Monday, March 23, 2009
Get outta town ! Resort homes offer value and a respite from The City amid recession.
Growing up middle-class in Connecticut, I never thought it unusual that my maternal grandparents had a second home on a lake in New Hampshire (what we Yankees call a 'camp') and my paternal grandparents had a ski house in Vermont. Most weekends year round were spent in one these modest homes boating, swimming, skiing or visiting the beaver lodges that my grandfather was constantly threatening to blow up with dynamite lest they cause the river to flood the road and homes nearby. It wasn't until I was much older that I discovered that everyone wasn't as lucky as I was.
Although they did well for themselves, I would never describe my grandparents as wealthy. So how did they end up with these terrific second homes that offered a respite from the daily grind and an opportunity for kids like me and my cousins to spend countless days exploring the woods, lakes, mountains and rivers without the distraction of television or the risk of getting hit by a car?
My maternal grandparents grew up in rural settings. Although they were raising my mother and her sisters in the suburbs, they still wanted their family to experience the peace and beauty of the country. So in the late 1950's they bought a rustic, unheated cabin on a bucolic New Hampshire lake. Although it was a lot of money at the time, they paid about $16,000 for the camp and the adjacent lot. Real estate prices had been depressed that year due to a recession in 1957, so Grandpa Tibbetts took a risk. Over the years they made many improvements and they still summer at the camp. I happily visit almost every year. After 51 years it has more than paid for itself and the memories for my entire family are priceless.
My paternal grandparents took advantage of another economic downturn when they acquired land to build a ski house. The 1969 recession hit the country hard, but my Pop Pop had a good year in the auto business. He took some of that money and bought a wooded lot uphill from a river in southern Vermont and built a ski house. His son would soon be a father (mine!) and Pop Pop pictured his growing clan gathered around the fire, drinks in hand, apres-ski. The house that he built with the help of my father, his brother-in-law and his friends became the locus for our family in winter and I cherish the countless memories I have.
In the past, during times of uncertainty, people with moderate incomes felt confident enough in the future to purchase a second home when they saw a good opportunity. Here in San Francisco we live in close proximity to Sonoma and Napa--counties that currently offer incredible value in a globally desirable second home market. Herth Real Estate has a wine country office that specializes in these properties and I'd be happy to help you find your retreat.
Tuesday, March 17, 2009
OMG ! EIK, WIC & FTCW ! Real estate acronyms 101, Title 24 & You.
Many people are familiar with the sometimes hilarious acronyms that Realtors use as shorthand to make the most of expensive ad space. EIK, WIC & WBF are more commonly known as eat in kitchens, walk in closets and wood burning fireplaces.
One acronym I have wanted to use but realized no one would understand is FTCW. FTCW or Floor-to-ceiling windows have become one of those encoded signifiers of style and luxury at most of the new and newer Downtown developments. Along with the prerequisite stainless, granite, and hardwood; FTCW have become one of the defining architectural characteristics of new buildings like Millennium, Infinity, & BLU. In Realtor prose, almost always preceded by "Stunning views framed by...", FTCW make even modest square footage feel larger and lighter which also allows developers to charge a premium for these homes even if they are smaller than comparable properties.
What few people realize is that this dramatic feature will most likely become a thing of the past since Title 24 came into law as part of the 2007 California Energy Code. Title 24 was passed in response to increasing energy costs and awareness about our dwindling natural resources back in 2007 when, if you referred to a building as "green", most people assumed you were talking about the exterior color. When you consider heating and cooling these ultra-glazed spaces, it does seem a bit extravagant given our current circumstances.
The new Energy Code increases the efficiency standards for almost all aspects of both commercial and residential new construction. Although most of the changes won't be discernible to the average buyer, a tower sporting a luscious all-glass facade certainly makes a different impression than a window and panel sheathed building. Think Millennium vs The Metropolitan or Heidi Klum vs Barbara Bush. You get the picture.
The current batch of high rises that make use of FTCW-- or glass curtain wall construction-- were designed and approved before the adoption of the 2007 code leaving One Hawthorne perhaps the last high rise under construction in San Francisco to utilize this design feature. Will the current vogue for endless sight lines diminish in a more frugal and less ostentatious age? Or will the glass towers become more desirable in the future compared against their more conservative, hemmed-in and energy efficient neighbors ?
OTWT,TTFN (Only time will tell, ta ta for now).
