Empty Nester, Home Seller in San Francisco, CA

(Ooops, meant to ask in SF, CA:) We are wondering about timing, are the 2.5 million and over houses selling?

Asked by Empty Nester, San Francisco, CA Sat Feb 14, 2009

We are future empty nesters in San Francisco and considering our timing for selling our home. We are fortunate in that we can wait, but are trying to explore the timing of our decision. In this regard, are you real estate folks seeing the houses in the 2-3 million dollar range selling yet? Any good news coming our way in terms of financing possibilities for these types of sales and loans? What are your expectations for these properties this year? Next year? Thanks in advance of all your information.

Help the community by answering this question:


Hi Empty-Nester,

My take on things may be a little different. My belief is that it can be a good time to sell or a bad time under any market conditions. It really depends on your individual circumstances.

There is so much negativity and fear mongering the mass media. Heck, even some of our fellow agents dismiss the entire real estate market as bad. Critical thinking and a hefty grain of salt are key!

Recently, a couple went on Trulia asking about trading up from their starter home into a bigger home in a better neighborhood. While many agents told them that the market stinks and they better stay put, I suggested we look at the bigger picture. They are now happily moved into their new home and the amount of money they saved on the move-up house more than covered the amount "lost" on their starter home. Gotta look at the overall picture and your next proceeds, etc.

We are very fortunate here in San Francisco and frankly, our market is pretty darn healthy in comparison to the rest of the country.

Before making any decisions, I would definitely recommend that you explore your individual circumstances.

Real estate is SO local. Where is your home specifically?

In the past 3 months (arguably the worst 3 months we'll see!), 7 homes in San Francisco sold for between $2-3 million. Right now, 4 are in escrow. Of course, there are 44 currently on the market. 30 homes either expired or were withdrawn from the market.

So, no, it is not a fabulous seller's market in upper end. Yet, some homes are selling and yours could be one of them. The key is to make sure that your home is one of the homes that sell vs. one of the ones that do not.

There are factors we cannot control and there are factors we can. Listing price, presentation and exposure are within the agent and the home seller's control. The economy (lending conditions, etc) are out of our control. I know a lot of this is stating the obvious so bare with me...

The lender I work with at Bank of America recently told me that there are jumbo loans over $1,000,000 available with 25% down payment. The rates were in the 5% range with 1/2 point.

That is a VERY different story from what I am hearing on the street, in the news, or even at my office meeting! I'm checking with her to see how high the amount can go just to make sure this could apply to your home.

All in all, most of us figure we will muddle around the bottom for a while and true appreciation may not happen for at least a couple more years...maybe 3-5 years.

My recommendation is to look at:
your long-term gains,
your tax situation,
your property tax situation (Prop 60 & 90: 55+ can take their tax basis with them under certain circumstances),
AND analyze the total net picture of where you want to go.
What I mean by this is to look at your real estate plans as a whole, on both the selling and buying sides.

For example, where are you moving to? How's the market for those types of homes? Maybe the deal you will get on the next home will make it appealing to sell in today's market. Maybe not.

A lot of this is better discussed offline and I am happy to help in anyway that I can whether or not your choose to sell your home. If you want to know about your neighborhood specifically, just shoot me an email and I'll send you a full picture. Neither pressure nor obligation, of course.

Here are some more resources:
http://www.sfgov.org/site/assessor_index.asp?id=92#EAOTAP and http://www.wwlaw.com/prop60.htm
http://www.wwlaw.com/prop60.htm (double check with your CPA and the local assessor's office)

Best of luck with your plans!

Danielle Lazier, San Francisco Realtor & Blogger
Assistant Sales Manager Zephyr Real Estate
danielle (at) zephyrsf.com
Web Reference: http://sfhotlist.com/blog/
0 votes Thank Flag Link Sun Feb 15, 2009
Hi Empty Nesters--The luxury market is inarguably challenged to date, as my colleagues have pointed out with the most updated data available. In a nutshell, properties which show well and are priced appropriately are selling, and buyers are taking advantage of low interest rates. The upper end of the San Francisco market, however, is somewhat tied to the value of securities. I have a couple clients who would purchase in the range you specify, but they are concerned about the liquidity of their stock portfolio. So there is a bit of reluctance to move forward with a large purchase in the $2-$3M range.

