Buyer-Seller Dynamics in San Francisco

This April 2014 analysis was based upon a survey of Paragon Real Estate Group agents regarding their past 12 months of activity: Paragon agents close over 1000 San Francisco home transactions per year; Paragon’s Van Ness office represents more buyers in successful city home purchases than any other brokerage office.

All percentages are approximate: This was not a rigorously controlled survey and analysis, but more an informal poll; still we believe the data below does generally reflect market dynamics in San Francisco.

San Francisco Home Sellers 

60% are selling to relocate outside of San Francisco: The main reasons, in order of prevalence, are schools (and other family-raising reasons) — which ties in with the fact that SF has the lowest percentage of children of any major city in the country — affordability (the ability to buy more home for the money elsewhere), job-related reasons (relocation, commute) and retirement.

15% involve trust, probate or investor sales, or people moving into rentals or retirement homes, and no new home purchase is involved.

25% are selling in order to buy another property within the city, typically either upgrading to a more expensive home or downsizing to a smaller home, or a divorce is involved.

San Francisco Home Buyers 

50% are first-time buyers. This is a very high percentage: In the U.S. the percentage is about 30% (and, of course, the U.S. median price is under $200k, while the SF median is over $950,000).

Average age of SF home buyers is generally getting younger and is currently in the mid-thirties.

47% of SF home buyers are employed in high tech. This is a distinctly San Francisco phenomenon related to the first 2 points above: An influx of relatively young, often newly affluent, high-tech employed, often first-time buyers – who can afford SF home prices – is playing a decisive role in the market.

20% of prospective SF home buyers have become discouraged and given up on buying in the city, due to the competitive environment and rapidly appreciating prices. They’ve either given up for the time being or shifted their home searches elsewhere.

Less than 3% of SF home buyers are foreign – exposes the myth of foreign money playing a significant role in the SF market. What purchases/investments they are making seem to be mostly in new or newer, high-rise condo developments. (There are cities in the U.S. in which large numbers of foreign buyers are having a significant impact on the market – Miami may be the most dramatic example – but SF is not one of them at this time.)

26% of homes are being purchased via “all cash” offers, though many of these offers are structured this way solely for strategic reasons to get their offers accepted in an exceedingly competitive environment. That is, many of these buyers end up getting loans either before or immediately after close of escrow. (This is a different phenomenon than investors paying all cash for distressed homes in other parts of the country – San Francisco has had very few of these sales in the past 2 years.)

Approximately 10% of home sales occur outside of the multiple listing service, i.e. as so-called off-market/ off-MLS/ pocket listings. This agrees with other analyses Paragon and others have performed.

Conclusions: To a greater extent than is probably normal, there is an exchange process occurring in San Francisco, with existing residents moving out and new residents moving in. One of the biggest reasons for selling is to relocate for better public schools outside SF or to save money by enrolling children in suburban public instead of city private schools; high prices are motivating some city homeowners to cash out to buy bigger/better homes elsewhere; frenzied market conditions are discouraging homeowners who might otherwise sell to buy other (larger, better) homes within the city – many of these homeowners are staying put out of trepidation. This last situation is affecting/lowering the supply of homes for sale.

Population/ Employment Growth and Housing

According to the latest U.S. census data, the estimated increase in the city’s population since 2010 is 32,000; over the same period, the number of employed residents has jumped by over 55,000. Per the Planning Department, the approximate number of new housing units added since 2010 is 4200. With 38% of SF’s households consisting of 1 person, and an average household size of 2.3 persons, we’re looking at over 22,000 new residents who have been looking for homes that don’t exist. This is one of the biggest factors behind the huge upward pressure on rents and home prices.

With the market recovery that began in 2012, another 6000 housing units are currently under construction and most should be ready sometime in the next 2 years. Housing units include condos (sales), apartments (rentals), houses (a very few) and community housing projects.

