Is It Too Late for Real Estate?
I've been investing in real estate for 24 years. I've seen the ups and downs of the market and I've made some bad investments, but most of them have turned out great – as long as I was prepared to stay through the bad times.
There's been a lot of talk lately about the real estate bubble bursting. What if real estate values go down where you live? In today's email, I'm going to cover three possible strategies for a real estate downturn.
Strategy #1: Don't Sell.
How serious is the problem really? Let's say that the home you live in, the property you are renting out or the property you bought as a fix and flip goes down in value. Well, if you weren't planning to sell right away, would it matter? Hang on until the market comes back. Historically, in the bigger picture, a real estate market will ALWAYS come back.
Of course, this sounds really simplistic. Don't sell. Wouldn't it be nice if everything was that simple? Maybe it really is, though. If you've followed the Tax Loopholes strategies for making sure you have enough cash for your debt (as outlined in
The Insider's Guide to Making Money in Real Estate and
The Insider's Guide to Real Estate Investing Loopholes.) A lot of people forget that when the emotions run high though.
In the late 1980's and early 1990's, the real estate market really started crashing in Phoenix. In 1995, I got a new tax client. She was a real estate broker in Phoenix. The market was recovering well by that time in Phoenix. But, the broker said she'd never own real estate investment property again. She said she'd lost a ton of money in the downturn. Her story, as it unfolded, was that she owned a number of single family residences that were rented for a positive cash flow. The market turned down and suddenly she was upside down on some of the houses. She panicked and sold all of them. In some cases, she needed to actually come up with money to close the deal.
The part that I didn't understand was why she felt the need to sell. The properties had a positive cash flow. By selling, she locked in the loss. At that point, someone bought the properties and waited out the downturn to take advantage of the upswing. Why couldn't she have done the same thing? She was afraid that the market would get worse. She was afraid that her tenants might move out and even though there are generally more renters when a market turns down, she was afraid she couldn't get more tenants. Basically, she was afraid and made an emotional decision.
The market has been running hot in many areas and actually over-heated in other markets. Phoenix is one of those markets. My husband and I are putting more cash away in case the market turns down and we need to wait a little bit for it to settle. We also want to make sure we have plenty of options when the deals start showing up. But, we are not panicking and selling. If we sell, it's part of a well-thought-out plan.
Strategy #2: Run Your Investments Like a Business.
I'm going to talk about some strategies that are worst case only. Remember that real estate is nothing more than a product. If you're good at a business and know how to thoroughly research a product and its market, you can sell toasters or you can sell a house. It's all the same. Of course, not too many people rent toasters and toasters don't appreciate and that's why real estate is such an easy business for so many people to jump into. That's also why there are so many catastrophic failures. It's too easy to make money in real estate, if the market is going hot, even if the investor does everything wrong. They have forgotten (or never knew) the fundamentals of business.
One of the fundamentals of business is to look for a way to create more value in what you're selling. Remember if you're renting a property, lease optioning it, doing a rent to own or straight out selling – regardless of what you're doing, you're selling something. And, if no one is buying (and in this sense, it includes renting as well) ask yourself why? Is there a way to add more value by making it more desirable for the buyer/renter? Some ideas might include changing the property, adding additional features that no one else has or making more favorable terms for a potential buyer.
One more comment on the people who say the end is coming for real estate. In a lot of cases, the doomsayers who happen to have money as well, are people who've gotten lucky. They're now afraid that they can never recreate that wealth and so they're just plain afraid of everything.
They realize, at some level, they had nothing to do with the wealth they've gotten and so they're afraid they will lose it. Having strong business skills means you have the ability to look at any market in any climate and figure out what to do next, without panicking.
Strategy #3 Keep Your Eyes On the Real Goal.
No matter what type of business or investments you have, you need to have fundamental skills. That's what Strategy #2 was all about.
Face it, I'm a CPA and Tax Strategist. For me, one of the biggest benefits of investing in real estate is all the great loopholes that you get. And, you'll get those loopholes no matter what happens with the market. Of course, I don't want you to do anything just for the write-offs. You have to make money to, at least in the long run.
Are you sure you're getting all the tax loopholes for your investments? How about your business structures – are they set up correctly and are you operating them in the best way possible? And, probably the biggest problem of all facing real estate investors, are you accounting for your real estate correctly? If you don't do the accounting right, you're going to miss the tax write offs.
It's possible to take advantage of just one of these strategies, but realistically, you need to have all parts of the
Tax Loophole's Real Estate Tax Loopholes Package to take advantage of everything that makes up a strong real estate investment strategy.
- Diane Kennedy* Visit her website for more information.
Selling A Home In '06 Requires Careful Planning
If you do any property investing at all, this FREE newsletter published by the
Creative Investor is a must. There is a wealth of information about markets across the country as well as available properties from motivated sellers and hard money lenders for tough situations or people who have trouble getting financing.
This month is a featured article on how to sell your home in 2006 and the careful planning required to do it. It says:
"If you plan to sell your home in 2006, now is the time to get busy. This year is proving to be a far more difficult year than was record-setting 2005. Most communities are now in a 'buyer's market', with more homes listed for sale than there are qualified buyers actively in the marketplace.
"The nationwide volume of home sales is down slightly, but median prices are holding steady, according to recent reports from the National Association of Realtors.
"HOW TO GET YOUR HOME SOLD IN 2006. There is still plenty of time to sell your home this year. But careful planning is required.
"The first step is to be a 'motivated seller' who really wants to sell. With a glut of homes now listed for sale in most price ranges, this is not a good time to 'test the market'. If you are not a serious home seller who will be realistic about your home's asking price, don't waste your time in today's difficult market...
Read More"
- The Creative Investor
Finally a San Francisco Chronicle real estate article we can agree with... sort of!
Sunday, September 17, the
San Francisco Chronicle contained an article that, after weaving its way through the fact that we are in a slowing real estate market (that is, a more normal market), staff writer, Carol Lloyd, wraps up the article by saying, that instead of doing expensive remodels, it is more helpful to stage the home instead. We have long been proponents of staging for all our properties in any market.
The article went on to make the point that people want to do their own upgrades in styles that suit their tastes, therefore, instead of spending tons of money to remodel, stage the home instead. These properties show better and are more likely to sell first.
Read the entire article
here.
- Mick Orton
Fast Facts from CAR and Freddie Mac - August 2006
Compared to last month's figures, this report show sales doing a little better and mortgage rates are down again. Here are the numbers.
- Mick OrtonCalif. median home price - August 06: $576,360 (Source: C.A.R.)
(note: compared to $567,360 last month)
Calif. highest median home price by C.A.R. region August 06:Santa Barbara So. Coast $1,190,000 (Source: C.A.R.)
