Education

Architect and the City Festival

While enjoying a cone at Humphry Slocombe the other afternoon, I picked up a pamphlet for the Architecture and the City Festival that runs from today, September 1, 2011 through September 30.

A quick read through shows it is put on by the AIA of San Francisco and has a lot to offer.  While programs were offered at a discount to AIA members, the general is welcome.

Events that seemed most interesting to me were:

“Working with an Architect,” which allows people to drop by (at no charge) to discuss their home remodel ideas on September 17 and 18 at the event headquarters at 2211 Alameda Street;

“(Re)discover the New Bay Bridge,” which is a guided boat tour of the newly emerging east span of the Bay Bridge; and.

“Then and Now – Pier 70,” which is a walking tour of an historic San Francisco pier.

I encourage you to take a look at:  http://www.aiasf.org/archandcity

Suburbia Isn’t Exportable

From the standpoint of resources, to replicate the standard of living of the American middle class with its sprawling suburbia is not feasible, no matter how desirable. We would need something on the order of 10 more planets to sustain such a lifestyle globally.

Most residents of Tokyo are considered middle-class. Forgetting for the moment the rest of Asia, what would happen if they were able to expand from their small apartments to American-style single-family homes?
Continue Reading…

Is a Short Sale Right for You?

If you want to sell your house, and the amount you owe plus the costs of sale are more than it’s worth, then you will be faced with the choice of attempting a short sale or bringing in the cash to close.  Despite the fact that San Francisco home values have held up much better than in other areas, this was the case for about 30% of my business in 2010.  So if you find yourself considering either of these scenarios, you are not alone.

If you are in the position to upgrade your home or investment property, it can be a great choice to sell a lower value property at a loss and obtain a more valuable property.  This is called trading up in a down market and it makes sense because x% off a lower price is less than x% off a bigger price.  But for those who are faced with the need to simply exit the market entirely due to job change, job loss, divorce, a mortgage they can’t pay or neighbors they can’t live with, the market being down does not have the same silver lining.

If you have the cash to bring in, the process is the same as a straight-forward, normal sale, albeit more painful.  In some cases, you can even write the loss off your taxes.  If you don’t have the cash, though, you will need lender approval and a good explanation of hardship to get the short payoff approved by the lender.  The forgiven debt is considered potentially taxable income by the state and federal governments.  The good news is that under the Mortgage Debt Relief Act of 2007, the Feds are not collecting taxes on mortgage debt forgiven in 2007 through 2012 up to $2 million for a couple filing jointly and that under the Conformity Act of 2010, California is doing the same for debt forgiven up to $500,000, with partial tax relief up to $800,000 of debt forgiven.  Especially with San Francisco’s fairly low value declines, these exclusions will protect most people needing to sell their homes short in our market. Continue Reading…

The New Real Estate Terminology

In the news, we’ve all be hearing a lot about the “Foreclosure Crisis,” “Distressed Properties,” and homes that are “underwater.”  Many of us even have family and friends who are suffering as a result of the sharp decline in real estate values that began about two years ago.

Even though it’s been reported that in San Francisco specifically and the bay area in general that prices are leveling off, the disposition of so called “toxic assets,” will go on for some time to come.  I’m not going to attempt in a 600 word article to tell you how to buy a distressed property, but I think that starting with some terminology would probably help most of us to do what many like to do best – talk about real estate.

Let’s start with a “foreclosure.”  I hear people talking about buying a “foreclosure,” all the time.  There are three ways to do this:  Trustee’s sale, public auction and buying an “REO” through the regular sales process. Continue Reading…

Is that a Streamline Moderne or Deco? James Dixon Does It Again!

I have to hand it to him.  James really knows how to make my life more fun and interesting –  especially since my main game is cruising around San Francisco viewing (and selling) fine examples of residential architecture.

Many of San Francisco’s neighborhoods were built in the boom times of the 1920s and 1940s and identifying the style of the homes has often been difficult for me.  With James’s rules of thumb regarding tell-tale characteristics and years built, I can now tell my deco from my Streamline Moderne and my Spanish Eclectic from Mediterranean Revival.  It’s really worth a look.

See also, James’s summary of Victorian & Edwardian Residential Architectural Styles in San Francisco, which contains information I use every single day.

To find out more about James Dixon and his work on Residential and Commercial projects, see his Website.

