Thursday, January 2, 2014

Where’s the Next Goldmine in SF?

Buyers and developers alike always ask me, “Dino, what areas of the city are undervalued – where can I expect the greatest appreciation looking ahead if I were to buy today?”  This is a very good question as most people are seeking price stability, first, with appreciation potential, in addition.  Timing is key.

My high-level, macro answer to this question is that the San Francisco real estate market is truly neighborhood-by-neighborhood, block-by-block even.  Location is vital, patience is necessary, and having the right agent will make sure that the proper execution and correct behaviors are in place to maximize value.  The value of advice translates into real dollars.

At a sub-district focused level, I believe there are two locales in SF that offer greater growth potential than others: Potrero Hill and the Richmond District.  Let me break it down for you as to why I believe this to be the case:

Potrero Hill is a deep hail mary pass away from the hot & hip Mission District, which has been experiencing new construction condo sales of $1,500 per square foot (e.g. http://3500-19th.com).  In comparison, the most expensive condo sale of 2013 in Potrero went for $931/sqft (and that’s an outlier).  Aside from being one of the sunniest parts of town (and without the strong winds), garnering killer views of the Bay and City skyline, here are some other reasons why Potrero is on the verge of blowing-up in value:
·         The UCSF Benioff Children's Hospital is currently under construction.  This world-class hospital will act as a boon for employment creating a potential and tangible buyer pool that will be soon reflected in the prices of property.  Unlike any other national area, SF real estate is driven by the economics of supply and demand and this is but a single contributor.
·         Proximity to the South Bay and Valley (via access to freeway and CalTrain) is easy in Potrero Hill.  More and more singles and families alike who work along the Peninsula but prefer City living are recognizing the value of this location.  There is value in getting to the office just a little more easily.
·         Although it’s known to be a little quieter in Potrero (which many prefer), you’re only a short cab ride from the hustle and bustle of the Mission restaurants and shops. Why live on top of the madness when you can still enjoy it slightly removed?

The Richmond District is my personal favorite given its proximity to Clement Street (shopping), and the Golden Gate Park.  Here are some reasons why this sub-district is a perfect value play:
·         Much of the ‘smart’ (investor) money is steadily making its way in this area.  It cannot be ignored, that every avenue in the Richmond is humming to the sound of contractors and developers either renovating for spec or end-user demands.  Bottom line: homes are affordable here, especially for those looking at single-family homes that offer separate in-law / au pair suites.
·         Price per square foot hasn’t been blown out of the water (yet).
·         Farmer’s Market just hit the scene several months back, and one cannot deny seeing the droves of young families and couples moving into the area.  The produce is fresh, too!
·         Clement Street restaurants, shops, and cafes are incredibly diverse – reflecting the people walking amongst them.

I’m happy to provide you with more insight into the quantitative side (the numbers) on both areas, along with other sub-districts that may be of interest - just let me know!  And remember, in real estate: 'you make money when you buy, not when you sell'.