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From the Chronicle: Bay Area residents still want to stay in California despite ‘mass exodus’ myths

The much hallybooed exodus isn’t as exodusing as it’s supposed to be…

There’s been a lot reported about San Francisco residents fleeing the city, causing rents to plummet and SF home sales finally embracing transparent pricing. But when looking at data from online real estate platforms, most of the real estate searching is still happening within the metro area and throughout California.

 

Source: Bay Area residents still want to stay in California despite ‘mass exodus’ myths

San Francisco Chronicle: Q+A: Sound Off: How important is parking and access to public transportation?

K E V I N + J O N A T H A N  I N  T H E  M E D I A 

From time to time we get asked to chime in the Sunday San Francisco Chronicle’s real estate Ask-a-Realtor column “Sound Off.”  This week’s question asked about how much value parking and proximity to public transit adds to homes.

Appearing in the San Francisco Chronicle’s “Sound Off” real estate column as published on Jan 21, 2018, see the online version here.

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Question: How Important Is Parking, Access to Public Transportation?

A: For a city that supposedly favors mass transit, San Francisco buyer behavior still shows that having parking impacts a property’s value equally for condominiums and single-family houses. In 2017, condominiums with parking sold for about $350,000 more than those without (an average of $1.3 million vs. $900,000), while houses with parking sold for $400,000 more than those without ($1.78 million vs. $1.38 million) per MLS data.

But for folks who are willing to lead a car-less life proximity to mass transit will impact property values significantly. These buyers are looking for an “urban” experience that relies on mass transit, Uber or foot power to get to work, entertainment and food — throw in an area close to a farmer’s market and you’re golden.

And while you’d expect younger, entry-level, Millennial buyers to value proximity as an amenity (as we see among our own buyer pool), we also see the same willingness to spend more for proximity from Baby Boomer buyers who sell their empty nests to flock to the city.

More Columns from Kevin + Jonathan

Our Annual Review: Steady As She Goes — Median San Francisco Prices Rise 6% Matching Historic Norms in 2017

The 2017 Annual Review
SF Real Estate Sales Data
What It Means

It’s time to look back at sales data for SF real estate for 2017. While 2017 may not have seemed to be the most normal year around the world — wild fires, 106° days in San Francisco, mayors suddenly leaving us early, presidential lows and a whole renewed awareness of what ‘crossing the line’ meant one thing that held unsurprisingly steady: real estate prices and value. As we’ve said time and time again, real estate is the ultimate hedge against risk, change and surprise in that it’s both an asset with value that also has utility. 

So, how did 2017 compare to 2016? 

First, remember that San Francisco homes have had the same annualized 6-percent growth rate since the Regan administration. Second, supply is incredibly low: 2016 saw 5,500 new housing units hit the market (including rental and purchase) but 2017 only saw 1,988 new units come online and there are only 3,400 units under construction currently. Then it should come as no surprise that values continued to grow steadily despite concerns about what a Trump administration could do and creeping interest rate rises. Take a look at numbers below along with our observations and thoughts about what we’ve seen and what may see going into 2018.

 

Big Gains in 2017 Are Just the Start for District 3’s Rise  

As we predicted last year, the biggest gains in median home values took place near SF State and the Excelsior. This is thanks to more value-minded buyers being pushed out of neighborhoods like the Sunset, Mission Terrace, Glen Park and Bernal Heights (not to mention Noe Valley, the Richmond or Potrero Hill) into District 3 Central areas like Eureka and Noe Valley continue to be popular as do other areas where folks can get 101/280 access easily so they can commute to jobs in Silicon Valley.

The Whole Foods effect: With the addition of palm trees, new street lighting and repaving, Ocean Avenue (which straddles District 3 and 4) has itself been transformed and updated. Throw in a Whole Foods and the massive new rental inventory from Avalon it’s no wonder that the area’s natural proximity to 280, BART and MUNI were finally discovered.

Construction here is just emblematic of the District’s long-term growth plan. The massive Park Merced complex (those buildings behind Stonestown Mall, off of 19th Avenue as you go south out of the City) is already being torn down as part of a $15 billion, 15-year redevelopment project that’s gotten underway. The Park Merced project is the big game in town as its 40,000 new units make up the bulk of the total of 60,000 entitled units in the City’s entire new pipeline.    

