A lot of real estate brokers on this site are arguing that real estate is always a good "investment". I think millions of people that lost their homes would disagree. The brokers fail to add their commissions, closing costs, maintenance, HOA, insurance, taxes and cost of interest in their P&L calculations. Plus the extra risk added by using leveraged debt. They also fail to add that just holding onto a property that is in the red (over 5-10 years?) when you have to move is very costly and added high risk.
Real estate should not be a gamble so therefor I've come up with the following: more then 20% down and less then 40% of the net yearly cash-flow in payments (i.e. if you or your wife lose your jobs you should still be able to keep the house). The interest deduction on the taxes only matters if you have an income, if you loose that your cost increases with 50% overnight. In addition to this, you should have a buffer of 25-50% of down payment for unexpected expenses.
I know that this is a very conservative approach but I prefer that than the recklessness that the real estate and mortgage industry have shown over the past decade. The last real estate broker I spoke to told me to max out my mortgage and get the biggest house I could find. That was in end of '05. I told her to go and... lol
You would have had to put $250,000 in cash into a CD.... whereas you only needed $50,000 (20%) down on the $250k Condo. So the cash on cash return is 1762% or an $830,000 gain. If you only had $50,000 in 1991 you made a whopping $20,000 when you sold in 1998 and you would have made a total of $60,000 if you held on until 2007. So you can make $60,000 on a CD where you also pay Cap gains when you sell, and have ZERO write offs, or you can make $830,000 and only owe Cap gains on $330,000 if you're married and you get to write off your interest and property taxes all those years.
The above scenario is the bad timing one.... you bought in '91. What if you bought in '98 when the market started going up? Your $50,000 CD earned $22k through 2007 and your $250k condo, purchased with $50,000 is still worth $880k. An $830,000 gain vs. a $22,000 gain. That's why people say you can get rich in real estate, but no one ever got rich in CD's.
We agents get thrown under the bus for having a "vested interest" when we talk about the market. How about a new paradign in how you look at us.... we BELIEVE in real estate.
Should someone moving to SF buy now? If they think they'll be moving again in another couple of years, than they may not want to take the risk. But if they can hang on for the long term, it can be an incredible investment. In fact, 2008 may be looked back upon as one of the best years to buy real estate throughout the country. And if it goes down more in 2009.... well, by 2020 you're still going to look like a real estate genius just like the person who bought in 1991 even though they "suffered" in their home for 7 years of no growth.
The more things change the more they............
As a realtor I concurr (mostly) with the views of my collegues. Waiting for a bargain in San Francisco is like trying to catch a falling knife.
While the sky is falling elsewhere it isn't happening here.
Martin Lavin Realtor Coldwell Banker
You can also see other reports for condos, 2-4 unit buildings, etc.
The answer to your question all depends on the district. Districts 1 and 6 are up significantly. Districts 3, 4 and 10 are down while the rest are holding their own. You can see what neighborhoods are in each of the districts in the report.
Let me know if you have any further questions.
the first two are mostly owners or buyers and realtors, the last one tends to get a lot of bitter renters so keep that in mind.