Second Quarter, 2009

The buyers are back. Properties in San Francisco’s best neighborhoods were not selling during the first quarter of this year, but that has changed. Coinciding with the Spring season, the buyers stepped forward, acknowledging the general consensus that our market has seen its bottom — especially in District 7 (Marina, Cow Hollow, Pacific Heights and Presidio Heights) and Russian Hill.

South Beach and South of Market remain the exceptions, with the over supply in the high rises continuing to suppress prices. Surprisingly Noe Valley and Dolores Heights suffered a larger downturn than expected, but are starting to also rebound.

All in all, District 7 and Russian Hill property values fell nearly 15% from the beginning of 2008, but have stabilized and are in some cases rising. Multiple offers, while now rare, are occurring once again.

Pricing is the toughest challenge for realtors, sellers and appraisers in today’s market. There are very few recent comparable sales to turn to for guidance, leading to a bit of trial and error in pricing properties.

Smart, motivated sellers adjust their prices when the market indicates a disconnect.The speculative developers are still keeping their distance, allowing genuine home buyers to seize the opportunity inherent in a fixer property — one that they will improve and hold for at least five years. While construction loans are rare, they can be obtained with a select group of high end lenders.

Putting on my economist’s hat, it is important to note that the weakness in the employment data and the longer term threat of inflation from federal programs (designed to solve our short-term economic ills) continue to have the potential to put a damper on real estate markets in general. We watch the venture capital community for signs of liquidity events/IPOs and their ability to raise funds — leading indicators of turning points in our local real estate market.

OpenTable’s (NASDAQ: OPEN) successful IPO in May has been an encouraging note. Net net, it is our limited patch of 7x7 miles that continues to mediate the swings in San Francisco’s property values, showing more stability and resilience than Manhattan’s market.

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.

Stay tuned for news from us about the ability to hold real estate in your IRA. Given some of the bargains still out there, buyers of second homes and income properties will be interested to learn more.Having the personal advice and dedication of a well-informed Realtor® will make all the difference.

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