We are regaular contributors to a new San Francisco real estate blog called The Front Steps. It can sometimes be contentious as the latest round of posts show (topic: Why are Realtors such @$$holes?) but the ultimate goal of the articles is to be helpful and inform. We’d like to thank Alex for giving us a chance to get exposure in his publication.

What we’ve done today is take one of the questions we answered on that blog and expand the explanation because, in my mind, there was clarification needed. And it is also a great example of how government price controls can actually “hurt” the people it is trying to help. Here is a recent question from a reader:

Hello, Thanks for putting up these Q&A’s! (at TheFrontSteps) They’re very helpful… …My sister was actually selected from the lotto (we both entered), and we’re excited about the opportunity to purchase a condo (fingers crossed-we’re meeting with the banker today about qualifying). My question is, if we get the condo, and want to sell it, let’s say 30 years from now, would there be a restriction on the selling price? We aren’t looking to use this as an investment property, but if we decide to sell it later we don’t want to get totally ripped on the price. Thank you! ~Sophia

Our original reply was this:

Sophia, There are two types of lottery for condominiums in San Francisco. One is the condo conversion lottery which allows apartment buildings convert their units to condominiums. It doesn’t sound like this is what the question is about.here. (Once you decide to sell…) First off, the Mayor’s Office of Housing (MOH) will set the price for you, not the market. Although they try to be fair to all concerned, there is a formula which may be found at the above link in Step 3. To that price you are allowed to add 5% to pay the listing and selling agents, but that is all. And finally, the only buyers allowed to purchase the property must qualify for the Mayor’s program.
At the time of the writing, it seemed like a clear answer, but I’d like to clarify a few things here.

The second type is the lottery for the Mayor’s Program which is geared toward first time buyers. This is probably what you are describing. There are a lot of nuances to a purchase (and sale) like this which may be found

The good news is, you can buy a place in which to live for under market prices! The bad news is, there are certain restrictions on how much the MOH will allow it to appreciate over time (as described above). One of the reasons for this is, they want the property to remain in the Mayor’s program to give other people a chance at your home when it comes time for you to move on to your next purchase.

People buy property to build wealth, so this will probably not be a great vehicle for that. While we are not experts on the subject, contacting the Mayor’s Office of Housing would be the best place to start. I hope this helps you with your decision. – Janis Stone

The good news to people participating in the Mayor’s Program is this. If you are a first time buyer, you can purchase a home at below market value and live there. In my opinion, owning is ALWAYS better than buying as long as you can afford it!

However, this program is not a place where you will be able to build wealth from your home when it comes time to sell, mainly because there is an artificial cap put on the price by the MOH.

The formula the MOH uses to calculate the resale value is very conservative because they don’t want homes to keep disappearing from their pool of available properties when you do finally resell. So to quote from the MOH Q&A page for reselling below market rate housing, “Many units will be priced in accordance with planning approval the change in the area median income from the time of the current owner’s purchase to the time of sale…” To simplify, that means they will take the area you own in and look at the median income for people living in that area and base the new price on that… NOT the value of the properties which have sold in that area (which is what the free market does). In effect, any improvements you might make will have no effect on determining the resale price.

In a normal real estate transaction, given the current rate of appreciation of properties in San Francisco and the recent rash of multiple offer situations, you could earn a considerable amount in capital gains ($250,000 of which is tax free on your primary residence at the time of this writing) over your original capital investment (cash downpayment). Whereas in the Mayor’s Program, you would be limited to the increase allowed by the formula set forth by the MOH worksheet.

- Janis Stone

Parking is a huge issue in San Francisco, and bumps and scrapes are all part of the game. So what can you do when you want to get rid of scratches and dings and keep that new car appearance or if you’re trying to get it ready for sale?

We have a fantastic guy who has performed miracles on our vehicles; we swear by him! And it doesn’t cost an arm and a leg to have it done!

After sideswiping the garage one evening several months ago, I took the paint off my front fender. We were given the name of a fellow who comes to your house and does factory quality paint repairs right out of his truck. It only took a couple of hours and the car looked like new again!

Then recently one of our partners returned her car to us, and we wanted to sell it. Before putting the “For Sale” sign on it, we had Patrick come and do both front and back bumpers which had taken a beating from City parking. Now it looks like new, and we will probably get top dollar for it!

What’s his name? Ironically enough, it is Patrick Carr with Automotive Touch-Up. He can be reached at 415-806-3214. Tell him Janis sent you!

- Janis Stone

Though not too many people go into foreclosure in San Francisco, there are those who were troubled by the crash of the sub-prime lenders and may be in trouble with their mortgages. If you are one of those people, there is help for you.

Non-profit organizations exist to get you back on track. For a complete list, you can see the brochure put together by the National Association of Realtors (NAR) here. But for starters, NeighborWorks is a good resource. They can be reached at 888-995-HOPE.