(note: compared to $1,075,000 last month)
Calif. lowest median home price by C.A.R. region August 06:High Desert $332,900 (Source: C.A.R.)
(note: compared to $333,330 last month)
Calif. First-time Buyer Affordability Index - Second Quarter 06:23 percent (Source: C.A.R.)
Mortgage rates - week ending 9/21:
- 30-yr. fixed: 6.4%; Fees/points: 0.5%
(note: compared to 6.48% last report and points are 0.1% higher) - 15-yr. fixed: 6.06%; Fees/points: 0.5%
(note: compared to 6.18% last report and points are 0.1% higher) - 1-yr. adjustable: 5.54%; Fees/points: 0.8%
(note: compared to 5.60% last report and points are 0.1% higher)
- California Association of Realtors & Freddie Mac
Mortgage Weekly Update - Last Week in Review
Foster Weeks does a
weekly mortgage update.
===================================
"...And now while a nice orderly slowdown that feels like a cool breeze is what the Fed desired with their string of seventeen rate hikes, concerns are now mounting about the severity of the slowdown. The Fed has had a history of always going too far, not being patient enough and sending the economy into recession. It will be interesting to see how things play out going forward, and next weeks reports will be especially important...
read on..."
- Foster Weeks
Do economists REALLY know what is going on?
The following is an editorial.
If you enjoy getting frequent market updates, go to
MarketWatch from Dow Jones and sign up for their free e-mail newsletter update. You will get anywhere from 2-3 updates a morning about everything from interest rate updates to housing reports. The reports can be very informative or confusing or even crazy making, depending on how you read them!
My question is this; how often are these economists really right? Their track record is never given as to how often they are right in their predictions. For example, this morning 's report was
"U.S. NEW-HOME SALES SHOW UNEXPECTED AUGUST PICKUP".
Unexpected is the key word here. Google information on housing reports and you will see that everyone recently has been banking on a bursting housing market bubble. Another report I got today was "
U.S. durable-goods orders unexpectedly fall 0.5%". Another
unexpectedly! So whose expectations were these, theirs or ours?
My point is that the economy is so big and complex that nobody can really predict with any accuracy what is going to go on. And this seems to be what news has become; not what happened and when it happened, but rather
predicting what is going to happen! It appears to be the new phenomenon. Take a look at news headlines and you will see that this often is the case anymore.
As Donald Trump points out, lots of people are out there telling you how to make money in real estate, but how many of them are actually doing it? He makes a good point. Many of these people make their money selling books and tapes or giving lectures telling other people how to make money buying and selling real estate, but how many of them have really done it??? The same question should be put to the experts. Let's see their credentials BEFORE they are allowed to tell us what is or is not going to happen!
Has life become so uncertain that we need to have someone look at their crystal ball and tell us what the future will bring before we get out of bed in the morning???
Look at our past posts and you will see that we are bullish on real estate for long term investment and building wealth. These up and down changes are just market fluctuations that happen all the time. If we knew what caused them with any certainty then we would probably be consultants to the
Wall Street Journal or some other publication and do better than the so-called "experts" they quote in their columns. In fact, moisten a finger and put it in the air yourself to make a prediction... you'll probably do better than these guys!
In closing, make your own reality. Be positive about our economy and invest for your future. Stick to the basics, watch the people who are making money and do what they do. Chances are you will make out just fine.
- Mick Orton
Private Annuity Trusts may provide enormous financial benefits - Part 2
This article is provided by our friends at
Quantum Advisors.
- Mick OrtonAs your real estate experts, we are very in tune with the concerns, problems, and issues that real estate owners face in today’s real estate market. One of these concerns is that the market has been very good to them, but now they need to find an efficient way to capitalize on their gains. Many owners/investors, CPA’s, attorneys, financial advisors, and real estate professionals are quick to say:
- “I’d like to sell my property but I don’t want to pay taxes.”
- “I’d like to get rid of the management responsibilities of my property but I don’t want to pay taxes.”
- “I can’t find a good property to 1031 exchange into, and I don’t want to pay taxes on an outright sale.”
- “I’d like to diversify my wealth into other investments, but I don’t want to pay taxes.”
- “I’d like to get more income from my assets but I don’t want to pay taxes.”
- “I’m nervous about meeting all of the strict requirements of a 1031 exchange to avoid taxes."
- “I’d like to plan my estate properly and I don’t want to pay estate taxes."
- “If I do a 1031 exchange, my new property will have the same very low basis.”
- “I was never told I would have to “recapture” the depreciation I deducted in all past years.”
- “I really want to sell my business but I don’t want to pay too much in taxes.”
- “I would like to protect my assets from creditors and lawsuits.”
- “I’d like to give money to charity, but I want my assets to pass to my children.”
- “I’d like to eliminate the liability of owning property but I don’t want to pay taxes.”
- “The Solution: Creative Strategies To Eliminate Current Taxation – And Help You Reach Your Financial Goals!
If you could “create” your own strategy to minimize taxation on your assets, especially real estate, you’d probably try to include these provisions in your plan:
- Ability to avoid current taxation on the sale of your property.
- No limit to the amount of current taxable gain you can avoid.
- No limit to the amount of depreciation recapture you can avoid.
- No requirement to immediately reinvest back into property.
- No requirement to reinvest in equal value property.
- Ability to receive needed income from your assets, when you need it, on a tax-advantaged basis.
- Ability to defer the income from your assets until you actually need the income.
- Ability to diversify your assets to minimize risk.
- Increase your basis on new properties to reduce future taxable gain, increase depreciation deductions.
- Ability to protect your assets against creditors and lawsuit judgments.
- Ability to pass on any amount of assets to your heir’s estate tax free.
- Access to funds for emergencies and opportunities.
- Deduct suspended carryover losses upon sale of the property while all current taxation is avoided.
- Ability to sell property without increasing the asking price to cover taxes that will have to be paid.
A Private Annuity Trust, properly implemented, will let you achieve all these objectives!
The power of the Private Annuity Trust is that it is a very conservative tax strategy that will help you defer the taxes you have to pay on sales of your appreciated assets, over your lifetime.
The choice is yours:
You can pay the taxes you owe immediately.
-OR-
You can pay the taxes you owe over a lifetime – it’s like a 0% interest loan from the IRS!
The Private Annuity Trust structure allows you to pay tax on your real estate gains over your entire lifetime. It is very important to remember that you are avoiding current taxable gains by deferring the payment on the entire gain over your lifetime! Unlike other tax deferral strategies, like 1031 exchanges, a Private Annuity Trust can be used with primary residence sales. Our next issue will detail the taxes saved, and the lifetime income created in a residential sale example.
For more information, or for a FREE, 10 page Tax Savings Analysis on your property, contact Gary Katz at QFN – 800-224-1053 – or email
Gary@QAplan.com.