One acronym I have wanted to use but realized no one would understand is FTCW. FTCW or Floor-to-ceiling windows have become one of those encoded signifiers of style and luxury at most of the new and newer Downtown developments. Along with the prerequisite stainless, granite, and hardwood; FTCW have become one of the defining architectural characteristics of new buildings like Millennium, Infinity, & BLU. In Realtor prose, almost always preceded by "Stunning views framed by...", FTCW make even modest square footage feel larger and lighter which also allows developers to charge a premium for these homes even if they are smaller than comparable properties.
What few people realize is that this dramatic feature will most likely become a thing of the past since Title 24 came into law as part of the 2007 California Energy Code. Title 24 was passed in response to increasing energy costs and awareness about our dwindling natural resources back in 2007 when, if you referred to a building as "green", most people assumed you were talking about the exterior color. When you consider heating and cooling these ultra-glazed spaces, it does seem a bit extravagant given our current circumstances.
The new Energy Code increases the efficiency standards for almost all aspects of both commercial and residential new construction. Although most of the changes won't be discernible to the average buyer, a tower sporting a luscious all-glass facade certainly makes a different impression than a window and panel sheathed building. Think Millennium vs The Metropolitan or Heidi Klum vs Barbara Bush. You get the picture.
The current batch of high rises that make use of FTCW-- or glass curtain wall construction-- were designed and approved before the adoption of the 2007 code leaving One Hawthorne perhaps the last high rise under construction in San Francisco to utilize this design feature. Will the current vogue for endless sight lines diminish in a more frugal and less ostentatious age? Or will the glass towers become more desirable in the future compared against their more conservative, hemmed-in and energy efficient neighbors ?
OTWT,TTFN (Only time will tell, ta ta for now).
Tuesday, March 10, 2009
Its deja vu all over again.
If you had told people one year ago that at this time in the future the stock market would have lost half of its value, all the major investment banks would be bankrupt and that General Motors would soon be history, they would have said you were crazy.
And here we are.
If we have learned anything, its the more things change, the more they stay the same. The country and the world have some pretty epic challenges to grapple with but if we take a look back, recent history has been pretty dramatic too. Start with colonialism, epidemics, two world wars, the civil rights movement, nuclear proliferation, the gas crisis, 9/11, Iraq Wars I & II and eight years of the Bush administration.
Granted, we are still working on solutions for the last two. What we find is that people in general and Americans in particular are really good at solving problems in times of crisis. It's something to think about when the media is peddling fear and trying to drown you in a sea of bad news. We can get through this by being part of the solution and deciding on... optimism. It really is as easy as that.
Remember my post from February 9th about the single family home in the Sunnyside neighborhood that received 12 offers when it went on the market for $665,000 ? That property closed last week for $705,000.
And here we are.
If we have learned anything, its the more things change, the more they stay the same. The country and the world have some pretty epic challenges to grapple with but if we take a look back, recent history has been pretty dramatic too. Start with colonialism, epidemics, two world wars, the civil rights movement, nuclear proliferation, the gas crisis, 9/11, Iraq Wars I & II and eight years of the Bush administration.
Granted, we are still working on solutions for the last two. What we find is that people in general and Americans in particular are really good at solving problems in times of crisis. It's something to think about when the media is peddling fear and trying to drown you in a sea of bad news. We can get through this by being part of the solution and deciding on... optimism. It really is as easy as that.
Remember my post from February 9th about the single family home in the Sunnyside neighborhood that received 12 offers when it went on the market for $665,000 ? That property closed last week for $705,000.
Tuesday, March 3, 2009
More Postcards from the Edge: A brief snapshot of current resale activity at 10 Downtown developments.
One month ago (February 2nd) we took a look at some cold, hard numbers. I chose ten new or newer condominium developments and pulled statistics from the MLS that communicate some very basic data on each building: How many resale units are for sale, what type of home it is (studio, one, two or three bedroom) and how many units are in the building overall? More than a few readers told me that they appreciated this not very scientific survey so I thought it might be interesting to see what difference (if any) one month has made. As I did last time, I kept any pricing analysis out of it because I believe that the aforementioned criteria tell their own story. An asterisk after the building name denotes that new inventory is still available through the sales office.
In a nutshell: small increases in inventory at roughly half the communities surveyed. No discernible trends thus far although it will be interesting to see what the spring resale market looks like. Keep in mind that the first batch of Infinity Tower I closings have also hit the one-year resale prohibition expiration.
If you have any questions about these numbers or would like more detailed information about current inventory and pricing do not hesitate to contact me. Without further ado, The Numbers:
The Beacon
Three studios, eight 1-bedrooms, four 2-bedrooms
Total units available: 15. Total units overall: 595.
The Metropolitan
Six 1-bedrooms and five 2-bedrooms.
