Signs of a Real Estate Market Comeback

The recently released Case/Schiller reports show a modest increase in housing construction starts.

A July 27 Associated Press Article also reported that home sales for June rose at the fastest rate in eight years.

Multiple factors are coming together to create an ideal buying market especially for those whose investment assets are not tied up in existing homes. The turnaround is primarily being fueled by first time home buyers and investors with cash who are taking advantage of factors such as the first time buyer tax credit, low interest rates and low real estate prices.

This unprecedented combination of positive buying factors is leading to the market putting the brakes on declining prices in the low price ranges, and competition due to over ten, twenty, or even 30 bids being submitted on foreclosure properties driving prices upward.

New housing starts should remain modest as the key factor in sustaining the market is existing home inventories and the foreclosure pipeline.
Foreclosures and short sales and still accounting for a significant percentage of real estate transactions.

Budget Cuts Incite Agency Action

(The BEFORE image)

Now that budget cuts threaten all municipal agencies, they are starting to come out of the woodwork.

As a property manager in San Francisco, I have had several occasions to deal with various agencies: Rent Arbitration Board, Building Inspection, and Fire Inspection to name a few.

Two weeks ago, I received a call from a real estate agent who is selling one of the properties I manage in The Mission District, to tell me that The City had posted a notice. I went by the property and found a notice from The Department of Public Works to abate graffiti. I examined the front of the property and found an area of about 12 x 24" where someone had spray painted a name. Now I have managed this property for over 8 years, and to my recollection this had been there for a VERY long time.

I returned in a day with materials to clean up the offending script and found yet ANOTHER notice from a second inspector taped over the top of the real estate agent's flier box!

Same complaint. Different inspector.
Three days after the first notice with the same complaint number!

After arriving at my office to call per the instructions to announce that the problem had been resolved, I found a notice from the Tax Assessors office for the same property announcing that the property had been damaged in a disaster and that I might be entitled to tax relief???? Could the disaster have been the graffiti?

I also looked up the DPW site and the only reference to graffiti were two links to a program they have for cleaning up graffiti on PUBLIC property and nothing about the regulation regarding private citations to property owners who are victims of graffiti.

Well I called The City on the graffiti issue and the woman who answered was a generic call center and she sounded rather incredulous about the graffiti notice as though she had never heard such a thing. But she gave me an abatement report number. This process took about a half hour.

I then called the Assessor's office about the "disaster damage" and was was confidently informed that the property had indeed sustained over $20,000 in fire damage on May 22 according to a report sent to them from the Fire Inspector's office.

Oh really? And exactly where was this damage?

Well after spending the next hour calling different fire department numbers, I got what I can only assume from the message was the correct office with only a voice mail option. I left a message and did not get a return call over the past week.

In the interim, I called one of the tenants to ask about this fire. It had occurred over 4 houses and 1 parking lot away from the property. There were 6 fire engines that showed up for the fire, most of which hung around and watched.

I can only surmise from this sudden visibility of City inspectors, that everyone is suddenly scrambling to try and justify their existence and their budgets. In eight years I have not seen such busy activity from inspectors I never knew existed!

This recalled another event from four years back where a building inspector signed off on a job on the same building, and approved it "pending approval from the fire inspector". The fire inspector came the next day and signed off.

Done, yes?

Noooo.

I found out 3 years later, that the same inspector who had signed off pending fire approval, had to come out yet again to sign off that the fire department had signed off! (According to my understanding of the English language, if something is approved contingent upon another individual's approval, once that second individual gives their "ok" the matter is over.)

Why would an inspector have to come back two days later to sign off on the same project he had already seen? Yet because of this they deemed the permit unfinished.

As a result, I had to open a NEW permit, to get the same inspector to come out 3 years after everyone else had signed off, to sign off again, to show the matter had closed.

