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Coworking Spaces in San Francisco Competing With Big Amenities

San Francisco’s coworking scene is undergoing a makeover as competition heats up between companies vying for the coworking market. Coworking is when workers from different companies work independently in a shared workplace. In San Francisco’s booming office market, coworking space takes up 2.5 percent of office real estate, but that is still big profits for companies offering the coworking places. They’re now in a battle of amenities to attract in new tenants or woo others away.

The biggest coworking company in the Bay Area is WeWork with 880,946 square feet of comfortable, ergonomic, well-conceived work space, plus the ever growing number of fetching amenities. Next in size is the Port Workspaces, with 118,000 square feet.

What kind of amenities are these coworking companies now integrating into their environment offerings. Well, there includes on site child care, a Mother’s room, sleep nooks, podcast booth (broadcast your own show), upscale club room, bocce ball court, and Port Workspaces offers a 30-foot slide down through a turquoise industrial style tube—for those quick descents we often need.

Making Laundry Sexy Again

How Laundry Rooms soothe and restore

It was the first room to the right just inside the front door. She walked in and twirled around like Julie Andrews in The Sound of Music. Visions of fitted sheets and t-shirts stacked like flattened origami danced in her head as she gazed at the folding table, while the side by side stainless Bosch gleamed in reflected light of the halogens above.

“You had me at the laundry room,” she told me later. 

It was the first time I realized how emotional people can get about laundry. Maybe I was behind the curve because San Francisco’s smaller homes generally don’t allow for the luxury of laundry rooms. Instead, we settle for a closet in the hall that can take a stacked unit or space among the storage shelves by the back door of the kitchen.  Lately, however, urban remodeling projects and new construction is honoring this special need for order and control and trying to address it with rooms, or at least a bit of extra space to sort and fold them. 

The following links are designed to soothe and inspire those who enjoy the Zen of a good wash and fold experience.

This first link from Houzz shows off design schemes bathed in grays, blues and greens. Depending on the shade, you will either feel neat and nautical, or utterly engaged in the Zen of it all.

These next two links offer more practical advice and images for small laundry spaces and rooms. My favorite ideas are the orange barn doors hiding the laundry “closet” in House Beautiful Small Laundry Room Ideas, and the drawer hiding the pull-out ironing board from a post with small space laundry ideas from MorningChores.com.

Finally, those of you who understand the transcendent power of  proper folding might enjoy watching the famed Marie Kondo demonstrating the folding technique that took the country by storm a few years ago with the advent of her best selling book “The Life Changing Magic of Tidying Up.”

SFRealEstateBuzz Makes Some News

Our most recent sale, referenced above was a modest bungalow in the Outer Sunset. It went for a lot more than asking because it was in a highly sought after neighborhood with a heavy beach vibe, had a stunning back yard, and offered lots of potential down with a set of fully developed architectural plans to add a kitchen, bath, family room and bedroom.

We got some press play  with this one– due to the record-breaking price  and some clever marketing.  Listed for $999,000, it closed for $1,605,000.

Robots Working in Restaurants in the Bay Area

Robots are part of the SF Bay Area food scene. Not the foodie scene. But definitely the food scene. Check out a scene on Telegraph Ave in Berkeley recently where a DoorDash robot at two feet tall was rolling the iconic street on its way to its next delivery, and it was so normal nobody much noticed. Robots being involved in our food in San Francisco has been around for a couple of years, and its growing, even though the robot technology is not that popular among the public. OpenTable did a recent survey of diners, with a whopping 70% against robots and automation in the restaurant and food service world. A report from McKinsey Global Institute states that the restaurant and hospitality sector in the U.S. is the fourth most automatable.

So, locally, we’re seeing robots delivering meals, robot arms dolling out coffee, and lunch bowls being made by robots (at Eatsa). And on the ever-changing hamburger front, over at 680 Folsom St. there’s Creator’s which features a total robot prepared burger — from slicing and toasting the buns to grinding and cooking the burgers themselves and tossing on orders condiments. All for $6. The robot burger is so popular as a novelty that you have to buy a ticket online to go get yours, and they’re booked into the future.

