've put together a map showing some (not all) of these projects. There are several sources for the information on the map.
This is a 1.0 effort and, as such, will go through some teething pains.  (Actually, we users will feel the teething pains -- the database and map will just be the source!)

The red dots on the map represent the approximate street address of the project.  Click on a dot and there is additional information including an image/rendering of the project (if available) along with the street address and a brief description taken from either Planning Department documents, press write-ups or the developers website.

In most cases there will be a link to the project's web site and an additional web site that has useful information about the project.  In some cases, the project's web site may just be a reference to the Planning Department document (PDF file) or the developer's web site.  Most sites that will be selling or renting units will eventually have a live web site but that comes relatively late in the development process.

Click on the image below to get started.

Any feedback (via comments or e-mail) would be appreciated.

Wednesday, March 13, 2013

Monthly Sales Statistics

We've just posted our monthly sales reports for February (in PDF format) and there are some telling numbers.

(BTW, the new look is to complement our new office on Nob Hill at 1715 Polk Street).

Basically, inventory (properties being actively marketed on the MLS) is down substantially compared to a year ago although, as is typical for this time of year, there has been some increase between February 1 and March 1.

Average sales prices have increased 20-25% compared to a year ago.

These reports are based on data from our MLS.  We survey five specific configurations of single family homes and condos in an effort to compare, as much as possible, similar properties.  Together, these five configurations account for 43% of single family homes that sold in 2012 and 60% of condos based on 2012 sales.  Our reports also include information on all 2-, 3-, and 4-unit residential properties.

The last page of the report shows historical pricing for these types of properties back to 1996.  In each of our survey categories the average annual sales price has gone up (year over year) two years in a row.

Off Market Sales

Admittedly this is anecdotal and without the usual hard statistics we report, but there seems to be a significant increase in "off market" sales recently.  Just in our immediate neighborhood on Potrero Hill there have been two such sales this month:

700 Carolina ...

View Larger Map

...received two pre-emptive offers and a final sales price reported at $1,265,000 ($15,000 over the "asking price").  A 4 bedroom, 2 bath home of approx. 1,600 sq. ft. for a price of $790/sq.ft.

1425 20th St. ...
View Larger Map

...received four offers and sold for $1,055,000 ($105,000 over the "asking price").  According to records, it's an 1,100 sq. ft. 2 bedroom, 1 bath home which works out to almost $960/sq. ft.

We've also received at least 6 e-mails from agents in the last week with properties for sale that are not shown on the MLS.

All of this underscores the lack of inventory available and a continued strong demand by buyers.

Wednesday, February 27, 2013

San Francisco Orchid Show -- Spring is on the way

Our friends in the east and midwest are still digging out of their latest snow but, the annual Orchid Show in San Francisco is a sure sign that spring is on the way.  Here are some photos to get you in the mood:

Sunday, February 10, 2013

More Overbidding

412 Connecticut, near the top of Potrero Hill, went on the market right after New Years (1/4/2013 to be exact).  It's a 2 bedroom, 1 bath, condo with a remodeled kitchen and downtown views, just over 1,000 sq. ft. with parking. (It's the building with the peaked roof, partially obscured by the tree).

View Larger Map

List price was $850,000 -- a reasonable list price for the area and condition of the property.  It went into contract 10 days later with 11 offers, all over asking price.  The winning offer was for $950,000., all cash -- almost 12% over asking.

And this isn't an anomaly.  During the first eight days of February, 72 single family homes and condos/TICs closed escrow -- all but five sold for at or above asking price.  Compared to the same period last year when  76 properties closed escrow, 21 of them at below asking price.


Saturday, February 9, 2013

Inventory Surprise

Something very odd happened on Friday -- 78 new listings hit the market in the previous 24 hours.  That's 15% of the then current total of 526 active condo and single family home listings in San Francisco.

Every real estate agent and most prospective buyers have been complaining / moaning about the lack of inventory for some months now.  Is this sudden uptick in listings an anomaly or the beginning of a trend?  Of course we won't know for a few weeks.  On the one hand, this could just be the beginning of the usual spring increase in listings which happens very predictably every year, boom or bust.  Or, this could be an indication that sellers are realizing it has been a sellers market for a while now and thinking they better take advantage of strong buyer demand while they can.

Stay tuned.

One thing is certain, the number of single family homes and condos/TICs that have sold in the last few months is back in the same territory as the boom years 2005-2007:

Friday, January 18, 2013

Condos Outpace Single Family Homes

Our latest monthly and quarterly statistics have produced a surprising (or maybe not so surprising) insight into what's hot and desirable in the San Francisco real estate market -- 2 bedroom, 2 bath condos are selling at five times the rate of similarly configured single family homes and they're selling at a price that's 22% (with a price per square foot over 30% higher).

You can find all of our statistical reports (monthly sales, quarterly sales, etc.) at our web site.

Here are a couple of graphics showing the number of sales by real estate district:

Sunday, January 13, 2013

Foreclosures Continue Downward Trend

The graphs tell the story (from

Notices of Default, the first step in the foreclosure process, are down:

Foreclosure inventories are down:

The same is largely true for most of the surrounding counties, although Marin and San Mateo counties saw an uptick in notices of default in the last reporting period.

Saturday, January 12, 2013

New Mortgage Qualification Rules

New rules are  being proposed by the Consumer Financial Protection Bureau (CFPB) that are likely to have impacts on the ability of buyers to obtain a mortgage.  The CFPB, created as a result of the financial reforms enacted by congress after the near financial collapse of 2008-2009, is setting out requirements that most banks (although not credit unions or "community banks") will have to follow to determine if prospective borrowers actually have the ability to repay their loan.

The most prominent feature of the new regulations is the requirement that the lender must determine that a borrowers total debt payments including their home mortgage, student loans, credit card payments, and child support not exceed 43% of their income.  There's a good itemization of other features in a Washington Post article.

Some of the new rules are likely to make it more difficult for prospective home buyers to secure a mortgage, especially in high cost markets like the Bay area.

It's too early to know what the actual effect on borrowing will be but one thing is almost certain -- the already cumbersome process some of the big bank lenders use today is likely to get even more convoluted, requiring more documentation, and will take even longer.

Friday, January 11, 2013

It's been a busy quarter

Since blogging isn't my primary occupation, I'll use that as the best excuse for the long time since our last update.  Since our last post we've had four closings -- a condo in Sausalito, two commercial condos in San Francisco, and a home in Pacifica.  And our experience is borne out by the broader sales statistics our monthly reports, the latest version of which will be available at in the next few days.  In the meantime, here are some highlights:

  • There has been a definite shift in pricing toward the high end of the market.  
    • The percentage of homes (condos and single family homes) selling for under $1million has fallen to 74% this year, down from almost 80% last year.  The last time this percentage was this low as back in 2008.
    • 6% of sales in 2012 were over $2million.  In 2011 that percentage was 5%.  The last time the high end of the market represented this much of the total market was, again, back in 2008.
  • The average sales price of a 2 bedroom, 2 bath condo in San Francisco breached the $1million barrier in December reaching $1,019,000.  This tops the three previous months where we've seen a steady climb in selling prices from $889,000 in September, to $893,000 in October, to $995,000 in November.  

  • And this does not appear to be a statistical anomaly -- the median sales price shows a similar steady increase. For the entire year 2012, 885 2 bedroom, 2 bath unit were sold. You have to go back to 2004 to see a greater volume of sales.