750 Van Ness

Interested in buying a condo at 750 Van Ness? A REO (foreclosed) home is currently on the market in the building. Its being advertised by the listing agent as a regular condo, but after an inquiry from a client I did some research and determined that it is actually a BMR condo (below market rate).

This is, to be blunt, a really big deal and a really big difference.

In an effort to provide affordable housing, any new development must set aside a portion of their homes for what are known as BMR or below market rate homes. The homes have deed restrictions on them, and their initial sales price is set by the Mayor’s Office of Housing. Any future resales are governed by the deed restriction, which mandates a sales price based on bay area incomes. In addition, the homes can only be purchased by first time home buyers and must be owner occupied. There are some other restrictions as well, but these are the big ones: sales price based upon bay area income index, first time home buyers only, must be owner occupied.

The tax records list this home as a “Condominium BMR” and the last sales price was a goofy number (usually sales prices are round numbers like $399,000 but this one was something very exact like $254,376). Based on the past purchase price I put a call into the listing agent, who has yet to return my phone call (3 days and counting).

I then contacted the Mayor’s Office of Housing, and was able to verify that the condo is indeed a part of the BMR program. The Mayor’s Office said they were in touch with the listing agent to have the listing corrected, but as of this morning the property is still not advertised as a BMR condo. While a buyer would hopefully discover the deed restrictions during their due diligence, I say why waste your time making an offer…

I have not included information about the property address or listing agent as I do not want to run afoul of MLS or Code of Ethic violations for advertising another agent’s listing and/or appearing to make unsolicited remarks about another agent. So let’s be clear: I’m not trying to advertise their listing, and if you want to bring me up on code of ethics violations for protecting consumers, go for it!

If you’d like the address, please drop me an email or phone call and I’ll share the details with you.

The Chicken Gang

Yesterday, when dropping the kiddo off at camp I came across a gang of chickens on the loose. I know that when you think of San Francisco problems, you’re more likely to think about our challenges with homeless encampments in city parks, aggressive panhandling, or public spaces that aren’t very public.

Quite frankly, all of those issues are so 2011. As you can see from the above picture, San Francisco streets and sidewalks are in the process of being taken over by wild gangs of chickens, with the chickens intent on marking their turf, laying down their gang colors, and generally eating any random bit of food left on the sidewalk.

While they might be from the local food-shed, don’t let their quaint demeanor trick you into a false sense of security. While they appear to randomly cluck around San Francisco street corners, I’ve got it on good authority that they are behind the string of recent iPhone thefts across the city. If you see an iPhone on craigslist in exchange for a bag of dry corn feed, and the grammar and syntax appears to have been carelessly pecked-out, you might just be dealing with chicken-fenced electronic goods.

If you happen to see this gang of chickens, or any of the others currently infiltrating the otherwise peaceful and safe streets of San Francisco, use extreme caution. I’ve heard on good authority that these birds, while not armed, are heavily feathered and will use their innocuous and charming good looks to put your mind at ease while rifling through your messenger bag for any overlooked morsels of food from your last trip to dine at the food trucks.

Word on the street is that the raccoon and feral cat populations are not amused with the chickens elbowing in on the free pickings to be had across the city, and are in the process of organizing a coordinated response. As always, keep us in your feed reader and check back regularly for updates to this developing story!

Merced Manor Home

Merced Manor Home

Merced Manor Home with Interesting Window

Today is Tuesday Broker’s Tour, which means I will shortly be out and about looking at homes all over San Francisco. While I was out last week, though, I drove past the home pictured above.

I have never, ever seen a window like the one pictured above. While I suppose it is possible that some strange settling effect has bowed a flat window out, my hunch is that the effect was intentional. Do any of our awesome readers know anything about this window style? Does it have a name? I’ve looked the home up in the MLS, and it hasn’t been for sale for at least the past 10 years (in fact, according to the San Francisco tax records the last sale happened in 1981), so I can’t offer you any juicy tidbits from the MLS.

