The answer to that question is an emphatic NO.  We are simply slammed right now.  No spare time to comment on the market, but we assure you that when we come up for air, we’ll have plenty to talk about.  Till then, it’s nose to the grindstone.  Thanks for hanging in there.

-The Editors

Please bear with us while we get our noses get grinded to to a nub.

After writing “Getting Granular in Noe Valley” a couple days ago [which has received tons of hits], we figured it would make for a nice contrast to take a swing at Excelsior.  Located just south of I-280, the nabe is home to many interesting people and houses.  Jerry Garcia even once called the Excelsior home.

Excelsior street signs - Photos by Jef Poskanzer

Like Noe Valley, the neighborhood has posted a generous amount of sales in 2009, making it a good candidate for a trending analysis.  And since it’s significantly different than Noe, it will be a fun little exercise.

Single family home medians (click to enlarge)

• The first thing I notice from this chart is how much smoother the line is compared to Noe’s, indicating that Excelsior may not be as sensitive to short-term perturbations in the market as Noe.
• Prices have fallen 32.34% from peak (in inflation adjusted terms), compared to Noe’s 22.05%.
• 15.96% [about half] of the 32% decline occurred in the past year.  Compare this to Noe’s, whose year over year decline was much more drastic (19 of 22%).  This tells us that Excelsior reacted to the downturn first, and Noe lagged.
• The “peak” occurred in 2006, a full year before Noe’s peak.
• Excelsior’s current median is right around 2002’s [in inflation adjusted terms].  Noe’s current median was more comparable to 2003/04.  Looks like Excelsior has regressed a bit further.

Sales volume for Excelsior:

Sale volume for Excelsior SFH's (click to enlarge)

• 1999 was the big year in Excelsior.  A full decade later, we’re at about half the sales volume of ‘99.
• Sales volume has remained relatively consistent since 2005.

Final Thoughts

It is an interesting comparison, Noe and Excelsior.  Not many people would run an analysis like this.  But that’s part of the fun.

Perhaps the most interesting thing to come out of this exercise is that Excelsior began its decline first.  The first signs of decline were between 2006 and 2007.  Noe didn’t show signs of decline until 2007-2008, a full year later.  In a sense, Excelsior served as a leading indicator of what Noe would do.  Is this a law?  Hardly.  But we wouldn’t rule out the possibility of using lower end markets to predict higher end markets, often with a year lead-time.  If you look at the complete 15 year history, inflation-adjusted medians have increased 195% in Excelsior and 212% in Noe Valley.  Not too far off from one another.  In recent years, Excelsior has fallen more, but Noe has fallen faster.  We predict that Excelsior will stabilize, or “hit bottom” before Noe.  But we’ll of course have to wait another year to see how these graphs change.  Keep tuning in, and keep truckin’!

For more “Getting Granular” articles, click HERE.

Looking down towards Noe Valley - courtesy of Wikimedia

In Noe Valley there have been 85 single family home sales recorded in MLS for 2009.  You know what that means!  Time for a trending analysis, as we have a nice long string of sales for the year.  What did we look at?

We calculated the median sales price for single family homes in Noe for the period of January 1 through September 1 of each year dating back to 1995.  A trend became clear after plotting the values on a graph.  But what about inflation?  We added a second line to show what median values look like over the same time period when inflation is accounted for.  The results?

Noe Valley SFH Trends (click to enlarge)

• In inflation-adjusted terms, Noe’s 2009 median is somewhere between 2003 and 2004.
• Values have come down 22.05% from peak.
• 19.94% of that decline occurred within the past year.
• The 2009 SFH median in Noe is $1,120,000.  At its peak it was $1,436,850 (inflation adjusted).
• The “peak” occurred in 2007.

The next graph shows us sales volume for SFH’s in Noe dating back to ‘95.

Noe SFH Sales Volume (click to enlarge)

• Sales volume peaked in 2004.
• Sales remain very consistent in Noe Valley and have not slid as much as other neighborhoods (particularly over the past 2 years).
• 2009’s sales may be slightly under-represented.  Some homes have closed but have not been entered into MLS yet.

Final Thoughts

I get asked all the time how much home values have come down.  The answer is never an easy one, as different property types in different neighborhoods have come down different amounts.  But now we know the number for Noe single family homes, don’t we.