And to see my favorite project of James’s, click here.  CAN YOU GUESS WHERE THIS IS?  First five people to email me the address get Peets cards!

20 Projects You Might Complete in Your Spare Time

If you know me, you might know about my obsession with baking the perfect sourdough boule or about the pizzas I make with wafer thin crust.  I use my 1940s Occidental Range that has a wonderfully unlimited thermostat to good effect, but I would love to practice with the inconsistent and more exciting high heat of a wood fired oven.  I have had an obsession with the homemade adobe oven pictured at right since the early 90s.  Every once in a while I run across a home where someone followed the directions originally published in Sunset Magazine in the 1970s and I am so jealous.  I am determined that *someday* I will have a backyard big enough to accommodate one of these just so I can play with it.

Yesterday, reading the SF Gate, I came across an article listing 20 of Sunset Magazine’s best backyard projects from their archives.  My other favorites were the built in patio scrabble game and the swing for two.

In these challenging times, it’s a great idea to look around and see what you can do yourself to make your home a nicer place to be.  Sometimes all it takes is a small improvement to make a previously uninviting corner of your city yard feel like home.

Are your property taxes too high?

It’s a good news/bad news situation. If your home is worth more than you paid for it, most people would agree that that’s a good thing. And if your home is worth more than you paid for it, you are likely paying the right amount of tax and so are not eligible for the scenarios described below. However, if your current assessed value is more than the fair market value of your home minus $7,000, you may be eligible for a reduction in your assessed value for the purpose of property tax calculation.

If you believe your home may be eligible for a reduction in property taxes based upon a decline in value, there are two ways you might proceed: an Informal Review by the Assessor’s office and/or a Formal Appeal with Assessment Appeals Board. The Formal Appeal, in particular, can be a complicated and time consuming process. Generally speaking (it all depends on the neighborhood and other details of your purchase), homes purchased 2005 through mid-2008 have the best cases for a property tax reduction. Declines from Peak Value (whenever that occurred) typically run in the 15% to 25% range. If your appeal is successful, the reduction in assessed value only applies to the 7/1/10 – 6/30/11 tax year. A decline-in-market appeal is only good for 1 year, the year for which it is filed. The Assessor’s “valuation date” is January 1, 2010 and any sales comparables submitted must have closed before March 31, 2010.

Informal Review

The SF Assessor’s Office has announced that they will now accept “Requests for Informal Review of Assessed Value” for tax year 2010/2011. Such requests must be filed by March 31, 2010 and apply only to single-family dwellings, residential condominiums, townhouses, live-work lofts and cooperative units. Last year 3,432 requests for informal review resulted in 1,683 reductions of assessed values for SF properties in tax year 2009/2010.

One can email the Assessor’s office with questions (Assessor@SFGOV.ORG), as well as call or visit the Assessor’s office to speak with the appraisers that are on duty (415-554-5596). And the SF Assessor’s website offers information regarding Decline-in-Value Informal Reviews: http://www.sfgov.org/site/assessor_index.asp?id=115404 

FAQs as Posted by the SF Assessor’s Office

Q1: I BELIEVE THE MARKET VALUE OF MY PROPERTY IS LESS THAN MY CURRENT ASSESSED VALUE. HOW DO I PROTEST MY VALUE?

First, check your current assessed value at http://gispubweb.sfgov.org/website/sfparcel/index.htm. Second, if the assessed value is higher than the market value, you have the following options:

1. REQUEST AN INFORMAL REVIEW (single family dwellings, residential condominiums, townhouses, live-work lofts and cooperative units only) – From January 4, 2010 to March 31, 2010, the Assessor will accept requests to review the market value of your property. Your request must be in writing by completing an application or submitting your request online with supporting evidence of your opinion of value. If you were granted a reduction for the year 2009-2010, we will automatically review your assessment for the year 2010-2011 to determine whether a reduction is still warranted, Send your request to: Assessor-Recorder, ATTN: Prop. 8, 1 Dr. Carlton B. Goodlett Place, City Hall – Room 190, San Francisco, CA 94102. Mail-in requests for an informal review must be U.S. postmarked by the March 31, 2010 deadline. By Fax: (415) 554-7915 or E-mail: InformalReviewRP@sfgov.org. Be sure to keep a copy for your records.