~~~~~~~~~~~~~~~~~~`
QFN is a full service financial advisory practice in Sacramento, CA that helps business owners, real estate owners, professionals, high net worth families, and individuals planning for success create, protect, manage, and distribute their wealth. Our comprehensive asset protection strategies help clients retain more of their resources, to better build their financial security, and insulate them from potential liability. Our comprehensive wealth building planning strategies help clients increase their opportunities for financial success, and make sure that all assets are used to maximum advantage, for today, and for future generations.
www.QAPlan.com- Betsy Hartwell - Quantum Advisors
*This is the second in a series of articles - to be continued...Part 1 may be read
here.
U.S. existing-home sales prices fall for first time in 11 years
This weekend's news was all about lagging housing sales.
MarketWatch is reporting, "U.S. existing-home sales prices fall for first time in 11 years." It was also on the radio this morning as well as the Sunday evening news yesterday! So it must be true.
We went back and put together statistics for each month for all the years we had on file and are currently collecting data that we do not have for as many years as we can. The San Francisco
MLS only has statistics going back to 2000 or so when the system was switched over. Historical information earlier than that is not available at this time.
What we found was that the
San Francisco real estate market slowdown really became apparent in
January of 2006. As for the assertion from the media making comparisons to August reaching an 11 year low... this is typically a vacation time and is slow EVERY year at this time. Look at the numbers. Here are our monthly comparisons:
- January
- February
- March
- April
- May
- June
- July
- August
- September
- October
- November
- December
As you can see from the numbers we, indeed, have been off. However, let's see what September statistics report since the Fed has frozen rate hikes for the moment. What we are seeing in the marketplace is very encouraging!
- Mick Orton
San Francisco Real Estate Market Update for 9/11 - 9/17/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report: "The fall market is still hibernating although the bears are starting to rustle. Open house activity continues to be active in most markets particularly with homes that are being held open for the first time i.e. the 50 groups through a new Albany listing and the 35 groups through an El Cerrito new listing. Listing inventories are rising once more.
"Fewer multiple offers were reported this week, although some markets continue to be strong with multiples----Palo Alto (60%), San Francisco (avg. 40%), San Mateo (45%) and Los Altos (60%). It is the same story that homes priced well and prepared extraordinarily sell quickly---a $3 mil. listing in Marin had 8 offers, a Danville listing for $1.879 mil. received 8 offers and a Berkeley listing at $1.295 had 7 offers and went well over. Those priced over market and not prepared are sitting.
"Price reductions abound as sellers are seeking price points that buyers are willing to pay. Buyers are cautious and have some resistance to moving too quickly. The continual negative press doesn’t help. There does seem to be more buzz in the air. The feeling is as sellers become more realistic and buyers begin to see inventory moving the market should kick up a notch. Lower interest rates could be a stimulus. There is no guarantee these rates will stay at current levels.
"Here are the numbers for the week: 12 offices reported increasing inventories, 15 steady and 4 decreasing---5 offices showed sales increasing, 17 steady and 9 decreasing."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
Interesting San Francisco real estate Blog
Recently we became aware of
SocketSite, a San Francisco real estate blog. The topic this morning was
"deceptive practices of Realtors". It was put forth that instead of reducing the prices on listings, agents are pulling the property from the MLS and relisting it at the reduced price leading people to believe that the home sold for over the asking price, when in reality it may have sold for less than the original listing price.
Of course, I had to put in our two cents worth by commenting the following:
"What people here are saying here has some truth... from the BUYERS point of view. However, having worked with a Realtor, I see the other side, the SELLER'S side, more clearly.
"Imagine you're trying to sell your property now after witnessing a frenetic market like we had a couple of years ago. You want the best price and expect it. Your Realtor suggests you put it on at $1,995,000. You insist that it is worth $2,500,000. It sits on the market for 3 months before reality sets in and the price is reduced to $1,995,000 which generates multiple offers and goes over the reduced listing price.
"If the price is only reduced in MLS, it creates the impression that there is something wrong with the property. (What problems made them lower the price $500,000?) And even with the new price, the listing becomes stale. Many Realtors may not see it again, or forget about this listing which is not serving the best interest of the SELLERS.
"Finally, don't forget, if the property had been withdrawn and placed with another broker, it would have shown up as a new listing anyway at the reduced price."
The bottom line here is that statistics may lie, or at least not tell the "whole" truth. When responding to a request for a CMA (comparative market analysis), the Realtor will bring a list of sold homes that compare to yours in order to suggest a listing price that is realistic in that day's market.
It is our practice (and most Realtors in the City will agree) that we NEVER tell the prospective seller that the house will go a certain percentage OVER the listing price! The statistics from the MLS are just that... statistics and should not be counted on.
We'd love to hear your comments.
- Mick Orton
Focus on San Francisco Neighborhoods - Russian Hill
Russian Hill as described on the
SFResidence neighborhood guide:
Russian Hill Homes with an eclectic assortment of 19th century Italianate facades, apartments, condos and single-family residences to structures designed by famous architects such as Willis Polk share this arena. Also, Vallejo Street Crest District w/ its National Register of Historic Places site to the infamous "crookedest street in the world" Lombard Street are all used as settings of countless books and films. Several lovely parks, plenty of good restaurants, and shopping on Polk and Hyde streets make this a highly sought after urban and centrally located area to live or rent.
The
San Francisco Chronicle says:
"Russian Hill, a residential neighborhood with pockets of restaurants and shops, feels a bit more visitor-friendly than its more formal neighbor, Nob Hill. The views are also just as dazzling.
"The neighborhood got its name when gold rushers found seven Cyrillic-inscribed gravestones at the top of the hill. Consensus on the identity of the Russian men buried there -- they were reputed to be anything from sailors to fur trappers -- was never reached, the gravestones disappeared in the late 1800s and the Russian influence has long since dissipated."
Read the rest of the article
here.
Other highlights on this page include:
- Sights & Culture
- Shopping
- Restaurants
- Nightlife
- San Francisco ChronicleFor more information on other neighborhoods and street maps visit our
website.
- Mick Orton
Previous Neighborhoods:Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
Short rentals - Corporate housing is big in San Francisco
The
San Francisco Chronicle reported last Sunday that the latest thing in City rentals is corporate housing. This might also be a way around the rent control issue for San Francisco landlords and create way to get positive cash flow by renting to corporations. It provides an alternative to vacation rentals which are seasonal.
According to the article, there are management firms that specialize in this type of rental who work with corporations and home owners to secure temporary housing for workers who are brought in for varying reasons. Their commission is high, about 30%, but might be a great alternative to long term rentals.
Landlords might want to check into this rental option.
- Mick Orton
Good news for consumers - Fed to hold interest rate hikes for now!
