Central Districts: Alamo/Hayes Valley/NOPA/Western Addition

How can I keep my house cool?

With spring about to be sprung, the temperatures are bound to increase. The Consumer Guide to Home Energy Savings (via Care2) has a few tips for keeping your home cool while keeping a precious few bills in your pocket. Here are a few:

• Keep doors and windows closed during the day to prevent unwanted heat and humidity from entering. By night, ventilate either naturally or with fans.
• Cut your cooling load by using some conservation measures such as shading east- and west-facing windows and delaying heat-generating tasks such as dishwashing until the evening. (Hey, a reason to put off chores!)
• Ceiling fans can make you feel more comfortable at higher thermostat settings. Try a sow-turning, ceiling-mounted paddle fan, which provides a breeze of about 2.5 feet per second or 1.7 miles per hour.
• Planting shade trees around the house can offer relief, but remember not to plant on the south side if you’re seeking to benefit from passive solar heating come winter.
• Ventilate at night and on cooler days, using window fans and an open window in each room. Keep interior doors open as well to permit air flow.
• High-efficiency air conditioners with an energy-efficiency ratio above 10 are helpful. For central air conditioners, look for a seasonal energy-efficiency ratio higher than 12.
• Finally, resist the urge to use a dehumidifier while your air conditioner is operating simultaneously. This will result in increasing the cooling load while forcing the air conditioner to work harder. This isn’t what you want!

What do Paragon agents offer you?

How do the agents here at Paragon plan and execute an equally important mission: finding you a property that you’ll love and enjoy for years to come, getting it for you at the best possible price and terms, meanwhile making the process as smooth, straightforward and stress-free as possible while managing the transaction so that you are fully aware of the condition and circumstances of the property you purchase?

Here’s a few of the ways we do this:

• Take the time to recognize your needs, wants, priorities, concerns, financial parameters and timeline
• Analyze the process, cost, options, strategies and decision points in order to make them understandable and manageable
• Help you understand market conditions and values to lead to an informed decision
• Offer prompt data on new listings that meet your criteria
• Help you stay informed of opportunities along with assisting you to evaluate the pros and cons of all the choices before you in terms of price range, neighborhood property types and conditions as well as architectural style and amenities
• Provide complete market value analysis of any property under consideration; this includes recent sales, comparable homes available and market conditions pertinent to the property
• Skillfully and aggressively negotiate on your behalf in order to secure the best possible price and terms
• Guide you during the course of investigatory due diligence so that you may fully review all material information before the close of your purchase
• Refer you to professional resources as necessary
• Present you with the facts as best we can get them, never rushing you or pressing you to make uncomfortable decisions
• Provide you with true fiduciary representation, which is our commitment to represent and protect your interests above all others.

Part Three: Factors that underpin the San Francisco market

Today we conclude our look at the Paragon report titled 10 Factors Behind San Francisco’s Real Estate Market. Here are the last of those factors:

• Magnet effect. This small city of ours is also the heart of what the report says is “perhaps the fastest-growing, most lucrative, highest-prestige business segment.” In addition, San Francisco is also an amazingly beautiful, educated, tolerant and culturally rich metropolitan area, making it a magnet for awesome folks of all types who are willing to pay a major premium for living here.
• Limited supply. With nearly two-thirds of the city’s housing in rental units, much of which is under rent control, the number of homes suitable for owner-occupancy and available for purchase is relatively small – between 6,000 and 7,000 units. This makes the San Francisco homes market less than half the size of that is Alameda and Contra Costa counties.
• Tax benefits. While not counted as one of the 10 factors behind the current market due to the fact that the enormous benefits are always present whether boom or bust, they’re still a huge factor underlying the housing market. The ability to deduct interest costs and property taxes also allows homes to cost much more while also remaining affordable to buyers.

Questions? Get in touch.

Part Two: Factors that underpin the San Francisco market

When last we met, we began to discuss the Paragon report titled 10 Factors Behind San Francisco’s Real Estate Market. Let’s continue to look at these factors, shall we?

