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California luxury home values post small gains

This article was posted from the California Association of Realtors. They, in turn, quote First Republic Bank’s “Prestige Home Index” report. Here’s what they have to say:
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Luxury home prices in Los Angeles, San Diego, and San Francisco continued to increase during the second quarter of 2006 but at a slower pace, according to the First Republic Prestige Home Index™, which tracks homes valued at more than $1 million in key California markets. In Southern California, sales of homes valued $10 million or higher have remained strong, while sales in the lower- to mid-tiers of the luxury home market have slowed. In San Francisco, the entire market for high-end homes has cooled.

According to the report, the value of luxury homes in Los Angeles edged up 3 percent from first quarter and 12.8 percent compared with the second quarter of 2005. The average value of a high-end home in Los Angeles now stands at a record $2.36 million. The prices of luxury homes in San Diego and San Francisco also recorded gains during second quarter, rising 6.4 percent and 4.8 percent, respectively, from a year ago. The average luxury home in San Diego is $2.14 million, while the average luxury home in San Francisco is valued at $2.93 million.

– C.A.R. Newsline

Here is the link to the latest “Prestige Home Index” report from First Republic Bank which changes periodically. Read the August 16th report below:
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Luxury Home Values Rise in Second Quarter of 2006 Modest Gains in Los Angeles, San Diego and San Francisco

August 16, 2006

SAN FRANCISCO — Luxury home values posted small gains in Los Angeles, San Diego and San Francisco in the second quarter of 2006, according to the First Republic Prestige Home Index™ by First Republic Bank (NYSE: FRC), a leading provider of wealth management and private banking services.The Index, which has tracked luxury homes since 1985, found:

  • San Francisco Bay Area values increased 0.3% from the first quarter of 2006 to the second quarter of 2006 and gained 4.8% from a year ago. The average luxury home in San Francisco is now a record $2.93 million, up $134,978 from a year ago.

“Over the past year, the luxury home market in California has transitioned to a more normal, stable market in which properties sell at a more measured and less frenetic pace,” said Katherine August-deWilde, Chief Operating Officer of First Republic Bank. “Luxury home values continue to increase, but at a much slower rate due to rising inventory and interest rates. Homes are being priced more aggressively to sell because buyers have more options.”

First Republic Bank produces the Prestige Home Index each quarter with Fiserv CSW Inc., a leading provider of automated property valuation services and home price metrics to U.S. financial institutions. Historical results of the Index are accessible at www.firstrepublic.com.

In San Francisco, values were up 0.3% compared to the first quarter—the slowest rate of appreciation since the third quarter of 2004. Over the past two years, quarterly increases in the San Francisco Bay Area have been no greater than 6%.

Agents in the San Francisco Bay Area said that well-priced homes in great locations are selling very well, but the market overall has weakened over the past year.

“The market between $2 million and $6 million is really strong because of continuing demand,” said Caroline Kahn Werboff of Hill & Co. in San Francisco. “If the house is priced fairly, you’re seeing multiple offers at or a little over the asking price. Interest rates would have to get up to double digits to make a significant difference.” In the high end of the market, Kahn Werboff said there have been some price reductions. She said some buyers are reluctant because they believe prices will decline.

David Gowan of TRI Coldwell Banker said the market is more balanced, although slower than it has been in recent years. “Instead of selling in two weeks, properties are selling in two months, just like they would in a normal market. What we’ve seen the past six years is unusual.” Gowan said buyers are generally making offers slightly under the asking price.

In San Francisco’s East Bay, the market is slowing. “Over $2 million, our inventory is up and buyers aren’t in a terrible hurry,” said Tara Rochlin of Village Associates in Orinda. “We’re seeing more sellers willing to negotiate and lower their prices. We’re headed toward a more balanced market, which is better for everyone over the long term.”

– First Republic Bank’s “Prestige Home Index” Report

Crime and safety in different areas of San Francisco

A reader asks: Where can I find information on the crime and safety in different areas of San Francisco?

Our reply: The best information can be obtained from the police department. There is a crime maps website posted by the San Francisco Police Department. After agreeing to the terms at the bottom of the page, you can go through their automated process to find statistics and maps for various types of crime.