Four Charts About San Francisco Luxury Home Sales

The second quarter of 2018 saw the highest quarterly number of SF homes selling for $2 million and above –  probably because quality family homes in good neighborhoods easily sell in the $2-2.5M category.

If we limit our view to higher-priced sales of $3m+, Q2 2018 is just a handful of transactions ahead of the Q2 2017 with a total of 97.

What’s the best time of year to sell a luxury home?

We often say there is no bad time of year to sell in San Francisco UNLESS you are in the luxury market. That’s  because rich people (and their agents!) like to travel in the summer and over the school holidays.

This next chart works with homes of $3M and above.  For the last few years, luxury house  closings have peaked in October, reflecting a busy September buying season.

Just Listed: 1500 Diamond Street

Your back bedroom opens onto a flowering garden, while at the front a sky lit kitchen and open floor plan take in a shimmering downtown skyline. Head up to the yard with your coffee and your eye will rest on a further sweep of view. If you need to get downtown, the bus stop is right across the street. On your way back, make sure to stop at Castro or 24th Street so you can meet friends for dinner. Afterwards, you can walk the meal off on the climb back home. When you have guests from out of town, they can settle in to the bedroom suite down with its own side entrance so they can come and go as they please. At the end of the day, they’ll join you upstairs in the home that will never let you forget how lucky you are to live there.

Please visit: SFDiamondInTheSky.com

San Francisco Real Estate Market Report

We are pleased to announce that Paragon Real Estate has joined forces with Compass in order to deliver a new level of support and service for our clients. Founded in 2012, Compass is a real estate technology company now operating in 30 regions with over 90 offices across the United States, including New York City, San Francisco, Los Angeles, Chicago, Boston, Seattle, Washington D.C., Dallas and Miami. With the merger, the Compass Bay Area team consists of more than 500 agents closing more than $4.5 billion in annual sales volume.

While we wait for the autumn selling season to begin in September, this report will take a look at SF and Bay Area market trends from a variety of angles, starting with home prices.

Market Seasonality & the Autumn Selling Season

Inventory and demand ebb and flow dramatically in the SF market, as illustrated by the two charts below. The spring selling season is the most active overall, a period in the Bay Area that can stretch from late February to mid-June. The market then slows down for the mid-summer holidays. Autumn is the second major selling season, but is much shorter, running from after Labor Day to early-mid November. Activity then plunges for the mid-winter holidays. Because of this dynamic, September is usually the single month with the greatest number of new listings coming on the market, providing buyers with the widest choice of homes until spring rolls around again. The luxury home market is even more fiercely seasonal than the general market, which will be discussed later in this report.

The September surge in listings (first chart) leads to an
October surge of listings going into contract (second chart).

Housing Affordability

The California Association of Realtors just released its Q2 report on housing affordability, which we have illustrated in the 2 charts below. The numbers tie into the county median home prices delineated in the chart near the top of this report.

The Luxury Home Market

Bay Area Sales by County

With the continued growth of high-tech – exemplified by rapidly expanding companies such as Apple, Google and Facebook – Santa Clara and San Mateo now dominate Bay Area luxury home sales. Santa Clara has the biggest population in the Bay Area and the 2 counties combined have 3 times the population of the city of San Francisco. San Francisco is the only county that has a substantial luxury condo market, which adds a different dynamic to the mix.

Luxury Market Seasonality

As mentioned earlier, the luxury segment is fiercely seasonal in its supply and demand ups and downs. This next chart measures the number of new listings coming on market by month. It is not unusual for luxury house sales to peak in October, fueled by the rush of new inventory in September. On the other hand, luxury condo sales typically peak in May or June, feeding off the spring rush of new listings. The high-end market generally crashes in activity from before Thanksgiving through January, so the short autumn period is considered the last major window for sales until early next spring.

The Ultra-Luxury Home Market in San Francisco

The highest end of the high-end market consists of house sales of $5m+, and condo and co-op sales of $3m+. These sales constitute about 2.5% of SF home sales. There has been a big surge in luxury and ultra-luxury condo construction in recent years, providing the basis for increasing sales, while ultra-luxury house sales have mostly plateaued in recent years (very little new construction). Many new-project condo sales are not reported to MLS, upon which this next chart is based.