Total units available: 11. Total units overall: 342.
Watermark
Four 2-bedrooms and one 3-bedroom.
Total units available: 5. Total overall: 136.
200 Brannan
Three 1-bedrooms, three 2-bedrooms and one 3-bedroom. Total units available: 7. Total units overall: 191.
The Brannan
Two 1-bedrooms, six 2-bedrooms and two 3-bedrooms.
Total units available: 10. Total units overall: 339.
The Potrero
No resale units. Total units overall: 155.
The Hayes *
No resale units. Total units overall: 128.
Arterra *
No resale units. Total units overall: 269.
The Infinity *
One 2-bedroom. Total units available: 1. Total units overall 364 (excluding Tower II).
One Rincon Hill *
Four 1-bedrooms and five 2-bedrooms.
Total resale units available: 9. Total units overall: 376.
In a nutshell: small increases in inventory at roughly half the communities surveyed. No discernible trends thus far although it will be interesting to see what the spring resale market looks like. Keep in mind that the first batch of Infinity Tower I closings have also hit the one-year resale prohibition expiration.
If you have any questions about these numbers or would like more detailed information about current inventory and pricing do not hesitate to contact me. Without further ado, The Numbers:
The Beacon
Three studios, eight 1-bedrooms, four 2-bedrooms
Total units available: 15. Total units overall: 595.
The Metropolitan
Six 1-bedrooms and five 2-bedrooms.
Total units available: 11. Total units overall: 342.
Watermark
Four 2-bedrooms and one 3-bedroom.
Total units available: 5. Total overall: 136.
200 Brannan
Three 1-bedrooms, three 2-bedrooms and one 3-bedroom. Total units available: 7. Total units overall: 191.
The Brannan
Two 1-bedrooms, six 2-bedrooms and two 3-bedrooms.
Total units available: 10. Total units overall: 339.
The Potrero
No resale units. Total units overall: 155.
The Hayes *
No resale units. Total units overall: 128.
Arterra *
No resale units. Total units overall: 269.
The Infinity *
One 2-bedroom. Total units available: 1. Total units overall 364 (excluding Tower II).
One Rincon Hill *
Four 1-bedrooms and five 2-bedrooms.
Total resale units available: 9. Total units overall: 376.
Monday, February 23, 2009
Trying to sell you're condo ? Don't try to compete with the developer.
It's called "chasing the bottom". A homeowner enlists the help of a Realtor to price their condominium for a quick sale. The Realtor pulls recent comparable sales and presents the seller with what they feel is a realistic list price, acknowledging that buyers will almost certainly offer below this. Sellers often have justification as to why their home is different (read: better) than the comparable homes and should be listed at a higher price.
"I can always lower the price later" they say, believing that buyers will be interested in working with a seller that has shown unrealistic expectations by listing it higher than it should have been in the first place. After the inevitable reduction doesn't work, they try a second time in order to get buyers attention.
The chase has begun. Unfortunately everybody involved in the marketing of this home has wasted precious time and the buyers that would have been happy to make an offer on an attractively priced home have moved on. The lesson ? If you are selling in a building that still has developer inventory you have lost the deal you could have had to the developer and probably more than once because you scared buyers away with the "my unit is special" price.
As I wrote last week; the sales offices are making incredible deals right now. One Mission Bay community has 2-bedrooms with parking from the high 500's. A South Beach community has put a unit in contract for 40% less than that homes twin sold for early last year.
In this environment, if you can't beat them, join them. Pricing a home aggressively when it hits the market is the only way to get buyers to pay attention. This is unwelcome news to those that put little or no money down on their condos and are now trying to sell. For these folks a short sale may be the best option for getting the property sold with the least impact to their credit scores.
For others that made more substantial down payments and want to sell, it may be time to bite the bullet and take the loss on what is already a depreciated asset. The bright side is that there is now an opportunity to purchase and take advantage of market declines and trade up.
No matter what your individual situation may be, I am happy to talk to you about marketing, selling and buying in our ever-changing real estate market. These are challenging times but we get to weather the storm in one of the most beautiful places in the world. That's a competition that all San Franciscans win.
"I can always lower the price later" they say, believing that buyers will be interested in working with a seller that has shown unrealistic expectations by listing it higher than it should have been in the first place. After the inevitable reduction doesn't work, they try a second time in order to get buyers attention.
The chase has begun. Unfortunately everybody involved in the marketing of this home has wasted precious time and the buyers that would have been happy to make an offer on an attractively priced home have moved on. The lesson ? If you are selling in a building that still has developer inventory you have lost the deal you could have had to the developer and probably more than once because you scared buyers away with the "my unit is special" price.
