You have a $325k spending limit and want to live in the city…with parking. What on earth can you buy?

939 OFarrell St San Francisco 94115
$330,000
Western Addition
MLS# 372010
Active

This little gem is located in Endicott Court, a small community of 7 Victorians that have been divided into 14 condominiums. Open living room/kitchen and a spacious bedroom. In the living room, there’s a bay window perfect for a dining area and a built in office nook” that can be closed off while entertaining. On-site laundry is also available as an added convenience.

1817 California #307 San Francisco 94109
$325,000
Pacific Heights
MLS#: 383692
Active

Pacific Heights complex with a lush, tranquil courtyard, on-site laundry and one parking space. 3rd level unit is a one bedroom, one bath condo with small balcony.

750 Van Ness #1101 San Francisco 94102
$339,000
MLS#: 382317
Active

Corner Studio with city views. One Full bathroom. Rooftop deck with BBQ and panoramic SF views. One deeded parking space.

Like clockwork, every time the temperature hovers over 70 degrees in San Francisco, we get a serious case of Spring fever. So if you find yourself off work on one of these particularly glorious days (or have caught a ‘sudden’ cold)…we compiled the top 5 outdoor spots in SF to take in the rays.

1. Baker Beach

You probably never go here as it’s foggy and windy most of the year. Catch it on a calm, 75 degree day and you’ll feel like the people in Malibu do every day of the year.

2. Dolores Park

It may be hipster haven but it’s great for people watching and the unexpected. Plus, Bi-Rite ice cream is across the street. A win-win.

3. Fort Mason Park

The water views, public restrooms and a Safeway across the street makes for the perfect instant picnic.

4. AT&T Park

Ahhh Baseball Season. Time to start working on that sinus infection to bail on work so you can catch a day game under the warm sun.

5. Anywhere

After all, it is San Francisco. You can’t go wrong in the city dubbed as “The most beautiful city in America”. Take a look around, find a grassy knoll and relish in your city’s international appeal.

Can a house THAT small cost THAT much?

Expired 2/3/05. Relisted 3/30/05. While the home appears to have gone through an extensive facelift, we wonder if the savvy buyer in a soft market would spring for $2,644 a sq ft. And can renovating a 435 sq ft home really cost $500,000?

86 Stanton St San Francisco, CA 94114

$1,150,000

List Date: 3/3/11

Beds: 1

Baths: 1

Sq ft: 435

Price Per sq ft $2,644

86 Stanton St San Francisco, CA 94114

Expired: 2/3/05

$659,000

Beds: 1

Baths: 1

Sq ft: 435

Price Per Sq ft $1,514

This post first appeared in: Cirios Trends – March 2011

Thus far, 2011 has been nothing if not newsworthy.

Economic data, financial news and even foreclosure scandals have been supplanted as headline fodder by the historic events taking place in North Africa and the Middle East. It is an exciting, if not somewhat terrifying time to be alive.

Yet even as news breaks around the world, most people wake up, shower, grab a cup of coffee and go about their lives. They drive to work, answer emails, surf the Internet and go back home, taking the inevitable curve balls that life throws in stride because, well, its what we have to do. The economy, however smarting, rumbles on.

Recent jobs data would even have us believe that the recovery is gaining steam. Data, however, can be misleading. The underemployment rate, measured by polling company Gallup, has essentially remained unchanged since this time last year, painting a bleaker picture than government employment data. Meanwhile, certain industries like technology and renewable energy are hiring at a brisk pace, muddling the employment picture even further.

And then there’s oil.

Unrest in the Middle East and the impending summer driving season have pushed prices at the pump up to more than $3.50 per gallon nationwide, and over $4.00 at some Bay Area stations. So much for that road trip.

So what does this all mean for the housing market? We continue to see the localization trend take shape. That is, fundamentally strong markets are outperforming those that are further from job centers or otherwise less desirable in a challenging economic environment. This is a trend we have discussed for months, and one that is now showing up in the data. (We discuss this further in our City Spotlight on Redwood City).

We view this as a healthy market development, one that indicates a market that is getting better, not worse. Price declines are still on the horizon in many areas, but the sky is no longer falling (in the housing market, anyway).

Lastly, we’d like to address a frequent question we have been receiving from the real estate investor community: “Where are all the REOs?” There is a distinct shortage of new bank owned homes (or REOs) coming to market. Investors are getting antsy.

From November of last year through January, there was effectively a nationwide moratorium on foreclosures. The robo-signing scandal coupled with a seasonal freeze around the holidays meant
foreclosure proceedings were delayed almost across the board.

