Despite the constant news of dramatic changes in the real estate market – Values soar! Values crashing! Market up or down ___% from last month! Double dip recession! – the home market in San Francisco has exhibited a remarkable stability over the past year. As shown in the charts below, median prices for both houses and condos are virtually unchanged from one year ago; buyer demand remains steady; months’ supply of inventory remains steady; foreclosure sales are stable; low interest rates continue. Statistics jump around within a relatively narrow percentage band: there has certainly been no definitive trend up or down. It is neither a crazy buyers’ market nor a crazy sellers’ market: it’s a relatively healthy, balanced market, where the basic rules of real estate generally apply: well-priced, well-prepared, well-marketed homes typically sell quickly and homes without those characteristics don’t.

click for larger image	Homes Accepting Offers The number of SF homes – houses, condos and TICs – accepting offers is remaining stable, though running a little higher than this time last year. (April was an abnormally busy month due to the expiring Federal tax credit.)
click for larger image	SF House Median Sales Price The Median Sales Price is that price at which half the properties sold for more and half for less. Though it has gone up and down a bit over the past year, the median sales price for SF houses in July 2010 was virtually unchanged from that in July 2009: no definite trend up or down has manifested itself. The average median for the past 13 months is $756,000.
click for larger image	SF Condo Median Sales Price The median sales price for SF condos has remained remarkably stable for the past 12 months, with the average median sales price for the past 13 months being $675,000. Certainly no definitive trend in value up or down is apparent from the median price.
click for larger image	Distressed Home Median Sales Price Distressed properties are those that are being sold by banks pursuant to foreclosure, and short sales, which require banks to reduce the outstanding loan amount for the transaction to close. The median price for such sales has generally fluctuated between $450,000 and $525,000, which, looking at the earlier charts, one can see is a substantial discount from overall median house and condo prices in San Francisco. However, the majority of such sales are located in the less affluent neighborhoods of the city.
click for larger image	Luxury Homes: For Sale vs. Under Contract The red bars show the number of active luxury home listings in any given month (in this case, defined as houses and condos with list prices of $1,500,000 and above), and the blue line shows the number of listings which accepted offers. In July, the percentage of higher-end listings which accepted offers was about 15%
click for larger image	Inventory of Homes for Sale The dark red bars show the total number of homes that were for sale during the given month, with the lighter bars showing how many were actively for sale on the last day of the month – the difference being those listings that accepted offers, expired or were withdrawn. As we get deeper into summer, both numbers have declined slightly.
click for larger image	Average Days on Market (DOM) This chart measures the average number of days between going on market and accepting an offer. The average in July was 55 days, the lowest in 13 months but basically unchanged since March. In July, houses had the lowest average DOM with 48 days; condos were at 59 days; and TICs were at 75 days: this reflects the respective heat of each market segment. The average days-on-market for “For Sale” homes is 79 days, since it tracks those listings that have not received an acceptable offer.
click for larger image	Months’ Supply of Inventory (MSI) MSI is defined as the number of months it would take to sell the current inventory of homes for sale, at the current rate of sale: the lower the MSI, the greater the demand. MSI for all SF homes has stayed generally stable at 3-4 months, which is considered moderately low. However MSI varies widely by property type: for houses, the MSI is a low 2.9 months; for condos, 4.4 months; for TICs, 5.4 months; and for 2-4 unit buildings, a relatively high 7.4 months of inventory.
click for larger image	Distressed Homes as % of Sales The hash-marked sections delineate the number of distressed property sales (bank-owned and known short sales) against total home sales. The percentage of such sales is noted at the top of each bar: generally jogging up and down between 14% and 17%. Since 2010 began, within any given month, there are usually 400 – 450 distressed properties for sale; 110 – 130 distressed-home new listings; 80 – 100 accept offers; 55 – 75 close escrow; and 30 – 40 expire without selling.
click for larger image	Percentage of Listings Under Contract This chart shows the percentage of home listings which accepted offers within the given month. Except for the surge in April and the doldrums of the holidays, that percentage has typically remained between 16% and 20%. In July, houses had the highest percentage under contract (22.5%), followed by condos (15.4%), TICs (13.5%), and 2-4 unit buildings (10.7%): the higher the percentage under contract, the hotter the market segment.
click for larger image	Sales Price to Original List Price The darker blue bars show the percentage of original list price , typically about 100%, achieved by SF home sales that occurred without a price reduction, i.e. they sold quickly. The lighter bars show the percentage of original list price achieved by those listings that went through one or more price reductions before selling. The difference is typically 10 – 13% of the original list price amount. (January’s numbers are almost certainly caused by faulty reporting.) A well-priced, well-prepared and comprehensively marketed home (of general appeal) will usually sell quickly for the highest price.
click for larger image	New Listings The number of new listings in the city are up a little over July of last year, but down from the peaks of the spring selling season. Usually, the market will see a surge of new listings after Labor Day.
click for larger image	Homes Sold vs. Listings Expired & Withdrawn The green bars denote sold homes and the purple bars denote expired and withdrawn listings. In July, when many of the spring listings that did not sell expired, the number of expired/ withdrawn listings was almost equal to the number that sold. Listings expire or are withdrawn typically due to being perceived as overpriced.