This analysis was performed in good faith with data from sources deemed reliable,
but it may contain errors and is subject to revision.
Source: Paragon
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FOR SALE: 1769 14th St. Oakland, CA

FOR SALE:

1769 14th St. Oakland, CA

Asking price: $399,000

40653176
Residential
Contemporary
2
2
1
1054
$191.00
Tina C. Wong 510-502-6018
N/A

Exquisite floor plan with high ceiling & amazing modern design 2BD/2.5BA townhouse in Zephryr Gate Development. Bamboo floors, granite countertops, ample of cabinets, stainless appliances & high end finishes throughout this home where has a spacious & airy feel as you enter into a kitchen/LR/DR open floor plan, that leads to a balcony. 2 master suites across from each other providing privacy.

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No Anti-Property Ownership Petition AB2405 & SB1439

We need everyone’s help to flight for property ownership rights by collecting signatures on No Anti-Property Ownership Petition.
No Anti-Property Ownership Petition (AB2405 & SB1439): in the past 3 months, there were 6 laws or legislation enacted by 5 politicians targeting property owners of San Francisco, once a piece of property is rented out, owners would have an impossible time getting it back. Among the 6 laws, 4 revoke the ability to remove illegal in-law apartments, or getting both floors of a single family back using OMI. The only way left in many cases is using Ellis Act. However, the rest of the 2 legislation, AB2405 & SB1439, are announced, to restrict property owners in San Francisco to evoke Ellis Act under any circumstance, regardless the needs to sell the properties, cash out for emergency, divorce, close of business, retirement, or inheritance arrangement. Please sign petition to oppose the SF government robbing property owners of property right and value! / 过去三个月,5位政客针对三藩市业主制定了6条恶法,造成大地震: 一旦房子出租,难以收屋。6条恶法中,其中4条法律,使得业主无法拆除非法姻亲单位,从而无法用“屋主自住”的程序把独立屋的上下两层收回自用,唯一的方 法是使用艾利斯法。但是,剩下的两条新提出的法案,限制业主使用艾利斯法收屋,无论是要卖屋、兑现救命、离婚、结业、破产、还是遗产处理,都不能迁出租 客,收屋自用。请签名反对政府严重侵害业权,掠夺财产。(Check out more info at AsianAmericanVoters.org)

http://www.leginfo.ca.gov/pub/13-14/bill/sen/sb_1401-1450/sb_1439_bill_20140221_introduced.html

http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_2401-2450/ab_2405_bill_20140221_introduced.html

Small Property Owners: http://www.smallprop.org/

Preserve the Ellis Act: http://www.preservetheellisact.org/history/

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OPEN HOUSE: 62 Mahogany Dr. South San Francisco

OPEN HOUSE:
Saturday, Feb 22nd from 1pm~5pm
Sunday, Feb 23rd from 1pm~5pm

Saturday, Mar 1st from 1pm~5pm
Sunday, Mar 2nd from 1pm~5pm

Where: 62 Mahogany Drive. South San Francisco, CA 94080

This 2-story, contemporary 4 bedrooms and 3 bathrooms detached single family dwelling complimenting with open floor plan. It is situated in a quiet yet convenient location, blocks away from Orange Creation Center.

~Built in year 2000; building 2,150 sq ft (per tax record); lot size 3,800sqft;

~Natural tone marble entry opens to dramatic high ceiling of living & dining room combo with open floor plan. Multiple windows provides amply of natural lighting permeate the entire house.

~Guest bedroom and 1 full bathroom conveniently located on the main level.

~ Kitchen consists of oakwood cabinetry, granite counter top double microwave oven and opens to the low maintenance backyard.

~Family room covers by wood flooring and accent with a cozy fireplace

~ Grand oak wood banister leading to master suite and 2 bedrooms with Jack & Jill bathroom.

~ Spacious master bedroom with vaulted ceiling, a perfectly appointed updated bathroom with a tub, separate stall shower and walk-in closet.

~Washer and dryer hook ups are available.

~Attached side by side garage plus 2 off street parking.

Contact info: Tina C Wong (510) 502-6018 / Realty World Advance Group
BRE#01252332 tina@tinacwong.com

62 Mahogany Dr. SSF (Flyer Front) Web

 

8 Octavia Tops Out at Corner of Market Street in Hayes Valley

 

San Francisco’s newest high-profile condominium building reached its maximum height this week. 8 Octavia, by award-winning architect Stanley Saitowitz,topped out its eight and final floor at the gateway location of Market and Octavia streets. The uber-luxury building will feature a mix of 47 one-and two-bedroom condos over ground-floor retail. The Saitowitz-signature glass panels have begun to be installed along the lower levels of the Market Street side while the rest of the building is still getting mechanicals outfitted. Expect a sales office this summer and occupancy late this year.