What do we make of this info?  Will things continue downward?  Maybe.  Have things bottomed out?  Tough to tell.  Because we looked at numbers on an annual basis, we won’t be able to identify a bottom until we see what happens to 2010’s median.  And that’s a while to wait.  The nature of this type of analysis has pluses and minuses.  The plus is that we get a nice long string of sales to compute that median.  The minus is that it is looking back in time.  The data lags the real-time market and we’ll have to wait until next year to see which direction the curve decides to go.  If you’re in real estate for the long term, and I always suggest that you are, then an annual picture such as this may be of benefit.  At least, I hope it is or I’ve wasted my last hour… hehe.

Is now a good time to buy?  Depends.

For more Getting Granular articles, click HERE.

As many of you know, I used to be a real estate appraiser (and in a way, always will be).   Appraisers are paid for their professional opinions, honesty, and expertise.  If they are lacking in any of those three areas, well, they’re just not cut out for the job.  I’ve heard a few stories about appraisers lately that made me cringe.

The Good: [Honest and expert] Appraisers not only protect banks from lending more than a home’s value, they also protect the buyer.  Let’s say that a buyer is in contract on a home for $500K and the appraisal comes back at $400K.  As a result, the buyer does not get their loan and they get angry with the appraiser.  In actuality, they should be extremely thankful that the appraiser saved their butts from overpaying by 25%, but appraisers are rarely thanked.  Instead, the appraiser gets bashed from the real estate agent (thanks for killing my deal), the buyer (hey, thanks, I lost my home), the seller (you imbecile, I was just about to cash in), and the loan officer (thanks pal, I’m not going to get my fee).  If the appraiser is truly an expert, there should be nothing stopping them from doing honest work, including pressure from any of the aforementioned parties.  Unfortunately, appraisers can be coerced and threatened (we’re not going to use your services anymore if you don’t hit our number!).  This is the reason new regulations are in effect that limit who can talk to an appraiser.

The old days: "If you don't hit my number we're never using your services again!"

Let’s face it, if you have three different appraisals on a property, you’ll get three different values.  A buyer can always go to another lender and try again.  And they do.  But what happens when appraisal #2 comes in at $415K?  That’s the point where the buyer should stop and ask themselves if they should even be moving forward in this transaction.  And they should ask themselves if their agent is representing their best interests… after all, the agent is the one who is facilitating the purchase, and if they are worth their salt, should be the one keeping you from overpaying.  Here are some tips:

• Always request your appraisal report from the lender.  The lender must provide you with one.
• Always take note of where the appraiser comes from — this is printed in the appraisal report (more on this later).
• If the value is in question, there is nothing stopping you from picking up the phone to order your own appraisal.  The bank won’t use it, but you’ll have piece of mind.  Select a residential appraiser with the MAI designation after their name.  They are the best of the best.
• If your appraisal does not make value and is way off (say, 15% or more), question whether you should be moving forward at all.
• If your appraisal does not make value and it is just a percent or two short, try another lender (who will subsequently order another appraisal).

The Bad: We recently had an experience where we were in contract on a home for $999,000 and the appraisal came back at the sales price, with plenty of supporting data.  The appraiser then sent off the report to his AMC’s quality assurance department.  AMCs are “Appraisal Management Companies”.  They have been around for a long time, but with new regulations in place, an AMC is now a mandatory step in the appraisal process.  All appraisers (even if they previously owned their own firms), must now work for AMCs if they want to practice.  In any case, the AMC’s QA department approved the $999,000 appraisal, and off it went to the lender in New York.  The lender had an in-house review appraiser take a look at the appraisal.  We got a phone call telling us that the review appraiser had slashed the value from $999,000 to $985,000.  Seriously??  From a desktop in NYC, they made this judgment call?  On a million dollar home they’re going to get their panties in a ruffle over 14 grand?  I’m sorry, but appraisals on million dollar homes don’t get to that level of granularity… at least from a desktop 3,000 miles away they don’t.  It was almost as if they just wanted to kill the deal… to not make the loan.  We were shocked and scrambled at the last minute to come up with $14K so the buyer could get their home.  How can a review appraiser in a different state supersede local expertise?  Just doesn’t make sense.  The system still needs fixing.

"Ah ha ha haaa, I just totally screwed with these people in California. Ah ha ha haaaa!"

The Ugly: Because all appraisers now work under the umbrella of AMCs, their earnings have been cut dramatically.  Appraisers used to earn around $300 to $500 for a typical residential appraisal.  Now, their fee is nicely trimmed by the AMC for which they work.  They’re now getting significantly less for the same work (and the work is anything but easy).  I feel bad for them, I really do.

