| The “Remodel Or Buy A House That’s Better” Blues | November 20th, 2008 |
|
There are advantages to just making what you’ve got better instead of moving. It can be less expensive. You can stay in the neighborhood where you’re established and familiar (provided you’re happy there). And you can customize your space to your specific needs. The two most popular rooms to remodel are the kitchen and baths. These are also normally the most used areas in a home. They are also the ones that will give you the best return on your investment. Another popular trend to accommodate those who are choosing to stay put are ‘flex spaces.’ These are areas that are re-purposed for another use (like turning a dining room into a family room) or taking a fresh look at an underused space for a playroom, office or craft room. The most common update I see in San Francisco is a conversion of space adjacent to the kitchen into a family area. In Edwardian or Victorian homes, this is usually accomplished by combining the dining room (or living room, depending on how you use the space) and kitchen to create a kichen/family room. Often there is a breakfast bar that divides the two spaces which also serves as an eating area. Another frequent ’repurposing’ in Victorian and Edwardian flats happens at the back where the old laundry porches are. Usually these porche are glassed-in rooms with sloping floors that allowed for water run off. They are almost always directly behind the kitchen. The most ambitious change homeowners make when repurposing these spaces is to level the floor and knock out the wall between the rooms. The extra space can then be incorporated into a kitchen remodel. Another, simpler alternative is to level out the floor and have the room serve as an office or craft room. I’ve also frequently seen owners ‘repurpose’ their basement rooms. It’s amazing to me how a little dark room below ground level can be turned into an attractive useable space with a resurfaced floor, good lighting, new sheetrock and a thoughtful color scheme. Remodeling baths are often a challenge in our older homes because they are so small. The most dramatic change I’ve seen with baths has happened when an owner is willing to grab space from an adjacent closet. But this choice often takes away valued storage space– which is a premium in older homes (where Victorians kept their clothes is still a mystery to me– I imagine they used lots of armoires and simplified their problem by not having much clothing to begin with.) One of my favorite ways to add storage is by installing a false wall at one of a bedroom to create a full-length closet. Owners often think that this can only work in a big bedroom but I’ve seen it work effectively in smaller rooms that don’t require much furniture (like a child’s bedroom or home office). Custom closet organizers can also make the little closet space you have more effective. I personally like the Elfa systems. The Elfa system is an alternative to a custom closet system. They aren’t as attractive as California Closets, but they take up less depth and are less expensive. If you are intimidated about installing the Elfa system yourself, CraigsList has postings from handymen who specialize in furniture assembly and installation of closet and storage organizers. |
|
|
|
If our troubling economic times are keeping you from buying up, don’t despair! You can still give your current a home a boost with some remodeling.| Tax Savings Can Help Pay For Seismic and Solar Upgrades | November 18th, 2008 |
|
Proposition N will increase the real property transfer tax rate to 1.5 percent for the sale of real estate selling for $5 million or more, and extend the transfer tax to real estate lease of 35 years or more. This part of the proposition is mostly aimed at sales of large commercial pieces of real estate, although it will also affect the upper-end luxury housing market. More significantly to Sellers of SF residential property, Proposition N will reduce the transfer tax for your property by up to 1/3 if you have installed a solar system or made improvements ot increase earthquake safety. On a $1M sale, this would equal a savings of $2,266.00. On a $5M sale (investment property owners, take note!), this could equal a $25,000 savings! It’s unlikely that for a small property owner these savings would pay for an entire solar system, but they could cover some simple seismic upgrades. If San Francisco follows Berkeley’s lead about which upgrades qualify (Berkeley has incentivized owners to retrofit since 1992), then credit will be given for foundation repair or replacement, mudsill repair or replacement, wall bracing in basements, foundation-to-mudsill bolting, shear wall installation, water heater anchoring, and securing of chimneys. If you are planning on doing any of the above listed work, keep your receipts and check about getting permits. The City may not allow simple handyman jobs to qualify without proper documentation. |
