Market Conditions – Real Estate Trends – Pacific Union Insights

Real Estate Roundup: What a Tech Bubble Could Mean for Bay Area Housing
October 12, 2015 by Pacific Union • Posted in Weekly Real Estate News Roundups

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

Should history repeat itself and the Bay Area’s mighty tech empire again come crumbling down, homes may lose some of their value, but long-term demand seems almost certain to persist.

A blog post examines the likelihood of a tech bubble and what effects its bursting might have on the housing market. While stopping short of saying that current economic conditions indicate a looming bubble, the article notes one unsettling similarity to the dot-com era: the proliferation of so-called “unicorns,” companies valued at at least $1 billion without the financial results to warrant it.

During the late 90s tech-industry meltdown, employment in Silicon Valley in the sector declined by 17 percent, and home prices dropped by 25 percent. Chief Economist Jonathan Smoke said that while a tech downturn would certainly impact Bay Area real estate prices, the silver lining could be relaxed demand and fewer bidding wars. But even if a tech bubble were to temporarily cause frenzied demand to ease, the Bay Area’s lack of housing inventory will always be a moderating factor.

Rental costs in San Francisco aren’t going anywhere but up, while prices in Oakland and San Jose have soared since last autumn.

In its latest monthly rental report, Zumper says that the median rent for a one-bedroom apartment in San Francisco is currently $3,620 per month, the highest in the country and up 2.5 percent from September. The company notes that rent prices in the City by the Bay are outpacing those of No. 2 New York City, where prices grew by 2.2 percent month over month and a one-bedroom unit fetches $3,230.

San Jose ranks as the country’s fourth priciest rental market — $2,270 for a one bedroom — while Oakland places sixth, at $2,080. Displaced San Franciscans have helped push up rent in Oakland by whopping 26.1 percent since October 2014, the most of any of the 25 U.S. metro areas in Zumper’s report. San Jose had the nation’s second-highest annual rental hikes, at 19.5 percent, followed by Sacramento (18.3 percent) and San Francisco (13.1 percent).

Mortgage applications jumped in advance of the Oct. 3 Consumer Financial Protection Bureau regulations, as buyers rushed to avoid any potential delays the changes might bring.

According to a Mortgage Bankers Association index for the week ended Oct. 2, mortgage applications rose 25.5 percent from the previous week, while refinancing activity increased by 24 percent. CNBC says that mortgage applications are up 49 percent on an annual basis and are at their highest level in five years.

The new regulations are intended to further protect homebuyers by requiring lenders to disclose all details at least three days before closing. As Pacific Union CEO Mark A. McLaughlin pointed out in a blog post this summer, the new regulations give lenders zero tolerance for errors or changes and may impact how quickly real estate transactions close.

Winter-sports fans who are hoping that the brewing El Niño will blanket the Lake Tahoe region in snow this season will probably like the latest weather forecast, as the system appears strong and poised to wallop the West Coast.

The latest forecast from U.S. Climate Prediction Center puts the chances of a powerful El Niño lasting until spring at 95 percent, unchanged from last month. SFGate reports that the system appears to be as powerful as the one that drenched San Francisco with 47 inches of rain during the winter and spring of 1997-1998.

And while a wet winter would be just what the doctor ordered for California, it would need to rain more than twice as much as normal to put a dent in the drought.

San Francisco County’s Plan to Ease Housing Crunch


Posted: 11 Feb 2015 08:01 AM PST

An aerial view of Hunters Point (center) and Candlestick Point (bottom left), where the city plans to build about 12,000 housing units over the next few years.

A booming economy is bringing more jobs and people to San Francisco. The county’s current population of nearly 850,000 is projected to increase by 8,000 to 9,000 residents yearly through 2017, according to Pacific Union’s recent San Francisco County Housing and Economic Outlook, authored by John Burns Real Estate Consulting.

But one big question facing San Francisco is where all of these newcomers will live and whether they will be able to afford a home in the city, even on large salaries. The supply of available housing in San Francisco has been severely constrained for the past several years, which has helped fuel large price increases.

Mayor Ed Lee hopes to address affordability and pent-up demand in a plan to introduce 30,000 new and rehabilitated housing units throughout the city. One caveat of Lee’s plan is that at least one-third of these homes would be permanently affordable for low-income (defined as those with a maximum $77,700 median yearly income) and moderate-income ($145,650 annual income) families, meaning that a buyer would pay no more than 43 percent of his or her monthly gross income on a mortgage payment.