As a result, many appraisers (unfortunately) are taking all the jobs they can get.  This oftentimes means that an appraiser will venture outside of their area of expertise in order to make a couple hundred bucks.  This happens all the time… we’ll get a call to let an appraiser into a home and they have a 925 area code.  Not a good sign.  The only appraisers that should be appraising San Francisco real estate are those that are intimately familiar with the City and all its nuances.  We recently heard of a story where an appraiser drove 85 miles (one way) just to do an appraisal.  And another story of an appraiser who drove around Mission Bay for 2 hours looking for the subject property.  Because many streets in Mission Bay are new, the appraiser’s GPS couldn’t find it.  Bad, bad, and bad!!  Furthermore, how can this possibly be OK with the bank?  Don’t they see the risk in this?  Oh, wait, these are the brilliant banks we’re talking about…

"Excuse me, how do I get to the Radiance at Mission Bay?"

Geographical competence is an absolute must for appraisers or they should not accept the assignment. Matter of fact, it’s written into USPAP (the book that governs the practice of appraisers).  USPAP stands for “Uniform Standards of Professional Appraisal Practice”.  USPAP’s geographic competency rule states: 

“Prior to accepting an assignment or entering into an agreement to perform any assignment, an appraiser must properly identify the problem to be addressed and have the knowledge and experience to complete the assignment competently… [continued]  In an assignment where geographic competency is necessary, an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market and the supply and demand factors relating to the specific property type and the location involved. Such understanding will not be imparted solely from a consideration of specific data such as demographics, costs, sales, and rentals. The necessary understanding of local market conditions provides the bridge between a sale and a comparable sale or a rental and a comparable rental. If an appraiser is not in a position to spend the necessary amount of time in a market area to obtain this understanding, affiliation with a qualified local appraiser may be the appropriate response to ensure development of credible assignment results.”

So what is “sufficient time”?  That’s a tough question, but I can say with certainty that expertise in the San Francisco market cannot be attained in a few hours, days, or weeks.  It takes a long time to be “sufficiently competent”.

To sum it up, most appraisers are out there doing good.  If you’re a buyer, seller, or agent, make sure that the person who appraised the property for your transaction is local and qualified.  Because you can’t choose your appraiser (the bank does), this will have to be done after the fact.  You don’t want a “rubber stamper” (especially if you’re a buyer), and you certainly don’t want someone driving 85 miles for the assignment.  Always request a copy of the appraisal (read it, and have your agent read it!).  In it you will find the appraiser’s contact info and their address, so you can see if they’re local.  If you receive an appraisal that you believe is inaccurate –and note the difference between inaccurate and unpleased-with– order an appraisal on your own so you can get a second opinion.  If there is a huge discrepancy between the two, then you know you’re on to something.  If not, then the first appraiser was probably right.  Good luck out there.

For more home-buying tips, click HERE.

Another light week on the Tuesday tour… which is the calm before the post-Labor Day storm.  Only four properties made four stars this week and one posted five.

Back yard of the week was a tie between 1871 Green and 946 Elizabeth. We had trouble deciding which one we’d rather be chilling in.  1871 Green is definitely a little more, well, green, and 946 Elizabeth has a fantastic patio with better sun.  Both have their strong points and are pictured below.

1871 Green's back yard is something out of a fairy tale.

This photo under-represents the back yard at 946 Elizabeth, but we'll attest, it's gorgeous.

Sun drenched patio at 946 Elizabeth.

For the four and five star ratings of the week, continue reading.  Click the bold address for additional info on any given property –>

“5 Stars”

	946 Elizabeth St, San Francisco $2,599,000 *Not much on curb appeal but overall a splendid home.

“4 Stars”

	3694 17th St, San Francisco $725,000 *This should sell in no time.
	449-451 Eureka St, San Francisco $2,000,000 *Would award 5 stars if the home was immaculate.
	3159 Jackson St, San Francisco $3,653,000 *Units 2 and 3 are nice. Price is, um…
	1871 Green St, San Francisco $2,395,000 *Great location, yard, family home.

Thanks for checking out the standouts from this past Tuesday Tour!  There were a couple of homes we didn’t have time to stop by, most notably the penthouse (#656) at the Clock Tower Lofts.  See below for info on that home.  See you next week!

To view Tuesday Tour posts of weeks past, click HERE.

	461 2nd St #656, San Francisco $1,195,000 MLS# 360016

	461 2nd St #656, San Francisco $1,195,000 MLS# 360016 Click for Listing Details The CleanOffer.com Team

Check out this article written by Amy Hoak via RISMedia.  The article is entitled “Homes in Walkable Neighborhoods Sell For More“, and sheds light on the growing popularity of walkability as a desirable attribute for real estate (and real estate values).