The Estates division within my company meets regularly to gauge the activity in the $1.5M range and above. At our last meeting, we discussed the fact that January started out extremely slowly. But we are halfway through February now, and luxury homes are being put on the market--and are being put into contract. On my broker tour this morning, I toured several beautiful homes ranging in price from $2M to $15M. A few reportedly had interested buyers.

With respect to loans available to buyers, my contact at First Republic informs me that for loan amounts between $1.1-$2M, the bank is currently offering a 7/1 ARM @ 5.35%, 0% points, 1% 3 year pre-payment penalty, and a 10/1 ARM @ 5.50%, 0% points, 1% 3 year pre-payment penalty. Minimum down payment is 25%. This quote is for a purchase of a primary residence, and assumes an existing banking relationship with First Republic.

A big factor in any decisionmaking is where you will move. It is easier to determine how much you'd need from your existing home's sale in order to make that move possible. If you are considering moving to one of the counties which participates in Prop 90 (Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, Ventura), that could work in your favor with respect to carrying your existing property tax base with you.

Hope this information is helpful.
1 vote Thank Flag Link Tue Feb 17, 2009

Wow, predictions..... ask 10 experts, get 10 opinions, only time will tell which one is right, but 9 will surely be wrong. So I'll focus on the here and now. Firstly, we went from almost no "luxury" sales since late September, to quite a few in the past 10 days. Will that continue? That's like predicting the stock market... and in fact, it may go as the stock market goes.

But this takes me to your home (where it is located and what it's like) and your situation (where you are moving to next and what you are going to buy/rent or move into). Both need to be evaluated.

When every home was going up in value people kept going further and further out until they could find something they could afford, and they gave little thought to the location. Today, the market is contracting, and Buyers are going in reverse. So if you happen to be in a location that anyone/everyone would want to live, you can still get a generous price and a quick sale. And in a City, that's usually "walkability". A short flat walk to coffee shops and parks is selling... something on a steep hill (unless it's got amazing GG Bridge Views) is not. "Up and coming" neighborhoods are not selling. Mature, highly sought after neighborhoods, especially on great blocks, ARE selling.

So where is your home located?

Your situation - I want to reiterate the idea that what you are buying next should be a major factor in your decision making. If you happen to be selling in an area that has held up, and are buying in an area that has dropped significantly, I'd recommend getting your home on the market now or very soon.

An example - let's say your home has lost 10% off it's peak value, but you're buying in a place that's lost 30%. If you wait you may find that your SF home is down another 5% but the other area has risen 5% because Buyers were snapping up values.

Another option is selling in an area that is down 10% and buying in an area that is down 10%. It's a wash, especially if you wait until your home recovers it's 10% but the area you want to buy in also rose 10%.

So where your home is now, and what you are doing next are VERY important considerations. I'd love to help you evaluate that if you're interested.
Web Reference: http://www.SFisHOME.com
0 votes Thank Flag Link Mon Feb 23, 2009
Hi again,

I double-checked with the lender. Right now, BofA will lend loan amounts between $1 million and $1.5 million with 25% down payment. Above $1.5 million, it is 30% down. The rates are VERY competitive.

Home buyers at this price point will have this down payment (or should) and many folks are taking advantage of the "trade-up" market.

Who knows what lies ahead but if it makes sense to move now, I wanted you to know that good financing is available for qualified buyers. Of course, we are all hoping that credit flows more freely in the future though maybe not as freely as before..

Hope this helps!

Danielle Lazier
Zephyr real estate
0 votes Thank Flag Link Mon Feb 16, 2009
Dear Empty Nester,

Lance has the right answer. Higher end homes are just not selling well these days and have not been for a good period of time.

Economists say our housing market will come back at the end of 2009 or by spring of 2010. But there are so many "ifs" attached to those statements. We should really worry because inflation is expected to raise its ugly head in 2011 if the economy does not begin to grow. Carol Rodoni has "Real Estate Unleashed" where she talks about the economy and real estate trends in 2009, Case-Schiller stats and lots more. You can find her under her name or Bamboo Consulting.