Sales of houses and condominiums in San Francisco jumped 50 percent in the first quarter from a year earlier and the median price rose 5.4 percent to $685,000, according to a multiple listings analysis by Terradatum Inc. House values will gain 7 percent this year, the biggest annual increase since a 9 percent advance in 2005, Rosen Consulting Group forecast last month.

“San Francisco has conditions of very restricted supply and lots of things that can push demand: an attractive climate, innovative economy and high quality of life,” said Harvard University economist Edward Glaeser, who has studied U.S. housing bubbles.

The city and metropolitan area has ranked first or second among the most-expensive U.S. housing markets for 19 of the past 20 years, according to data compiled by the National Association of Realtors. The San Francisco Bay Area’s focus on technology and exports make the region an early beneficiary of the U.S. recovery, said Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto.

Prices for existing single-family homes rose in 60 percent of U.S. cities in the first quarter, the Chicago-based Realtors group reported last month. San Francisco metro area values increased 16 percent in March from a year earlier, the biggest jump of any city in the S&P/Case-Shiller home-price index. The 20-city composite measure climbed 2.3 percent.

A Dozen Bids

Hyuck Jae Lee and his wife, Seung Hye, beat a dozen other suitors last month for a three-bedroom, 1,400-square-foot (130- square-meter) house in San Francisco’s Inner Richmond, a half block from Golden Gate Park with its museums and meadows that stretch to the Pacific Ocean. The couple won by offering $875,000, or 14 percent above the asking value, after losing a nearby home that sold at that price.

The transaction is expected to close tomorrow, said Suhl Chin, the Lees’ agent at Zephyr Real Estate.

“We feel like we’re stepping into our San Francisco life,” said the 38-year-old Silicon Valley engineer, who works at a chipmaker in Sunnyvale, about 35 miles south. Lee looks forward to playing in the park with his seven-year-old daughter and taking bicycle rides in the city, he said.

Possible Slowdown

There are factors that may slow housing gains throughout the U.S., including the expiration of homebuyer tax credits and end of the Federal Reserve’s purchase of mortgage bonds, Robert Shiller, Yale University economist and co-creator of the home price index, said in a May 25 interview.

A prolonged debt crisis in Europe could batter stock portfolios and stall San Francisco’s rebound, said Kenneth Rosen, a University of California economist and chairman of Berkeley-based Rosen Consulting Group. He gives that scenario a 20 percent chance and said low U.S. interest rates will probably offset any volatility.

Limited availability of jumbo loans that finance the city’s high-priced homes may also drag on the upturn, said Joshua Rymer, chief executive officer of Sonoma, California-based Terradatum, which sells a monthly analysis to the San Francisco Association of Realtors. Jumbo mortgages are larger than government-supported Fannie Mae and Freddie Mac can finance, from $417,000 in most places to $729,750 in high-cost areas.

Citigroup Inc. led a $222 million sale of jumbo-backed securities in April, the first private offering of the debt in more than two years. There were more than $200 billion of the securities issued every year from 2003 to 2006.

“We’re in trouble if someone doesn’t start up that part of the market,” Rymer said.

