Rebecca White

Hello,

I have always enjoyed numbers and like trying to make sense of them. I have been keeping an eye on short sales and foreclosures in San Francisco for some time now. I will endeavor to track these distressed properties a little better. I recently checked out all of the foreclosures currently on the market in San Francisco: single-family homes, condominiums and multi-family buildings. I also broke down the number of SFR REOs and condo REOs by "district"-our way of looking at our City of San Francisco.

A few interesting items...

Of course, I could scare you all and say that single-family home foreclosures are up 20% in the past few weeks. This is accurate but very misleading. A few weeks ago, we had 712 single-family homes on the market; 36 of which-5%--were REOs. As of today, November 23, 2008, there are 38 REOs-an increase of only 2-but the number of homes on the market has decreased to 670. This makes the foreclosure percentage 6. So, our percentage of foreclosed homes has increased but the actual number is only TWO more.

Currently we have 24 foreclosed condos on the market or 3% of the total market.

TOTAL Number of SFRs, condos and 2-4 units that have been foreclosed on recently-and currently available: 69.

What I find more interesting is the distribution of these properties. Some districts (see map link: http://www.sfarmls.com/docs/areamaps.htm ) have 0, nada, zip foreclosures and only one district has a significant amount of both SFRs and condos. Of course, any Realtor worth her (or his) salt in San Francisco will know that District 10 (Excelsior, Outer Mission, Bayview, Vis Valley, etc.) tops the list for REO SFRs. With 23 out of 38, no other neighborhoods come close!

It is probably fairly common knowledge that District 9 leads in condo foreclosures with nearly half-or 11 out of 24.

It is the second place areas that are a tad more interesting. District 10 has the second highest number of condominium foreclosures with 8 REO listings and District 3 (Ingleside, Oceanview, etc.) has the second highest number of foreclosure homes with 7.

Coincidentally, I saw most of these yesterday and was quite pleasantly surprised to see several decent, habitable homes at well-below-median price. I showed a practically brand-new home with a detached garage and "office" in back for less than $500,000 and another home with a fully-remodeled (illegally-I can touch the ceiling) basement plus main level plus attic for $539,000. "Our favorite" was not only well-maintained and updated but had 3 bedrooms, hardwood floors, hot tub and a wonderful deck with an ocean view! (Hmm, maybe that's where Oceanview gets its name? J ) All this could be had for less than $600,000. If my clients are lucky, it could be theirs.

In conclusion, the number of foreclosures in San Francisco is increasing-ever so slightly-but we are still very fortunate in comparison with most of our bordering municipalities.

I keep saying that now is a good time to buy and after yesterday, there are some great buys to be found.

I was reading a Chronicle article recently that-despite being a year old-is still largely relevant. It spoke of neighborhoods facing foreclosure and zip codes with high rates of foreclosure in the Bay Area.

I am curious about some of the comments made in the article and, of course, want to add my own comments and raise a few questions...

According to Robert Kleinhenz, economist with the California Association of Realtors, the greatest impact was on those places with entry-level home prices. In the Bay Area, this applies to many places: Oakland, the Bayview in San Francisco, Vallejo, Brentwood and Antioch to name some.

But another interesting comment was made (in this article) by our (San Francisco) Assessor, Phil Ting. He said that the neighborhoods with the most foreclosures were those with large "minority populations...".

Hence my confusion, what is meant by minority population and where is the juxtaposition of "minorities" and entry-level homes?

I live in Nob Hill. The preponderance of my neighbors are Chinese; Chinatown is over the hill. The Richmond and the Sunset have huge Asian populations. None of these neighborhoods are "entry-level".

And the neighborhoods that Mr. Ting mentioned, such as Bayview, Oceanview, Crocker Amazon, Excelsior, et al; is he referring to African Americans? Hispanics? Asians? Whites? (Aren't we in a minority majority state?)

Allow me to digress to an article that I read years ago about the 10 most common surnames of people who were buying homes in San Francisco: 9 out of 10 were Asian surnames-8 Chinese and one, Nguyen, Vietnamese-and number 9 on the list was Martinez.

Are these the people defaulting? For some reason, I don't think so. But then, who is? People who never should have bought a home in the first place? Who had marginal credit, little or no down-payment and "stated" (a polite way of saying lied about) their incomes?

If so, what is the bigger picture here? That we (Realtors, lenders, et al) encouraged people to buy who really shouldn't have? That we should have denied the American dream to people who desperately wanted to own a home but were incapable of hanging on to it?

And some people legitimately qualified for loans. I have clients who used her inheritance-their life savings-and put a full 10% down to over bid a home with multiple offers by $90,000. Their house has gone down in value $100,000 a year in value and we are in a short sale situation. They would like to keep their home but after he lost his job and her income was cutback, they can no longer make the payments; years of scrimping and hard work all for naught.