• High rents. It’s sometimes the smarter move to buy a home in San Francisco – given the multiple tax benefits, low interest rates, equity accrual and future appreciation – if your alternative is paying a ridiculous amount of rent without any of these benefits.
• Low interest rates. In the decade between 1996 and 2006, 30-year fixed-rate loans averaged a 6.3 percent rate. As of year-end 2015, that figure was running about 4 percent. That’s a 37 percent reduction in the cost of financing, which makes a major difference in affordability as well as the ongoing costs associated with housing. According to recent Fed indications, many are expecting rates to rise in the future.
• Renting rather than selling. These high rents and low rates have convinced some owners who would otherwise sell to rent out their homes, which is enhanced by the option to rent to tourists through AirBnB. Paragon has also heard from some owners that they are afraid to sell now, lest they or their children never again be able to afford to buy. Inventory is negatively affected by this since there are fewer listings coming on-market.
• The work-there, live-here factor. This relatively recent development entails reverse commutes – people working or taking new jobs in Silicon Valley high-tech and bio tech, but insisting on living in the city. Witness the Google bus phenomenon for further examples of this.

We’ll conclude our look at these factors next time.

Part One: Factors that underpin the San Francisco market

What are the main factors at play in determining the San Francisco real estate market? That’s what the folks at Paragon wanted to know, hence this report titled 10 Factors Behind San Francisco’s Real Estate Market. (Original name, don’t you think?)

Specifically, as the report notes, some of these “reflect general macro-economic trends and some … are specific to the city itself.” It goes on to state that in 1989, 2001 and 2008, many of those factors stalled or even went into reverse rapidly due to a large, negative, economic, political or even ecological event such as the Loma Prieta earthquake. The most current version was updated at year-end 2015.

So with no further ado, let’s start to look at these factors:

• Population growth. With an approximate annual addition of 10,000-plus new residents, San Francisco is struggling to keep up with city housing needs. “New construction is booming again in the city,” the report proclaims, “and tens of thousands of new housing units are now somewhere in the planning and construction pipeline, but for the time being, it appears that it will still be a while before enough new units arrive (to rent or buy) to substantially change the existing high-demand/low-supply market dynamic.”
• Brand new wealth. For the newly affluent residents of San Francisco, the number of which include many millionaires and even billionaires thanks to stock options, IPOs and company sales, the market’s wealth effect has been super-charged.
• Stock market upswing. Despite the turbulence last fall, the S&P 500 is nonetheless up about 60 percent since 2011 – an increase that has benefitted largely from a major increase in the value of financial holdings.

We’ll continue this discussion next time, when we’ll pinpoint more factors behind the market.

Courtesy Paragon Real Estate

June ballot to feature affordable-housing measure

The San Francisco Chronicle reports that the San Francisco Supervisors have, after much contentious debate, voted unanimously this week to place on the June ballot a charter amendment requiring developers to sell and rent a quarter of units in new projects at below market-rate prices.

The measure has over time been opposed by several parties – mayor Ed Lee, developers, construction trade unions and several moderate-leaning supervisors – and so Tuesday’s unanimous vote comes as a bit of a surprise. The opposing parties had said that the 25 percent below-market requirement, which more than doubles the current 12 percent requirement, would damage the housing market to the degree that it would actually make for less affordable housing as a result. The measure’s authors, Supervisors Jane Kim and Aaron Peskin, were dismissive of those claims.

“In the end, all 11 supervisors got behind the measure, even if some did so grudgingly,” the Chron reported. “There were political and practical reasons for doing so. Politically, voting against more affordable housing simply doesn’t look good in a city where affordability is a huge concern.”

However, that 25 percent requirement may not hold. The figure could be lowered either project-by-project or citywide, according to a resolution between the mayor and the measure’s authors that says by April 19, the Board of Supervisors is to pass legislation including a grandfathering clause that could exclude developments that are already in the works.

