Rebecca White

It is a mixed blessing to have SEVEN listings currently. Four are short sales-luckily two are in escrow-one should close soon; one in East Oakland may never sell as despite a massive price reduction (see previous post: http://activerain.com/blogsview/922619/A-House-in-the-Bay-Area-for-less-than-25000-And-one-for-85000 ) it has yet to be shown; and the others may be over-priced for today's market despite major price reductions.

I am pondering why some properties-specifically large condo complexes-are more prone to short sales than others. I have (or will have) several listings in two complexes: Marina Bay in Richmond and OceanView Village in San Francisco. The similarities: affordability, attractive to first-time buyers, new or newly remodeled and attractive grounds. The differences: OceanView Village is built in to a commercial shopping center so amenities are right there, it is close to BART but some units overlook the 280 freeway, some units have "apartment-like" interior access and there are no amenities. Marina Bay is isolated from stores and restaurants-save one-but close to parks, the Bay Trail, has amenities (pools, gym, and tennis courts) and lovely grounds replete with "lakes" and fountains.

Both complexes were similarly priced at the beginning-maybe OceanView was a bit higher-but the prices today are very different-not only from each other but in the case of OceanView Village-from similar properties.

I can comprehend why Marina Bay failed its homeowners. The prices escalated artificially in the beginning. People were sold on the lifestyle there rather than looking around more in the area. (To clarify, I am not being critical as I came very close to purchasing a unit here myself and sold one to a very close friend.) Where the problem really began comes down to two things: first, of course, no one had a crystal ball and could foresee the mortgage crisis and second, the developer commenced sales of not one-BUT TWO!-other projects prior to selling out Marina Bay. Other developers built condos and there was a glut of inventory on the market.

So now, people are being forced out of their homes and having great difficulty "wrapping their heads" around the fact that a home they may have paid $450,000 to $525,000 for-and were told that it would be worth $600,000 in the future-has fallen in value by 50%. I am grateful that I didn't make the same mistake (?), but sad that these people can't stay in their homes and someone else will reap the benefit and purchase a beautiful 2-bedroom, 2-bathroom home in the mid $200,000s (or a one-bedroom for less than $200,000).

I am not really sure what caused the problem with OceanView Terrace: the location?, the enormity of the complex?, lack of amenities? Yes, the newer condos south of Market are having their fair share of foreclosures and short sales but prices there have fallen maybe 20-25%, not the 50% we are witnessing on the far south side of our City.

I am not sure if it comes down to location, developer greed or bad timing and broken dreams. I just wish that the stimulus package helped more with debt reduction for existing homeowners rather than rewarding those who waited who stand to benefit in the hundreds of thousands of dollars for their procrastination. No, I don't really mean that as I am glad that many people who couldn't afford to buy when things were crazy can now afford to make their dream of home ownership come true. But it is sad to see so many-especially investors-benefit from the broken dreams of others.

At Keller Williams Realty, we believe in a "win-win" philosophy and it is hard for me to "wrap my head around" this "win-lose" reality.

Frequently I get "buyer/investor" leads who want a 3-bedroom, 2-bath home in a nice north end neighborhood such as Nob Hill (where I live), Russian Hill (a few blocks away) or Pacific Heights (close to my office) for some ridiculous price of $300,000 or $400,000 or maybe even $600,000. It is all I can do to not be rude and query if they forgot a ZERO??

I politely say that nothing meets their criteria, what the least expensive property that does is priced at and suggest other neighborhoods where they may get what they want in their price range.

Yes, our median price fell 20% last year but not in all neighborhoods. Some statistics that I received for November showed a median price of $765,000. I just checked for January of this year. There were 82 sales of single-family residences and the median price was a surprising-to me--$609,000. But when a house sells for less than $200,000; perhaps this could be expected?

Ever curious, I decided to separate our real estate districts to roughly north and west (Districts 1, 2, and 4-8) and south and east (Districts 3, 9 and 10-see map: http://www.sfarmls.com/docs/areamaps.htm ).

An entirely different story emerges. Looking at the northern and western districts, the median price was $797,500 and the average price was over $1million (for 34 sales)

For the other neighborhoods, the median price (for the 48 sales in January) was $529,950 and the average was a tad higher at $545,881.