Warning Will Robinson. Westwood Park (District 4) showed extraordinary strength in 2017. As demographic turnover continues in the area, which is known for very large, detached and charismatic houses that channel a bit of Southern California, folks looking to renovate houses into forever homes should beware of a few blocks of Plymouth Avenue where backyards abut City College’s parking lot. A bit of SoCal’s pesky suburban sprawl is on the way to the area in the form of 600-800 rental units from (of course) Avalon. The large dirt berm that separates the backyards of these houses on Plymouth from the parking lot will be bulldozed away. Construction is slated to take at least 2 years but who knows how many years property values will be impacted.  

District of the Year:
District 3 — The Southwest

Areas in yellow show where the prime real estate is for District 3 — between Ocean and Holloway. Also, note where on Plymouth Avenue will abutt Avalon's latest SF project that will replace parts of City College's parking lot

District 2: Houses in the Sunset need to improve to sustain price growth, otherwise expect steady values

People will get pickier. For example, the coveted 3-bedrooms-on-the-same-level layout will be at the top of people’s wish lists. Folks will want to live on the odd-side of a numbered avenue (to get views), developed in-law spaces that are flexible in use (income unit versus legitimate in-law use to an au pair unit) and finish level for flipped houses will be even more important going forward to motivate increasingly discerning buyers as prices move up (and up).

The Sunset’s prosperity may not translate to the Parkside.

As this cycle’s prosperity has moved from north to south and east to west the question that some folks may wonder is if the Central or Outer Parkside. Our guess is that while price strength may come to the area, the Parkside’s housing stock — especially the Outer Parkside — is smaller and denser with far fewer trees. Value-added homes will have to feature smarter design and higher-end finishes to get higher dollar-per-square foot prices than you might otherwise get for a Sunset home.  

West Portal’s limits is the Inner Parkside’s gain. 

We’ve talked about how the charm of this Americana-meets-San Francisco neighborhood has captured the imaginations and pocketbooks of buyers looking to have bigger homes with character and proximity. Indeed, average prices here are pushing past the $2 million mark, which has had a positive knock-on effect on its adjacent Inner Parkside neighborhood where there are more homes that have yet to undergo the mandatory Sunset-Parkside once-in-fifty-year updating. And while West Portal has been on many people’s radars for quite some time, the Inner Parkside’s growth curve just started about 3 years ago as $2 million is still a substantial number despite rising incomes. For both areas, watch for more fixer homes here go for higher prices especially if the house is on a bigger parcel with views and the potential for higher-end finishes or more desirable floorplans.    

 

Containing Enthusiasm
District 2 — The West

What will happen with the Sunset, Parkside and West Portal? Where's better and where's to come?

The Rest in a Nutshell
Quicker Thoughts About Up north, down south and out east

We saw home prices in District 7 and 8 decline slightly but only in the aggregate as fewer fixers are coming available as showcase houses take time to prepare

Don’t let the slight declines in the traditionally strong north side neighborhoods trip you up. As we’ve said many times before, when folks think of Pacific Heights they think of grand redone mansion-like homes. But when they got there they would oftentimes encounter musty old houses that needed to be redone. Nowadays when you are in Pacific Heights you’re more likely to encounter construction crews and port-a-potties as the musty old houses are undergoing the conversion into those big mansions you’re picturing (if you want to see completed mansions then you should go over Presidio Heights). Anyway, these projects take time to complete (2-3 years at least) and, if it’s a flip, face an interesting dilemma: at these high price points folks want to customize and personalize their homes rather than live with what a developer picks for the ‘market.’ But when done right, flipped homes will sell and will sell very well.

South Beach and South of Market

Price growth isn’t as strong as the rest of the City for a few reasons: an oversupply of same-looking inventory, increasing traffic congestion, MUNI light rail construction and new building construction in general. But once things get a little more settled down as projects get completed the housing inventory picture will become clearer (at least for a foreseeable future) and the area’s traffic issues should become better (fewer construction-related delays) condo prices will start to rise at a rate closer to the City’s 6 percent average. This should take place within the next 2-3 years. And, to combat the sameness issue we will start to see more distinctive projects and architecture like 181 Fremont for example.  

Bits and Bobs

Bayview: Thrown-together, opportunistic flipper projects in the Bayview where unsophisticated developers have pushed prices down.