Approximately 12,000 of the mayor’s planned 30,000 new and rehabilitated units — almost all of which are condominiums — will be built in the city’s southeastern corner, according to Tiffany Bohee, executive director of San Francisco’s Office of Community Investment and Infrastructure. Two sections – the Hilltop of the former Navy shipyard and the Hunters Point – Candlestick Point development – are part of a mixed-use collaboration with Lennar Urban and will include new housing. The project will also include a rebuild of the Alice Griffith public housing development by vertical partner McCormack Baron Salazar.

Lennar will build about 1,500 to 1,600 homes in the shipyard and Candlestick Point by 2020, Bohee says. A ramp-up of the additional 10,500 homes in the area should happen after that, according to Lennar Urban Vice President, Sales & Marketing Sheryl McKibben, who estimates that 88 homes will be completed by spring of this year. The company will complete close to 250 units by the end of 2015 and about 519 by 2016 at the Hilltop location. McKibben said that pricing on the units has yet to be determined.

For developing neighborhoods like Hunters Point, the goal is to apply the best of San Francisco neighborhood planning – walkable streets, plenty of open space, and extensive transportation options – says John Rahaim, planning director for San Francisco city and county, who estimates that 80 percent of development slated for the city will occur on 20 percent of its land.

“The advantage of that is that [residents are] closer to transit, the transit is available, and those services in those neighborhoods will improve because the density will allow for a certain market for a lot of the retail services and so on,” Rahaim says.

Other neighborhoods that will see additional housing – both new and rehabilitated – supply by 2020, include Pier 70, 5M (the section of SOMA centered around 5th Street and Mission Street), Mission Bay, Mission Rock, Park Merced, Transbay Redevelopment and Transit Center, Treasure Island, and Visitacion Valley. The city also hopes to repair public housing in Sunnydale and Potrero Hill.


The slow buildup in construction is typical for San Francisco, as planning and building regulations, along with collaborations with private developers (and their equity and debt), create more hurdles than in other cities. The mayor’s plan aims to not only spur new construction but also to streamline government processes – including land use, planning, and design processes as well as technical reviews – for the various agencies.

“It was really critical in terms of focusing and leveraging the city’s regulatory process because San Francisco is known for its gauntlet of rules and regulations – put in for good reason – but it’s very complex,” Bohee says. “I think the mayor’s plan certainly facilitated and has accelerated development for affordable housing.”

Rahaim and the planning commission worked with the mayor’s office to set the 30,000 number – a goal that was “reasonable but still aggressive” – through projects in various stages of completion (including those already approved and not yet approved).

“Land use and development in San Francisco is a pretty intense topic, and this is the only city I know where land use is high in people’s consciousness,” Rahaim says. Bohee notes that new developments can take as long as 30 years to play out behind city office doors, adding that plans for Mission Bay have been in the works since 1998.

Other plans by the city to increase affordable housing include a density-bonus concept that would allow builders on certain sites to surpass the size permitted by San Francisco code and to acquire and rehabilitate buildings once earmarked as rental units and turn them into more permanently affordable housing.

Another financial plan the mayor’s office touts is its Down Payment Assistance Loan Program. The 10-year initiative is designed to help first-time, middle-income buyers purchase a home in one of the country’s priciest cities. The mayor hopes to add $100 million dollars to the program.

“We usually fund people to the tune of $100,000 to 200,000 a household,” says Sarah Dennis-Phillips of the Mayor’s Office of Economic & Workforce Development. “It provides people an opportunity to invest in their future because it is through homeownership.”


Dennis-Phillips acknowledges that while bringing down housing prices in the city is a tall order, the increased supply should eventually help temper appreciation and accomplish the mayor’s goals.

“The more housing we have out there, the less competition there is for each and every unit and the more prices start to level out a little,” Dennis-Phillips says. “I don’t think housing will ever be cheap in San Francisco, but if we can combat this rapid kind of price increase that we’ve seen over the last two years and get prices back to a somewhat reasonable level, then I think those 30,000 units will have done their job.”

Rahaim is similarly upbeat about Lee’s plan, noting that the housing supply and current urban trends toward city living will help drive the city to its goal.

“I have very little doubt that we’ll meet the mayor’s target,” he says. “I think the market is there for it. Even if the economy takes a turn or levels off, there is a big paradigm shift happening in the country … of people being much more interested in cities and in city living.”

San Francisco Quarterly Real Estate Report Q3 2014

San Francisco’s real estate market has had a lot of changes in the last quarter – read my quarterly newsletter for more details!

» San Francisco Quarterly Market Report Q3 2014

The Pulse March 2014

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Agent ImageThea Miller (415) 229-1218   (415) 336-6019 01382829

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San Francisco doesn’t need much of an excuse to throw a good party. But when it comes to St. Patrick’s Day, it sure doesn’t hurt that the San Francisco Bay Area is home to an estimated one million people of Irish descent.