The home was built in 1940, and is in the Merced Manor neighborhood of San Francisco, not too far from 20th Ave. and Eucalyptus.

So what can you tell me about this window? Is gravity having an effect? Is the roof crushing it into a crazy shape? Or was it built this way on purpose? If this is your home, your neighbor’s home, or you just happen to be incredibly educated about window styles in San Francisco, please drop us a comment and let us know!

Dogpoet, a blogger you should read if you aren’t already, is an all-around great guy that I’ve stalked, er read, for years. It just happens he’s half of a couple in the market for a house, and when I threw out my crazy idea about blogging he didn’t stop returning my emails or phone calls, and in fact seemed vaguely interested.

He’s a bit ahead of me, and if you want you can read about our first tour together from his perspective.

Dogpoet’s husband is a phenomenal barber (the best in the Castro, if not all of SF, I’d venture), and during a haircut we ended up talking about real estate (if I had a dollar for every place I’ve talked real estate I’d be retired). So most of my conversations about homes and neighborhoods had been with The Husband, and I really hadn’t had much of a chance to talk with the Dogpoet about what he was hoping for in a home, and what his biggest concerns might be about buying a home. I’d reached out to him to offer a chance to sit-down or go look at homes, and the timing worked out so that I could tour homes with the Dogpoet while the Barber was out-of-town.

I always get a bit neurotic (okay, maybe a lot) before meeting with a client for the first time in a professional context. Even if I know them really well, I still up my personal expectations of myself when venturing into the realm of professional services and I always assume my clients do also. Preparation for a tour usually starts with a trip to the car wash, which inevitably leaves my car 95% really clean and 5% not-quite-awesome, which is the 5% I inevitably notice. I suppose it’s a good thing when looking at homes…

Our first home tour had us looking at single-family homes on a Sunday afternoon in the Sunset, Parkside, and Ingleside Heights. Our tour was a combo of open houses and vacant homes on lockbox.

Here are a few impressions:

- One of the homes we visited already had two offers in on it, and it was hosted by an agent who wasn’t the listing agent. This is pretty common, the listing agent has other things to do and the agent holding it open is actively trying to solicit buyers to work with them. This particular house had an unfortunate layout and an aggressive agent, so I was ready to flee through the door sooner than the Dogpoet was. Or, we were equally ready to flee but kept our game faces on.

- One of the homes we visited was on lockbox, but the owner was home. Which is incredibly, extremely rare in San Francisco. He was gracious and polite, but it is still odd walking through someone else’s home, making internal judgments, while the owners (and their children!) are lounging about playing online games. I understand, logically, that sellers have their quirks, but at the end of the day I think sellers should leave their home during showings. Period, end of story. Call me old-school.

- One of the homes we visited was just plain unfortunate (the Ms. Martha home if you read his blog). Fortunately for us, it was the first home we saw and things improved on the next homes we visited (which isn’t always the case – I arrange tours in a geographic order that makes sense, and don’t put houses that I think clients will like or dislike at the front or end of the tour).

- One of the homes was as enormous as it was cosmetically challenged, but that didn’t stop several hundred people from descending on it like locusts while we took a look as well.

- No matter how well I prepare, I always end up answering at least five questions with “I don’t know – that’s a good question, let me find out.” While beginner’s mind is a great state to be in and an honest I-don’t-know is better than a fictional but authoritative answer, I sometimes wonder if clients find themselves thinking “WHY THE HELL DON”T YOU KNOW THAT?!”

In between homes we chatted a bit. It was important to me that the DogPoet felt as involved in this process as The Husband had been up to this point, particularly since this is his first home purchase. So we chatted a fair amount about the buying process in SF, the market, neighborhoods, and his concerns and worries about buying a home. I tried to throw in a little witty banter every now and again to keep things from being too intimidating. One man’s witty banter is another man’s fingers-on-chalkb0ard-annoyance though, so I won’t grade myself on whether I was witty or insufferable.