Let's get really real. The district with the most distressed properties-short sales and foreclosures-is District 10-and the sub district of the Bayview What is the story here? For District 10, the median sales price was $525,900 for last month (and average a tad lower at $503,911). The Bayview had a median price of $390,000 and an average of $352,300. The lowest sale ($196,500) was in this area as well.

What does of this mean? Yes, there are houses to be had for less than $300- 400- or 500,000 but only in one or two of our 96 districts and sub districts.

There are TWO homes on the market RIGHT NOW for less than $200,000-and yes-you guessed it-BOTH in the Bayview. Of 571 active single-family residences currently on the market, ONLY 11 are $300,000 or less.

So people, PLEASE get real, San Francisco is still a strong market. Most neighborhoods are holding their own. Don't let the national economy or the Bay Area doom and gloom mislead you into believing that this is also the situation in the City by the Bay. We are not immune, just better inoculated by a beautiful location where everyone would like to live at some point in their lives.

Great news!! Remember I mentioned the new short sale listing that I was working on? Where the couple's home declined $200,000 in value in 18 months?

Within a few days of obtaining the listing-Boom! an offer-quickly followed by two more. We ratified one over asking a mere 10 days after the place hit the market.

My point: Buyers are out there and will jump on a good deal when and if they see one.

Now I just need to get the package to the banks. I am optimistic about working with Wells Fargo again as I hate B if A when it comes to short sales. I am four months into a transaction with B of A and on my THIRD negotiator--who she has yet to contact me--nor did Guy #2 respond to any emails nor tell me that he was abandoning my offer.

Maybe Bank of America prefers trashed REOs to above-asking offers on pre-foreclosures?

It has been a month since I last did an analysis of the short sale listings in San Francisco.

Let me share how these numbers—or percentages—are changing…

The percentage of short sale single-family residences (SFRs) has increased from 13% to 18% in the past four weeks. Should we worry about this? ABSOLUTELY NOT! The net increase is ONE new listing. The percent of short sale SFR listings is up because the inventory is down. The first week of December, there were nearly 600 homes on the market; by the first week of January, the inventory dropped dramatically--by nearly one-third--to only 438 homes.

As far as condos, I realized an error in my previous analysis that diluted the numbers. In San Francisco, all type 2 properties are lumped together despite there never being—to the best of my knowledge—any foreclosures of TIC interests. (I also doubt as most co-ops require hefty down-payments and interviews that they have distress issues either.) So I eliminated tenancies-in-common and cooperatives from my statistics. By only looking at condominiums (including lofts), the amount of inventory was less with a corresponding increase in the percentage of short sale condos.

Whereas four weeks ago, I considered a 4% short sale ratio to be not of much consequence, this number is now 7% sans TICs (and coops)—more significant in my opinion.

FYI, the neighborhoods with the highest ratios of short sale condo listings are Ingleside Heights, Potrero, Bayview, Crocker Amazon and Hunter’s Point (67% of the condos on the market are short sales).

After I look at the REO trends, I will report back.

I was reading an article by RealtyTrac (or using their data--not a plug as I am NOT a fan--just giving credit where it might be due) and it talked about the "Top Ten Foreclosure States (as of October)".

Number 1 on the list was Nevada with 1 in 74 homes. Guess too many people gambled on Vegas instead of in Vegas? J

Arizona was close behind with half the number or 1 in 149 homes; then Florida close with 1 in 157.

And...drum roll please...California was number 4 with 1 in 231 homes in foreclosure.

And where does my hometown of San Francisco fit into this? I don't know exactly how many homes there are in the entire city of San Francisco but we can look at this a couple of ways. As of today, January 3, 2009, we have 41 REO SFRs (single-family residences). If this would be 1 in 231, we should have a mere 9471 residences-we have far more than that.

Another way of looking at this, is by calculating the percentage of houses listed that have been foreclosed upon. 41 is 9.4 % of 438.

If you have been following my SF REO Stats, you will notice two things-first: this is a higher percentage in the past but second: only because the number of homes on the market has fallen by nearly a third over the Holidays.

So overall, I would say that we are still pretty lucky in San Francisco. The foreclosed homes are non-existent in 3 of our 10 real estate "districts" and over half are in one district-District 10-the southeast part of the City.

P.S. The other "Top Ten" states were Colorado (1 in 390), Georgia (1 in 391) Michigan, New Jersey, Illinois and Ohio (1 in 417).