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The story of San Francisco’s Marina District is the story of land and water repeatedly and dramatically altered by nature and by human development.
The traditionally busy spring home buying season is rapidly approaching. Over the past year, we’ve enjoyed a strong housing market.

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Bay Area Market Report Update- Coldwell Banker

Strong Economic Reports Provide Encouragement for Housing Market

As the holidays approach, the Bay Area housing market is wrapping up a very strong 2013, with solid sales volume and double-digit sales price increases compared to last year. No one knows for sure what 2014 will bring, of course, but several new reports out this week provide encouragement for the market as we head into the new year.

Perhaps the strongest bit of good news came Friday when the U.S. Labor Department announced that employers added 203,000 jobs last month, more than analysts had expected. November’s job gains helped push unemployment to a five-year low of 7 percent from 7.3 percent. The past four months have now averaged 204,000 jobs created, up from 159,000 the previous four months.

Friday’s news followed other encouraging signals earlier this week. The Bureau of Economic Analysis announced that the nations GDP grew 3.6 percent in the third quarter, much faster than expected and considerably higher than the BEA’s initial reading of 2.8 percent.

And finally, new home sales soared in October after three months of relatively soft sales, evidence that the housing recovery may be gaining steam. The Commerce Department announced sales of new homes grew 25.4 percent to a seasonally adjusted annual rate of 444,000 – the largest monthly percentage increase since May 1980.

What does this all mean for Wall Street and Main Street? For much of the past year, Wall Street inventors have read good economic news as “bad news” – a paradox driven by investor fear that the Fed would start tapering its bond buying program sooner rather than later if the economy heated up. That could drive interest rates higher and put a damper on investments.

But on Friday, investors took the “cup half full” approach and cheered the good economic news as a sign that a stronger economy could help boost corporate earnings in the year ahead. The stock market finally read good news as good news and rallied on the jobs report, sending the Dow surging 198 points to top the 16,000 level once again.

The improving economic reports also give Main Street and the housing industry reason to cheer as the year draws to a close.

A strong employment market is one of the most critical underpinnings of a healthy housing market. Consumers without a job or in fear of losing the one they have aren’t likely to be buying homes. And while the 7 percent jobless rate and the 200,000+ job creation level still is well below where we want to be, the job market now appears to getting better all the time.

Only time will tell whether this week’s bullish economic reports are the start of even greater improvement for the economy in the coming year. But at least for now, buyers, sellers and real estate agents all have reason to be optimistic that 2014 will indeed be a Happy New Year.

Below is a market-by-market report from our local offices:

North Bay – Our Mill Valley office says high-end sales have been strong for Southern Marin with three pending sales over $3 million. Only about 10% of the homes listed above $4 million are under contract though. Our Central Marin offices say it has been slower the past week or two due to Thanksgiving. There are only two weeks left of any real activity prior to the holidays, leaving agents gearing up for the new year. The seasonal tap has turned off for new listings, our Sebastopol manager reports. Buyers are still kicking tires but want new inventory. The few open houses over the holiday weekend all had attendance in the single digits as opposed the large crowds we saw earlier in the season.

San Francisco – Lakeside office agents are reporting that they have buyers who want to complete their house shopping as soon as possible. They are keeping up the diligent search through the holidays. But sellers have retreated and many say they will wait until next year. For the few who are ready to open their homes during the holidays it looks as if they will be receiving a very warm response. The City’s inventory in homes and condos dropped sharply through Thanksgiving to now, our Lombard office manager reports. There were some new listings this week, but many agents are waiting until January to list their homes. The long weekend still brought in some transactions and good open traffic. Lender underwriting and conditions are still delaying some closings. Similarly, our Market Street office manager notes that the inventory, which has been low all year, is now even more so as the holidays quickly approach. All ratified listings this period received multiple offers, but the number only ranged from 2-4 in each case. At this point, homeowners that have plans on selling are preparing for a January unveiling.

SF Peninsula – Everyone is scrambling to close before Christmas/year-end, and there is little new inventory to report, according to our Burlingame offices. Agents are working diligently to unearth listings that are not on MLS. They are contacting sellers who had previously listed and didn’t sell. This has resulted in a few sales. That familiar “sweet spot” of $1-1.5 million is still highly sought after. There is plenty of pent up demand when these properties come to the market. There has been an end of year slowdown in much of the upper end market. There still are several transactions scheduled to close before year-end and the smart cash buyers are definitely shopping right now. The inventory is really shrinking so the right property in the right location is getting major interest. Our Menlo Park manager says sales have been steady, but multiple offers are appearing less frequently with fewer new listings. There were just eight new listings on tour this week in the five-city local area. In Palo Alto area, there are just four single-family homes on the market. Because of the lack of inventory and the holidays everything is moving very slowly in the Redwood City-San Carlos area, too. The few listings will likely command multiple offers. Sales were not bad in the Woodside/Portola Valley area this last couple of weeks. Agents and clients are still roaming the streets looking for properties.

