Third Quarter, 2009


Reflecting on the third quarter of 2009, it is clear that San Francisco real estate experienced a bounce off the bottom of the market as buyers returned in earnest. Buyers now realize that the market recovery in San Francisco has not just begun-it also appears to be sustainable.

While prices are still below their 2007 levels, even in our most desirable neighborhoods, multiple offers are becoming increasing prevalent again. Clear patterns have yet to emerge in price and time-on-market. Wonderful well-priced properties can linger, and others surprise even the pros by being snapped up quickly.

Cash buyers-from all over the world-are flexing their muscles in acquiring choice properties, especially in the over $3 million range. Bringing cash to the table is worth as much as 5% in terms of offering price. This is a direct result of the problems with mortgage lenders that handicap borrowers vis-à-vis cash buyers today.

Interest rates are still low enough to be very attractive to buyers. The new rules governing appraisers have resulted in out of town appraisers being sent into our neighborhoods without the benefit of knowledge of the subtle differences between locations. This can result in 11th-hour requirements for buyers to increase their down payments. Tenancies in common (TICs) have been particularly hard hit by the lending environment of the past year. Buyers are thinking long and hard about going on a group loan with a co-tenant in a two-unit building, if only until condo conversion. In the case of TIC buildings of three+ units, most of the fractional lenders have dropped out, leaving only two choices. Those two lenders are charging high premiums for their fractional loans. As a result, TICs have been selling more slowly and at a deeper discount than normal relative to condominium pricing.

Conservative financial advisors are still predicting one more dip in the stock market to complete the "W" pattern, yet that may well not result in another dip in the San Francisco real estate market. Our market is more driven by our local economy and the very real shortage of properties on the market. The consensus among economists, yours truly included, is that our real estate market in the City of San Francisco is back on its feet and on the rise again, albeit very slowly.

Once again, the current rapidly moving market creates a time where market savvy and experience make all the difference in the world. Experience and knowledge can pay dividends to sellers and lack thereof can put buyers out in the cold. Having the personal advice and dedication of a well-informed Realtor® will make all the difference.


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