It takes around 90 days for the average property to go from foreclosure sale to listed REO, so properties (not) foreclosed on during the recent moratorium would have been coming to market now. Most banks restarted the foreclosure machines in February, so a normal flow of REO listings should come to market by April.

Sound far-fetched? The 2008 moratoria led to an inventory shortage in early 2009 and a market low that April. The question then becomes whether history will repeat, rhyme, or something else altogether in the coming months.

This post first appeared in: Cirios Trends – March 2011

Is the system for educating San Francisco’s children so arcane that even the city itself has given up explaining it? Sort of: The subject is so complex the San Francisco Unified School District’s (or SFUSD) own website contains a Frequently Asked Questions page that is a year out of date.

Nevertheless, Cirios has made an attempt to distill the most
salient details for parents (or prospective parents) considering how public schools may or may not fit into their child’s future.

By The Numbers
A quick glance at San Francisco and its schools:

The Lottery
Despite an overhaul last year, San Francisco’s student assignment process is spectacularly complex. For years, parents were asked to list their seven top school choices and students were assigned to schools seemingly at random. Proximity to home was not considered, and students ended up walking past perfectly good schools on their way to a 30-minute MUNI ride to class.

The rationale for such an ostensibly bizarre system was to promote diversity in public schools and give students in lower income neighborhoods an opportunity to attend one of the city’s top public schools. An admirable goal on paper, but poor execution of the Lottery has pushed many students to private schools or out of San Francisco altogether.

Last year, the SFUSD tweaked the process such that location now matters. The changes will be implemented for the upcoming 2011-2012 school year. For more information, check out the SFUSD’s website, where parents can find a document highlighting the key features of the new process … a mere seven pages long.

The Schools
There are 140 pre-K through 12th grade public schools in San Francisco which include the following:
- Child Development Centers
- Elementary K-5 Schools
- Middle Schools
- High Schools
- Alternative Grade Span Schools
- Charter Schools
- County Schools

A complete list of schools can be found here, along with links to profiles, academic plans and other potentially useful information. This link will help you get a sense of attendance boundaries for different schools, which now matter more than ever.

The Scores
In an attempt to standardize academic performance metrics,
California adopted the Academic Performance Index, or API, in 1999. With scores ranging from 200-1000, the API is based primarily on two standardized tests, the CST and CAHSEE. With the recognition that schools would begin at different base levels, administrators focus on API score growth and set targets for that growth. In other words, they want to see schools improving. The state has set the goal that all schools work towards an API score of 800. To check the API score of a school, you can click here.

The Blog
With out of date district websites and a dizzying amount of data to chew through, parents are often left exasperated at the prospect of sending their children to public schools in San Francisco. As a result, many have turned to The SF K Files, a nationally acclaimed blog written by a real live San Francisco mom, Kate.

The Bottom Line
Picking a school for your child is not an insignificant decision. And the city of San Francisco takes an already difficult choice and makes it downright arduous. The best advice for parents is to start early, do their homework and seek guidance from other parents. Examining your educational goals for your child as they relate to the options at hand is a key step in the application process. Furthermore, creating a thoughtful and detailed plan aimed at navigating the maze of San Francisco’s public schools will prime your child for achieving his or her academic goals.

This post first appeared in: Cirios Trends – March 2011

Redwood City’s official slogan, “Climate Best by Government Test,” is no joke: At the turn of the 20th century, the US Government found Redwood City to be at the center of one of the world’s three best climates (the others being the Canary Islands and the Mediterranean Coast of North Africa). Situated nearly equidistant from San Francisco and San Jose, it offers a suburban setting with a strong sense of community and rich history. Redwood City was the first incorporated city in San Mateo County and has drawn in commuters for more than 100 years. Population skyrocketed in the late 1990’s as the tech boom brought the masses to Silicon Valley. Today, Redwood City has a population hovering around 80,000 residents.

We chose Redwood City to profile for a host of reasons, but primarily because it is one of the most socio-economically diverse cities in the entire Bay Area. Unsurprisingly, the real estate market is equally varied, with hilltop estates and barred up shacks alike.

The City
Redwood City encompasses over 25 square miles, extending from the wetlands on the edge of San Francisco Bay to the hills adjacent to the Pacific Ocean. For comparison, Daly City, a town in northern San Mateo County with a similar population, has a total area less than one third the size.

In general, neighborhoods improve (and home prices increase) as one moves east to west. As seen on the map above, the city can generally be broken into about a dozen distinct neighborhoods, each of which with its own unique character.