Market Watch reports:
The Federal Open Market Committee will hold rates steady at its policy meeting on Wednesday, taking a "wait-and-see approach" amid hints that the economy is downshifting and inflation pressures abating, economists say.
"This seems like a good time to stay on hold because there really is a lot of uncertainty now," said Robert Dederick, a former Commerce Department economist and the president of RGD Economics.
"We've reached that stage in the cycle where things could go a number of ways. The wisest thing would seem to stay there and look around," Dederick said.
The FOMC stopped hiking interest rates in August after 17 consecutive rate hikes raised its key target Fed funds interest rate from 1% up to 5.25%.
Read the entire article
here.
Realtors expect home prices to fall
A recent article in
Market Watch, a newsletter published by Dow Jones, it was reported that the NAR (National Association of Realtors) is saying that home prices will probably fall temporarily as the market corrects, but predicts that prices will bounce higher again in a few months. This is contrary to what Forbes and Templeton forecast for the real estate market, both sources predicting a gloom and doom scenario.
In
San Francisco, we are seeing a lot of activity in the fall market and prices continue to hold steady, particularly in the higher end homes. However, it is taking longer to sell properties and has shifted to a buyers market. As listings sit on the shelf longer, it makes it easier for them to negotiate. There are still multiple offer situations, but today that is the exception rather than the rule.
- Mick Orton
San Francisco Garage Construction "Moratorium" a False Alarm, at Least for Now
The
San Francisco Association of Realtors overreacted somewhat when they reported
previously that the City was considering a moratorium on garage additions to existing buildings. Here's what was reported today.
"Reports that the Planning Commission was planning to impose a moratorium on the issuance of all permits to add a new garage to an existing residential structure, reported in last week's REALTOR® Advantage Online, proved to be somewhat exaggerated. Here's the story:
During the public comment portion of a recent Planning Commission meeting, questions were raised regarding the standards the department uses in reviewing permit applications for the construction of new garages in existing structures, both in structures identified as potential historic resources and structures not so identified. Concern was expressed that permit applications for new garages were typically being approved over-the-counter by the planning staff when a more thoroughgoing review was appropriate.
"As a result of these concerns, two Draft Zoning Administrator Bulletins have been prepared. If and when these bulletins are issued, they will formalize the review process for new garages in existing structures—historic and otherwise. In the coming weeks, the draft bulletins will be the subject of discussion at future meetings of the Planning Commission.
"For the present, there is an unofficial policy in effect which will allow permit applications for garages in building 50 years old or less to be approved over-the-counter. Garages in older buildings will require a more thorough review."
- San Francisco Association of Realtors
Mortgage Weekly Update - Last Week in Review - Mortgage Market Guide - Will the Fed raise rates again?
According to Mortgage Specialist,
Foster Weeks, the Fed may raise rates again on fears of inflation. Ideally the target rate of inflation is between 1-2%, however, a week ago last Friday they reported inflation was at 2.8%; higher than the Fed wants. This could indicate that we are in for more interest rate hikes. Even so, rates are still relatively low, historically speaking.
Read the entire article
here.
- Mick Orton
Private Annuity Trusts may provide enormous financial benefits - Part 1
Over the next several weeks, we’ll be investigating a powerful seller’s resource, and highlighting one of our resources, a national leader in helping owners and investors maximize the profits from their real estate. A
Private Annuity Trust is a type of special sale that allows you to pay capital gains taxes over many years rather than immediately at the time of sale.
If you own highly appreciated real estate, we know that you may be reluctant to sell because of the large tax bill you think you’ll face. This hesitancy may be especially true if you own investment real estate, because you may have to pay both capital gain taxes and depreciation recapture taxes associated with the sale. We know that the thought of selling real estate, and paying 20%, or even 30% of the sale price in taxes to the government has stopped many real estate investors from selling their properties.
We think there may be a solution you’d like to investigate:
The Private Annuity Trust.
Benefits include:
- Lifetime deferral of current capital gains taxes
- A lifetime income from the trust, starting when you decide you need it to
- Flexibility in how the trust is invested
- Asset protection from lawsuits and creditors
- The ability to borrow from the trust
- The assets pass to your beneficiaries, estate and gift tax free
Private Annuity Trusts may provide potentially enormous financial benefits for tax-conscious real estate and other highly appreciated asset owners who are, or would like to be, considering selling. By transferring the property assets into a Private Annuity Trust prior to the sale, the owner can defer all taxation, and create a lifetime income stream.
For more information, or for a FREE, 10 page Tax Savings Analysis on your property, contact Gary Katz at QFN – 800-224-1053 – or email Gary@QAplan.com.
- Betsy Hartwell - Quantum Advisors
*This is the first in a series of articles - to be continued...
San Francisco Real Estate Market Update for 9/4 - 9/10/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report: "The housing market is still in holiday siesta mode. Listing inventory increased as sellers begin to put their homes on the market for the fall. The buyers are out there as evidenced by their attendance at open homes. First time open houses attract the majority of buyers looking for the “right home” (meaning priced well and in perfect shape). A new Berkeley listing under $700.000 was visited by 42 groups of buyers.
"The media still continues to hammer the housing market---trying to look for every negative shred of evidence that the housing market has tanked. In spite of their efforts—many smart buyers know this is an excellent time to buy---more choice, a break in interest rates as they continue to come done and a environment conducive to negotiations. Still 30 % of our offices received multiple offers—20% at the 30% plus level. Down a bit from previous weeks, but still indicating good homes go quickly. With that said, there are still a majority of sellers who have not adjusted to the new reality---homes are not going up with double digit appreciation. Homes in today’s market are either flat from last year or slightly lower (10% or less). Sellers need to remember that prices went up 50% plus from 2003-2005. A small reduction from the highs of last year still leaves outstanding returns, as real estate is a leveraged investment. The gains are substantial and well beyond any other asset class.
"We are seeing an increase among buyers wanting to renegotiate offers during the escrow period, especially after inspections. This is why it is important for sellers to have pre-sale reports so that buyers can make offers based on the condition of the home. This can prevent unnecessary fall out. Sellers should also take care of any deferred maintenance which also helps prevent reasons for renegotiation.
"Believe it or not aggressively priced properties are attracting buyers in droves. A Parkside listing in San Francisco received 42 offers---sounds like 2005. What it means is that buyers are ready to leap when they see an outstanding value. Some buyers have a challenging time of it understanding that properties can receive multiple offers---they believe everything they read in the media about the bubble bursting. This is not the case in markets that have smaller inventories----like the buyer who lost in a multiple offer presentation in Burlingame found out the hard way.. He couldn’t understand why his offer was outbid. The reason is that the SF/Bay Area is a highly attractive place to live and certain areas, no matter what is happening in the general market, their desirability increases value of properties in spite of the transitional market.
