Finally got one

Well we finally got one. We just got the keys and haven't moved in yet. Despite the market conditions we didn't get a steal, paid over asking, and in fact the home didn't appraise so we had to bring some extra money to close as well as convince the sellers to come down a little. On the other hand the home needs only a paint job and a chimney sweep, is big enough for our family of four, is close to things that are important (school, shopping, park, friends, backyard), far from things we don't like (noise, crime) and is as good a fit for our needs as we could hope for. Most of our new neighbors have lived in the neighborhood for ten years or more so we have a nice stable piece of San Francisco to call home.
With two little ones in desparate need of a yard we weren't in a position to wait anymore and frankly we were just out of patience. Our criteria was what can we afford right now that we can bear to live in for the next ten years. And on that front we are satisfied. The big lesson I have walked away with here (which will make the realtors happy) is that what you pay for a house has no correlation to it's actual value. As some of you probably know we have spent literally years bidding on foreclosures, fixers, probates, stale fish, etc trying to get a bargain and have come up empty handed every time (I haven't blogged about the last couple misadventures but there have been a few and one in particular just about broke our heart). But the times we were denied did give us more time and eventually our savings caught up to the point that we could actually compete and in the end we wound up buying in a normal deal with normal sellers putting our well-over-asking offer in the day it listed and even then apparently not having the highest offer, but winning because we offered a damn fast close.
The asking price, the comps, everything you think you know about a property is meaningless when it comes to the final price. It all boils down to whether you are in a class that has a lot of other buyers. As a family looking for a family home in a city that isn't exactly loaded with quality inventory for families, we eventually learned we were going to have to either pay more than we would like, or not have anything at all. If you are in the market for a condo, or something on the top end of the market I think it's a different experience, but reasonably priced homes appropiate for a family with young children are tough nuts to crack.
Anyways I'm happy to start worrying about lawn care now. Home depot has new meaning to me and I can't wait to make my first visit there with serious intent.

On a side note, those who have enjoyed my Rent vs. Buy spreadsheet will be pleased to learn that I have nearly completed converting it into an iPhone app. I'll make an announcement when it's available on the Apple store.

Didn't Get It.

Not a huge surprise, we were lowballing and we knew it.

I'll provide all the details once escrow has closed (I don't want to mess with someone else's house purchase mid deal). This house should be a fascinating object lesson.

Putting a bid on a house today...

It's a long shot as we are lowballing, but wish me luck anyways. I'll provide the deets once the whole story is complete...

Chasing The Bottom Line At The Potrero

This blog ignores condos, but we're making an exception just once:

On May 1st of this year The Potrero launched a sales incentive "No Mortgage Payments for 1 year". They said the offer "must end June 15th", and that they only had 25 units left.

On June 9th they extended the offer to July 15th, and announced they are "nearly 90% sold out" and that there's "no better time to buy a home at The Potrero".

On July 14th, they announced "for the month of July only, we are offering a special collections of homes at special prices.* The Broker comission rate on all remaing homes is now 4%". Oh and now they are officially "90% sold" instead of "nearly 90% sold".

The Potrero is 165 units, which means that over the course of 10 weeks they managed to move an additional eight units. So they are moving around 3 units a month (down from around 4 a month at the end of December), during peak season (spring/summer) and with their biggest incentive yet on the table. Keep in mind that their stated goal was to move 12 units a month, and for a while they were selling 18. I'm assuming what's left are the leftovers nobody wanted and is going to be even harder to sell. At this rate it's going to take some serious work to get this all closed up and finished by the end of 2008.

Now here's the rub: in business, it's not the first dollar you make that determines your profit, it's the last. That's where all the bottom line is, and that's what the developer is currently chasing. If you got a 10% markup, and you don't sell your last 10% of inventory, you didn't make any money!

As it is they were clearly hoping to be finished by February of this year, and now it's mid-July and they are still working that last 10%. While I don't think they are in danger of losing money, it's clear their profit margins are probably shrinking from what they were hoping for or expecting.

Submedian rent vs. buy calculator updated

The most comprehensive calculator for San Francisco real estate just moved to Beta 2.5 folks. Added support for interest only loans among other goodies.
Enjoy!
http://spreadsheets.google.com/pub?key=pM4Gw0s2zSeAnOTnop5I7Lg

This is a big deal...

So why is no one talking about this?

http://thefrontsteps.com/2008/06/11/stats-numbers-single-family-homes-may-2007-versus-may-2008/

Median prices down in every single district (with the exception of D8, which doesn't count since they only had 2 sales in the whole district), YOY, in the fabled "spring bounce" month of May.

One would think there would be 20 comments on this at least, and all the local blogs would be discussing this with great interest, yet there isn't a peep from anybody but me. Wussup with that?

Submedian Searches: Sunset in Spring

For my next little "feature" I'm going to narrow my focus on a particular neighborhood to tell me something about the market for submedian single family homes (i.e. anything under $750k) with at least 2 bedrooms and see how things are holding up.

This week's featured neighborhood is the Sunset.

As of 9pm on May 5th, I got 29 results on one of my favorite sites Redfin.com. After eliminating the handful of condos and TIC's (I'm all about the SFH's here...) I have 22 SFH's. Some interesting data points arise when I take a closer look:

First of all I'm interested in how many homes are selling for more then they were purchased for. I'm frankly not surprised that out of the 13 homes that list the previous sale price 6, or 46% are listed for less then what they were previously purchased for. But what does this tell us about prices in general? Well, when we dig in a little deeper they tell us some interesting things:

Of the 6 homes that are listed for more then their previous purchase price, five of them were last sold in the 90's. That's a rather stark statistic: if you want to sell your house for more then you paid for it, you better have bought your home a decade ago.

Among homes showing a prior sale price, anybody selling a Sunset home purchased within the past five years is showing negative appreciation. And in some cases, it is drastic: 1491 43rd Ave is now listed at $720,000. It's high water mark was it's purchase for $875,000 in April 2005. That's a whopping $155,000 depreciation over three years. That's $4189/month not including taxes, maintenance, insurance, closing costs, commissions, etc.
Just to give you a point of reference here, you can find on craigslist today 2 and 3 bedroom houses and flats in that part of sunset for $2,000 - $2,500, today in 2008.

Intriguingly, the people who bought in the 90's seem to be suffering from another problem: greed. They have across the board higher listing prices then the newer homeowners, and are paying the price for their desire to hang on to those higher prices by having much higher DOM's: 54 is the DOM average for the people who have owned their homes more then five years, compared with 26 for the folks who are newer homeowners.