|
|
|
Two real estate related propositions passed this month. Proposition M set up new categories and descriptions of tenant harassment by landlords, and clarified what harrassment meant with | Why Words Matter - Writing Ad Copy for Real Estate | November 15th, 2008 |
|
Buyers go for style over substance: words like “curb appeal” or “beautiful” made homes sell faster than cut-and-dry terminology like “value” and “price.” Homes described as “beautiful” moved 15 percent faster and for 5 percent more in price than the benchmark. A home pitched as a “good value” sold for 5 percent less than average. Another dead-in-the-water phrase is “must see!” which had a statistically insignificant effect on the number of days homes took to sell. If you’re selling, it’s important to think about how words that sound good can be misunderstood. Here are some commonly used ad words and how buyers and/or their agents often interpret them: Motivated Seller - Please low ball ************************************** When I write about my listings, I try to help someone imagine living there. I also focus on the lifestyle a property offers and use words that will draw in the appropriate buyer- for example, copy for a SOMA loft should differ significantly from copy for a Noe Valley single family home. When moving into details, I like to augment my descriptions with language that helps a buyer picture the space. ”Big walls for art” and ”Rooms you can roller skate in” are two examples of how words can offer affect a home buyer’s experience of the property. To learn more about how I write about my listings, please visit the ‘featured properties’ section on my website. |
|
|
|
Researcher Paul Anglin, who teaches real-estate and housing trends at the University of Guelph in Ontario, Canada, studied the wording of more than 20,000 Canadian home listings from 1997 to 2000. His aim was to see how the language of the ads affected the speed and price a property sold for. Here is some of what he learned:| Updates on Some New Home Developments in San Francisco | November 12th, 2008 |
|
Fillmore Heritage - 1300 Fillmore Street. 92 units with Yoshis and the noted soul food restaurant, ‘1300 Fillmore’ downstairs . They’ve been trying to sell their last 6 units for quite awhile and have recently significantly dropped prices. There are 2-1brs and 4-2brs left. Symphony Towers - 724 Van Ness. Symphony Towers is two towers with 130 units total on Van Ness near Turk. They are anxious to sell out Tower I and move on to Tower II and are doing huge price reductions in both Towers right now. Finishings are medium grade and many of the units have pleasant outlooks to City Hall, and down Van Ness. I call Symphony Towers the “Crazy Eddie” building these days because of their price-slashing. The sales staff even talked about having something like a clown smashing a foam rubber dollar sign out in front to demonstrate how low they will go. As it stands, they’ve got an ad campaign and signs in the windows that make it look like a Montgomery Wards going out of business. Please call if you want more detailed information about their prices, but it would be reasonable to say that some of the units could sell 30% below their original list prices. Citrino - 566 South Van Ness. This 32 unit boutique building started selling last year. It’s in a somewhat challenging location but the building is sweet with small well laid-out units that have good light. They are also anxious to sell their last 9 homes and have reduced by about 10% off their original list prices. Simply Blu Condominiums - 631 Folsom. This high quality condo tower has 114 units and is in a coveted location on Folsom near 2nd. Finishes are upscale and square footage is good, with only 4U per floor. The trick here is to pay attention to which stack you look at. One side of the building faces the AT&T building and has no outlooks to speak of. The other side is great, and the units are priced accordingly. The Hayes - 58 Page Street. The Hayes is also reducing prices as they move beyond the magic 70% sold mark. This is a 128 unit low-rise building at Page and Gough. High-ish end finishings with espresso colored cabinetry, granite countertops and nice, big baths. People love the location because it’s so close to the Civic Center and the Hayes Street shops. 