Good luck,

0 votes Thank Flag Link Sun Feb 15, 2009

The answer to your question is rather complicated. While anyone who says they know what the market is going to do is at best overestimating their abilities, there is a disparity in the market right now between loan guidelines and pricing, and a great deal of uncertainty about where the market is headed. My opinion is that with this disparity something has to give, and even those wealthy enough to afford properties in this price range are taking a long look at whether this is a good time to do so. Further affecting the housing market here is the unknown factor of how badly the job market is going to deteriorate. I personally know many people who lost high paying jobs in the last few weeks who were intending to buy and now will have to wait.

The jumbo loan programs are not very attractive right now either, but we have been getting some feedback from several lenders that rates for jumbo loan products will get better in the not too distant future for those who qualify, but they will require larger down payments and superlative credit and income levels. If rates get better on these programs that would help a lot.

Some stats for you:

There are currently 54 homes for sale right now over 2.5 mil citywide, and the average Days on Market is 101.

There are currently 2 homes in this price range that are under contract, and 2 more pending.

In the last 3 months (we use three months because all of these properties would have gone into contract post Wall St meltdown and that is more indicative of current market activity) 9 properties sold above 2.5 mil citywide, were on the market an average of 87 days, and sold slightly below ask on average.

During this same time period 31 homes had their listings expire or were withdrawn.

Keep in mind that citywide stats have only marginal use in terms of pricing a particularly property, but it does give some indication of trends in this price range. Obviously the neighborhood and particular property characteristics have a huge impact.

In order to give an intelligent opinion about whether or not to put your place on the market I would need to see the property and see if you were being realistic about pricing, but the general trend is that things are taking a lot longer to sell and the number of active, withdrawn, and expired listings far outweighing the pendings and solds is not good news for sellers. Normally that would be an indication to wait. The problem with waiting though is that these kinds of properties could potentially lose more value - the higher the price the further they could potentially fall - so waiting for better loan products or perceived market stability could hurt you in terms of eventual sales price if they fall in the meanwhile.

The properties that compel buyers on the sidelines to pull the trigger on a purchase are usually some combination of being perceived as under value or priced well, have some unique qualities, or incredibly desirable location.

The upside if you are planning to buy another property is that you can potentially make up the possible shortfall on the sell by negotiation on the new purchase. Bottom line: it depends how bad you want to get out and what your plan is for where you're going.

Best Regards,

Lance King/Managing Broker
415.722.5549 Cell
0 votes Thank Flag Link Sat Feb 14, 2009
The interest rates are very good in some respects, except when you look at the difference between conforming anf jumbo rates.
The real problem for you as I see it is the turmoil in the economy. Many others, just like you, feel it's time to hold off on major decisions. Will this reduce the number of prospective buyer? I think so and that's why I'm advisiing my clients to wait a while till the future becomes a little clearer. Obviously when clients need to sell I can sell the property for them in any market but if, as you say, you can wait then I'd let you wait and see what tomorrow brings.
People in that price range are always moving and buying. You could move on and be where you want to be it just depends on how much you'd rather be there than where you are now.
0 votes Thank Flag Link Sat Feb 14, 2009
Jed Lane, Real Estate Pro in San Francisco, CA
You've asked a good questions, but also a difficult one because it involves forecasting. Having seen market surges and declines, it is clear to me that it is nearly impossible to forecast specific events. What is possible is to realize what kind of market you are in compared to recent market changes and predictions of what the near future will bring.

In recent weeks we saw several accurately prices homes go into escrow (3388 Clay at $4.98M, 135 Locust at $2.998M and 2580 Broadway at $4.2M). Buyers are attending open houses, with many drawing 100 visitors on a given day. What seems to separate the winners from the losers is pricing.

I was debating how to price a roughly $4M home this past week and ended up picking a price that hopefully be received as fair and accurate as opposed to inflated. I have advised the sellers of this home to market it as soon as possible while good financing is available and buyers are looking for good properties to buy.

If I had to forecast where the market is going, I would say interest rates are going to rise thereby making homes more expensive for buyers.

Shaban Shakoori
TRI Coldwell Banker, SF's #1 Office
0 votes Thank Flag Link Sat Feb 14, 2009
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