This

..or this. You make the call.

RISMEDIA, August 22, 2009-(MCT)-Homes located within walking distance of amenities such as schools, parks and shopping aren’t only more convenient for their owners, often they’re also worth more than homes in neighborhoods where driving is the rule, according to a new study.

The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of “walkability” were directly linked to higher home values.

The report, “Walking the Walk: How Walkability Raises Housing Values in U.S. Cities,” was commissioned by CEOs for Cities, a national network of urban leaders from the civic, business, academic and philanthropic sectors.

It’s an important point for homebuyers who are trying to identify which homes will hold their value, said Joseph Cortright, the report’s author and a senior policy adviser to CEOs for Cities. Cortright is an economist and president of Impresa, a Portland, Ore.-based consulting firm. Walkable places have some of the best chances of performing well in years ahead, he said.

The analysis used transaction information from ZipRealty. It calculated walkability of the homes using the Walk Score algorithm, which grades addresses based on amenities that are nearby, from restaurants and coffee shops to parks and libraries. Scores range from 0 to 100, with 100 being the most walkable; a score higher than 70 indicates it’s possible to get around in the area without using a car.

Controlling for other factors including a home’s size, the number of bathrooms and bedrooms, age, neighborhood income levels, distance from the Central Business District and access to jobs, the study found that a one-point increase in Walk Score is linked to an increase in home value between $500 and $3,000, depending on the market, according to the study. The premium for homes in neighborhoods with above-average Walk Scores ranged from $4,000 to $34,000.

But that premium wasn’t found everywhere. In Las Vegas, walkability correlated with lower housing values. Bakersfield, Calif., showed no statistically significant connection between walkability and home prices, according to the study. The report didn’t investigate why homes in walkable neighborhoods didn’t bring a premium in those two places.

It’s speculative, but in Las Vegas, “it may be that those neighborhoods that have the highest walkability are not the most attractive areas” in the metropolitan area, Cortright said. Matt Lerner, chief technology officer of Front Seat, the software company behind Walk Score, said Bakersfield is somewhat sprawling and perhaps never developed a healthy city center or clusters of walkable neighborhoods. Or it could be that the volume of foreclosures and the macroeconomic trends with which these cities are dealing are overwhelming any positive effects that walkability might have on home prices, said Pat Lashinsky, chief executive of ZipRealty.

Even in areas where walkability does statistically matter, the premium it affords isn’t the same from place to place. Dense urban areas such as Chicago and San Francisco showed higher price gains based on higher Walk Scores; in less dense markets like Tucson and Fresno, home prices didn’t jump as much due to higher walkability. Other metropolitan areas included in the study were: Arlington, Va.; Austin, Texas; Charlotte, N.C.; Dallas, Texas; Jacksonville, Fla.; Phoenix, Ariz.; Sacramento, Calif.; Seattle, Wash.; and Stockton, Calif.

There are environmental and health benefits from living in a place where the car can stay parked. In promoting Walk Score, Lerner said his firm emphasizes how walking rather than driving can play a part in preventing global warming and how people who live in walkable areas weigh seven pounds less, on average, than those who don’t. Places with higher Walk Scores also often have better mass transit services, according to the report. “I don’t know of any other study that has put a dollar value on walkability,” he said.

Consider two neighborhoods in Charlotte, N.C. In Ashley Park, with a typical Walk Score of 54, the median home price was $280,000. In Wilmore, where the average score was 71, a similar home would be valued at $314,000, according to the report. While convenience does play a roll in the desirability of walkable neighborhoods, consumers still haven’t forgotten the days of $4-a-gallon gas-and that scar is influencing where they want to buy a home, Lashinsky said.

“When people are looking to buy a house now, they know in the back of their mind that there is a risk that gas prices can be higher than they are right now,” Cortright said.

“This is not about people having to live without cars.” Rather, it’s about giving people the option to use them less often. “They don’t need to use them for every single trip, and when they do have to, they don’t have to drive as far,” he said.

The findings are also important for policy makers, said Carol Coletta, president of CEOs for Cities, in a news release. “They tell us that if urban leaders are intentional about developing and redeveloping their cities to make them more walkable,” she said, “it will not only enhance the local tax base but will also contribute to individual wealth by increasing the value of what is, for most people, their biggest asset.”

(c) 2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.

Last Friday Bernanke delivered a speech spouting off the best news he’s given since the economy took a nose-dive.

“Economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good,” Bernanke said at an annual Fed conference in Jackson.

Big Ben was cautious about his optimism, stating that the recovery was likely to be “relatively slow at first.”