After a few hours of touring we had some definite “no way would I live in that” homes, a few maybes, and some that were of definite interest.

Which is always a good start.

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January 2012 Sales: Data Source SFARMLS

As you can see from the above chart, January 2012 sales are down slightly from 2011, but up significantly from the bottom in 2009, when only 180 homes were sold in January.

From 2002 – 2005, January sales averaged right around 400 sales per month, then it went down to about 350 sales per month during 2006 and 2007, continuing to fall during 2008 (247 sales) until it hit bottom in 2009.

January 2010 sales were back above the two hundred sales mark, with both January of 2011 and 2012 coming in with over three hundred sales.

The reported sales in the San Francisco don’t include any new construction sales (because they aren’t advertised in the MLS, they aren’t listed as sold in the MLS), so I would say you could easily add 20 sales to the number and still be on the conservative side, based on conversations I’ve had with sales offices about their January activity (this isn’t including The Madrone, which would push it even higher).

The stats accurately reflect what I’m feeling in the marketplace, which is plenty of buyers who want to buy but there isn’t inventory that they want to make offers on. I have a feeling that 2012 will be a busy year in San Francisco real estate, with volume picking up in the March – June timeframe.

Rates are low and buyers are out there, so if the homes come on the market (which they will) then I expect that 2012 will turn in a solid performance, and perhaps the best performance since 2008.

It should go without saying (but I’ll say it anyway), that when I’m gazing into my crystal ball the future is always a little hazy. We are in an election year, so who knows how the housing market will be tweaked and treated by politicians, but I’d say it is a safe bet that no candidate wants to be the person who upsets the slow recovery of the housing market.

The statistics used to create the chart are from the San Francisco MLS, the data is believed to be reliable but is not warranted and is not guaranteed. Your mileage may vary. Always buckle up.

The San Francisco real estate market feels about the same right now. As you can see from the below chart, which is based on data from the SFARMLS deemed to be reliable but not guaranteed, we ended December with less than a two months supply of inventory for buyers. Which is really, really low.

Why the Real Estate Market Feels Tight

Months supply of Inventory is a measure of how quickly things are selling. It essentially looks at the number of homes selling in a given month and compares that to the total number of homes actively for sale. The metric tells you, at the current sales rate, how long it would take for all of the existing to be sold. A real estate market with less than 5 -6 months supply of inventory is generally regarded as a seller’s market, 5 – 6 months of inventory is considered a balanced market, while more than that is considered a buyer’s market.

If you are a buyer in the current market, though, don’t despair. Just like a dedicated fitness and healthy eating plan will have you back in your favorite jeans within a few weeks, San Francisco is due for it’s post-Super Bowl inventory bump. Real estate agents almost always freak out about this time each year, absolutely distraught that there just isn’t enough for sale. And at the moment, there really isn’t.

But if you can be patient, exercise regularly, and eat healthy I promise you that you’ll be able to comfortably wear your favorite jeans to the housewarming party for your new house!

2012 Loan Limits in San Francisco

Curious about how big of a loan you can get to buy a home in San Francisco? The above chart will walk you through what your options are for single family homes, condos, and 2 – 4 unit buildings. Please note that the purchase of a condo home falls under the “one unit” category, regardless of the number of condo homes in the development.

As you can see for a single family home or condo, a conforming Fannie loan is $417,000 and you can go as large as a $729,750 loan through FHA. Regardless of the program (Fannie, Fannie Jumbo, or FHA) you can expect to pay for private mortgage insurance if you have less than 20% down.

Interested in a 2 – 4 unit building? Depending on the building size, you can expect to qualify for a loan of between $533,850 to $1,403,400. If you don’t have 20% down, FHA loans or portfolio lenders (not pictured) are pretty much your only financing options at the moment.