Bernal Heights: housing prices have stabilized but are still very strong for projects that go the extra distance or are otherwise special and well-executed

What’s Up with Rentals in San Francisco? October 2016 Edition

A Rental Market Round Up

More Rental Units, More Rent Control, More Confusion

The Bay Area has the dubious distinction of being one of the most expensive rental and real estate markets in the country if not the world. Yet, despite having some of the most progressive public policies designed to promote housing (e.g., below market rate unit requirements, rent control laws, very active Rent Boards) rent and real estate remains very precious and expensive. Rather perversely, progressive housing policies contribute to pushing prices up. But it’s a heated topic and one that resonates with Bay Area voters as the numerous rent control initiatives this November demonstrates. (Take a read here about how passionate it can be when it comes to campaign mailers).

It’s Not Just Rent Control Laws Silly, It’s More

But expensive are also a result of public policy that slows development down (stringent environmental review standards, historic preservation and zoning considerations, infrastructure) while making it more expensive; climate

If You Build It, Prices Will Go Down… Ever So Slightly

With the stated objective of adding more housing units in San Francisco, public policy planners have streamlined the approval process to the extent they can. The result? More rental units have debutted in San Francisco over the past year. As such you can see some price easing (less than 5% on average from 2015). The chart to the right shows that progress has proven incremental but it’s still progress. But remember all of the units added are usually exempt from San Francisco’s Rent Ordinance meaning they’re exempt from rent control and eviction control regulations and protections.

More Rental Units, Less in Rents, Right?

Wait A Minute, Don’t You Guys SELL Real Estate?

Why talk about rentals in San Francisco? Well, it is an important part of the City’s economy but showing high rent prices highlights why renters should consider buying property instead of renting it because, on balance, monthly rents may equal or even exceed monthly mortgage payments especially when lenders like Citibank and SoFi can offer 10-percent-down loans without mortgage insurance on property purchases in the City.

Also, if you’re an investor, rent roll income (even from rent-controlled units) provides a more stable and constant revenue stream with tax benefits that the stock market cannot. Give it some thought!

TELL US MORE.

Fill out our Buyer-Intake Form here and we’ll talk with you and investigate if property ownership makes more sense than renting.

San Francisco’s Tenant Buy-out Program a Year Later…

Following the Cash (For Keys) in SF

SF-Buyout Data Graphic Apr 2016

Cash for Keys a Year Later

How the City Has Changed Since New Landlord-Tenant Buyout Provisions Went Into Effect

On our way back from an appointment at City Hall to confirm a new listing that we will tell you about in future posts (very exciting) we stopped by the Rent Board just because. Really, just because. Why? The folks there, no matter how busy, are among the most knowledge and friendly in the City and have copious amounts of data on rental units, evictions and, since last year, buyouts.

San Francisco changed its policy for landlord buyouts of tenants forcing the parties to register buyouts with tenants a little more than a year ago. Apart from having to register the buyout, landlords are now required to give tenants a written disclosure outlining the process and the tenant’s right to change their mind even after an agreement is struck.

The system was an attempt to regularize the system but leads to confounding results and perplexing questions especially if a landlord’s goal is to take the building condo. If the buyout involves more than 1 tenant than the chance to convert evaporates until 2024 or later. Moreover, if there is a single tenant occupying a unit if that tenant is protected that also renders the unit ineligible for conversion, even if the tenant is more than willing to take a buyout. We called his issue out when the policy first came out and wondered if that it would give rise to a spike in Ellis Act evictions, which mandate certain relocation costs and notice period. Why? Ellis Act fees are less than historic buyout agreement prices, which are not regulated. Ellis Act evictions also render units un-rentable for anywhere from 5 to 10 years depending the circumstances. But if the goal is to simply sell off those vacated units as individual TIC units to get out of the rental business then the Ellis Act route would be the cheaper means to get to that end.

DoReMi: Creating an arts oasis in a forbiddingly costly city – San Francisco Chronicle

Art collectors Deborah and Andy Rappaport are taking over an industrial building in Dogpatch to test a unique plan to save San Francisco’s galleries from being squeezed out of this overpriced city. Their concept: offer space at a rent that is drastically below market rate in hopes that they will lose money or — best-case scenario — break even.

via DoReMi: Creating an arts oasis in a forbiddingly costly city – San Francisco Chronicle.

Shuttered Mission District Grocery Store Site Could Sprout Housing – SocketSite™

April 7, 2015 Condos, SF News, SF Urban Planning

A formal proposal has yet to be made, but the Fortress Property Group has met with San Francisco’s Planning Department to explore the possibility of redeveloping the long-shuttered DeLano’s Market site at 1245 South Van Ness in the Mission with over a hundred units of housing.

Shuttered since 2010, Fresh & Easy was slated to take over the 21,450-square-foot grocery store back in 2012, but financial troubles have effectively killed those plans.  And while rumors of various other players interested in the store continue to swirl, we’d be surprised if anything other than a complete redevelopment of the parcel, a parcel which is zoned for development up to 50-feet in height, occurred.

via Shuttered Mission District Grocery Store Site Could Sprout Housing – SocketSite™.

Wiener’s bill aims to slow building of ‘monster homes’ in S.F. – SFGate

In an effort to slow down the proliferation of “monster homes” in Corona Heights, Supervisor Scott Wiener will introduce legislation Tuesday that would require additional scrutiny of proposed large homes and additions in the neighborhood.

The legislation would require a conditional use hearing, a more in-depth environmental evaluation than is typical, for any new structure that exceeds 3,000 square feet or for any addition that would increase the size of an existing home by more than 75 percent. It would also limit extensions to 55 percent of lot coverage.

via Wiener’s bill aims to slow building of ‘monster homes’ in S.F. – SFGate.

Efforts to bury all utility wires in San Francisco becoming nearly impossible task | abc7news.com

January 23, 2015 SF News, SF Urban Planning

Efforts to bury all utility wires in San Francisco becoming nearly impossible task | abc7news.com.

San Francisco pivots to being enclave for the wealthy as rents soar even higher – San Francisco Business Times

Earlier this week, Zillow (NASDAQ: Z) noted that the Bay Area saw the biggest rent hikes in 2014 and sees this year being just as bad. Zillow’s website Friday made it clear that anyone opting to buy rather than rent in Hayes Valley’s zip code would have to pony up more than $900,000 and often well over $1 million.

The frustration can be seen throughout San Francisco, but let’s take a look at one of the city’s more popular neighborhoods, Hayes Valley. There, Avalon Hayes Valley apartments have come to the market at even higher rents than expected.

via San Francisco pivots to being enclave for the wealthy as rents soar even higher – San Francisco Business Times.

The Valencia Effect: Are there too many restaurants on the Mission’s hottest street? – San Francisco Business Times

It seemed like the deck was stacked in favor of Abbot’s Cellar, the upscale restaurant sequel to Monk’s Kettle from Nat Cutler, Christian Albertson and chef Adam Dulye that opened two years ago in San Francisco’s Mission district.

It combined the booming popularity of craft beer with a menu that was praised by critics and a sophisticated look from restaurant architect Olle Lundberg.

It also had a spot on Valencia Street, the city’s most popular dining drag. For a while, it seemed, landing a coveted space on Valencia was a guarantee of success.

But as Abbot’s Cellar prepares to shutter its doors at the end of January, and with other restaurant closings on Valencia, it seems possible that there can be too much of a good thing. Has the Valencia effect given rise to too many restaurants for the neighborhood to handle?

via The Valencia Effect: Are there too many restaurants on the Mission's hottest street? – San Francisco Business Times.

SF Now Has More Than 50,000 Units in the Housing Pipeline – The Numbers – Curbed SF

December 24, 2014 SF News, SF Urban Planning

San Francisco’s housing pipeline is composed of unbuilt housing in every stage of approvals, and according to SF Planning’s latest Quarter 3 Pipeline Report, there are about 50,600 units on the way. The city currently has about 381,000 units, so if all of that new housing gets built it would create a sizable increase in San Francisco’s housing supply. About 3,090 new units have been completed in the past year and an additional 6,700 are currently under construction. Many of the new units in the pipeline are on the south side of the city in neighborhoods like South Beach, SoMa, Mission Bay, Mid-Market, Potrero Hill, Dogpatch, and the Mission.

via SF Now Has More Than 50,000 Units in the Housing Pipeline – The Numbers – Curbed SF.

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