How Are Things On My Street?

Lately we have read lots of broad-stroke news about the state of the housing market. Reports are everywhere you turn, and across the state of California (and our country in general) we have seen a major slowdown in the sales of homes, and important decreases in prices. But let's take a more in-depth look, for not all is bleak. In this climate, it is important to know the details of your surrounding marketplace to form a more contoured strategy and weather the proverbial storm. Sometimes that means simply "zooming in."

What is the picture like up-close? Are all markets similar? Are the problems the same everywhere?

Take San Francisco, for example. The city and county covers an area, almost square in shape, seven miles by seven miles. It is the tip of a peninsula, has a varied geography, with beaches, and hills, and views, each with a different micro-climate, and neighborhoods with their own distinct character. With all this variety, the real estate market is also fragmented, from luxury properties in Pacific Heights and Nob Hill, to up-and-coming young districts like SOMA, dotted with new luxury condos, to the more suburban Sunset and Lakeside districts, the ethnically mixed Mission, and the lower-income districts such as Bayview, Excelsior and Ingleside.

Although there is the common thread of lower prices and slower sales, all these areas have weathered the last two years differently; it almost seems that if you walk a few blocks, you will find yourself in a different micro-market.

On the high side, some of the most expensive listings have made the front page of the paper: a penthouse in the New Millennium building was sold for $11 million, before the completion of the building. Another penthouse, on four levels and with over 20,000 feet of area, was listed at the astronomical price of $70 million+. There is a mansion in Pacific Heights listed at $48 million, and there are several other listings in the $10 million PLUS price range. Luxury homes in the Marina, Pacific Heights, or homes in desirable areas such as Noe Valley and Cole Valley, have pretty much held their value or have seen small drops in prices, and in some cases even slight price increases.

There is not much room in San Francisco to build new single family homes, so the existing inventory is retaining its value fairly consistently. Some of the lower-income areas have suffered more significant price drops, at times in excess of 30%. The fact is, that in spite of all that is said about foreclosure crisis, foreclosures and short sales are not a major factor in the market at this time, representing less than 2% of sales. There are some older neighborhoods gaining in popularity that have lower inventory such as Bernal Heights and Potrero Hill. Overall, inventory is higher than before, but that also varies widely depending on the area.

In the South of Market area, the last two years have seen the addition of over 5,000 new condos on the market already, or under construction and ready to reach the market in the next year. All these new properties may put pressure on existing sales in the area. But homes are selling!!! The overall view of our real estate market hides large differences and can really take the wind out of your sails. Really look deeply into the details of your region to get a handle on what is happening. Once you are more informed, you will have a more crystallized view and will be armed with pertinent information to go forward with.