As always, if you have more questions or want details about a particular loan scenario, don’t hesitate to get in touch. We aren’t mortgage brokers or bankers, but we are more than happy to put you in touch with a top-notch San Francisco mortgage broker.

Below are several pictures I took yesterday:

Indiana Street across from Millwheel Condos

New Plantings

Additional view with I-280 in the background

The photos give you a feel both for the park in relation to the Millwheel condos, as well as in relation to I-280 and its northbound on-ramp at Indiana & 25th St.

What you can’t see about Progress Park (from these photos) is that there is also a fenced-in off-leash dog park area. When I was there in the middle of a weekday, there were several dogs with their guardians taking advantage of the off-leash area, which has a doggie drinking fountain and a reasonable amount of space for running around.

Progress Park appears to be actively under improvement, with lots of new plantings and paths. Because of the noise from 280, I wouldn’t characterize it as a tranquil setting, but it certainly is a vast improvement over what used to be there.

If this little outdoor haven isn’t your cup of tea, the good news is that Esprit Park is just about a three block walk north up Indiana St. Should you find yourself over in the dogpatch neighborhood – either for work or play – do yourself a favor and stop by. Even better, visit the website and sign up to help complete and maintain this excellent addition to the dogpatch neighborhood.

Date: Mon, 6 Feb 2012 08:57:46 -0800
Subject: 3R order processing, turn-around time, and customer service
From: Matt Fuller
To: Vivian Day

Vivian,

Hello. I’m a Realtor here in San Francisco, and last week dropped off an application and payment for a 3R report required for the sale of a client’s single family home.

When I dropped off the application and payment, I was told that – as of last Thursday – your department is currently processing 3R requests received on the 20th of January. This seems to be a service level that is far lower than the 5 -7 business days quoted on your department’s website at: http://sfdbi.org/index.aspx?page=238#3R

When the fee increased from $50 to $160, your department went to great lengths to assure customers that the increase in fees was to cover necessary costs and that there would be an increase in both the accuracy of the reports and a decrease in the amount of time to receive the report. It has been almost four years since the fee increase, and your department still provides no warranty or assurance of the accuracy of any information contained in the report (I’ve attached a copy of the one page disclaimer provided to buyers that explains how unreliable the document is), and your processing times are currently 2 – 3 times longer than what is quoted on your website.

In addition, applications for a 3R permit cannot be processed online, nor can reports be received via email. I also have a hard time understanding why my clients must pay for a report when it contains information that is almost identical to that which can be found in the free online building department permit lookup site found at http://dbiweb.sfgov.org/dbipts/.

For all of these reasons, I’d appreciate it if you could take some time to review your department’s commitment to providing accurate and timely information in 3R reports.

Sincerely,
Matt Fuller, GRI

–
Matt Fuller
415.203.1745
Zephyr Real Estate/4200 17th St/San Francisco, CA 94114
Your Guide to San Francisco Real Estate
DRE# 01342261

Here’s a copy of the 3R warning provided to buyers in San Francisco.

I don’t make a habit of refuting every ridiculous article written about TICs, but this one was so over the top that I feel compelled to bring some facts to the discussion.

In his article, Mr. Shaw posits that:

“… it [condo conversion] would be a huge job killer, eliminating desperately needed construction jobs and making financing for new condo projects even more difficult to obtain.”

While I’ve heard any number of fascinating stories over the years about what condo conversions do or do not do to the city and its housing stock, this is the first time I’ve ever heard that condo conversions kill jobs. The heart of his argument seems to be that any homes converted to condos would reduce the demand for new condos by a ratio of 1:1 (or more, perhaps?).  In particular, Mr. Shaw seems to be concerned with the development of new condo projects in neighborhoods that he identifies as “emerging” like Visitacion Valley and The Bayview. He goes on to state that:

“Building condos creates living wage blue-collar jobs, and most of these new condos are slated to be built as economic engines for emerging neighborhoods like the Bayview and Visitacion Valley.” – Mr. Shaw

I have a few problems with this argument. While I’m shocked to see Mr. Shaw suddenly advocate for the creation of condo developments in San Francisco, particularly when he has a history of taking pride in defeating development opportunities, we’ll put that to the side for now. Once I picked my jaw up off the floor, though, here are some facts that we should take into consideration if we want to have a rational discussion about condo conversions and jobs.