"Here are the numbers for the week: 12 offices saw increasing inventories, 13 steady and 6 decreasing----4 offices reported increasing sales activity, 19 steady and 8 decreasing."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
Focus on San Francisco Neighborhoods - Nob Hill
Nob Hill as described on the
SFResidence neighborhood guide:
Nob Hill was the spot on which all the Big Four railroad magnates ( Charles Crocker, Mark Hopkins, Leland Stanford and Collis Huntington) lost their palatial mansions to the infamous fire of 1906. What you will find now on Nob Hill are luxury hotels such as Fairmont, Mark Hopkins, Stanford Court and the Huntington. A few elegant mansions, expensive highrises with crisply dressed doormen, a few homes or buildings by Julia Morgan ( William R. Hearst hired this young lady, first woman to ever graduate from the famous Ecole de Beaux Arts in Paris who orchestrated the building of Hearst Castle in San Semeon). Sharing this world famous square is the Masonic Auditorium, Grace Cathedral, and the Huntington Park which provides a playground for the nannies of the wealthy to the annual Junior League Open Market. The historic cable car barn pulling all the cable cars by massive drums with standing-room -only loads of tourists and locals up and down the hills from Union Square to Aquatic Park. No hill in San Francisco can boast of more history than Nob Hill!.
The
San Francisco Chronicle says:
"Nob Hill is one of San Francisco's signature neighborhoods, renowned for its city landmarks and the famous hotels that border Huntington Park. For those who explore further, it also reveals unexpected facets. In addition to its swanky character, the area is influenced by the diverse personalities of the downtown neighborhoods that surround it, making it an intriguing place to visit.
"The area's reputation of privilege dates back to Gold Rush times, when cable car lines made the hilltop accessible and the railroad barons and bonanza kings built their mansions there, far above the rowdiness of the bawdy waterfront. Luxury hotels now stand in the place of those original palaces, and when you hike to the top of the hill, historic buildings such as the Fairmont Hotel and the Flood Mansion are undeniably impressive, as are the lush cascades of bougainvillea and the genteel apartment buildings with their wedding-cake facades."
Read the rest of the article
here.
Other highlights on this page include:
- Sights & Culture
- Shopping
- Restaurants
- Nightlife
- San Francisco ChronicleFor more information on other neighborhoods and street maps visit our
website.
- Mick OrtonPrevious Neighborhoods:Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
Focus on San Francisco Neighborhoods - Sacramento Street
Sacramento Street as described on the
SFResidence neighborhood guide:
"Seeking refinement? Wind your way west on Sacramento Street, from Broderick to Spruce. This quiet residential neighborhood, on the cusp between Pacific Heights and Presidio Heights, is a home decorator's wonderland. Start small, with Deruta pitchers, cashmere throws and perfumed Florentine soaps, then work your way into the Sacramento Street Antiques District for Turkish rugs, 18th-century English armoires, and 19th-century French pastry tables. From American Shaker to African beadwork, it's all here. Even the hardware stores are tastefully stocked with giant willow baskets and chenille rugs. When you tire of shopping for your home, you can indulge yourself with a pair of red Prada bowling shoes, Vivienne Westwood glasses, or Jimmy Choo slides. And if you feel a little overwhelmed after dropping $1,000 on a fur-trimmed Yohji Yamamoto bag, you can unwind over at the Biofeedback Institute Stress Management Center."
- StyleMavenFor more information on other neighborhoods and street maps visit our
website.
- Mick OrtonPrevious Neighborhoods:Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
Mills Act keeps property taxes low for historical buildings in San Francisco
We thought you might be interested to know about the Mills Act. It is a program that could help you lower property taxes if your home becomes designated as a historical site. Of course, there are always drawbacks. Once designated, you may have limitations on what you and the people you sell to can do with the property with regards to remodels later on. But the property tax savings can be significant. Here's what the Office of Historic Preservation says:
===================================
The Purpose of the Mills Act ProgramEconomic incentives foster the preservation of residential neighborhoods and the revitalization of downtown commercial districts. The Mills Act is the single most important economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners.
Enacted in 1972, the Mills Act legislation grants participating local governments (cities and counties) the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief."
Read more
here.
- Mick Orton
Realtors Blame Sellers for Housing Woes
This article is a week old from NewMax. There is some truth in what is being said here, though it only applies to some of the more stubborn sellers. After the long run up of real estate in the San Francisco market, people have become accustomed to multiple offers over the asking price. We are still seeing some multiple offers in our office on a few very select properties, but nothing like in the past. Here is what the article says.
- Mick Orton===================================
Realtors Blame Sellers for Housing Woes9/8/06 - Realtors pointed their collective finger at home sellers for the slumping housing market. They say that sellers are refusing to cut prices to attract prospective buyers. As a result, the National Association of Realtors dropped its sales forecast for the year.
"Sellers are more stubborn than I expected," said David Lereah, the NAR's chief economist. "For five years in a row, it was a seller's market. They were calling all the shots, and they got accustomed to it."
The NAR now says sales of existing homes will fall 7.6 percent this year. That’s much worse than the 4.4 percent drop it called for in January. Sales of new homes will plunge 16 percent, predicts the NAR. In January, the NAR said new home sales would fall 6 percent.
Because sellers are holding out, the NAR expects that prices will rise above last year’s highs. However, the NAR expects prices to start falling within months as sellers become more anxious. It points to the record 3.86 million homes on the market or a 7.3-month supply.
The national median existing-home price for all housing types is expected to grow 2.8 percent this year to $225,900, with the median new-home price rising only 0.2 percent to $241,400, says the NAR.
"Folks are still thinking they can get top dollar for their homes," says Tom Rath, an agent at Re/Max Premier in Ocala, Fla., to USA Today. "I don't think reality has set in."
Prices for new homes aren’t rising as much because builders are offering incentives to reduce inventory, according to the NAR. Yesterday, three builders acknowledged that they are giving away free upgrades such as granite counter tops, pools and vacations to lure buyers.
The NAR does say that home prices should level out after they correct. According to Lereah, "Home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms."
"Keep in mind that over time, home prices rise at the rate of inflation plus one-to-two percentage points - buyers in most of the country who plan to stay in their home for a normal period of homeownership can pretty well bank on those historic averages, but people who purchased last year with the intent of flipping are likely to get burned," he (concluded).
- NewsMax
Focus on San Francisco Neighborhoods - Golden Gate Park
Golden Gate Park as described on the
San Francisco Chronicle neighborhood guide:
"Though the Golden Gate Park has seen changes over the years, what remains today is a testament to the will of the city to preserve a place to play, relax and grow culturally. The new de Young museum is sure to bring a new wave of visitors, as the re-opening of the Conservatory of Flowers did in 2003. The music concourse is being improved and should open in early- to mid-2006, perhaps around the same time the Murphy Windmill returns from repairs in the Netherlands. The California Academy of Sciences is due to re-open in 2008. The old horse stables, closed in 2001, may be renovated starting in 2007. And a new, temporary disc golf course is being evaluated in late 2005 for long-term feasibility," says the
San Francisco Chronicle in their neighborhood guide.
Other highlights on this page include:
- Museums & Gardens
- Sports & Recreation
- Other Sights & Activities
- San Francisco Chronicle
For more information on other neighborhoods and street maps visit our website.
- Mick Orton
Previous Neighborhoods:
Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
San Francisco Planning Commission Considers Imposition of Moratorium on Garage Construction
The director of the Department of City Planning is scheduled to make an informational presentation to the City Planning Commission at its meeting on Thursday, September 14, 2006 at 1:30 p.m. in Room 400, City Hall, in which a segment of the REALTOR® community may be interested. The presentation will describe the Department's draft policy for review of new garages in existing structures. Interested REALTORS® are encouraged to attend this meeting and to pick up a copy of the draft policy which will not be available in advance of the meeting.
- San Francisco Association of RealtorsOur understanding is that this would halt construction of any more garages in existing buildings, something the City needs badly! If you are concerned, you should be at this meeting!
- Mick Orton
Interviewing a Realtor to sell your home
A reader asks:What are some questions I should ask when interviewing agents to sell my home?
Our reply:You want to know your agent's experience, strategy and resources to get the job done. Here are some sample questions to ask an agent:
- What is your "list to sell" ratio? This is the number of properties the agent sells that he/she takes on as a listing. You want a high percentage of sales.
- What experience do you have selling homes in my neighborhood? You want to know the quantity of properties sold, similarity to your home and how long ago was he/she working in your area.
- What would be your marketing plan to sell my home? You're looking for the advertising plan, Open House schedule, availability to conduct private showings, etc.
- What resources does your brokerage firm have to help you market and sell my home?
- Does the brokerage firm have easy to read signs for the front yard?
- Is there a sales meeting where the agent can market the property to other agents in their office?
- Does the agent have access to an e-mail list of top agents to send an announcement to?
Ask your agent to stay in close communication with you throughout the sale. Tell him or her how you like to receive information: e-mail, phone, in-person meetings. The best scenario includes a strong partnership between you and your listing agent.
- Kathleen Macdonald
San Francisco Real Estate Market Update for 8/28 - 9/3/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report: "The buyers are out there. Open houses overall showed impressive activity for the Labor Day weekend. In spite of this activity buyers are still taking their time in making offers. However, buyers do understand value and when they see the well priced and presented home they will move quickly.
"The good news is that 40% of our offices had multiple offers with 25% of the offices having multiple offer percentages of greater than 30%. Price reductions are generating offers, a few are even receiving multiple offers. We are no longer seeing prices on multiple offers going over asking price. In some cases these listings are going under list price.
"Sellers have become more realistic. An expression that is heard when the market changes is ”sellers tend to be 6 months behind the market and buyers are 6 months ahead of the market’. We are now at that point where sellers are now beginning to understand what they need to do the sell their homes. Experience is a good teacher as a seller found out in San Francisco. After 3 weeks on the market the seller received 2 offers. They decided to counter the offers over asking price. Both buyers declined. The listing agent tried to revive the offers, but was unsuccessful. If the seller had initially accepted one of the offers their house would have been in escrow.
"As stated in last week’s report inventories in the majority of counties are beginning to slowly decrease. This is due to increasing number of expired listings and fewer listings coming on the market. Seasonally, as fall approaches we normally experience a second wave of new listings hitting the market. So far we haven’t seen this surge.
"Seasonally we experience an increase in activity as both buyers and sellers return from vacations. Buyers would like to make their moves before the holiday season begins. It is important during this opportunistic period that sellers understand the need to price properly and invest in presenting their homes in the best light possible. That means taking care of any deferred maintenance, staging, and having reports done before going on the market. This will increase their chances of having a successful sale.
"Here are the numbers for the week: 6 offices reported increasing inventories, 18 steady and 5 declining---3 offices showed increasing sales activity, 21 steady and 5 decreasing."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
Tenant's rights in San Francisco
A reader asks:I am a tenant in a building for sale in San Francisco. What are some of my rights and am I entitled to notification of when the building has been sold? What happens to my lease when we have a new landlord?
Our reply:The
San Francisco Rent Board is very helpful and has a web site that can answer many of your questions. You may also check with the
Tenants Union and see what rights you have. Review your rental agreement you will also see what rights you have.
San Francisco may give you even more rights that your lease does so it is best to check with all three sources.
If you have a lease and your building is sold the new owner must honor all of the terms of your lease. If you are on a month to month agreement the new owner still must honor your agreement, but if the new owner wants to occupy your unit they may be able to give you notice to move.
It is very complicated in
San Francisco and tenants have a lot of rights. Sometimes an owner can buy a property and not be able to live in his property without invoking the "Ellis Act" which allows an owner to go out of the rental business.
- Janis Stone
Helpful San Francisco telephone numbers
Whether you are moving or just purchased a home in the City, these telephone numbers can be helpful in getting your services set up.
Pacific Gas & Electric Co .......... 1-800-743-5000
Comcast (cable) .......... 1-800-945-2288
ADT (alarm company) .......... 1-800-366-7534
Police Department .......... 911 (emergency) / 553-0123 (business)
Fire Department.......... 911 (emergency) / 861-8000 (business)
Ambulance .......... 911 / 431-2800
Poison Control Center .......... 1-800-502-3387
Community Crisis .......... 885-7290
Neighborhood Parking Permits .......... 554-5000
Illegal Parking .......... 553-0123
Tow Away/Retrieve Towed Cars .......... 553-1235
Street & Sewer Repair .......... 695-2100
Voter Registration .......... 554-4375
Rent Board (170 Fell, Room 116) .......... 252-4600
Street Lighting (out of order) .......... 554-0730
AT&T (phone service) .......... 800-310-2355
MUNI Information (public transportation) .......... 673-6864
Sunset Scavenger (garbage) .......... 330-1300
Golden Gate Disposal .......... 626-4000
San Francisco Water Department .......... 550-4911
San Francisco Water Department (turn on/off) .......... 923-2400
Chronicle (S.F. Newspaper Service) .......... 777-5700
Warman’s Security (for new keys, etc.) .......... 775-8513
- Courtesy of SFResidence
Psychological factors contribute to declining home sales
The housing market should continue leveling out in the coming months, according to NAR's (National Association of Realtors) most recent Pending Homes Sales Index (PHSI). In July, the PHSI stood at 105.6, down 7 percent from the previous month and down 16 percent from July 2005. The index gauges home sales activity for upcoming months based on the number of transactions that have signed contracts but are not yet closed. A PHSI of 100 or more generally indicates a high level of homes sales activity.