East Bay – Our Berkeley manager says the local market has been very quiet these pre-holiday and holiday weeks. Some listings that have been on the market for several weeks now have ratified offers and some even received sudden multiple offers. One buyer returned to a listing that had gone off market and buyer and seller were happily reunited. There has been a 25% decrease in Inventory for the Tri-City marketplace. Appraisals are starting to come in lower than the sales price, our Fremont manager reports. Sales in the Lamorinda area are easing as the holiday season gets underway. Our Walnut Creek office manager notes that buyers are still out there, especially in certain pocket neighborhoods where there are still bidding wars. Sellers seem to be waiting for the new year, however.

Silicon Valley – A few of the Cupertino agents are still extremely busy, but things have definitely shifted into holiday mode. Inventory continues to be scarce with only six single family homes in the town of Los Gatos, in the Los Gatos School District, under $1.5 million. The Previews high-end market is steadily improving. There are only 15 active single-family homes in the Almaden area of San Jose as of last Monday. The Willow Glen market is also experiencing the seasonal slowdown with new listing inventory, resulting in a contraction in the area’s inventory of homes for sale. New product coming to the market is generating a lot of attention even during this holiday season. We are seeing multiple offers and homes being bid over the asking price. A Willow Glen home received immediate attention upon coming to the market and was under contract in 48 hours with multiple offers well over the asking price.

South County – South County (as in the rest of the Bay Area) is experiencing a seasonal slowdown. Though sales were strong in the first part of November, activity fell dramatically as the Thanksgiving holiday approached. Listings remain scare (in all price points) and agents are reporting that attendance at open houses is lackluster at best. The one bright spot in the local market, however, remains new construction activity. In both Morgan Hill and Gilroy builders are selling new homes as fast as they can be completed. Demand for new homes is very, very strong, with potential buyers waiting months for the opportunity to write an offer as each new phase is released to the public. One Morgan Hill builder is now taking “reservations” for homes that will not be completed until August or September of 2014.

Santa Cruz County – The 2013 real estate market has tracked very similarly to the 2012 market. Prices have been going up due to a continued lack of inventory, however, the number of total home sales will end up being very close to what those same numbers were last year. There are very few good, well-priced homes for sale, and if one comes on, it sells quickly. Median price is about $649,000, up from $500,000 a year ago. Lack of inventory continues to hold back the number of sales. There has not been much change in the Previews end of the market, over $1 million in Santa Cruz County. Of the 462 active listings, 152 of those are priced over $1 million representing 33% of the total market. Sales appear to be very hit and miss; no consistency or trending that can be identified. A property may sit on the market at the same price for months and then suddenly two offers appear. 40% of all deals are cash, and includes the high-end sales. Prices are nowhere near where they were at the peak in the upper end segment.

Monterey Peninsula – The Thanksgiving holiday weekend was especially busy with foot traffic in our Carmel Ocean Ave office and both Pacific Grove offices. Agents reported meeting new clients and as of this morning, there is an offer in on one of our listing that resulted from an out of area walk in. The Monterey Peninsula November property sales were 105, down from 135 in November of 2012 and -2.8% lower than the 108 sales last month. November 2013 sales were at their lowest level compared to November of 2012. The median sales price in November was $607,000, up 1.3% from $599,000 in November of 2012 and down -13.6% from $702,344 last month. The average sales price in November was $914,153, up 7.9% from $847,059 in November of 2012 and up 4.3% from $876,458 last month. The total inventory of properties available for sale as of November was 529, down -11.5% from 598 last month and down -14.0% from 615 in November of last year. November 2013 Inventory was at the lowest level compared to November of 2012 and 2011. There are several multi-million dollar sales in the pipeline that are scheduled to close the end of this month and into January. The high- end market is strong for vacation homebuyers as usual.

As always, we wish you prosperous San Francisco real estate hunting.

Thea Miller, Real Estate Representation (415) 229-1218

Janis Stone, Real Estate Representation (866) 224-8024

Michael DiVita, Mortgage Finance Support (800) 239-1103

Thea Miller – DRE #01382829
1699 Van Ness Ave.
San Francisco, CA 94109
“The nicest compliment you can give me is to refer others within your circle”

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