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.