2. FILE AN ASSESSMENT APPEAL (All property types) – From July 2, 2010 to September 15, 2010 you may file an Application for Changed Assessment with the Assessment Appeals Board (AAB), an independent body established to hear and resolve valuation disputes between the Assessor and taxpayer. A $30.00 filing fee due at the time of application and the AAB will schedule a hearing for you at a later date. Applications may be obtained by contacting the Assessment Appeals Board – Clerk of the Board at 1 Dr. Carlton B. Goodlett Place, City Hall – Room 405, San Francisco, CA 94102, by phone: (415) 554-6778 or directly from their website: www.sfgov.org/AAB.

Q2: CAN I, AS THE OWNER OF A SINGLE FAMILY DWELLING, DO BOTH PROCEDURES?

Yes. If upon the receipt of your annual Notice of Assessed Value, which will be mailed at the end of July 2010, you disagree with the assessed value, you .can file an assessment appeal with the Assessment Appeals Board. Please see instructions above.

Q3: WHAT DOES MARKET VALUE MEAN?

Market value is the price a property would sell for when the property is put up for sale in a competitive and open market.

Q4: WHAT IF MY CURRENT ASSESSED VALUE IS BELOW MARKET VALUE?

The Assessor is required to enroll the lesser of your factored base year value (assessment) or the market value. For example, if the market value (what you could sell your house for) of your property as of January 1, 2010 is $500,000 and your assessed value is $200,000 the Assessor would enroll the $200,000 as your taxable value. You would not qualify for a lowered assessment.

Q5: WHAT TAX YEAR AM I APPEALING?

The assessed value being appealed will cover the fiscal year from July 1, 2010 to June 30, 2011.

Q6: WHAT TYPE OF INFORMATION WILL I NEED TO PROVIDE TO SUPPORT MY CLAIM?

You will need to submit sales information and/or an appraisal performed by a licensed real estate appraiser to support your claim. The sales information or appraisal’s date of valuation should be near the January 1, 2010 lien date but no later than March 31, 2010.

Q7: IF THE ASSESSOR OR THE ASSESSMENT APPEALS BOARD AGREES TO REDUCE MY VALUE, WILL THE NEW ASSESSMENT BE PERMANENT?

No. The reduction is temporary and only applies to the tax year being appealed. Once a reduction is made, the assessor is required by law to annually reappraise the property until its fair market value exceeds the factored base year value.

Q8: WHY ARE TENANCY-IN-COMMON (TICs) UNITS EXCLUDED?

Unlike residential condominiums and cooperative units, TICs do not have separate parcel numbers. A review of a single TIC unit is more complex. TIC owners can appeal their taxes by filing an Application for Changed Assessment with the Assessment Appeals Board beginning July 2, 2010 thru September 15, 2010.

Q9: WHEN WILL I BE NOTIFIED OF THE RESULTS OF MY INFORMAL REVIEW REQUEST?

Homeowners will be notified of the results of their informal review in the annual Notice of Assessed Value which will be mailed at the end of July 2010.

Making a Formal Appeal

The next open formal appeal filing period for San Francisco will be July 2, 2010 to September 15, 2010 — to appeal the 2010/2011 assessed value of your property. A formal appeal can be made for multi-unit and commercial properties, as well as for houses, condos & cooperative units.
It is possible to attend assessment appeals board hearings for other people to see how they work. They are open to the public. These 3 online resources offer important details regarding the filing of a formal appeal:

1. SF Assessment Appeals Board: http://www.sfgov.org/site/assessment_index.asp

2. Publication 30: “Residential Property Assessment Appeals”: http://boe.ca.gov/proptaxes/pdf/pub30.pdf

3. Informational Videos on Property Tax Appeals: http://sanfrancisco.granicus.com/MediaPlayer.php?publish_id=458

Warning on Scams

There are a number of property-tax-appeal service companies, who have been sending out their solicitations on stationery that suggests a government agency affiliation. SF Assessor-Recorder Phil Ting has stated the following:

“We’ve received reports from dozens of taxpayers who have received a letter from companies offering to facilitate the property tax reassessment for $179 [or more]. This is unnecessary and deceptive. Taxpayers can fill out a simple, one-page application for a review of their property in my office, free of charge… There is no need to pay for this service.”
All information is from sources deemed reliable but subject to error and omission, and not warranted. Interested parties should contact the appropriate government agency to confirm all pertinent guidelines and procedures.