"We've never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy in growing and interest rates are favorable," said NAR Chief Economist David Lereah. "Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy. Contributing to this hesitancy is a lot of negative news stories, but in the end we believe that underlying market fundamentals will prevail."
The PHSI declined across the nation in July compared with the readings a year ago. On a regional basis, the PHSI was highest in the South, where it declined 11.3 percent to 122.3. In the West, the index fell 20.3 percent to 103.1. The PHSI also declined in the Midwest and Northeast regions, falling to 93.3 and 92.1, respectively.
More info- California Association of Realtors
MoneyNews contradicts its earlier position on real estate
Contrary to what was reported earlier, in its latest report MoneyNews reports, "U.S. home prices continued to rise in the second quarter but showed the biggest slowdown in three decades, federal regulators reported Tuesday."
This indicates that, although there is a slowdown, home prices are continuing to rise. Here is the whole report.
- Mick Orton===================================
Home Prices Slow SharplyU.S. home prices continued to rise in the second quarter but showed the biggest slowdown in three decades, federal regulators reported Tuesday.
The figures released by the Office of Federal Housing Enterprise Oversight, the agency that oversees the big mortgage-finance companies Fannie Mae and Freddie Mac, provided the latest indication that the housing market is cooling substantially.
Average home prices rose 1.17 percent in the April-June period, compared with 3.65 percent in the second quarter of 2005 - the biggest decline in price growth since OFHEO started keeping track of home prices in 1975, the new report showed.
The agency cited higher interest rates and rising inventories of homes for sale as possible factors in the slowdown in price growth.
"These data are a strong indication that the housing market is cooling in a very significant way," OFHEO Director James B. Lockhart said in a statement. "Indeed, the deceleration appears in almost every region of the country."
Data issued last month provided proof that the housing boom is over. The Commerce Department reported that sales of new homes dropped in July by 4.3 percent, the largest amount since February, while the inventory of unsold homes climbed to a record high. And sales of previously owned homes fell 4.1 percent in July to a 2 1/2-year low, according to the National Association of Realtors.
Sales of both new and existing homes set records for five consecutive years as the housing industry enjoyed a boom powered by the lowest mortgage rates in four decades. But rates have been steadily rising this year as the Federal Reserve tightens credit conditions as a way to slow the economy and keep inflation under control.
Analysts expect home sales to drop by some 10 percent this year.
Still, the OFHEO report noted, house prices grew faster from the second quarter of 2005 to the same period this year - by 10.06 percent - than did prices of other goods and services, which rose 4.41 percent.
The second-quarter figure is derived from an average of home prices in April, May and June. Prices in that April-June period were up 1.17 percent from the first quarter of the year -- the smallest rate of quarterly price growth since a 1.12 percent gain in the fourth quarter of 1999, OFHEO said.
- © 2006 Associated Press
Focus on San Francisco Neighborhoods - Lake Street
Lake Street as described on the
SFResidence neighborhoods page:
The Lake Street neighborhood offers Edwardian-style single-family homes, flats and apartments with easy, yes! We said easy, parking. Presidio Golf Course, tennis courts, children's playgrounds of Mountain Lake Park are all minutes away; while an abundance of shopping and dining options are near by on California, and Clement St. which is dominated by Asian markets and restaurants.
For more information on other neighborhoods and street maps visit our
website.
- Mick OrtonPrevious Neighborhoods: Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
San Francisco Rent Control
A reader asks:Do all apartment buildings and rentals in San Francisco have rent control?
Our reply:All apartment buildings, units, condos, TICs, cooperatives, houses built before June of 1979 are governed by rent control. However, there are some exceptions (check the
San Francisco Tenants Union website). Because of the
Costa Hawkins Act owners of single family homes and some condos can increase rents as long as the required 30 days (and sometimes 60 days) notice is given.
Current rent increases are limited to 1.7% under the law. And landlords are required to pay interest (currently 3.7%) on security deposits.
In San Francisco, because most buildings are older, you will find that the majority of properties fall within the jurisdiction of the rent control law. If you have a question about a certain building you can always call the rent board or check their
website for free information. If you have checked and still are not sure call an attorney that specializes in San Francisco rent control law.
- Janis Stone
Graffiti on San Francisco Real Estate
A reader asks:
Who do I contact to take care of some graffiti on my building?
Our reply:If it is a rental building you can contact your management company or landlord (where you send your rent) and see if they are aware that there has been graffiti put on the building. Then they may be able to wash it off (if they are lucky!) or repaint the area with the same color paint.
If it is a condo you can contact the HOA (homeowner's association) and ask that it be removed.
It would be a good idea to do it as soon as you notice it so that other vandals don't tag the property even more.
- Janis Stone
San Francisco Real Estate Market Update for 8/21 - 8/27/06
Avram Goldman, President and COO of Coldwell Banker, San Francisco Bay Area said in his latest weekly report: "Now that we are through two-thirds of the year what does the market look like? Let’s start with a few trends. For the first time this year four counties experienced declining inventories on a month over month basis---Sonoma, Marin, San Francisco and San Mateo. For San Mateo county it was the second month in a row. For the others it was the first time since the end of last year that inventories did not grow. Inventories for the remaining counties grew at a much slower rate than previous months-----most growing at less than 3%. Only Contra Costa was above that at 5%. Inventories are still up over last year anywhere from a low of 20% in San Mateo to 70% in Solano County-----Marin 23%, SF 40%, Santa Clara 40%, Sonoma 47%, Contra Costa 47%, Monterey Peninsula 56%, Napa 57% and Alameda 69%. Please keep in mind that last years’ inventories were historically low.
"You would think with inventories up prices would go in the other direction. However this is not the case. In actuality median prices in four counties were up, 3 flat and only 2 down comparing closed sales median price August 2006 vs. 2005. Marin county led up by + 7.5%, Monterey Peninsula + 6.8%, Napa +5%, Santa Clara +3%, Contra Costa +2.5%, Alameda flat, SF flat, Solano flat, San Mateo -4%, Sonoma -5%. Keep in mind this is August compared with August and that this is the entire market including both single family homes and condos. What this reflects is that the properties that are priced most competitively and that are presented most attractively are selling and those that aren’t are staying on the market for a number of months. Over the last two months expired listings have increased significantly.