TICs aren’t found in the neighborhoods he expresses concern about
I did a search of all listed TIC sales in the San Francisco MLS from March 1, 2009, to the present. There wasn’t a single sale of a TIC in District 10 in that entire period! In fact, I had to go all the way back to 2008 to find even one TIC sale in district 10 (a 2-unit building in the Excelsior). If I go back over ten years to look at all sales in District 10 since January 1, 2000, in District 10 (here’s a guide to the MLS districts), there have only been six TIC sales in all of the following neighborhoods: Silver Terrace, Bayview, Portola, Excelsior, Mission Terrace, Outer Mission, Crocker Amazon, Visitacion Valley, Little Hollywood, Bayview Heights, Candlestick Point, and Hunters Point.

So, at most, in the emerging neighborhoods that Mr. Shaw is deeply concerned about, six new condos will be created. At most. If they haven’t already been converted to condos.

Where are the TICs?
As  you can see from the map below (which contains the location of all TICs sold for almost the entire past three years), the overwhelming majority of TICs have been sold in central San Francisco. These are neighborhoods like The Castro, Noe Valley, Corona Heights, Duboce Park, Glen Park, Twin Peaks, Mission Dolores, The Haight, Cole Valley and Parnassus Heights. What do these neighborhoods all have in common? For the most part, neighborhoods where you find TICs are neighborhoods that have been almost entirely developed, where the opportunities for ground-up development are incredibly rare.

View TIC Sales in San Francisco in a full screen map

Neighborhoods Aren’t Interchangeable
Mr. Shaw also doesn’t appear to understand that home dwellers (renters and buyers) are rather picky about their San Francisco neighborhoods. Some folks want to live in The Mission or nowhere else. Some set their hearts on Noe Valley and won’t settle for anything less. While most people have a list of five to ten neighborhoods that they are interested in living in, I have seen very few people who view his emerging neighborhoods (Visitacion Valley, Bayview) as interchangeable with their preferred neighborhood. Put another way, I have yet to meet a buyer that says, “Well, if I can’t get what I want in Noe Valley I’ll take something in Visitacion Valley.” While both neighborhoods might have Valley in their name, the similarities pretty much stop there. Neighborhoods are not interchangeable, and the creation of housing stock in one neighborhood does not destroy demand in another neighborhood.

Take a look at the boom years for condo development in South Beach, Yerba Buena, and SOMA. If you take the entire quantity of condos built at The Palms, The Millennium, One Rincon, The Infinity, Blu, SOMA Grand, and The Beacon the total is 2,287 – about 10% more than the 2,000 potential condo conversions that have Mr. Shaw terrified (on a side note, I don’t know if 2,000 is an accurate number of potential condo conversions – anyone care to help?). Did the sale of 2,287 condos in the South Beach/SOMA/Yerba Buena area decimate the condo market in Noe Valley, North Beach, Telegraph Hill or any other part of San Francisco? No, they didn’t! Why? Because for many buyers, the neighborhoods weren’t interchangeable, and even if they were willing to consider neighborhoods with new developments, many objected to the style or the size of the building. Not to mention the fact that demand for housing has almost always out-stripped supply because of the challenges developers face in building homes in San Francisco.