Supervisor Norman Yee, who helped make the deal a reality, told the Chron that he “really want(s) to have this resolution as a companion to the Charter to let people know I am serious.” Stay tuned.

San Francisco home prices: affordable to a fraction of households?

We know that the market is tough, but data recently reported by Paragon – and profiled in the San Francisco Chronicle – really brings this fact into relief. Paragon’s recent San Francisco Bay Area Housing Affordability Report finds that, despite the first drop in home values since 2011 (as seen at year-end 2015), real estate prices in the city are still hitting record highs. This translates to record lows in terms of affordability – in fact, only 8 percent of households are earning enough to afford these price tags.

The Chron quoted the report thusly: “The California Association of Realtors just released its Housing Affordability Index (HAI) for the 4th quarter of 2015, which measures the percentage of households that can afford to buy the median priced single family dwelling (house) – and San Francisco is now 3 percentage points above its all-time low of 8 percent, last reached in Q3 2007.”

Three factors affect affordability according to the HAI analysis: median house price, mortgage interest rates and household income. The Paragon analysis incorporated local data compared across neighborhood, city, county, and country. The chart that accompanies this post further breaks down in detail the exact affordability across the metro area. It’s a sobering read for many.

But here’s a few important things to consider, as outlined in the Paragon report:

• By definition, half the homes sold were at prices below the median sales price.
• The CAR Housing Affordability Index uses median house prices for its calculations – not condos, which make up a lot of the city’s housing inventory. In fact, in San Francisco, more than half of all home sales are condos, stock co-op apartments and Tenancy-in-Common units, or TICs, and if you include units of less than two bedrooms, they are significantly less pricey than houses.
• Other than large and recent increases in well-paid employment and population, much of the demand for Bay Area housing is underpinned by increases in household wealth, which differs from household income. Wealth includes items such as stock-market gains – and in particular, new wealth seeks to invest in first homes.
• Finally, insofar as San Francisco is concerned, most of its households consist of renters, the majority of whom are under rent control. These housing costs have little to do with market-rate purchase conditions. In addition, between 3 and 5 percent of San Francisco homes are bought by wealthy non-residents and foreign buyers as second homes or investments.

Questions? Get in touch.

Courtesy Paragon Real Estate

Part Two: Looking at San Francisco home values

Previously we started dissecting Paragon’s report on affordability by San Francisco neighborhood. Today we’re going to conclude that conversation by talking about slightly more expensive homes in the city.

If you’re looking to spend $1 million to $1.5 million, you’ll find prospects in the west and central-south parts of the city, including Central Sunset and Parkside, Golden Gate Heights, Miraloma Park, Sunnyside, Bernal Heights and Mission Terrace. As the report notes, the past two years have seen quite a bit of upward pressure on these areas.

You’ll find most condo and co-op sales in this price range around the areas including South Beach, Inner Mission, Hayes Valley, Dogpatch and South of Market, as well as in more high-end neighborhoods such as Pacific Heights, Russian Hill and the greater Noe-Eureka Valleys area. This is largely thanks to the arrival of newer condo developments that have surged onto the market over the past decade to decade and a half.

Now let’s get down to the higher figures — $2 million to $2.5 million. When you get up here, the market becomes dominated by the greater Noe-Eureka-Cole Valleys district, the St. Francis Wood-Forest Hill district, the Potrero Hill-Inner Mission area, and the Inner-Central Richmond and Lake Street area.

Then there’s the luxury market, otherwise known as homes selling for $2.5 million and above and condos, co-ops and TICs selling for $1.5 and above. (This is San Francisco, which is not necessarily your father’s luxury market.) These millions play differently depending on neighborhood. Factors that play significant roles include views, which are particularly important in the luxury condo market. The ultra-high end in the city is dominated by the northern neighborhoods such as Pacific Heights, where you’ll see houses selling for $5 million and above. You’ll find the most luxury condo sales in the greater South Beach-Yerba Buena area.

For prevailing SF median house and condo prices, Paragon’s interactive map of neighborhood values can be found here: SF Neighborhood Home-Price Map.