Source: Curbed

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Good news for California homeowners facing short sales

Under regular tax rules, when a lender forgives a debt — that is, relieves the borrower from having to pay it back — the amount of the debt is taxable income to the borrower.

A homeowner who has $100,000 in mortgage debt forgiven through a short sale, for example, would have to pay income tax on the $100,000.

This “cancellation of indebtedness” rule could have caused enormous financial hardship to the millions of homeowners whose homes were “underwater” during the home foreclosure crisis that began in 2007.

To prevent this, Congress enacted the Mortgage Forgiveness Debt Relief Act of 2007. This law allowed homeowners to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure.

This law was never intended to be permanent. It was originally scheduled to expire at the end of 2009. However, it was extended for an additional four years. It will now expire at the end of 2013.

The law could be extended again, but there appears to be little urgency in Congress to do so. That means starting on Jan. 1, 2014, there is a good chance that the old rules on forgiveness of home loan debt will come back into force.

If this does occur, it appears that the impact on underwater homeowners could vary greatly from state to state. This is because several states have enacted anti-deficiency legislation that prevents lenders from holding a homeowner personally liable and going after his or her personal or other assets if the proceeds from a foreclosure or short sale are not enough to cover the amount of the home loan.
The California Association of Realtors has projected that even under the recovering housing market, there may be as many as 55,000 short sales in California in 2014.”

California is one of these states. And, in fact, it beefed up its anti-deficiency rules in 2011 by adding a provision specifically applicable to short sales. (Calif. Code of Civil Procedure 580(f).) What does this have to do with the soon-to-come demise of the Mortgage Forgiveness Debt Relief Act of 2007? It could make it meaningless for most California homeowners.

In a Sept. 19, 2013, letter to Sen. Barbara Boxer, D-Calif., that has only recently been made public, the IRS says that “if a property owner cannot be held personally liable for the difference between the loan balance and the sales price … the owner would not treat the canceled debt as income.”

The IRS concluded that because of Section 580e, a California homeowner who goes though a short sale will not have cancellation of indebtedness income.

This is good news for California homeowners. The California Association of Realtors has projected that even under the recovering housing market, there may be as many as 55,000 short sales in California in 2014. The debt forgiven — $60,000 per short sale, on average — could have been taxable without this clarification.

However, the IRS was careful to note it its letter that it was only considering the impact of California’s anti-deficiency statute, and not that of any other state. Other states with anti-deficiency laws include Alaska, Arizona, Hawaii, Minnesota, Montana, Nevada, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota and Washington.

These state laws are not all the same and they do not all have a provision like California’s Section 580e. The extent to which they protect against having to recognize cancellation of indebtedness income in the event of a short sale is unclear. For details on state anti-deficiency laws, see the National Consumer Law Center Foreclosure Report.

– See more at: http://www.inman.com/2013/11/25/good-news-for-california-homeowners-facing-short-sales/#sthash.xJ3OKHlX.dpuf

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“Senate Pulls Dirty Trick! Tries to Punish C.A.R. for Opposing Recording Tax by Holding C.A.R.’s Tax Relief Bill Hostage!”

Call Your Senator NOW! Urge a NO Vote on the SB391 (Recording Tax) and a YES Vote on SB30 (Tax Relief)!!

In a surprise move this week, the Senate Appropriations Committee linked C.A.R SPONSORED bill, SB 30, which provides tax relief to those who are selling a home in a short sale to SB 391, a C.A.R.-opposed bill that creates a recording tax, using a shameful political maneuver to force C.A.R. to support the recording tax. As now linked, SB 30 can only become law if SB 391 becomes law. Once SB 391 is defeated, the link in SB 30 can be removed.

REALTORS® and the public should be OUTRAGED that distressed homeowners are being held hostage by Senate Leadership.
Action Item

CALL YOUR SENATOR TODAY

Ask him or her to stand with REALTORS® and families and
VOTE NO ON SB 391 (recording tax) and
VOTE YES ON SB 30 (tax relief on debt forgiven in a short sale)!