“In contrast, converting a rental or a unit owned as a tenancy in common (TIC) to a condo creates no jobs.” – Mr. Shaw

Condo Conversions Create Jobs
I don’t feel like I’m going out on a limb when I say condo conversion will create jobs. For starters, every unit approved for condo conversion must undergo three inspections by the city – one general building inspection, one electrical, and one plumbing. Any deficiencies noted by the city during these inspections must be fixed as a condition of conversion to a condo (in fact, the violations must be fixed no matter what). All of the work must be done with permits by contractors that are licensed in the appropriate trade. Most of these contractors are smaller outfits – not the big construction companies bidding on large condo project developments. Could they use the work? Absolutely! Would the conversion of 2,000 dwellings to condos put these folks in the soup line? Absolutely not!

In addition to the jobs generated by physical inspections and corrective work, the condo conversion process requires the creation of legal documents (the covenants, conditions, and restrictions – or CC&Rs – along with the bylaws and articles of incorporation) and a survey of  the condominium building. Both the survey and legal documents would bring work to small businesses. While we can argue if creating more jobs for attorneys is a good idea or a bad idea, the reality is that condo conversion will help keep the doors open at small businesses across the city.

“After all, if you were a builder trying to get financing to build an approved project, why would a bank lend money to you when your units will be competing with thousands of newly converted units fresh on the market?” – Mr. Shaw

Condo Converted Homes Are Already Occupied
In contrast with building new developments like SOMA Grand or The Palms from scratch, the conversion of an existing dwelling into a condominium does not create a vacant property. TICs are already occupied – primarily by hard-working home-owners, but also by tenants. A homeowner is not going to sell simply because they converted their ownership from a TIC percentage of the whole building to a condominium. Does it make it easier for them to sell? Absolutely. Does that mean they will? Not necessarily. And guess what – even if they did sell, that would be good for the economy and jobs because it would mean that they would need another place to live.

If they do move, realistically they are going to be interested in “moving up” in their existing neighborhood (or a nearby one), but who knows, maybe they’ll want a condo in one of Mr. Shaw’s developing neighborhoods. In which case, the condo conversion helped create demand for more housing, not reduce it. The sale of a home also generates revenue from transfer taxes that go directly to the city. Not to mention the painters, landscapers, movers and other handy-folk that get business when a home is bought and sold.

“Think we would see many Ellis evictions if speculators knew that 3-6 unit buildings in San Francisco could never become condos? How about addressing this serious risk to long-term tenants instead of figuring out new ways for real estate speculators to get even richer?” – Mr. Shaw

Buildings with Two or More No-Fault Evictions Are Already Prohibited From Conversion (Including Ellis Acted Buildings)
Mr. Shaw published an article on May 11, 2006, in which he was delighted about “tough eviction protection legislation” that had just been passed by the Board of Supervisors and signed by Mayor Newsom. What was this tough eviction protection legislation? It was an ordinance that prohibited the conversion of a TIC to a condo if there was the eviction of an elderly or disabled tenant after May 1, 2005, for any reason unrelated to the tenant’s behavior. The law also prohibits condo conversion if tenants have been evicted from two or more units since May 1, 2005, for any reason unrelated to the tenants’ behavior. This eliminates any building that was vacated using the Ellis Act (or any other no-fault eviction method that removes tenants from two or more units) from eligibility for condo conversion. The law is also building specific, rather than owner specific – restrictions run with the property regardless of who owned the building at the time of the eviction. How quickly we forget…

“… does not change the fundamental issue: 3-6 unit building that were built as rental units, and typically stayed rental units for over eighty years are now off the rental housing market when rental units in San Francisco are more scarce than ever.” – Mr. Shaw

Condos Can Be Rented!
Mr. Shaw argues that the conversion of ownership from TIC to a condominium will eliminate hundreds of buildings from the rental stock. Which is, quite frankly, a blatant lie. As he immediately acknowledges in the next paragraphs of his article, condos can be rented. They are not subject to rent control, which is an entirely different concern.

I’ve been a tenant in San Francisco, and I’ve been a homeowner. The creation of condos from TICs might do a lot of things — like help the city balance its budget. But to suggest that it will somehow kill jobs is perhaps the most ludicrous thing I’ve ever read.