1521 Sutter is a 28 unit building near Octavia Street. It’s narrow and tall on a standard size lot. There are a combination of 1br and 2br units here. Feng shui inspired floor plans, high ceilings, bosch appliances, gas stoves. All units come with hardwood floors. Right now they have twelve units left, which they have been trying to sell for some time. There have been no price reductions, but the sales agent indicates that they are ‘open to offers.’ The Artani - The Artani is at 818 Van Ness. Cross street is Eddy. 52 units total, all 1br, 1br+den and 2br. People rave about the Artani because of the exterior architecture and the finishings inside. They also have a knockout roof deck and will have a concierge on site. Prices here are also very (very!) negotiable. |
|
|
|
What follows is an update on sales activity and pricing at a handful of new homes projects. I also have updates on: The Lambourne, The Greenwich, Mission Bay Radiance, 888 7th, the Arterra, 170 off Third, Soma Grand, the Millenium Tower, The Infinity (2nd tower coming soon), One Rincon, Homes on Esprit Park, Chelsea Park, Cubix, 829 Folsom, The Montgomery and One Ecker Place. Please call 415-577-0809 if you would like more information.| Pets in Condos? Yes We Can! | November 12th, 2008 |
|
Many older Homeowner Association (”HOA”) have written restrictions on pets. But a law effective January 1, 2001 required that any time an HOA generated new governing documents or amended or modified existing documents, the HOA had to allow each owner to have at least one pet. (Civil Code 1360.5) “Governing documents” includes CC&R’s, bylaws, and rules and regulations of the HOA. Allowable pets are any domesticated bird, cat, dog, aquatic animal kept with an aquarium, or other animal as agreed to between the HOA and the owner. A more recent law, which became effective on July 1, 2006 (Civil Code 1363.03,) requires all HOA’s to modify their rules regarding HOA elections. As a result, many HOA’s did modify their rules to comply with this new requirement. So, if an HOA has changed elections rules to comply with this law, they may be unable to prohibit pets in the complex. The state’s opinion is that when an HOA makes the required elections rule changes, it triggers the change that requires HOA’s to allow one pet per owner. While such an opinion does not carry the force of law, it is persuasive and may indicate how courts will rule in the future. A problem can occur if a particular HOA has not yet changed its elections rules (so as to comply with CC 1363.03), and a buyer or existing homeowner wants to have a pet in the unit. Theoretically, the homeowners (with the encouragement of an owner or new buyer after close of escrow) could compel the Board of Directors of the HOA to make the mandated rules change regarding elections, which then would trigger the requirement to allow one pet in each unit. Buyers can also try to push the issue if they are considering the purchase of a unit that doesn’t allow pets. If a buyer is demanding to be allowed to have a pet in the unit, their agent can forward the request to the HOA and ask the HOA to respond as to their position on pets in the unit. If the HOA is still maintaining a ‘no pets’ policy your buyer can insist that they have a right to a pet and hire an attorney to contest the matter after close of escrow. But keep in mind that this could be a protracted (and perhaps expensive) legal battle. |
|
|
|
A recent change to a law will have the effect of making it easier, and more common, for condo owners to have a pet.| Sustainable Cities - Who’s Hot and Who’s Not | November 9th, 2008 |
|
This year San Francisco remained in the #2 spot right behind Portland. SustainLane is especially happy with our Energy and Climate Change Policy, our City Innovation, and our Solid Waste Diversion. We ranked #1 in all three categories. SustainLane is not so happy with our Housing Affordability (we ranked 50th), Natural Disaster Risk (47th), and our Metro Street Congestion (45th). Other interesting findings in the SustainLane study: The study’s least eco-friendly city is Mesa, Arizona, which has poor air quality, a lousy water supply and little local food and agriculture. Right behind San Francisco is Seattle, followed by Chicago, then New York City. Among the ‘gotta give ‘em points for trying’ cities are: Columbus, Ohio, which moved from #50 to #30 in the last two years; Atlanta, which went from #38 to #19; and Cleveland, Ohio, which went from #28 to #16. In a reverse trend, Las Vegas dropped from #27 to #47; and Colorado Springs went from #26 to #43. |