“Although we have avoided the worst, difficult challenges still lie ahead,” he told the gathering of bankers, academics, and economists. “We must work together to build on the gains already made to secure a sustained economic recovery.”

Critics mentioned that Bernanke’s positive tone and optimistic outlook may have been motivated by his job’s expiration in early 2010.  “When you go on an interview, you never speak of your shortcomings“, stated Richard Yamarone, economist with Yargus Research.

Whatever the case may be, the economy does seem to be turning a corner and we are certainly reading more positive articles.  Whether the turnaround is genuine (or sustainable) remains to be seen.  We like to remain cautious and most importantly, realistic.

What does this mean for local real estate?  Our feeling is that opportunities will be around for a while for buyers.  Maybe not low interest rates or tax credits, but the ability to buy low with less competition from other buyers will remain as long as credit remains tight.  If your plan is to buy and hold long term, this is a good time.

-Excerpts taken from Jeannine Aversa, Associated Press, “Fed chief upbeat on world economy“, published on Saturday, August 22, 2009.

Want some dismal news to balance Bernanke’s economic assessment?  Check out Robert Kiyosaki’s “Preparing for the Worst“.

Bernanke in action

A couple of listings hit the market during the past few days that got us feeling blue.  Here, have a look:

115 Nevada in Bernal Heights

115 Nevada is a cute little 1940’s home located in Bernal Heights.  The 2 bedroom, 2 bath home is listed at $799,000.  We’re partial to the paint job, which reminds us of the house in My Big Fat Greek Wedding.  Throw in a few Ionic columns, marble statues, and a fountain, and let the bids roll in!

The actual house from My Big Fat Greek Wedding (note the blue and white Greek paint job-- classic!)

Our next blue home belongs to a condo at 1170 Sacramento in Nob Hill.  Somewhere on the 14th floor, you’ll find miles of blue carpet leading up to rock star views of the city skyline and bay.  The 3 bedroom, 3.5 bath home has nearly 2,000 square feet of living space and is listed at $2.38 mil.  If you can stomach the $2,704 monthly HOA dues and the electrified carpet, this may just be the place for you!

See, we weren't kidding... miles of blue carpet.*

Hey look, you can even see where the furniture is supposed to go!

It's electric... boogie woogie oogie

Carpet can be changed, but this kick a** view will not

Wow, not feeling blue anymore...

*Yes, we know that’s a mirror back there.

For articles about other Public Listings, click HERE.

Dear Readers of Inside SF Real Estate:

We’re unpacking from a big move and trying to clear out some of these boxes so normal life can resume.  We will be back in the swing of things in a few days.  Thanks for your patience and readership!

-The Editors

Image courtesy of Running Spider

The Harris Poll just published its annual findings with respect to occupational prestige.  This is reassuring if you’re a firefighter, scientist or doctor… not so much if you’re a stockbroker, accountant, or a real estate agent.  The survey queries 1,010 U.S. people asking them what level of “prestige” they associate with different jobs.  Here’s a look at the results from 2009:

Who's that all the way down there at the bottom? (click to enlarge)

From working in the industry, I can definitely see how this continues to be the public perception.  I rub elbows everyday with other agents and brokers.  My observation is that agents are either genuinely good people who have their clients’ best interests at heart, or they are snakes who care nothing more than themselves and who will do anything to get the deal done… even at the expense of their “valued” client.  There isn’t much gray area in this business.  You’re either good [ethical] or you’re not.  With low barriers to entry, real estate can really be a minefield for people who need to hire an agent.  Here are some tips:

1. Interview agents before choosing one to work with.
2. If you get a less-than-wholesome feeling from this person, even a tinge, keep searching for someone else.
3. Trust your intuition.  You should be able to smell a snake after just a few minutes with them.
4. Make sure they know their stuff.  Ask tough questions about the market.  Expose a BS-er.
5. Know that there are good people out there working as real estate agents.  Don’t stop searching until you find one.

Times are certainly changing for the better. Pushy (not to mention, tacky) sales tactics and an opaque, secret-laden business model is fading away as a more socially aware, information-rich culture emerges.  It’s Web 2.0 for real estate.  In my lifetime I hope to see the profession get cleaned up and the riff-raff get cleaned out as their careless actions get exposed to an ever-growing online community… a place where information travels at the speed of light.

If any of you readers have tips for selecting agents to work with, place them in the comments below.  Until then, the good agents should continue to put their heads down and work hard to push this profession in the right direction, despite the low prestige factor.  There’s only one way to go from here!  Cheers.