– Janis Stone and Mick Orton

A “normal” deposit for buying San Francisco Real Estate

A reader asks: Do buyers generally put down 3% or is that flexible when making an offer?

Our reply: The amount of deposit that is given with the initial purchase offer can reflect the seriousness of the buyer. We encourage buyers to make the largest deposit they are able to (up to 3%) when we present their offers. This shows the seller 1) that they have cash available, 2) are qualified buyers and 3) are serious about purchasing the property.

However, if the buyer’s money is tied up in investments and will take some time to liquidate, the initial deposit could be any amount but usually a minimum of $1,000 which is then increased to 3% within a short period of time or upon removal of contingencies. This same approach applies when the buyer is getting 100% financing.

The reason 3% has become generally accepted as the deposit up to close of escrow is because of the liquidated damages law in California. This clause in the sales contract reads as follows: “Item 27. LIQUIDATED DAMAGES. If Buyer fails to complete this purchase because of Buyer’s default, Seller shall retain, as liquidated damages, the deposit actually paid. If the Property is a dwelling with no more than four units, one of which Buyer intends to occupy, then the amount retained shall be no more than 3% of the Purchase Price. Any excess shall be returned to Buyer. Release of funds will require mutual, signed release instructions from both Buyer and Seller, judicial decision or arbitration award. BUYER AND SELLER SHALL SIGN A SEPARATE LIQUIDATED DAMAGES PROVISION FOR ANY INCREASED DEPOSIT (e.g., CAR Form RID).”

– Janis Stone

Visitors want to know about the weather in San Francisco

A reader asks: As a first time buyer coming from the Mid-west, what areas in the City get the most fog? Is it foggy in San Francisco year-round?

Our reply: It is called the “fickle finger of fog” for a reason….. sometimes it cannot be predicted and comes and goes without explanation. For instance, last week we had fog and cold weather every night except on July 4th! That night it was perfectly clear, and fireworks could be seen all over the Bay area! Then the following night (and almost every night thereafter) the fog was back.

San Francisco’s foggiest months are June, July and August. However, that doesn’t mean it is foggy every day and is not usually foggy during the day all over the City. As we said before, it is unpredictable.

There are areas that are consistently foggier more often and longer during the day. Generally speaking those areas closest to the ocean (not the Bay) are colder and have more fog; neighborhoods such as Richmond, Sea Cliff, Lake St., Sunset, Golden Gate Heights, Parkside, St. Francis Wood, Monterey Heights, West Portal, Lakeshore, Stonestown, Merced Manor, Merced Heights, Lakeside, Ingleside Terrace, Ingleside, Oceanview, Balboa Terrace, Mt. Davidson Manor, Westwood Park/Highlands, Miraloma Park, Forest Hill & Extension, Diamond Heights, Midtown Terrace, Forest Knolls and Twin Peaks. Sounds like most of the City, doesn’t it??? Yet even within these districts there are “banana belts”– small areas where it gets warmer and the fog tends to clear more often or earlier in the day.

Going eastward there tends to be less fog and it clears earlier in the day. They warmest areas of the City tend to be the Mission, Noe Valley, Potrero Hill, South of Market and Mission Bay. The other areas are somewhere in between. Of course some days, expecially in July and August, the fog persists all day long all over the City and the tempertature stays in the high 50’s and low 60’s.

The good news is that when we have those heat waves where the temperatures reach the 80’s and 90’s we have the fog to look forward to — we like to call it “San Francisco air conditioning”!

– Janis Stone

Golden Gate bridge tolls

A reader asks: If you live in Marin county, is there a monthly pass to get across the Golden Gate Bridge, or do you pay 5 dollars a day everyday?

Our reply: No, there are no monthly passes for the Golden Gate Bridge which connects Marin County to San Francisco. And the days of buying booklets of discounted bridge “tickets” have gone away with the new FasTrak system. It is $5 to cross the bridge at the time of this writing but costs only $4 with FasTrak.