As I wrote last week; the sales offices are making incredible deals right now. One Mission Bay community has 2-bedrooms with parking from the high 500's. A South Beach community has put a unit in contract for 40% less than that homes twin sold for early last year.
In this environment, if you can't beat them, join them. Pricing a home aggressively when it hits the market is the only way to get buyers to pay attention. This is unwelcome news to those that put little or no money down on their condos and are now trying to sell. For these folks a short sale may be the best option for getting the property sold with the least impact to their credit scores.
For others that made more substantial down payments and want to sell, it may be time to bite the bullet and take the loss on what is already a depreciated asset. The bright side is that there is now an opportunity to purchase and take advantage of market declines and trade up.
No matter what your individual situation may be, I am happy to talk to you about marketing, selling and buying in our ever-changing real estate market. These are challenging times but we get to weather the storm in one of the most beautiful places in the world. That's a competition that all San Franciscans win.
Monday, February 16, 2009
Making lemonade from lemons: A window of opportunity opens for new construction buyers as developers say "Sell!"
Trendy is as trendy does. When granite kitchen counter tops were introduced at The Brannan back in 2000, almost every new development that followed made it a standard feature. How about stainless steel appliances? Does anybody remember what we had before those? And don't get me started on Studio Becker cabinets! I love them; don't get me wrong. They are a beautiful, high quality product that I have in my own home, but they are everywhere.
It's safe to say that once a San Francisco developer discovers an attribute or amenity that sells units, he sticks with it--perhaps to the point where it gets a little banal.
There is one trend that I'm happy to report has spread to just about every new development in the City. I'm referring to slashed prices. With Radiance, BLU and Arterra announcing dramatic price cuts last week, it's safe to say that all new construction sales offices have awakened and smelled the coffee. It's a particularly strong brew this morning and it shows that developers now understand what it takes to move inventory in this market.
There is a method to the madness; it's not only about moving units. Over at The Infinity, developer Tishman Speyer wants to make certain they have at least 25% of Tower II in escrow before they start closings in April. That first closing triggers the start of operations for the Tower's HOA and the assessments for all the unsold homes must be paid for by the owner (Tishman). It's understandable that they would want decent sales velocity before committing to paying the dues for 300+ units at an average of $700 per month. Once they hit their target, will prices go up? It's anybody's guess where the market will be in spring.
The team at BLU has a similar strategy. Announcing aggressive new prices last week (2-bedrooms from $599K), their goal is to fulfill a presale requirement that, if missed, will delay closings until the magic number is reached. Their pain may be your gain when they achieve their goal and decide that demand is sufficient enough to begin ratcheting prices up.
It's important to remember that for a city the size of San Francisco, there isn't that much condominium inventory. With a population of almost 800,000 people there are approximately 600 new construction condominiums available Downtown. We don't have a sea of empty high-rises like in Miami or Las Vegas and with developers slashing prices and new construction at a standstill, this could be a golden moment to enjoy a tall, cool glass of lemonade.
Remember: The sales office works for the developer; I work for you. My knowledge and expertise will get you the best home at the best price, period.
It's safe to say that once a San Francisco developer discovers an attribute or amenity that sells units, he sticks with it--perhaps to the point where it gets a little banal.
There is one trend that I'm happy to report has spread to just about every new development in the City. I'm referring to slashed prices. With Radiance, BLU and Arterra announcing dramatic price cuts last week, it's safe to say that all new construction sales offices have awakened and smelled the coffee. It's a particularly strong brew this morning and it shows that developers now understand what it takes to move inventory in this market.
There is a method to the madness; it's not only about moving units. Over at The Infinity, developer Tishman Speyer wants to make certain they have at least 25% of Tower II in escrow before they start closings in April. That first closing triggers the start of operations for the Tower's HOA and the assessments for all the unsold homes must be paid for by the owner (Tishman). It's understandable that they would want decent sales velocity before committing to paying the dues for 300+ units at an average of $700 per month. Once they hit their target, will prices go up? It's anybody's guess where the market will be in spring.
The team at BLU has a similar strategy. Announcing aggressive new prices last week (2-bedrooms from $599K), their goal is to fulfill a presale requirement that, if missed, will delay closings until the magic number is reached. Their pain may be your gain when they achieve their goal and decide that demand is sufficient enough to begin ratcheting prices up.
It's important to remember that for a city the size of San Francisco, there isn't that much condominium inventory. With a population of almost 800,000 people there are approximately 600 new construction condominiums available Downtown. We don't have a sea of empty high-rises like in Miami or Las Vegas and with developers slashing prices and new construction at a standstill, this could be a golden moment to enjoy a tall, cool glass of lemonade.