Technology Jobs

Even with the concerns, high prices are to be expected in a 47-square-mile (122-square-kilometer) city surrounded by water on three sides, Glaeser said. Less than a third of San Francisco’s 361,213 dwelling units are single-family residences, and condominiums account for 12 percent, according to the city planning department. Apartments make up half the total.

A revitalized technology industry “almost certainly” drove the creation of 1,200 new jobs in the city from February through April, said Ted Egan, chief economist in the San Francisco controller’s office.

“I wouldn’t go nuts, but I would expect to see more improvement,” Egan said. “Hospitality and restaurants, health care and education are continuing to grow, and those are the things you’d expect to pull us out of the recession.”

Tech Stock Rally

The Standard & Poor’s Information Technology Index jumped 21 percent in the 12 months through June 4, outpacing a 13 percent gain in the S&P 500 Index. Six of the top 10 members of the technology measure are based in the Bay Area, including Cupertino-based Apple Inc. and Mountain View-based Google Inc. Real estate bubbles conclude with smaller price gains in cities with elastic supply, or more room to build, than in inelastic markets, Harvard’s Glaeser wrote with Joseph Gyourko and Albert Saiz of the University of Pennsylvania in a 2008 paper. That’s because elastic cities build extra supply, causing a glut that push values down, the economists wrote.

A city such as Houston, with an abundance of land, “tethers prices to reality,” while San Francisco’s geographic barriers and global appeal keep values high, Glaeser said.

“In supply-constrained and highly attractive markets there is no natural landing point for prices,” he said.

Katherine Yung and Kevin Brandstetter understand that concept. They were the top bidders out of 26 offers for a 1,600- square-foot house in the Golden Gate Heights neighborhood, paying $931,000, or $162,000 over the asking price. The three- bedroom home has ocean views, an updated kitchen and borders on a small park. It’s quieter than their old apartment.

“Maybe we way overbid, but we came up with a number that was worth it for us,” said Yung, 33, who met her husband in medical school in St. Louis. “Now that we’re in California, it’s nice to see the ocean and the mountains.”

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So what does it mean? Whether the 20-city or 10-city measure, changes to home prices have been so small nationally over the past few months that the Case-Shiller index has morphed into modern art – journalists and economists make of it what they want, which suggests they impart little value for handicapping the future. And let’s not overlook the fact the data are already two months old when released – a lifetime in financial circles.

Things can change in a hurry. Consider the dynamics in the new home market over just one month. In March, sales surged 26.9 percent to 411,000 units, exceeding the consensus expectation by over 80,000 units. Meanwhile, inventory dropped to 6.7 months from 8.6 months, as did mean and median prices, suggesting a shift toward lower-priced homes.

Consumer confidence shifted just as suddenly, with consumers displaying much more optimism in April compared to March. The sentiment numbers suggest to us the labor market is improving, and consumers are much more willing to spend. In February, the mood was the polar opposite.

The one constant has been the Federal Reserve’s willingness to hold the federal funds rate near zero, which it did once again after Wednesday’s Federal Open Market Committee meeting. The Fed has held the rate near zero since December 2008 and said conditions are likely to justify leaving it at “exceptionally low” levels for “an extended period.” The Fed also said that “economic activity has continued to strengthen” and “the labor market is beginning to improve,” which suggests that an “extended period” might not be as extended as many people think.

In short, mortgage rates are as low as they’re going to go, and the Fed has proven over the past few months that there is little that can be done to move them lower.

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The research findings correspond with efforts by the federal government and some mortgage lenders to help distressed borrowers with loan modifications and by facilitating short sales, the process in which banks allow homes to be sold for less than what is owed on the mortgage.

In another trend, while mortgage trouble remains more prevalent in lower- and moderate-price areas, it appears to be increasing in some affluent Bay Area ZIP codes.

The number of notices of default, which is the first step in the foreclosure process, declined in both the state and the Bay Area during the most recent quarter ending in March, according to MDA DataQuick, a San Diego research firm.

The 81,054 notices of default in California were 3,514 fewer than last quarter. Bay Area default notices declined by 77 to 13,517 compared with the same period last year. The Bay Area notices were 30.5 percent lower than the first quarter of 2009, when they were at a record level across the state, according to DataQuick.