Aside from the first inspector on the graffiti issue, which I can understand to some degree (except for their absence for many years and sudden appearance of not one but TWO inspectors within days of each other), consider the expenses:

An unnecessary report from the fire inspector, paperwork involving 2 city agencies, and the support staff and resources to handle my inquiries I speculate conservatively cost The City over $200. The additional graffiti police trip and report and subsequent paperwork, support staff, handling my calls and abatement: $140. The additional permit to close the first permit, special trip for the inspector to spend 30 seconds initially a job card, gas, paperwork, computer clerical support etc. for the re-inspection of what had just been inspected $340.

So just by cutting these redundant or unnecessary reports, inspections, filings, etc. would have saved The City at LEAST $680. Now imagine multiplying that by the many actions by these many employees during the typical day, and even if only one incident occurred per day it translates to about $17,000/year.

I can only surmise that there is a sudden flurry of activity for departments to justify their budgets, their existence and their level of staffing.

Oh Mr. Newsom! Mr. Scwartzenegger! I think I found you some money for your emergency services!

(Oh, and sometime ask me about The City and the parking lot management incident.)

San Francisco: Chinatown? Definitely! Japantown? Sure. Greektown????

San Francisco neighborhoods were greatly influenced by the influx of immigrants in the late 19th and early 20th centuries. As certain groups settled in certain areas, appropriate businesses opened to serve their needs, and it started a trend.

Most have since dissipated over the decades as members of a certain community became more affluent, were less reliant on connect with those who spoke their native tongue, and moved out into the general population and into other neighborhoods.

The Inner Mission is perhaps the best contemporary example with its strong ties to Central and South America and the Spanish language.

The most famous ethnic neighborhood in San Francisco, of course, is Chinatown. When it was originally founded it was actually the waterfront before land fill created the financial district area between Kearny and the Bay. Originally, the members of the Chinese community primarily worked to build the railroads and in shipping, import and export. That community is still there over 200 years later.

But what of other ethnic groups in San Francisco?

Japantown has Japan Center as a focal point for their community with its shops and restaurants, Korea town has cropped up on the fringes of The Tenderloin and Civic Center.

There was second wave of Russian immigrants into the outer Richmond over the past two decades and the community centers around the Holy Virgin Russian Orthodox Church on Geary. But even a half a century ago the nexus of the Russian community was on Potrero Hill with its Russian Orthodox, Molokon, and Baptist churches.

A few of the communities that have diffused throughout or beyond The City have included: Irish and Scandanavians primarily populated The Castro and Eureka Valley, Greeks who populated the area now referred to as Mission Rock corridor of 3rd Street. Greektown originally set up shops on the 7th and Mission corridor as well and arranged for the first San Francisco Greek Orthodox church to be build on 7th Street between Harrison & Folsom. It's gold dome can still be seen from the freeway and it is now a Ukranian Orthodox Church. The Greek congregation, Hagia Triatha, had a newer Byzantine-styled edifice built on Brotherood Way in the 1970's.

It was that community that gave San Francisco one of its more famous mayors: George Christopher.

And of course the North Beach area, was and still is, an Italian enclave that also gave us Joseph Alioto and his family political dynasty and the likes of Joe DiMaggio.

But San Francisco has also given rise to other trends and communities parsed by economics, beliefs or other community factors over the centuries.

A few of these were the Beat Generation which evolved in the coffee houses and bookstores in North Beach around Broadway.

African American communities of the Western Edition, BayView District and Hunter's Point.

The Hippies of course claimed the Haight-Ashbury area around Golden Gate Park which still shows that influence, and the fledgling Gay community originally settled the Polk Street corridor in the 70's before they outgrew the area (as comedienne Margaret Cho talks about in her standup routines) and migrated to The Castro which became the international heart and soul of Gaydom second only to possibly Greenwich Village because of the presence of the iconic Stonewall Inn and the history it represents.

Affluence also had its districts: South Park, and Nob Hill passed their heyday and then it became Pacific Heights, Presidio Heights, The Lake Street area and Seacliff district. Even somewhat in St. Francis Wood and Forest Hill areas which were pretty much sand dunes until the mid twentieth century.

The Chinese community outgrew the Chinatown area as well, and migrated into the Marina, Inner Richmond and Sunset Districts forming collections of Asian businesses along the Clement, Judah, Irving, Taraval, and Noriega business corridors. But none of those satellite areas has the significance or image of the parent community around Grant Avenue.

It is the strength and vitality of these communities that lends San Francisco its charm, it vibrancy and exemplify its long history of acceptance and welcoming of the new, the foreign and the vanguard of social and cultural evolution, until those tags are washed away in the eclectic currents and eddies of the San Francisco cultural mainstream.

WANTING IT ALL. NOW!

I want it all.....NOW!

Other than being a Tubes song, this was also a story reported by Edwin Newman on NBC in the seventies about Marin County, CA. Basically it showed a hedonistic lifestyle of hot tubs, pop psychology and plastic surgery of affluent people occupying the suburbs of San Francisco just across the Golden Gate Bridge. (The 1980 serio-comedy, Serial with Martin Mull, Bill Macy, Tuesday Weld, Sally Kellerman, Christopher Lee and Tom Smothers ran with that theme.) The NBC story led to Marin residence symbolically “plucking the NBC peacock” by displaying peacock feathers in their homes as protest.

However, it is a good theme for the impatience we are experience in this socio-economic transition in which we currently find ourselves.

One piece of ancient wisdom comes to mind: forcing change always meets with much more opposition than removing the factors that prevent and resist change.

This is good advice for any “hot-button” topic in the news these days: Real estate market decline, the automotive industry crisis, financial crises, political polarity, same-sex marriage, alternative energy, etc.

President Obama in his Notre Dame speech last week use a modicum of this philosophy in being conciliatory and opening dialogue with those who share an opposing opinion.

Bringing this philosophical tenet down from the level of the sublime to the mundane, we see how the real estate market is starting to transition in many areas of the country.

Price resistance and lack of confidence and credit availability but the brakes on the expanding market. Now we beginning to see a market “bottom” being defined in the statistics in some of the worst-hit areas on real estate prices. Some areas showing this trend are Southern California, Eastern communities of the San Francisco Bay Area, Atlanta, Texas, and Sacramento, CA

This dynamic is the result of factors downward pricing pressures and real estate availability overcoming fear, uncertainty and, of course, high prices, giving first time buyers and investors the initiative to dive in to take advantage of financial decisions that simply make sense for them.

This accounts for about 50% of the current buying trend and is in contrast with the mechanism that fueled the real estate “bubble” to begin with: trading up in equity to buy more house than was economically prudent. The potential for appreciation gains on paper created a boldness that resulted in imprudent leveraging. This then trickled down to those who did not want to get left behind who dove in to a market they could not afford out of fear of being left behind and goaded to action by easy credit.

And since the new administration took office under a banner of change, everyone wants change NOW!

Unfortunately the change will not come all at once.
It will not come in a guise that will please all of us.
It will not come in a package that is free of pessimism and criticism.

Grand edifices of social, political, or economic change come about as trends that gain momentum gradually.
They are ideas that eventually take hold in the minds and hearts of people and the attitudes of markets, they are not suddenly found on the morning landscape after a dark night like manna.

Those who exhibit impatience with the situation and attempt to force change too quickly will meet with a resistance opposite and equal to what they are exerting.

It's not “good”, it's not “bad”, it's just the way It Is
.
So everyone take a deep breath, keep you eyes and ears open for opportunities, whiffs of change in the direction of the winds, and take advantage of opportunities that appear where there was only resistance before. You will already notice hints of new scents in the breeze and be reassured.

After all, we wouldn't be able to handle it all now.

MILL VALLEY MARKET BOTTOM?

The Bottom!

Everyone talks about “THE BOTTOM” of the Real Estate market.

Has Mill Valley Real Estate hit “THE BOTTOM”?

Recent housing statistics show a trend over the past 12 months show a leveling in Mill Valley Real Estate regarding supply in relation to sales with the Altos Research Median Market Average index remaining consistently in a narrow “buyer's market” range. This illustrates that supply in relation to sales has stayed somewhat level during the past year.

Median single family home prices have declined approximately 13% over the past year to $1,266,692 as of May 10 and the days on market have escalated to 112 from a low of 68 in January, 2009. Median price per square foot has dropped $70 over the past year to between $610 and $628/sq. ft.