Ah, but what is the solution? Should we help people keep their homes? Make it harder to bail? My clients couldn't re-do their loan as their income was no longer sufficient to qualify. At the price they will sell their home for-less than half of what they paid-they could afford it. Wouldn't it make more sense to "re-sell" at the short sale price and keep them in their home?

I am glad that the house won't go into foreclosure as then it would most certainly be vandalized and destroyed. If a lender were to re-do loans-even losing a significant amount of money-they would still net more than the cost and diminished value of a foreclosure.

I am not really sure how we got here and I don't have all of the answers but what is happening now is that the rich are getting richer as investors snatch up foreclosed or short sale properties. The middle income folks who have lost their homes no longer have equity and are soured about the home ownership experience. And our government thinks that "rewarding" the corporate greed that got us here in the first place is the solution. It is doubtful that this largesse will "trickle down" to benefit my clients who are losing their home.

I could ramble more but I have to go show some short sales and developer close outs. At least this client is buying property that she and her family will eventually live in.

My last 2 cents, vote for Obama who may be the only way out of this mess. We need to get out of Iraq and then we can clean up our own mess right here at home. How can we justify sheltering Iraqis when we can't shelter our own citizens? The economy is the worst that it has ever been in my lifetime because of the wimp who stole the Presidency from Al Gore--but that is another rant!

I was a little shocked today to see Inman News touting that close to 10 MILLION HOMES were "upside down" (meaning people owe more than their home is worth). The state with the highest percentage of upside-down mortgages is Nevada with 48%; followed by Michigan, Florida and Arizona. California is in 5^th place with 27% of our mortgages being upside down.

Of course, I naively assumed that this didn't affect the "island" of San Francisco. Interestingly enough, I was wrong. Yes, we don't have bazillions of foreclosures like Oakland, Richmond, Stockton and Sacramento but the number is steadily increasing.

The locations of foreclosure homes are also steadily creeping away from District 10 (Bayview, Portola, Vis Valley) into exclusive, north-end neighborhoods such as Pacific and Presidio Heights.

All of this brings me to the local and relevant statistic that REALLY shocked me: of the 712 single-family homes currently listed in San Francisco, 36 are FORECLOSURES or a measurable FIVE PER CENT.

Here we are in one of the most stable real estate markets in the country and one out of 20 of the houses listed is bank-owned!! Wow! I will have to quit saying that we don't have very many foreclosures--3 dozen and counting says we do!

I am not sure if our ancestors used the "toilette" (john, biffy, pot, etc.) as much as we do but it seems that most homes that have been around for half a century or longer only have one bathroom. Or Yikes! in San Francisco--a split bathroom. (How can people possibly go potty without washing their hands? OMIGOD--the germs!)

Which leads me back to why (mostly rhetorical) everyone seems to want TWO bathrooms but very few places have them-legally at least.

So, remember my remodeling nightmare? (BTW, it will be on the market this week. It takes a long time to find a decent plumber in this town.) I spent (too many) tens of thousands of dollars, and among other items, have a second bathroom. It has custom maple cabinets. Hmm, maybe I should say cabinet as the large linen closet was too big despite my contractor telling me to order it. It blocked the light switches. (It now sits in the main bathroom but can be moved by the new owner.)

It has a new toilet, new lights, tile floor, and a large, simulated marble shower with a green floor that matches my moss green vanity- also some type of synthetic marble-possibly my favorite item in the place.

To wit, I have a second bathroom; something unusual and rare in an older TIC building in Nob Hill. So what does this add to my value? There is a nice one-bedroom TIC in a 6-unit building with parking and a view nearby for $649,000. Is my second bedroom and second bathroom with a Pyramid view sans parking worth a commensurate amount?

The market will tell. And I hope it speaks a resounding "Yes"!

If you recall--and you probably don't--I have a short sale listing in Richmond. Whereas my clients paid $500,000 for this adorable bungalow, made significant improvements, invested their life savings, and this home should have been worth $550-600,000; I had to list it at a fraction of what should have been its' value: $350,000--to no avail. A few months later, I dropped the price to $325,000--still no takers.

After doing a new CMA, I dropped the price drastically to $250,000-still above the comps--as this is a special property.

Amazingly enough-lots of interest-and FOUR offers. Hmmm, why? Yes, it is priced well, but there are houses selling and listed for $150,000; 100,000 and even less! Why is my listing selling for close to the list price? Because it is still-unlike almost everything else nearby-owner-occupied!!!

Banks that are kicking homeowners out are doing a disservice. A vacant house is an invitation to criminals, drug-users, vandals and vagrants--and a major decrease in value!!

Thus, I have two point here: one-a well-priced home will sell, but condition-or value-trumps a dump and two-lenders, PLEASE let people stay in their homes as it will maintain the value better and keep the home from being trashed (more on this later).