“We are seeing signs that the worst may be over in the hard-hit entry-level markets, while problems are slowly spreading to more expensive neighborhoods,” said John Walsh, DataQuick president. “We’re also seeing some lenders become more accommodating to workouts or short sales, while others appear to be getting stricter about delinquencies.”

Trustee deeds, the final step of bank repossession, were also down. The state saw 8,203 fewer trustee deeds in the first quarter of 2010, a 16 percent decline. The 6,417 deeds in the Bay Area were down about 1,000 from the previous quarter.

The Obama administration is pushing lenders to reduce homeowners’ monthly payments through the $75 billion Home Affordable Modification Program.

The White House recently announced major changes to the program as foreclosures continued and critics called the program ineffective. In the coming months, it will expand to include unemployed workers and payments to lenders to reduce the principal owed on mortgages.

One figure that jumps out from Tuesday’s DataQuick report is San Francisco County’s 91 percent jump in trustee deeds in the first quarter of 2010 compared with the first three months of 2009.

The total number of homes, however, increased only from 101 to 193. The numbers are small, given the volume of homes sold in a given year, according to San Francisco Realtor Eileen Bermingham.

She said there were 3,867 single-family homes and condos (not including new homes) sold in 2009, according to the San Francisco Multiple Listing Service.

“I really don’t see the foreclosures bringing down overall values in the city much at all,” Bermingham said.

DataQuick analyst Andrew LePage said that the annual increase in San Francisco may be the result of lenders finally pushing through defaults long on the books.

“The surge in actual foreclosures looks like it might be catch-up from notice of defaults that have been there for a while,” LePage said.

Following a historical pattern across the state, mortgages were least likely to go into default in the first quarter of 2010 in Marin, San Francisco and San Mateo counties, according to DataQuick. The probability was highest in Merced, Stanislaus and San Joaquin counties.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/04/21/BU241D1LHF.DTL#ixzz0llcEyP17

The housing market is tightening up in San Francisco, according to the most recent Market Focus Report released jointly by the Rosen Consulting Group and the San Francisco Association of Realtors.

The report found that completed home sales in March 2010 increased 58 percent from the same month a year ago, absorbing much of the excess inventory in the market and intensifying competition among buyers for desirable properties.

John Lee, president of the San Francisco Association of Realtors, said the scarcity of housing units for sale has driven up the median sale price of single-family homes. He

Single Family Homes 119 Homes Sold Median Sale Price was $718,000 Minimum Sale Price was $150,000 Maximum Sale Price was $6,500,000 Median Selling Price was 103% of asking price Median Days on Market was 61 Median Selling Price for homes that sold within 30 days was 103.5% of asking price Condominiums, Lofts & Co-ops 93 Homes Sold Median Sale Price was $620,000 Minimum Sale Price was $208,700 Maximum Sale Price was $1,750,000 Median Selling Price was 99% of asking price Median Days on Market was 72 Median Selling Price for homes that sold within 30 days was 99% of asking price TIC’s 22 Homes Sold Median Sale Price was $584,000 Minimum Sale Price was $330,000 Maximum Sale Price was $895,000 Median Selling Price was 101% of asking price Median Days on Market was 108 Median Selling Price for homes that sold within 30 days was 100% of asking price

FEBRUARY Single Family Homes 120 Homes Sold Median Sale Price was $701,250 Minimum Sale Price was $200,000 Maximum Sale Price was $3,362,500 Median Selling Price was 101% of asking price Median Days on Market was 33 Median Selling Price for homes that sold within 30 days was 104% of asking price Condominiums, Lofts & Co-ops 120 Homes Sold Median Sale Price was $660,000 Minimum Sale Price was $115,000 Maximum Sale Price was $4,100,000 Median Selling Price was 97% of asking price Median Days on Market was 54 Median Selling Price for homes that sold within 30 days was 100% of asking price TIC’s 23 Homes Sold Median Sale Price was $549,000 Minimum Sale Price was $250,000 Maximum Sale Price was $870,000 Median Selling Price was 102% of asking price Median Days on Market was 104 Median Selling Price for homes that sold within 30 days was 97% of asking price