CALL 1-800-969-3310

Enter PIN#166013451 to be connected

If you wish, you can bypass the first part of the message by entering your PIN, followed by the # sign, at any time. You may also bypass the 2nd part of the message by hitting the “1” key to be directly connected to your legislator’s office.
Here are detailed background and talking points on both bills.
Background/Talking Points – SB 391

California Association of Realtor (C.A.R.) is OPPOSING SB 391 (DeSaulnier) which imposes a recording TAX to generate funds for affordable housing programs. SB 391 creates a $75 per document recording TAX to fund the affordable housing trust. C.A.R. is opposing this measure because it unfairly adds to the cost of recording real estate documents. C.A.R. is an aggressive advocate for affordable housing, but believes it is bad policy to fund affordable housing at the expense of homeowners who need to record real estate documents. The real issue is that this TAX is imposed only on real estate document recordings.

Affordable housing programs should be funded by the broadest base possible of California’s citizens.

C.A.R. opposed the bill’s predecessor, SB 1220, last year until the bill was amended to exempt recordings that were part of a sales transaction. Afterward, C.A.R. supported the measure, but it was defeated. Don’t be misled by allegations that C.A.R. “changed its position” on SB 391. C.A.R.’s Board of Directors considered SB 391 for the first time in May of this year; prior to that, C.A.R. did not take a position on SB 391. The sponsors were advised of this process well before the bill was introduced. In May, the Board of Directors voted to oppose SB 391.

C.A.R. is opposing SB 391 because:

SB 391 unfairly targets property owners who need to record real estate documents to pay for affordable housing programs. Affordable housing is an issue of broad social concern. While there may be a need for affordable housing funds, it is unfair to require only those individuals recording real estate documents to be the sources of that funding.
SB 391 is a recording TAX. While it may not apply to sale transactions, it still applies anytime a homeowner needs to record a document (e.g., refinancing, transferring into or out of a trust, liens, quit claim deeds, etc.).
SB 391 provides no guidelines; it doesn’t prioritize affordable housing needs and requires little oversight. There is nothing in the bill that specifies how funds should be awarded and it provides little oversight as to the best uses of the funds. While it contains an audit requirement, that requirement doesn’t even kick in until the end of the program’s second year, when $1 billion could have already been distributed. And, it’s “geographic” approach to distributing the funds doesn’t ensure the neediest Californians benefit from the program.

While C.A.R. aggressively supports the creation of homeownership opportunities, SB 391 is clearly not the way to achieve that goal.

Background — SB 30

Short sales have become an increasingly important alternative to foreclosure for distressed homeowners. Federal and state law views the debt forgiven by a lender in a short sale as income. In recent years, C.A.R. and NAR have secured short-term relief in state and federal law that keeps this “phantom” income from being taxed. In early January, the President signed into federal law an extension of mortgage debt tax forgiveness until the end of this year. Because state legislation has not yet passed extending the sunset for state tax purposes many short sale sellers are in limbo: the forgiven debt is not income for federal tax purposes but state law has not yet been passed to conform to federal law making it clear that the forgiven debt is also not income for state tax purposes. SB 30 will provide that much needed tax relief.

C.A.R. is SPONSORING SB 30 because:

Lack of conformity is chilling the market. Failure to act will have a “chilling” effect on the still struggling housing market and risk increasing foreclosures at a time when they are beginning to drop. Distressed homeowners often only have two choices – closing a short sale or allowing their home to be foreclosed upon. If they fear state income tax liability on their short sale, they will opt for foreclosure instead, in order to avoid state tax liability. Foreclosures destabilize communities and are more damaging to housing values than short sales.

Families are stuck in financial limbo. Homeowners currently in short sale negotiations can’t finalize these transactions without potentially incurring state tax liability. Sellers who are involved in short sales or contemplating a short sale need to know now that the debt forgiven is not going to be treated as income for state tax purposes.

It’s the right thing to do. Families forced to make the difficult decision to sell their home as a short sale are already in financial trouble. They simply should not have tax liability on “phantom” income or debt forgiveness, money they’ve never actually received.

 

Source of content:   C.A.R. click on this link: http://www.car.org/?view=ContactUs

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