"We are still experiencing a good number of multiples on the SF Peninsula. Open sales were only down 5% in SF and 14% down in San Mateo counties August 2005 vs August 2006. As one buyer said to a manager in San Francisco after losing out in a multiple offer situation “I thought those days were over”. They are over in many markets, but not in all as a fixer in San Francisco went with 9 offers. I believe what these numbers reflect is that the best properties in terms of price and condition (excluding fixer properties that are priced well under market reflecting their condition) sell expeditiously. Today we are seeing many more price reductions. Sellers have realized that prices are not continuing to go up at high double digit rates, although they certainly are not taking large declines either. They have just stabilized at last years’ levels or adjusting downward giving back a small amount of the massive gains over the last three years.
"Open house activity for the most part is still active, particularly with first time opens. There is a whole new crop of buyers entering the house hunting search as interest rates continue to decline. We are expecting a number of attractive new listings coming on after Labor Day. The Fall selling season is about to begin. Many of the buyers will be looking to be in their homes by the holidays. Seasonally we expect sales to increase from July and August numbers. I believe many sellers are now in tune with a more normal market and have a better understanding of today’s market conditions. On the other hand buyers realize good properties do not remain on the market long. This combined with decreasing interest rates and declining inventories will give buyers reason to move more quickly, especially in the most desirous areas and price ranges. In those markets with larger inventory supplies it will take some time before there is a sense of urgency.
"Here are the numbers for the week of August 21-27: 3 offices reported increasing inventories, 14 steady and 11 decreasing----19 offices experienced steady sales and 9 saw decreasing sales."
- Avram Goldman* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with "weekly market report" in the subject line.
Housing 'Freefall' Worse Than Dot-Com Crash?
Here is the latest "scare" report from
NewsMax.com. As you will see they are trying to compare what is happening in the housing market to what happened in the dot-com crash of 2001. How much more irresponsible can that be? First of all they are comparing apples to oranges. The dot-com craze was fueled from excessive optimism of people trying to capitalize on what was a new market; the Internet. Nobody knew (or refused to believe) that traditional market values applied to cyber-offerings too, that is, a company is a going concern and has to make money to stay in business!
What people ended up doing was speculating on the possibility that the next newest and greatest technology offering would make them rich by the buying and selling of the stock itself instead of the tradition way that money was made in the stock market; the dividends paid out by successful companies. To simplify, the stocks themselves became the product of the company, not the product of doing what they were in business to do.
Real estate is a whole different ball game because it is just that; REAL! Though the term came from Latin for royal, you get my point. When the housing market takes a hit, just hold on. How many times have prices come down over the long term? And if they do fall, you still have the property not a worthless piece of paper saying you own a percentage of XYZ company!
With that said, here is the article.
- Mick Orton===================================
Housing ‘Freefall’ Worse Than Dot-Com Crash?The number of unsold homes in America is at a 10-year high, and some analysts fear that the current slowdown in the housing market could cause more damage than the dot-com bust of 2001.
Canada’s Globe and Mail cites David Rosenberg, Merrill Lynch’s North American economist: "[Rosenberg] has fretted about a housing bubble for at least two years. He of course has been wrong. Prices kept rising.
"Now he looks more right than wrong and he's steadfast in his convictions. He talks about ‘the recession under way in the housing sector.’ Note the lack of ‘potential’ or ‘possible’ ahead of the R word," the paper says.
"Houses are the biggest store of North American wealth. If even a small fraction disappears, watch out. With cruel glee, Mr. Rosenberg points out that there have been 10 U.S. housing downturns in the past 50 years and seven of them triggered a ‘full-blown recession within 24 months.’ "
The UK’s Guardian reports that according to official figures, the number of new homes sold in July was 22% lower than at the same point a year earlier, and prices were nearly flat - all of which is leading experts to predict that what is now a housing slowdown will devolve into a total crash.
"Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it's the right one to use here," Paul Ashworth, chief U.S. economist at Capital Economics, told the Guardian.
Ashworth claims that since 2001, some 30% of all jobs created in the U.S. have been linked to housing - anything from work on construction to employment at a store like Home Depot. The paper says a housing decline could see businesses cut some 73,000 jobs a month in 2007.
Morgan Stanley’s chief economist Stephen Roach believes that the housing slowdown - which is cutting into construction spending and robbing homeowners of ready cash from their properties - will slice about two percentage points off 2007 GDP growth, taking the United States close to recession.
The Guardian quotes Roach: "For a wealth-dependent U.S. economy, the bursting of another major asset bubble is likely to be a very big deal," he said, warning that, with U.S. fiscal and trade imbalances now larger than five years ago, the fallout for the rest of the world could be more devastating than the aftermath of the dotcom boom.
" ‘A bursting of the property bubble poses equally serious risks for America's key trading partners and for the rest of an increasingly integrated global economy,' he added."
- MoneyNews from NewsMax.com
September San Francisco Real Estate Market Update for August 2006
The number of Single Family Homes sold for August held steady from July in the San Francisco Real Estate Market and average selling prices were only off slightly. The average selling price was over 102% of the average listing price even though the average selling price was down from July. However, compared to a year ago, the average selling prices of homes sold were up about 4%.
The number of Condominiums sold in August jumped up by almost 28% over the previous month in the San Francisco Real Estate Market. And the average selling price was slightly over 100% of the average listing price. The average selling prices dipped slightly from July and were down significantly compared to a year ago.
The number of homes sold in the Overall Sales category for August in San Francisco Real Estate was up from July, and the average selling price was still over 101% of the average listing price. However average selling prices dropped from the previous month. Compared to a year ago, August numbers were down this year as were average selling prices.
See the numbers on our
website.
- Mick Orton
Focus on San Francisco Neighborhoods - Laurel Heights
Laurel Heights as described on the
SFResidence neighborhoods page:
The Laurel Heights area offers some of the largest homes in the city w/ a mix of upscale apartment buildings. Blessed with two very popular shopping areas, Laural Hts. Village as well as Sacramento St. one can find state of the art supermarkets, banks, one of the oldest coffee shops in San Francisco, second-hand shops, antiques store after store, small boutiques all within these two areas which run parallel to one another; and, of course a Starbucks.
Wikipedia says:
"Laurel Heights is a neighborhood to the south of the
Presidio and east of the
Richmond District. It is bordered by
Geary Boulevard or the
University of San Francisco campus to the south, Arguello Boulevard to the west, California Street to the north and Presidio Avenue to the east. The Laurel Village shopping center is located on California between Laurel and Spruce, the
California Pacific Medical Center is on California between Arguello and Maple, and a
UCSF campus is located in the north eastern corner of the neighborhood."
- Wikipedia
For more information on other neighborhoods and street maps visit our
website.
- Mick OrtonPrevious Neighborhoods:
Castro - Cow Hollow - Diamond Heights - Golden Gate Park - Lake Street - Laurel Heights - The Marina - Nob Hill - Noe Valley - Outer Richmond - Pacific Heights - Russian Hill - Sacramento Street - St. Francis Wood - Sea Cliff - Telegraph Hill