|
|
|
The | The Bay Area’s Highest Earning Zip Codes | November 3rd, 2008 |
|
2. 94028 — Portola Valley. My hometown. When I grew up there in the 60s and 70s, people had horses in the front yard, creeks and trails in the back and neighbors all living in the homes they built themselves. Today it’s wineries in the front yards, caretakers in the back and scions of industry in impressive houses with vast square footage. Median income is $221,139. 3. 94506 -Danville’s Blackhawk community. Back in the 80s, Blackhawk was the first really expensive housing community I’d ever heard of in Contra Costa. The median household income here is $205,894 and the average home value over $1.2M. 4. Alamo. There’s a bit of drop in the median income as you hit Alamo to $179,506. 5. 94528 - Diablo 6. 94582 - San Ramon (forgive me, but this one surprises me. I always thought of San Ramon as one big office park.) Median income is $163,910. 7. 94065 - Redwood City. This zip code’s neighborhood is adjacent to the more expensive Menlo Park and has some gracious single family homes on large lots. Redwood City’s downtown has also undergone a renaissance in the past 20 years and is now cute as a button. 8. 94920 - Belvedere/Tiburon. How these towns come in behind Redwood City and San Ramon escapes me, unless many residents there are long-time homeowners who moved in before the big bucks came to town. 9. 94563 - Orinda. I love this little town. Great movie theater, super weather. 10. 94552– Castro Valley. Castro Valley’s explosive growth has made it a commuters nightmare for anyone that needs to drive to work, but its hillside homes are generally good quality construction and boast nice views. Relative to income, it also has one of the most reasonable average home prices at $844,682. 11. 94301– Palo Alto I think of Palo Alto as my second home town because it’s where my father practiced law and my parents moved there right after I graduated from college. It was best known as a university town until the 1980s hi-tech boom. 12. 94708– Berkeley Hills. Big houses with big views. 13. 94707– Berkeley’s Kensington neighborhood. Homes here are charmers, on winding streets. Kensington is also known for its excellent public school system. 14. 94526 - another Danville neighborhood. Danville used to a be another horsey sort of town until the 80s. It still has a charming downtown that reminds me a bit of Walnut Creek. 15. 94062 - Redwood City again. This zip code is further up towards the 280 freeway, where you’ll find homes with acreage and amazing views. 16. 94539 - Fremont. Young, hi-tech money in newer custom-built homes and high-end tract housing. 17. 94404 - San Mateo. It seems like most of the towns up and down the mid-Peninsula are on this list. 18. 94549 - Lafayette. I always think of Lafayette as being pretty tony. The average home price there is $1,045,864. The median income from here to #24 (Moss Beach) is all between $133,000 to $130,000. 19. 94556 -Moraga. Small, quiet, chic. Homes here are just a shade less expensive than Lafayette. 20. 94127. St. Francis Wood in San Francisco. This residential enclave is the closest thing the City has to a suburban neighborhood with gracious winding streets and elegant homes on extra big lots, dating back to the 1920s. 21. 94123. Marina District/Cow Hollow/Pacific Heights. Heights. Of the 25 most expensive homes sold in San Francisco, 20 were in this zip code. 22. 94517. Clayton. I know almost nothing about Clayton. anyone care to share? 23. 94074. San Gregorio. This beach town near Half Moon Bay has a population of 287. My suspicion is that you’ve got some very wealthy folk in waterfront homes skewing the average income upward. 24. 94038. Moss Beach. Another beach town. Population here is a little less than 2,000. 25. 94105. San Francisco’s South Beach neighborhood. This one is a bit of a surprise, but can be accounted for by the 20- and 30-somethings working in hi-tech. The average home sales price at $726,262 is the list’s lowest because virtually all the housing is condos. In reviewing the list, I found some interesting statistics: Except for Fremont, San Gregorio and Danville, the average household size in all these zip codes is under three, which indicates a sizeable number of empty-nester and child-free households. South Beach’s average household size is the lowest at 1.44, probably because of the large number of one-bedroom homes there. It’s also a popular neighborhood for singles. The average net worth of people living in the top nine zip codes is over $2M. Belvedere/Tiburon and Orinda also crack the $2M mark. The average net worth of a Pacific Heights/Cow Hollow/Marina resident is the lowest on the list at $1,286,305. One theory on why is that these neighborhoods’ relatively high number of younger renters (especially in the Marina) have yet to build substantial wealth. The younger South Beach demographic has a comparable average net worth, at $1,354,186. Relative to income, South Beach is the most affordable zip code, where the average home price is 5.64 times the median income. The least affordable is Pacific Heights/Cow Hollow/Marina at 8.63. Other expensive neighborhoods relative to income are Palo Alto and Lafayette where homes run 7.8 times the median income. |