Downtown has recently undergone a major redevelopment, which is ongoing, and businesses, housing and prosperity are taking root. Eastern Redwood City has a strong Latino population, and many Bay Area locals argue Redwood City is home to the best Mexican food outside San Francisco’s Mission District.

The Schools
No home search would be complete without a deep understanding of local schools. And understanding the landscape of public schools in Redwood City is as important as any city in the Bay Area. As seen below, API scores (see previous article on San Francisco schools for more on API scores) in Redwood City are all over the map. Roy Cloud Elementary and North Star Academy have some of the highest scores in the country. Meanwhile, despite vast improvements over the past decade, Garfield, Hoover and Taft still lag higher quality schools in the district.

Home prices, as one would imagine, vary widely by neighborhood and specifically by school district boundary. Cross a boundary and home prices can change by as much as 10%.

Home Prices
In February 2011, the median home sale price in Redwood City was $752,000. In January, it was $704,975. The average sale price in February was $812,485 compared to $741,077 in January. So does that mean home prices are skyrocketing? Far from it.

Home sales data, like all data, are easy to manipulate. In fact, in recent weeks, housing data providers are calling into question the validity of data put forth by the National Association of Realtors.

And in places like Redwood City, where neighborhoods vary greatly, broad measures of home prices can be even more misleading. To cut through the noise, Cirios Real Estate’s tireless data gnomes spliced Redwood City home price data by neighborhood, according to the groups listed here.

As can be seen by the first graph, sale prices vary widely in Redwood City. In Farm Hill, the posh area in the hills, million dollar homes are the norm, and prices have only slipped back to where they were in 2005.

Meanwhile, in Friendly Acres, a working class neighborhood between Bay Road and Highway 101, prices have fallen more than 30%. In nearby Redwood Village (not shown), prices are off more than 50%.

But simply looking at sale prices doesn’t tell the entire story. One interesting way to examine price trends is by looking at price per square foot and normalizing data to a common point. In other words, let’s assume all areas start at a base level (in this case, 100) and see how they fared over time.

In the second chart, we see that despite the great strides many of the working class parts of Redwood City have made, more desirable areas have actually fared better in terms of home prices.

Since the beginning of this year, we are starting to see noticeable differentiation between neighborhoods, something which was absent through much of the housing boom, when pretty much all prices went up, albeit in varying degrees.

But starting about a year ago, prices in different areas have started to move more independently. This is a trend we have harped on over the past year, that in more healthy real estate markets, prices move based on local fundamentals. We may not be back to what most would consider “healthy,” but we certainly are closer than we were a couple years ago.

This post first appeared in: Cirios Trends – Special Edition: The Year Ahead

I settled into the rigid chair, personal space all but non-existent in the crowded ballroom. The speaker rose, lights dimmed and a hush fell over the several hundred commercial real estate professionals attending the 2011 State of Real Estate Forum. The first slide went up. The crowd released a nervous chuckle. I felt the hair on the back of my neck rise. My stomach churned and I flashed back to the weekly sales meetings in Manhattan circa 2007 where cocky mortgage traders tried to calm jittery bond salesman fielding calls from fearful clients. It’s the nervous din of uncertainty: the sound of sweaty fingers crossing.

“Thank Heaven For 2011.”

A clever tagline for a bunch of real estate stiffs, catchy and indicative of a group that’s battered, but not quite defeated, hoping beyond hope that this year couldn’t possibly be as bad as the last few. Slides slid by, compelling graphs and data explained that, after three years of dismal performance, the economy appeared to be back on track, jobs were slowly returning and maybe, just maybe, the worst of the real estate market’s downward spiral was behind us.

I actually went into the conference with similar feelings, that risk-reward has flopped and despite persistent headwinds, opportunity outweighs risk if you focus on the right locations, the right properties and the right strategies. But this widespread optimism spooked me. Here is a group with such extensive experience, insight and market knowledge that they were blindsided by the market’s collapse. And now their breathing of a collective sigh of relief made me nervous.

The speaker droned on, slides blended together and the infectious optimism spread through the crowd like a slow, persistent wildfire. The Bay Area market was different, we were told. And perhaps it is. The economy is on the mend. And perhaps it is. Inflation looms. And perhaps it does. With prices down, there is nowhere to go but up. Perhaps. But perhaps not.

In this issue of Cirios Trends, we highlight four real estate investment themes for 2011. As you will see, these are not necessarily four strategies we endorse as the best buying opportunities out there, but rather four ways to frame the housing discussion this year in a more optimistic light. We are not without challenges ahead, massive macro-economic imbalances remain from historic intervention by both the federal government and the Federal Reserve.