- Janis Stone

Previous things to do:

The May report for home prices in California are finally in. As mortgage rates keep creeping up, the California market is slowing down. Though interest rates are still fairly conservative, all things considered, it might take time before consumers adjust to the new higher rates… provided they stop rising!

As you can see from the numbers, the median price dropped from last month meaning that other parts of California are having a harder time of it than we are here in the San Francicso Bay Area. Look for our July report with June’s figures to be released this weekend on our website. We think you will see why San Francisco real estate continues to be a great investment!

Calif. median home price – May 07: $591,180 (Source: C.A.R.) (note: compared to $597,640 last month)

Calif. highest median home price by C.A.R. region May 07: Santa Barbara So. Coast $1,325,000 (Source: C.A.R.) (note: compared to $1,475,000 last month)

Calif. lowest median home price by C.A.R. region May 07: High Desert $313,550 (Source: C.A.R.) (note: compared to $317,420 last month)

Calif. First-time Buyer Affordability Index – First Quarter 07: 25 percent (Source: C.A.R.) (note: compared to 25 percent last month)

Mortgage rates – week ending 6/21:

• 30-yr. fixed: 6.69%; Fees/points: 0.5% (note: compared to 6.37% and 0.4% points last report)
• 15-yr. fixed: 6.37%; Fees/points: 0.5% (note: compared to 6.06% and 0.4% points last report)
• 1-yr. adjustable: 5.66%; Fees/points: 0.7% (note: compared to 5.64% and 0.6% points last report)

- California Association of Realtors & Freddie Mac

SFResidence is part of the TRI Coldwell Banker office at 1699 Van Ness in San Francisco which is one of the premier offices in the City and has the market share numbers to prove it. We have some of the top agents selling real estate in the San Francisco Bay Area. As a result, our office posts some impressive numbers.

As summer is upon us, the market seems to be slowing from a month ago, but still going strong. Multiple offers are not as common as they once were, but the sellers can only accept one anyway! Sales have been steady this past week where, once again, our ratified deals outpaced our new listings almost 2 to 1.

Here are the numbers for this week:

6/27/07

• 7 new listings (average price $972,850 – low $539,000, high $1,908,000)
• 13 ratified sales (pending) (average price $1,869,385 – low $599,000, high $4,995,000)
• 6 closed sales (sold) (average price $2,156,667 – low $576,000, high $3,610,000, 1 confidential)
• 1 reduced ($869,000)

- Janis Stone

Foster Weeks publishes a weekly mortgage report which is updated every Monday morning. How is this affecting the San Francisco real estate market? Read our weekly and monthly market reports. Foster points out this week the “roller coaster” ride last week’s rates took even though they ended the week relatively unchanged from the beginning. This would indicate that timing of the loan might be crucial to getting that all important low rate locked in.

Bond Traders and investors alike didn’t buy tickets for this ride [the roller coaster], but they’ve had that “funny feeling in their tummy” for the past few weeks, as Mortgage Bonds and home loan rates continue to swing sharply higher, then plummet back lower, sometimes in the course of just a few hours. Say what indeed – what’s causing all this dramatic action?

Last week, there was a definite lack of economic headlines to drive the ride, but the action was still intense for a variety of reasons. Our Mortgage Bonds are purchased by many foreign investors, who are watching global interest rates rise, and contemplating keeping more of their money “closer to home” and investing in their own country, rather than in the US. If they sell off…Mortgage Bonds plunge nauseatingly lower. Additionally, US companies that issue their own Corporate Bonds also buy and sell huge blocks of Treasuries and Mortgage Bonds, which can jolt the Bond market higher or lower on any given day. They do this in an effort to protect their own Corporate Bond issuance against rising interest rates, as they prepare and then sell off their own Corporate Bond issuance. Further, with oil prices ratcheting ever higher, investors pulled money out of Stocks on Friday and sent them swooning lower…but parked the money in Bonds, helping Bonds regain the altitude they’d lost earlier in the week.

A little sick to your stomach just trying to follow all the action? The good news is that despite lots of midweek action – home loan rates pulled back into the station on Friday around the very same levels they started the week at. But last week may have just been a kiddie ride compared to what the coming week may have in store…read on for this week’s forecast, and learn why the action is likely to stay intense…

Read more.

- Foster Weeks

Read what Rick Turley, President of Coldwell Banker, San Francisco/Peninsula says in his latest weekly report:

There was no report for the week of June 9-15th due to a family emergency.