MARCH Single Family Homes 210 Homes Sold Median Sale Price was $790,000 Minimum Sale Price was $130,000 Maximum Sale Price was $13,500,000 Median Selling Price was 100% of asking price Median Days on Market was 31 Median Selling Price for homes that sold within 30 days was 103% of asking price Condominiums, Lofts & Co-ops 182 Homes Sold Median Sale Price was $683,500 Minimum Sale Price was $235,000 Maximum Sale Price was $2,450,000 Median Selling Price was 101% of asking price Median Days on Market was 40 Median Selling Price for homes that sold within 30 days was 99% of asking price TIC’s 22 Homes Sold Median Sale Price was $560,000 Minimum Sale Price was $370,000 Maximum Sale Price was $980,000 Median Selling Price was 99% of asking price Median Days on Market was 53 Median Selling Price for homes that sold within 30 days was 101% of asking price.

NEW YORK (CNNMoney.com) — Short sales are the hottest thing going in the distressed-property market, and the trend is expected to get even hotter in coming weeks, when the government starts handing out cash to encourage lenders to close these deals.

“Banks have ramped up short sale approvals,” said Duane Legate of House Buyer Network, which connects short sellers with buyers. “They’re hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sale

These transactions, where lenders allow homeowners to sell their houses for less than they owe, accounted for 17% of all residential real estate sales in February, up from nearly 13% in November, according to a monthly real estate market survey by Campbell/Inside Mortgage Finance.

And Bank of America (BAC, Fortune 500), the country’s largest mortgage servicer, has more than doubled the number of short sales it processed in recent months.

Elizabeth Weintraub, a Sacramento, Calif.-area real estate agent who handles many short sales, was amazed at how quickly a recent deal went through. “Bank of America approved it in 24 days,” she said. “That flipped me out.”

This is a huge change from even just six months ago when the short-sale market was stalled and most people would describe the process has real estate hell. Because lenders stand to lose so much on these transactions, they have been reluctant to make short sales happen, often waiting months before getting back to potential buyers.

“In the past, many short sales would never come to fruition and the ones that did averaged over half a year to complete,” said Chris Saitta, CEO of Equator, which produces short sale software.

“Things would just fall into a black hole and not come out again,” added Weintraub.

And even when banks did agree to the sale, the process could be further complicated if the original owner had a second mortgage.

In most cases, the first lender is repaid in full before any money flows to a second-lein holder. And because most distressed borrowers are severely underwater, there’s usually nothing left to send on. As a result, second-lein holders are left holding the bag and have been killing many deals.

But that has been changing. For one thing, banks realize that they make out far better financially with a short sale than a foreclosure. “The lenders lose 50% on a foreclosure and only 30% on a short sale,” said Glenn Kelman, founder of the real estate Web site Redfin. “And short sales offer a way to get distressed properties off their books quickly.”

And on April 5, lenders and mortgage investors will have even more incentives to offer troubled borrowers short sales instead of foreclosing.

Under the new Home Affordable Foreclosure Alternatives program, borrowers will earn a $3,000 “relocation incentive” and servicers will get $1,500 for handling a short sale.

The investors who actually own the mortgage notes will get $2,000 in exchange for sharing proceeds of the short sales with any second-lien holders. And, finally, those second lien holders will receive up to $6,000 for releasing their claims.

Lenders participating in the program must also determine the market values of properties early on and inform the owners of just what price they’re willing to accept. Then, if owners come back to the lenders with bonafide offers, they have to be accepted within 10 days.

Equator’s Saiita anticipates a short sale explosion in response to the new program. “The challenge will be handling all the volume,” he said.

The company has already tweaked its software, which 58 servicers use, to handle the new HAFA rules. And that should help reduce the time it takes to execute a sale, which currently averages 88 days.

The boom in short sales may accelerate the end to the foreclosure crisis by cleaning out the overhang of borrowers in distress and replacing them with more stable homeowners.

Plus, these sales are better for distressed borrowers because their credit scores suffer less. Going through a foreclosure can knock 200 points off a FICO score, twice as much as the penalty for a short sale.