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Winter 2008 Issue
Market Update — Sunny Skies Ahead
If you read the recent San Francisco Chronicle article, "New real estate year starts with a tale of San Francisco's two cities," then you know the widely reported slump isn't significantly affecting higher-priced neighborhoods like Noe Valley, Ashbury Heights and Russian Hill. It's the historically working-class neighborhoods like the Outer Mission, Ingleside and Bayview that are feeling the sub-prime pinch as low, introductory interest rates from a few years ago are resetting. The supply of homes in these southeastern neighborhoods is about 20 months, as compared to the citywide supply of 3.7 months.
The media coverage of the sub-prime bust had a psychological affect that put folks everywhere in a "wait-and-see" mindset. But in spite of a slow end to 2007, I'm feeling positive about 2008. Prices never dipped in San Francisco's middle-to-high-cost neighborhoods like they did in places like Contra Costa County, where a slump sliced 15% off home values and left many recent first-time buyers holding mortgages that exceeded their homes' values.
I expect that San Francisco housing prices in all but the southeastern neighborhoods will hold or rise slightly in 2008. The following year should see the market back in fine form. After all, this city has a finite housing supply and lots of people who will always be willing to stretch to live here.
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Sunset House Showcases Green Solutions
If you haven' t already seen it, don' t miss the amazing Sunset Magazine Idea House designed by my architect friend John Lum. It' s full of ideas and cutting-edge green technology that capitalizes on sun, wind and rain power. Lum added a third floor to an existing two-unit building, completely renovating the house inside and out with environmentally friendly, energy-saving products.
Check out the cool steel staircase with glass risers, colorful Ann Sacks concrete tiles and Pratt & Larson circular tiles in the bathrooms. Heath Ceramics tiles were used in the "Endless Pool" spa. Kitchen countertops are made with recycled Skyy Vodka bottles that create jazzy Cobalt specs.
The home features very elaborate, and in some cases expensive, green solutions. A system that catches rainfall on the roof feeds into a tank and is used for garden irrigation. The 50-foot wind turbine puts energy back into the house instead of draining precious resources. Rooftop solar panels and hot-water tubes save energy and make for a green-chic accent in the third floor ceiling. "We don' t expect people to incorporate all of these ideas in their projects, but we hope it inspires them to create more energy-efficient houses with less impact on the environment," said Lum.
The Sunset Idea House is located in the Mission at 1303 Alabama St. and is open 9 a.m. to 4 p.m. Fridays, Saturdays and Sundays through January 27. General admission is $20; $15 for seniors on Fridays. No children younger than 10.
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HGTV Showtimes!
Since many of you have asked when my shows are airing, I thought you'd appreciate a comprehensive listing. I recently wrapped four HGTV National Open House shows focusing on what $250,000, $500,000, $750,000 and $1,000,000 buys in our fabulous city. As I'm sure you already guessed, I had to tell them $250,000 might just be enough to buy a parking space in San Francisco! The following are upcoming air dates. Please also check the HGTV website for the latest listings. If you TIVO and catch one of these shows, let me know what you think!
NATIONAL OPEN HOUSE AIR TIMES:
My other HGTV real estate program called, "My House is Worth What?," airs in February. This show focuses on one family for the entire half hour. The homeowners submit a video of their remodeling projects, then I go take a look in person. I start by talking with the proud owners about all their carefully considered choices and what value they think their remodel adds to their home. Then I ask them to leave, give the place a complete going-over and make candid comments about what I see.
When it's time for the homeowners to return for my verdict, I've got to tell them the truth on camera about how their remodeling efforts have affected the value of their home. Sometimes it' s good news. Sometimes it's not. Either way, it's a nail-biter, and you won't want to miss the dramatic ending of this show.
My next My House is Worth What? airs on February 12 at 11:00 p.m.
I've been signed to do five more programs at the end of the month, and I promise to email you with the exact dates and times for all. If you'd like me to help you decide what and when to remodel in preparation for a sale or for building future value, please give me a call.
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Remodeling Projects With Payback
What do you think is the San Francisco home remodeling project with the highest return on investment? If you said kitchen, bath or garage, you're wrong, wrong, and wrong again. If you said deck, give yourself a hand. According to the Remodeling Cost vs. Value Report of 2007, decks have the highest payback at an average cost of $13,509 to $17,665 at a midrange home (a 130% return) and a cost of $17,191 to $19,878 at an upscale home (a 115.6% return).
An attic bedroom remodel is the second most profitable mid-range home remodeling project in the city, with costs recouped at 121.3%, followed by minor kitchen remodels with an 11.36% return. For upscale homes, the second most financially rewarding remodeling project is the replacement of wood windows with a 112% return, followed by vinyl window replacements with a 104.7% return.
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Quick Sale in a Slow December
Greg Gibbs had been thinking for months about selling his one-bedroom/one-bath condominium in the historic Park Hill complex on Buena Vista Park, but he dreaded the process of vacating and all that it might require. "Like so many other people, I was caught off guard by the rapid shift of the market and I felt daunted by the prospect of preparing, moving and selling," remembers Gibbs.
Within days of our meeting, all that changed. I gave Greg a detailed plan for selling his property fast and he took action. "Brendon really lit a fire under me. His calm, determined and professional approach to the whole process gave me confidence," said Gibbs.
Within two days of our first meeting, I called in an electrician, a stager, and a painter — I even went out and bought light fixtures. We had the place on the market and ready to show in 10 days. Gibbs accepted an offer I brought him about three weeks later, and the deal was done.
"I had lowered my expectations because I wasn't convinced it could be done so fast in this market," remembers Gibbs. "But as Brendon says, 'All it takes is one offer!'"
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Market Stats
Although homes may stay on the market a bit longer and some people have reacted to the sub-prime news by sitting on the sidelines, San Francisco's median home sale price for the month of November 2007 was significantly higher than the median price in November 2006. The median sale prices in middle to high-end neighborhoods were high enough to offset declining values in southeastern neighborhoods. Another positive indicator is that final selling prices in November continued to be higher than asking prices, as reflected in the statistics below:
Median Home Sale Price:
November 2006: $750,000
November 2007: $820,000
Increase: up 9.3%
Average Sales Price as a Percentage of Final List Price, November 2007:
Sold Houses: 101.8%
Sold Condos: 100.3%
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