The Average Days on the Market figure has been consistently at 110 Days since the end of February which is up from a low of about 70 days in mid 2008.

In some communities there has been little decline, in some none at all. There is not enough of a trend to draw any conclusive answers in relation to the bottom, but there are some data that show some leveling off of some analytics.

Current Mill Valley homes for sale.

Mill Valley foreclosures.

Potrero Hill continued

"We Potrero Hill boys gotta stick together." - From the movie "Dirty Harry".



Potrero Hill at one time was known as “Russian Hill” among the locals, (not the current Russian Hill which was so named because of a Russian sailor being buried there) because there was a large settlement of Russian families in the neighborhood: Russian Orthodox and Molokon religions were the majority of the families. Their strong cultural roots also colored the streets.

I had one aunt who would always talk about the wedding processions of singers escorting the bride to church on foot.

Several generations of families stayed in the area until real estate prices began to escalate in the 80's and the economy changed, so there are now only tattered remnants of these families remaining amidst the newcomers who have mostly come from out of State which has resulted in the demise of the tenuous San Francisco “accent”.

(Speaking of real estate, the neighborhood had Ray Cicerone and later, his former employee opened Peterson Realty as the two Realtors on 20th St.)

A typical Hill property currently on the market

I guess my point is, San Francisco like other great cities, is known around the world for the flavor and history of its neighborhoods: North Beach, Haight/Ashbury, The Castro, Noe Valley, The Richmond, Pacific Heights, Polk Street, etc. Each of these evokes an image and a feel for the retail and living spaces that help to define them.

Although “The Hill” is not a tourist neighborhood on the scale of North Beach, Montmartre, The French Quarter, etc. There remains a distinctive flavor and mood that keeps it unique.

This is a tradition that should be fostered in our cities, embraced incorporated into change that comes with time. The history and ambiance should be honored and emulated as these areas evolve, and it will continue the rich, local tradition of The City.

Newer Hill property in with traditional flavor

Another classic Hill property

Fairfax Redux

Previously I wrote briefly about Fairfax, CA before (see my blog post on 2/26/09), but there is so much local color, I thought I should elaborate.


Fairfax residents pride themselves on the alternative lifestyle mood and hippie heritage (The bumper stickers: “Fairfax: Mayberry on Acid” and “Only in Fairfax” are testaments to their self-image.)

There is a lively bar and music nightlife scene on Broadway featuring some local talent and lots of Marin-ites. On weekend mornings it is a nexus for bike racers and mountain bikers (After all, Mount Tam IS T-H-E “mountain” in the phrase: “Mountain Bike”.

There is an attitude there that hearkens way back to the West Marin identity during the Prohibition Era. Bolinas boasts the longest, continuously operating bar in the U.S. Because they were so isolated, the government agents could get to them to shut them down.

It is an excellent community noted for the quality of the schools and the laid-back environment. The retail area of town has suffered over the past decade or so, but there are still cafes, diners and coffee shops interspersed with yoga studios, and, because of its relative isolation, maintains a diverse retail environment catering to all of West Marin.

One project on the drawing board, is a German sausage house slated to take over the old Real Food store on Bolinas Road, across from the Town Hall. Their manager, Murphy is a serious bike enthusiast and plans to have bike racks IN the cafe space.

They intend to be serving fare such as vegan sausage and kale salad along side traditional German sausages and beers, sauerkraut and salads. The owner, Fra, is a HUGE fan of traditional German sausage houses and has been wending his way through local government approvals and permits for the past seven months.

These efforts along with the City's proposals of adding more biker-friendly facilities, is showing how the local color is reacting to existing trends and reinventing itself.

It is innovation and energy like that which can keep the local flair and color alive and vibrant in trying economic times and continue to build a sense of community pride and identity.

The current real estate market there shows 31 properties on the market as of May 10 (up from 23 in January and down from a high of 43 in October of '08) and the Median home price is currently at $731,231, down about $80,000 from a high in October of '08.

One current Fairfax Listing

Another property in the median range.