FHA Loans – Changing Regulation Limits Opportunities

There is an important change just going into effect regarding FHA loans:  “Spot Approvals” are going away February 1. A Spot Approval is when a lender can approve and fund a loan on a specific unit in any condo building provided the building meets certain conditions (building is 4 units or greater, 90% of units sold, 51% owner-occupied, no more than 20% commercial space, healthy condo budget, etc.).

Loans insured by the Federal Housing Administration (or “FHA loans”) are just about the only loans available to buyers with less than 10% down.  FHA loans may be used to purchase both single family homes and condominiums, provided the condominium project is approved by HUD for this type of financing.

An FHA Spot Approval is key for buyers because it means the buyer has lots of inventory to choose from. As of February 1, HUD is eliminating Spot Approvals, meaning an entire building must be approved by HUD directly or by a lender directly. Because of fraud liability and risk issues, most lenders are not approving whole buildings and deferring to the HUD-direct approval method.

Now, you are probably wondering – how does this affect me?

Good news first:  FHA loans top out at $729k, so if the property you are buying or selling is priced above about $800k, this will not affect you at all.  If you are a buyer with more than 10% down, this might be good for you as competition from FHA buyers will be virtually eliminated.

And now the bad news:  If you are a buyer with less than 10% down, planning to use an FHA insured loan, this means that you will have less inventory to choose from OR a very long waiting period in escrow that might make an offer from you less attractive than one without the waiting period.  For example, in all of San Francisco, there are only 27 FHA-approved condo projects currently approved! **

Just a bit more (bad news):  If you are a seller, the buyer pool will be constrained to those with more than 10% down who don’t need to use the FHA program OR you will need to cooperate in a long approval process for your building to qualify for the loan.  I would not advise trying to qualify in advance of accepting an offer as the process is time consuming.  However, I would advise that you and your agent take a really critical look at whoever’s handling the loan for the buyer as all mortgage professionals are not created equal.  If you are interested in taking a look at the criteria for becoming FHA approved, just let me know!

**Why are there so few, you ask?  Well, one reason is that prior to last year, FHA loans were not available above $417k, so most buildings just didn’t bother.  Now, with the higher loan limit of $729k, FHA loans are a relevant part of our market.  If you have good credit and at least 3.5% down, you may be able to buy a home using this program.  If you are interested in finding out more – just ask, of course!

Have We Found the Floor?

Yesterday, the Case-Shiller Index — considered the most objective index of US home prices — reported, as pertaining to April to May prices: “10-city and 20-city composites reported positive returns for the first time since the summer of 2006…the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.”

For the SF Metro Area (i.e. greater Bay Area, NOT just SF), C-S reported gains of .6% March to April, and 1.4% April to May. Year over year, C-S reported an overall metro area decline of 26.1%. Read the full article here.

From my own experience, I can happily say that things are picking up. Home of the Week 1617 Fulton went into escrow after just 5 days or so on the market with a pre-emptive offer. My listing at 640 Judah got three offers after just a short time on the market, and buyers who I am working with now are regularly competing in a field of 3 or more offers. To be clear, these deals are all well under the $1MM mark, and activity is definitely being driven by the availability of financing available at very low rates. Homes that are not eligible for these low rates – most TICs and homes requiring a loan over $729k are not moving nearly as briskly (if at all -oh so gorgeous Home of the Week 116 Sugarloaf has been on the market over a year and has been reduced from $7.5MM to a mere $4.5MM).

The below charts show that there has been a substantial increase in sales volume, and about a 20% decrease in homes selling under asking price. Volume for the two weeks ended July 15 was 172% of what it was for the period ended March 18 of this year. It is too soon to tell if the decrease in homes selling under asking price (and the commensurate increase in those selling over) means that prices are climbing. However, my recent market experiences tell me that there has been a shift toward underpricing homes to attract attention (and multiple offers) in the “affordable” sectors of the market.

Well, it’s changes like these that keep things exciting and I am really happy to be participating in these busy times due to the support I get from all of you. Thanks, as always for your referrals and for letting me be your go-to person for your real estate needs.

(All data is from San Francisco MLS)

Who is San Francisco?

Some fun facts to mull over: