Part Two: What’s happening in the 2-4 unit residential market?
Yesterday we began a discussion of the state of the 2-4 unit residential market in San Francisco, as based on Paragon’s special report on the subject released last month. Today we continue that discussion – and as always, I encourage you to get in touch with any and all questions.
When it comes to sales and values by neighborhood, we’re seeing sales concentrated in the city’s district that were mostly built out before 1940. These areas, which were previously considered working-class, include the Richmond, the Inner Mission and Noe Valley. That said, there were also 2-4 unit residential buildings constructed in affluent areas such as Pacific Heights, and a 6,081-square-foot, two-unit Edwardian in Cow Hollow recently sold for $6 million.
Due to condo-conversion rules, two-unit buildings typically sell at a premium price here in San Francisco. When we see dramatic short-term fluctuations in price, these can be chalked up to the mix of particular properties on the market and selling in a particular time period. Remember that short-term trends are less significant than their longer-term compatriots.
Over the past four decades, many 2-4 unit buildings have been converted into condos or exclusive-use TICs – and few if any new 2-4’s are being built. That translates to a decline in inventory, lending more fuel to the fire of San Francisco political issues surrounding housing. It also means that even with the huge market recovery of the past three years, sales have dropped more than 40 percent from a decade and a half ago.
In the first quarter of this year, a great majority (83 percent) of the sales of 2-4 unit buildings were completed with no price reductions – they were quick and averaged sales prices of 7 percent more than asking price. This indicates a stronger market of high buyer demand as well as what we mentioned above: inadequate supply of inventory for purchase.
Finally, it’s important to know that the range in sales prices – just as with the type, size and quality of buildings – is significant, running from less than $500,000 to more than $6 million. Factors include location, condition, parking, views, era of construction and tenant profile.
Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email firstname.lastname@example.org. www.ceceblase.com