|
|
|
1. 94027 – Atherton Also known as the home of the $6.4 million dollar teardown, Atherton is a favorite of developers, who like the town’s developer-friendly building code. The median household income is $236,845.| Vote and Starbucks Will Give You a Free Cup of Coffee! | November 3rd, 2008 |
|
Starbucks is offering voters a free tall brewed coffee on November 4, 2008, after they cast their ballots. Starbucks announced the initiative with an exclusive 60-second ad during the final pre-election Saturday Night Live on NBC, Saturday, November 1. You can see the ad on this YouTube channel. With all eyes, hearts and minds on this week’s U.S. election, we wanted to find a way to celebrate the occasion and highlight the significance of the moment. Voter participation is incredibly important to democracy. It is also a meaningful way for Starbucks to contribute on Election Day and support our customers who care about making a difference locally, nationally and globally. |
|
|
|
This missive comes to me from my client Leamon Abrams, Director of Government and Civic Affairs for Starbucks Coffee in Seattle:| Reasons to Buy — | November 3rd, 2008 |
|
Leverage and Appreciation - This is one of my all-time favorite arguments for real estate over stocks and paper investments. Appreciation won’t happen overnight, but with the right property, over the long term, appreciation is a safe bet. Using leverage to acquire the property will magnify the return on investment. Appreciation of 10% on a $1MM property translates into a 50% return on investment with a 20% down payment. Real estate is one of the few investments where investors can use other people’s money to magnify their return. When the property is sold, taxes can either by avoided, or deferred. Section 121 of the tax code allows for the avoidance of taxes on a primary residence, and Section 1031 allows for the deferral of taxes on the sale on an investment property. Many sophisticated investors will combine Section 121 and 1031 together for maximum tax advantage. An example would be to convert a rental property into a primary and avoid taxes on the sale. Leonard Spoto of the Asset Exchange Company reminded me that Warren Buffett advises “be fearful when others are greedy and be greedy when others are fearful.” I’m going to start using that quote– a lot! |
|
|
|
If you’re ready to stop looking at real estate as a quick way to make money (and I bet you are!), it remains a solid investment for the following reasons:| San Francisco Market Snapshot - How Bad Is It? | November 3rd, 2008 |
|
For Districts 1-8 only– the change in the median price for a 3/2/pkg SFD between the first half of 2007 and 7/1/08 – 10/15/08 is a decline of 6.6%. For District 5 only–the change in the median price for a 3/2/pkg SFD between the first half of 2007 and 7/1/08 – 10/15/08 is an increase of 14%. In all the SF analyses, over 40% of the 2008 period sales went pending within 30 days, to close at an average sales price that was approximately 3% - 4.5% over asking. This data reminds us that real estate values — in the country, California, the Bay Area, within the city itself – are local and completely specific to the property’s exact location. Warning: don’t try this at home– Statistical data often has no direct bearing on the value of your own property. For a more comprehensive analysis of what price your property could go for today, please call me at 415-577-0809. |
|
|
|
Two weeks ago the Chronicle published a scary article that projected 25% decrease in prices – from the market peak — in SF, Marin and San Mateo. The data got me thinking, so a couple of weeks ago I did an analysis of median sales prices for 3BR/2BA houses with parking, and compared sales in the first half of 2007 (typically considered the “peak” in SF) and sales in the last 3 1/2 months (7/1/08 - 10/15/08). I have a full analysis if you want me to send you a copy, but here is a summary:
