Saturday, December 29, 2012

Ultra-luxury (& Affluent) SF

Have you ever driven through Pacific Heights and wondered who owns the ultra-luxury real estate in San Francisco?  We certainly have, which is why Coldwell Banker Previews International conducted an ultra-luxury survey (full report here: Previews Luxury Market report), which examined current data on today’s wealthiest homebuyers and sellers who have either listed or sold a property priced at $10 million or more.  Here is what we learned:
  • The ultra-luxury sector is generally defined as properties in the top 1 percent of a given real estate market.
  • The golden rule of real estate, “location, location, location,” is still true at the top of the market: 79 percent of agents said that the single most important property feature is location for their clients.
  • Cash is King - most deals are made with no bank or personal financing involved.
  • Despite a growing number of international buyers entering the market today, 72 percent of the ultra-affluent are still local to the area in which they are buying.  Of the 28 percent of international buyers, 39 percent come from Asia and 20 percent come from Western Europe.
  • Real estate agents interviewed for the survey noted that 44 percent of their clients in the $10 million and up price range are entrepreneurs and 62 percent are between the ages of 45-54.  For that reason, very few are single: 54 percent are married with children and 38 percent are married.
  • In San Francisco, the typical ultra-affluent buyer is younger - between the ages of 30 and 45, given Silicon Valley’s presence and booming high-tech sector.  Malin Giddings, a Previews Specialist and Top Producing agent in my office, estimates about 90 percent of her clients in the $10 million and over range work in the tech industry or investment banking sector. 
In the survey, Malin Giddings further noted that it is all about the views and location for these ultra-affluent Buyers in San Francisco – encouraging most to Pacific Heights and Presidio Heights.  A new phenomenon was also observed among this profile of buyer: a very strong interest in mid-century architecture.  Specifically, this group is not interested in traditional, ornate or Mediterranean style homes; rather, they want a clean, minimal palette with high ceilings, large glass windows for the views and big, open rooms.

I hope this gives you a sense of the upper echelon and the stats surrounding their real estate activity.  As an aside, you may be wondering how you find out about available homes at this price point.  The majority of the $10 million plus homes are sold privately or off-market given the profiles of the individuals and their preference for a confidential sale.  At TRI Coldwell Banker, we have insight into these off-market opportunities.  For more info feel free to call me at 415.317.4546 or email

Tuesday, November 27, 2012

Home Improvement: Are You Up for it?

Being the son of a developer, I have gone through my own share of do-it-yourself home projects, and am a promoter of taking home improvement into your own hands.  However, there are several questions you will need to address before committing to such an adventure: 
  • Aesthetics: Are you up-to-date with the design and finish selection that best suites the style of your home (its location) and optimizes value?  In the same vein, will the finish selection you go with compromise the property’s re-sale value in any way?  Would a bumpy stucco job or slight unevenness in the hardwood floors bother you, for example?
  • Skill: Do you have the necessary skills to frame out a room, and do it safely while being mindful of the local building code?
  • Scale: Is the size of the project one you can handle in a reasonable period of time?
  • Bottom line: When factoring in the value of your own time, can the project be completed for less cost by a professional?  Do you have the tools, and understanding to utilize the materials needed?
The points above are all very important questions to consider before taking-on a home project.  Ultimately, one of the main differentiating factors in determining whether to do the work yourself or hire a professional is whether the work is structural in nature.  Specifically, structural elements of a building (i.e. beams, footers, headers, certain walls) play a critical role in the integrity and safety of a property’s very existence.  As such, any alterations made to the structural makeup of a property should be deferred to an architect, structural engineer, and trusted contractor.
Aside from structural modifications, it may be prudent to engage a professional when updating or modifying the ‘Systems’ of a home (i.e. the electrical, plumbing, HVAC).  Such components require proper, certified training as taking-on such work could be deadly if not done properly.
I hope I haven’t scared you, as saving money and having fun with a home project is still within reach.  There is always something to address or fix-up; and changing fixtures, refinishing hardwood floors, or installing a surround-sound speaker system can be easily handled by you with a quick reference to an online resource or call to your local hardware store.  Please feel free to contact me for recommendations on qualified tradesmen and various other resources (i.e. inspectors, designers) pertaining to residential and multi-unit properties.

Monday, October 22, 2012

The Beauty of Color… Paint!

Painting is the fastest and easiest way to transform your home.  A coat of fresh color on the walls breathes life into any space - and decorative paint techniques go a step further, adding dimension, drama, and distinctive personality.  

Color is key to your room’s personality and combining new colors and decorative techniques will make your home and rooms come alive.  I am sure we have all painted a room whether it be in preparation of a newborn coming home, or getting a home ready for sale.  Here are several tips to keep in mind when taking on this fun project:

  1. ‘Preparation’ is the key to any great paint job.  For starters, sand away any flaws and create a smooth surface to work with
  2. Be sure to fill holes and patch cracks with joint compound prior to slathering your color of choice
  3. Use tinted primer: Tinted primer does a better job of covering the existing paint color than plain primer, so your finish coat will be more vibrant and may require fewer coats
  4. Eliminate brush and lap marks with paint extender.  The secret to a finish that is free of lap and brush marks is mixing a paint extender - also called a paint conditioner, such as Floetrol into the paint
  5. Finish one wall before starting another: Pros get a seamless look by cutting in one wall - painting along the edges - then immediately rolling it before starting the next.  This allows the brushed and the rolled paint to blend together better
  6. Box the paint for consistent color: The ‘same’ color of paint can vary between cans.   To ensure color consistency from start to finish, mix the cans of paint in a five gallon bucket, a process called ‘boxing’
You are now ‘armed and dangerous’ to give your place a fresh, new look.  If you do not feel comfortable and prefer to delegate the task, feel free to reach out to me and I will give you some strong recommendations of Painters in the City.

Tuesday, October 16, 2012

A Glance at Distressed / Foreclosure Activity

Compared to National (and State) activity, Foreclosures in San Francisco have been a minute percentage of the market – particularly in the desirable parts of town.  I believe this is a true testament to the wealth and resources found in San Francisco and its micro-economy, overall.  Let us have a closer look at some stats…

Per, pre-foreclosure activity in San Francisco has remained relatively flat over the past two months with 375 properties in the pipeline, 35 percent of which are in District 10 (i.e. Bayview / Hunters Point) versus 33 percent two months ago when a total of 378 San Francisco properties were in the pipeline.  On a year-over-year basis, pre-foreclosure activity is down almost 40 percent with over 600 properties in the pipeline at the same time last year, roughly 35 percent of which were in District 10 (which is likely the least desirable sub-district in the City) – hopefully this gives you some perspective.  

Per, on a more macro (overall California level), September 2012 California Notice of Defaults were down 20.7 percent from the prior month, and down 48.1 percent compared to last year.  There has been speculation that the banks would rush to clear inventory before the CA Homeowner Bill of Rights takes effect in January, 2013, causing an increase in the number of foreclosures.  Clearly, this is not the case as we continue to see the number of Foreclosure Starts decline.  

The above data is very encouraging and supports the over-the-ask / multiple bid activity currently experienced in San Francisco.  Feel free to reach out to me to further discuss the San Francisco real estate market and what I anticipate looking ahead. 

Saturday, September 22, 2012

‘Sharpen’ Your Bid.

“I have an idea: given we have been beat-out on the last three offers submitted on homes you absolutely loved, I think it is wise to make an offer of $10,000 above the highest offer received, not to exceed $700,000 on the next property you find and absolutely adore!”  These were the words and strategy I shared with my client after being out-bid by the market during an eight month search for a place to call home in San Francisco.

With inventory (supply) low, the Tech sector / IPOs ripe, and interest rates at historical lows, demand for property has grown exponentially as the year has progressed in 2012.  In turn, all-cash and incredibly sophisticated Buyers are left by the wayside, unable to compete in a frenzy of bidding wars taking place over home ownership.  Luckily, this is where I come in. 

See, I employ a strategy called a ‘Sharp Bid’.  It is an old school strategy, but works in today’s market if executed properly (and with the right tact).  By submitting a Sharp Bid, you are ultimately telling the Seller you will pay an ‘X’ amount over and above the highest offer received, thereby trumping the ambiguity often found in your competition, and winning the property.  Do you pay over the asking price?  Yes, nearly always; but, this is the nature of the current market dynamics in San Francisco, which begs the approach if you want to own an appreciating asset in this beautiful City. 

I am happy to discuss the various nuances found with submitting a Sharp Bid, as there are several pros and cons to consider before going this route.  Feel free to contact me anytime.

Sunday, September 2, 2012

SF Holds its Own 'Weight'

Using the below tables directly from the S&P / Case-Shiller:

  • In the year 2000, the average number of units (in 000s) was 1,100, while San Fran was 14% lower than the average.  This stat clearly speaks to the inventory / supply issues that real estate professionals, home-buyers and owners constantly reference. 
  • More revealing is that, in the same year, the average price of a home in SF was double that of the average: $465K versus $224.25K.  In terms of statistical significance: that is three standard deviations away.  (465-224.25) / 81.4 = 2.95.  Wow, that bell curve is as flat as Lady Gaga’s abs!  Cheekiness aside, simple economics are clearly present here: lack of supply = increase in demand.  

Begging to rant, the C-S is a weighted index that gives more emphasis to cities such as SF.  Think of the S&P 500—it is cap weighted, where the biggest companies get larger weightings.  Removing San Francisco from the national index, as a mere exercise, would result in the national housing average to drop by nearly 7%.  I think it is safe to conclude that San Francisco is a strong and resilient market (to say the least).