Last Sunday being Father’s Day, and the more than 540 open houses held last weekend were mostly well attended. Typically, the summer months see a slowing of the market as it competes with graduations and vacations. We have yet to see that typical slowdown in most areas. Though some areas are reporting lighter activity, others are seeing sales pick up. Once again, the standard patterns of real estate in the Bay Area continue to elude definition. Our reports reflect the week’s activity in each particular branch office, and it appears that “busy” sales weeks directly follow an influx of newer listing inventory in that office’s market. In the City and the Peninsula, we are not seeing increases of inventory followed by slower sales activity. In most offices, it’s quite the opposite.A $2,795,000 listing in the Liberty Hill/Noe area of San Francisco received four offers. A San Francisco Parkside area home received 21 offers significantly over the list price, however several other properties in the City were lucky to receive one offer. On the Peninsula, inventory is sporadically feast or famine depending on the location. Woodside/Portola Valley, Foster City, Redwood Shores and the most desirable San Mateo area neighborhoods all suffer from low inventory. Menlo Park is seeing a steady, healthy market; listings are picking up, and are selling just as quickly. The past two weeks have seen a few more $5M+ sales on the Peninsula. Buyer confidence is strong; the Dow and NASDAQ have made some local residents more flush which helps fuel the positive activity.The rest of the Bay Area reports a similar mix of ups and downs. Castro Valley, Livermore and Pleasanton are all reporting that “things are picking up” with their sales activity. New, attractive listings in the core areas of the Berkeley market remain hot commodities. Many markets in the North Bay remain hot, especially in Marin County. Sonoma continues to be haunted by a glut of inventory, however this may bode well in the near future as frustrated buyers from other areas start reconsidering Sonoma as a viable place to settle with a wide selection of well-priced homes. And then we get the reminder we need to hear from time to time; an East Bay office reports that three separate deals each died a day after ratification last week. In a more “normal” market, the hard work and the majority of negotiations simply begin once the property sells.

Listing Activity was reported as steady by the majority – 20 offices. It increased for seven offices, and only decreased for two offices. Even with the seasonal slowing in the market, sales activity for our offices were reported as being steady by 16 offices, increasing for six, and decreasing for seven offices.

In an unpredictable market, an overwhelming “steady” report well into the month of June certainly says a lot about the power and expertise of Coldwell Banker Sales Associates.

- Rick Turley

* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with “weekly market report” in the subject line.

Despite the recent cooling of the real estate market, luxury homeowners remain positive about the market, according to the 2007 Coldwell Banker Previews International® Luxury Survey. A full 56 percent of survey respondents expect the value of their home to increase at least somewhat, and 10 percent expect it to increase significantly, during the next 12 months. Thinking more long term, 36 percent of respondents believe the value of their primary residence to increase significantly over the next five years, while 58 percent believe their residence will increase at least somewhat over that time period. Read more.

“These responses tell us that the affluent truly understand the value in owning real estate,” said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate Corporation. “It is important to remember that in addition to being a home, real estate is a long-term investment, one that can withstand periodic changes in the market.”

The survey also revealed that affluent women are even more optimistic than men. Sixty-one (61) percent of female respondents expect the value of their home to increase somewhat over the next 12 months, compared to 50 percent of male, while both genders remain even at approximately 10 percent in predicting their homes’ value to increase significantly in the next year. Over the long term (five years), 40 percent of female respondents expect the value to increase significantly, compared to 32 percent of male. The sexes come out fairly even (60 percent male, 56 percent female) in forecasting that their homes will increase in value somewhat in five years.

“I’m not at all surprised that women are more positive about their home values than men,” Gillespie continued. “Women continue to comprise a significant segment of the home buying public; in fact, 22 percent of all homes sold last year were to single women. That statistic, together with affluent women’s confidence in real estate, suggests that women may, in fact, be the driver that ultimately helps the market turn the corner.”

David Siroty
Coldwell Banker Real Estate Corporation
973.407.7199
David.Siroty@coldwellbanker.com

Lauren Naru
MS&L
212.468.3040
Lauren.Naru@mslpr.com

Named after the artist whose career is now bigger than the whales (he) paints, the gallery features aquatic imagery for ocean lovers who like to sit and rest their drink on an artful glass coffee table supported by dolphins. From life-sized bronze sculptures of a manatee to piercing blue ocean water painted in watercolors and oils, this gallery also displays original paintings, sculptures, and prints created by other artisans. Those on a tight budget however, may just want to take home Wyland’s coffee table book, which features more than 50 of his aquatic murals.

The Embarcadero and Beach Street
San Francisco, CA 94133
+1 415 398 1922
Open Hours10:30a-8p Su-Th, 10:30a-9p F-Sa
http://www.wylandgalleries.com/

Neighborhood: Fisherman’s Warf

Previous things to do:

Parts 1 – 20, Part 21 – Yerba Buena Ice Skating & Bowling Center, Part 22 – 49-mile Scenic Drive, Part 23 – Segway San Francisco Electric Tour, Part 24 – Vesuvio, Part 25 – Haight-Ashbury Street Fair