By putting a credit card on file with the district, you receive a transponder to put in your car’s window. Then your card is charged in $40 increments, and $4 is deducted every time you cross the Golden Gate Bridge. This transponder now also works for all 8 of the Bay Area bridges including the Richmond-San Rafael Bridge, the Oakland-San Francisco Bay Bridge, and the Carquinez Bridge which connects Napa County to Contra Costa County.

– Janis Stone and Mick Orton

ARMs coming to an end… what’s next?

A reader asks: Are creative mortgage products going to create buying opportunities as interest rates rise and peoples ARMS come to the end of their fixed rate term?

Our reply: Lenders are already coming out with products that have longer amortorization periods which make monthly payments lower and enable buyers to qualify for the loan. There are now 40 year Adjustable Rate Mortgage (ARM) loans and other new products according to Dennis Kowalski at Princeton Financial.

– Mick Orton

Information about San Francisco’s schools

A reader asks: What are the school systems like in San Francisco? Which are better, public or private?

Our reply: Parochial schools are also highly rated by parents. A blog has been created to discuss matters pertaining to San Francisco schools. And for more information on which schools are located in different districts you may go to the San Francisco Public Schools website.

Finally, for a rating of which schools are best, got to GreatSchools.net.

– Janis Stone

“Budget priced” San Francisco Real Estate?

A reader asks: Are there any “lesser known” areas where you can live with decent views of the Bay, easy access to the water and aren’t completely tourist ridden for less than a million dollars?

Our reply: Yes there are areas that fit your requirements, but they are not really “lessor known” areas. There are a number of condominiums, lofts, TIC’s (tenancies in common) in the South of Market area, South Beach, and the newly developing 3rd Street corridor. They have or will have some views of the Bay, fairly easy access to the water and sell for under a million dollars. Of course you did not mention the size of the property you wanted or how many bedrooms and baths you were looking for. These details would be large factors in the price.

Most of the areas mentioned above are not usually on the tourist path. However, they can get congested when people are going to baseball games or trying to get to freeway onramps!!

– Janis Stone

Explaining the “one inch” rule in San Francisco Real Estate

A reader asks:Was there a reason for having the “one inch” rule or “no common wall” ordinance when it comes to building homes in San Francisco?

Our reply: Over the years the building codes for San Francisco have been modified many times as have the zoning laws which also determine what can be built on a lot. So what was able to be built even 20 years ago cannot be built today. I am not aware of the “one inch” rule and a search of the Building Department’s database revealed nothing.

Several years ago we demolished a property and built a new one in San Francisco’s Noe Valley. In this case we were able to build to the lot line. But practically speaking we had to deal with other properties that were built to their lot lines (and they were also leaning onto our lot). As a result, we had to build a slightly smaller home which was only 24 feet 9 inches wide on a 25 foot wide lot!

Actually, there are existing homes in San Francisco that have “common walls”. We sold one in lower Pacific Heights, and there was a common wall agreement recorded on the title. That home was built in the late 1800’s. Another common wall development we know of in San Francisco, is what is called a PUD (planned unit development) in the Twin Peaks area.

– Janis Stone

Standard Realtor’s commission percentage in San Francisco

A reader asks: How much of a percentage do Realtors normally charge as commission in San Francisco?

Our reply: Commissions are negiotiable and the is no “normal” rate. In today’s open market there are any number of choices for a seller. There are those who have a nominal flat fee and only put the property in the MLS but do not help the seller negiotiate or find a qualified buyer. However, as in most businesses, “you get what you pay for”.

If you want to receive the most “net” from the sale of your property a good, experienced Realtor can be worth much more than the commission they earn. For example, in a survey by the National Association of Realtors it was discovered that For Sale by Owners receive 16% less than owners who used a Realtor. So with a 6% commission paid to the agent, the seller would still be ahead by 10%! And if that agent was a skilled negiotiator the seller could be ahead even more.

Experience is so important in any market but in a changing market it can mean the difference between selling the property or having it sit on the market losing value. Although do not believe in a gloom and doom scenario, the San Francisco Real Estate market has begun to change. (Refer to our previous article on June 16, 2006. We also publish a weekly report of market conditions from Avram Goldman, President of Coldwell Banker, San Francisco Bay Area on our website.) Choosing the right broker can not only make the process easier but also more profitable for the seller.  

– Janis Stone

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