Luxury Condo Sales in the Greater South Beach District

Generally speaking, the SF luxury home market cooled significantly in mid-2015 due to a number of economic events (Chinese stock market crash, oil price crash, Brexit, big drop in IPO activity and high-tech hiring, presidential election fears), before picking up again in 2017. The luxury condo market in the greater South Beach district, running south from the Financial District and Market Street, was hammered by these events plus a number of other factors, which are delineated on the below chart. After peaking in 2015, sales volume (as reported to MLS) suddenly dropped almost 50%: Agents sometimes reported no one showing up for open houses.

Then in 2017, a recovery began that has now brought sales back up to a dramatic new peak. (Sales not reported to MLS would further increase recent sales volumes.) One of the big dynamics in this district is the competition between newly built, luxury condo listings and resale listings. Whether new or resale, almost all of these properties are in gorgeous, high-service, high-rise buildings, often with staggering views.

3 Classic Measures of Market Heat
Longer-Term Trends

Average Days on Market

As the market get hotter, listings sell faster.

Percentage of Listings Selling over List Price

The entire market has been very strong – these percentages are staggeringly high – but the house market is hotter than that for condos and TICs due to supply issues. The very small co-op market in SF is dominated by very expensive listings, and the luxury market is almost always softer than more affordable segments: The pool of buyers for the highest priced homes is clearly much, much smaller. And, frankly, luxury home listings are more prone to overpricing, which drastically affects response.

Months Supply of Inventory (MSI)

The stronger the buyer demand as compared to the supply of listings available to purchase, the lower the MSI. Generally speaking, MSI figures around the Bay Area have been flirting with historic lows in 2018.

Mortgage Interest Rates
Short-Term and Long-Term Trends

Two of the factors that have worried market analysts have been the big changes in federal tax law limiting the deductibility of state and local taxes, and interest rate expenses – changes that affect more affluent, higher home cost areas like ours most dramatically – and increasing interest rates. So far in 2018, buyers appear to have shrugged off any such concerns, and dollar-appreciation rates have actually accelerated since the beginning of the year.

Interest rates play a big role in housing affordability, and their plunge after the 2008 crash played a vital part in the market recovery of the past 6 years. It has typically been very difficult to predict interest rate changes with any accuracy, though most economists believe they are headed higher. The questions being: If so, how high? And how will buyers react?

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

© 2018 Compass

SF’s November Ballot Includes Tax For Large Companies to Help Homeless

San Francisco’s City Election committee recently approved a ballot measure up for vote in November 2018 that will address the city’s homeless situation with a tax on the city’s largest companies. The proposal is found in Article 28, brought to the election committee by Our City, Our Homes, and is dubbed, “Homelessness Gross Receipts Tax Ordinance.”

Led by Our City, Our Homes, a coalition of nonprofits, homeless advocacy groups and community groups put together 28,761 signatures for the ballet measure. The plan will raise $300 million from a 0.5 percent gross receipts tax on businesses that bring in $50 million a year in revenue (about 1,000 businesses in the city). The $300 M would double the city’s yearly homeless budget.

Estimates are that the funding from the tax could house 4,000 homeless people, and pay for 1,000 more shelter beds over five years. It would also fund legal assistance, rent subsidies and mental health services.

So far, the SF Chamber of Commerce says it will mostly likely come out against the measure.

Props and Shout-Outs This Week

Our business is built on referrals from old clients and fellow agents outside San Francisco.  This week’s hat tips go out to Colleen Larkin of Thornwall Properties, Julie Cuellas at Red Oak Realty, Heidi Abramson of West End Properties and Caldecott Properties’ Andy Read.

And thank you to everyone who continues to think of us for friends and family. We couldn’t put food on the table (and take you out to nice dinners, or send you chocolates and plants) without your help.  Plus you are loads of fun to talk to– as is anyone who reads and likes my blog or newsletters.

So don’t hesitate to reach out if you want to talk about San Francisco real estate. And remember, there’s no such thing as a “stupid real estate question.”

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