Remember: The sales office works for the developer; I work for you. My knowledge and expertise will get you the best home at the best price, period.
Monday, February 9, 2009
A Tale of Twelve Offers. Yes, you read that correctly.
The property has great curb appeal. There are tasteful and modern finishes throughout the modest two bedroom and 2 bath home yet the gracious vintage charm has been retained. A large, manicured back yard awaits a French Bulldog and there is a garage for the Prius. A convenient Sunnyside address seals the deal. My talented colleague reported that she received 12 offers on this property last week, 10 of which were very strong. Is this February 2009 or 2006 ?
The buyer and seller just went into contract so we won't know what the final price is until escrow closes but I speculate that it's not a huge run-up. So what does 12 offers on a single family home in San Francisco listed at $665,000 mean ?
To begin with, this price point represents a sweet spot for a lot of first time buyers in The City. If you factor in a 20% down payment of $125,000 that keeps the mortgage balance below the current conforming loan limit of $625,500 ensuring access to the best available interest rates. A single person or couple that have been saving, have good credit scores (above 700) and stable employment can easily qualify for the loan.
Now that we know the lending piece of the equation can be achieved by a lot of potential buyers in San Francisco, why so much demand for this one house in particular ? The location is close to both transit and shopping yet still has a classic neighborhood vibe. It's thoughtfully and tastefully updated (stainless steel appliances and original refinished hardwood floors). Then there's that yard, garage and fireplace. Any client looking for a single family home in San Francisco in this price range would be crazy to NOT put in an offer. This is an example of a perfect real estate storm: a fantastic home that fulfills multiple buyers criteria listed at a price considered reasonable to those interested. One lesson that can be gleaned from this example is that there are still plenty of qualified buyers out there just itching to find a place to call home. You can grab their attention by making sure your property shows at it's absolute best and by pricing it realistically. Living in the moment now pertains to real estate values, too. For a complimentary evaluation of your properties current value make sure to contact me.
Speaking of contacting me, My colleague Bernie Katzmann and I have just listed a beautiful Downtown loft. A three level, top floor historic conversion with 2-bedrooms, 2 bathrooms, penthouse den and huge roof deck with skyline views. Deeded parking and two deeded storage units round out this 1500 square foot Rincon Hill aerie. The address is 346 First Street #301 and we'll be open for tour today from 2:00 - 3:30 and again on Sunday from 2:00 - 4:00.
Stop by and say "Hi". It's an impressive home steps from everything Downtown and although we may not get twelve offers I'm keeping my fingers crossed !
The buyer and seller just went into contract so we won't know what the final price is until escrow closes but I speculate that it's not a huge run-up. So what does 12 offers on a single family home in San Francisco listed at $665,000 mean ?
To begin with, this price point represents a sweet spot for a lot of first time buyers in The City. If you factor in a 20% down payment of $125,000 that keeps the mortgage balance below the current conforming loan limit of $625,500 ensuring access to the best available interest rates. A single person or couple that have been saving, have good credit scores (above 700) and stable employment can easily qualify for the loan.
Now that we know the lending piece of the equation can be achieved by a lot of potential buyers in San Francisco, why so much demand for this one house in particular ? The location is close to both transit and shopping yet still has a classic neighborhood vibe. It's thoughtfully and tastefully updated (stainless steel appliances and original refinished hardwood floors). Then there's that yard, garage and fireplace. Any client looking for a single family home in San Francisco in this price range would be crazy to NOT put in an offer. This is an example of a perfect real estate storm: a fantastic home that fulfills multiple buyers criteria listed at a price considered reasonable to those interested. One lesson that can be gleaned from this example is that there are still plenty of qualified buyers out there just itching to find a place to call home. You can grab their attention by making sure your property shows at it's absolute best and by pricing it realistically. Living in the moment now pertains to real estate values, too. For a complimentary evaluation of your properties current value make sure to contact me.
Speaking of contacting me, My colleague Bernie Katzmann and I have just listed a beautiful Downtown loft. A three level, top floor historic conversion with 2-bedrooms, 2 bathrooms, penthouse den and huge roof deck with skyline views. Deeded parking and two deeded storage units round out this 1500 square foot Rincon Hill aerie. The address is 346 First Street #301 and we'll be open for tour today from 2:00 - 3:30 and again on Sunday from 2:00 - 4:00.
Stop by and say "Hi". It's an impressive home steps from everything Downtown and although we may not get twelve offers I'm keeping my fingers crossed !
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