But despite this, and despite the fact that a room full of suits are cheering for 2011, we at Cirios remain cautiously optimistic. Bullish may be too strong a word, but the time for bearishness on real estate, we believe, has passed. Perhaps.

This post first appeared in: Cirios Trends – Special Edition: The Year Ahead

While most of the positive press in 2010 surrounded the single family home market, perhaps no segment fared as well last year as apartments. Investors piled into multi-family properties for a host of reasons, which leaves the sector at a critical crossroads for 2011.

First, a quick tour of last year’s data. According to Integra Realty Resources 2011 IRR-Viewpoint, the multi-family sector is typically the first to turn around after a recession, and 2010 was no different. Integra saw 81% of US markets recover or begin an expansionary phase, compared to just 9% in 2009. Vacancy rates dropped dramatically, a finding echoed by REIS: Nationwide vacancies dropped to 7.1% in Q3 of last year.

A major factor pushing down vacancies was a snap back from the massive demographic upheaval of the Great Recession. According to Marcus and Millichap, between 2005-2009, the number of 18-34 year-olds living at home increased by 2.2 million, the highest level recorded in the past 25 years. Since this demographic is the highest population of renters, vacancies skyrocketed as the economy soured.

But vacancies started dwindling as the economy slowly got back on track. Call it pent-up demand to move out of mom’s basement: As young adults began to find jobs (or became more hopeful they would do so soon), they moved into their own places in droves. Further, the housing market’s dramatic collapse coupled with tightening mortgage guidelines is forcing many young people to delay the home buying decision for more clarity in the market’s future.

Meanwhile, falling vacancies and an influx of investor cash pushed down capitalization rates to levels not seen since before the crash. During the early stages of the downturn, investors raised huge pools of cash to buy up distressed commercial properties as banks foreclosed on troubled borrowers and pushed the buildings out to market. But as Washington encouraged lenders to extend loans and modify terms, the flood of distressed properties never came.

Marcus and Millichap noted that the pendulum has swung full circle, and that 2010 exhibited a flight to quality trend, as investors focused on geographic markets with strong liquidity characteristics and resilient economies. New York City, Washington DC and San Francisco have been the beneficiaries of investor money seeking high quality, cash flowing assets. Cap rates, as a result, have compressed, leading some observes to wonder if the apartment market has gotten ahead of itself.

Here in San Francisco, there has been a marked change in the rental market just in the past six months. Gone are the days where tenants could negotiate a lower rent or get a couple months free. Back are the days where multiple applicants are common and the most pro-active prospects show up with deposit checks and completed applications in hand. Rents have risen in kind, as employers like Twitter, Salesforce.com, Zynga, Trulia and others are doing their part to repair the battered Bay Area employment market.

A second trend, which has been noted both nationwide and locally, is the divergence between high end and mid-low end buildings. Just last week, the popular economic blog Calculated Risk noted “the apartment market has bifurcated. Upper half of apartments are improving, regardless of geography. Lower half are struggling.” This echoes Marcus and Millichap’s view that there is a flight to quality ongoing.

So where are the opportunities, if big players are snatching up all the “high quality” properties and banks are delaying the flushing of distressed assets onto the market? The answer, in our view, lies somewhere in between.

As anyone who has spent considerable time as a renter can tell you, landlord quality varies widely, if not wildly. Often, owners of small buildings (duplexes, triplexes, etc) can offer high touch, personal service, resulting in a good tenant experience. On the other end of the spectrum, large institutional landlords may be impersonal, but generally their service adheres to a reasonably acceptable level of quality. Meanwhile, there is a middle band of properties that lie somewhere beyond the scope of the small-time landlord but below the radar of the institutional owner. Typically in the 5-30 unit range, these buildings are often older, landlords less pro-active and amenities lacking. Low rents can be found, but tenants likely have to settle for outdated kitchens, old appliances and fairly mediocre living conditions.

This is particularly true here in the Bay Area, where large numbers of such buildings were constructed during the 1950s and ‘60s. Many of these properties have been owned by the same individual, family or small investment collective for decades and haven’t been updated since Reagan was President, or before.

Rents are low, systems are out of date and the properties in general are in need of some love. The opportunity exists for savvy buyers to come in, make smart improvements, raise rents, lower operating costs and dramatically increase the value of the property. Couple this straightforward, time-tested investment strategy with downtown redevelopments ongoing in cities like San Mateo, San Carlos, Redwood City and Sunnyvale and you have a recipe for opportunity.

Of course, such properties are scarce and sellers often unwilling to bring prices down to where it makes sense for an investor. Which begs the question, where are the real sellers and will they finally come out of the woodwork in 2011?