How Much Can this Mansion Appreciate in Two Years?

One of San Francisco's more spectacular properties is now on the market. Say hello to 3701 Washington, a Beaux-Arts mansion in the heart of Presidio Heights. Listed at $17.5M, the property boasts six bedrooms, six and a half baths, as well as a two-level, one-bedroom carriage house. And the home has changed hands twice since 2005. It sold for $10M in 2005, then $14,250M in 2006. We'll see how much appreciation will be gained in this next sale. 3701 Washington joins the elite list of eight single-family homes currently on the market listed from $15M-$65M.

Another Great "Project" House

I stopped in at 2434 Leavenworth on my Tuesday broker tour yesterday. This house has great potential. It's located just down the hill from the foot of the crooked part of Lombard (where some of the Hell's Angels were gathered, taking photos). There are 3,600 square feet on the top two floors, as well as an additional 1,400 square feet of unwarranted rooms and bath on a third level. There's a quirky quality to the whole place, but the right person could come in and really spruce up the place. Among other things, one could renovate the kitchen and baths, and enhance the original features, such as the two grand staircases, six fireplaces, and wood casing throughout. List price is $2.8M.

Saturated in SoMa

The South of Market neighborhood remains the go-to place for young professionals looking for affordable condos or lofts with reasonable homeowners association (HOA) dues. With 96 units currently listed as available in the Multiple Listing Service (MLS), there's plenty to choose from. And that doesn't even include some of the new-construction buildings, which don't typically begin marketing through the MLS.

One bedrooms dominate the SoMa condo market. There is a selection of units ranging in price from $438,000 for a short-sale unit with a large patio, low dues and leased parking, all the way up to $999,999 for an 1800+ sq foot unit in the Clocktower Lofts at 2nd Street that's been on the market for 44 days. But most one bedrooms in the area are in the mid-$500,000s-$600,000s.

On the two-bedroom front, prices are predominantly in the $700,000s-$800,000s. Of course, this doesn't include buildings such as The St. Regis or Millennium Tower, both of which are marketing two bedrooms in the $2.5M-$4M range.

A Good "Project" Building

I saw 179-181 27th Street in Noe Valley on broker tour last week, and thought it was a great project for either TIC partners (two units carry a lot less risk for TIC arrangements) or one owner with an eye toward investment. The property features two large 2BR/1BA Victorian flats priced at $650,000 and $750,000 (entire building listed at $1,395,000).

The kitchens in both units could use updating, and there are certainly some major structural issues that need attending. For example, the building has no heat. (An estimate is on file for about $14,000 for heat installation.) There's also a $28,000 termite report. But on a long-term basis, this building could work well for the right buyer.

Time to Reassess Your Property's Value

Some property values in San Francisco have undoubtedly dropped over the past year. This means that you could be paying more property taxes than you should.

The Assessor's Office reports 1,600 requests for informal property value reviews since May 2008. But it's important to note that, according to City Assessor-Recorder Phil Ting, those 1,600 requests represent less than 1.5 percent of all residential property owners in San Francisco. He cites San Bernardino as a comparison, which has received 132,235 requests.

For some owners whose condo building had even one foreclosure sale in the past year, for example, it may be time to file a request for a review. For more information, you can visit the Assessor's Web site to see what's possible.

Ease on Down the Road

In and out of contract twice since it first came on the market in June, 67 Lippard in Glen Park poses a unique challenge to the intrepid buyer: a sewer easement. This means that there is a city sewer line that runs underneath the house. So if it needs to be repaired, or altered in any way, for example, the city has the right to dig up your property to access the line. Not to mention that you have a major sewer line in close proximity to your home.

But if you're okay with livin' on the edge, this 2BR/1BA, 935-square foot house is still available for $675,000.

"Lower" End of Market Heats Up

Despite the continuing economic turmoil this year, you'd think that sales in The Bay Area would have fallen off precipitously. Surprisingly, the number of homes and condos sold has only declined year to date by 11% in the nine Bay Area counties.

These numbers exemplify the strength of sales in the under-$500,000 price ranges. I think there are three reasons for the concentration of sales in this range. First, the number of foreclosures and short sales have increased over last year, as banks and other financial institutions have been dumping these properties from their books. Secondly, mortgage monies are more readily available in this price category, as they meet the conforming limits. Finally, as home prices have declined, affordability for first-time home buyers has increased.

Just some encouraging words for those looking to get into the real estate market!

Three Cheers for FHA Loans

I had the pleasure of closing a purchase transaction last month with clients who obtained an FHA loan. These loans involve the Federal Housing Administration, and they are geared toward first-time home buyers.

The big deal about FHA loans is that you can have a minimum of 3% down payment (though the minimum increases to 3.5% after September 30, 2008). You can purchase a single-family home with a loan amount max of $729,750 (this decreases to $625,500 after January 1, 2009); credit scores have to be in the 580-620 range as a minimum. There are FHA loans available for 2-4 units, as well as for condos. Requirements vary on these types of properties.

I worked with Sue Ballinger at Guarantee Mortgage on the FHA transaction last month, and have to give her kudos in getting this loan done.

A Visit to Cubix Yerba Buena

I stopped in yesterday at the new Cubix Yerba Buena, located at 766 Harrison, between 3rd and 4th Streets in the South of Market neighborhood. The project features 98 studios ranging in price from $279,000-$328,000. Though small, the studios are well appointed, and the finishes are stylish and modern. The best buyers for these units are either first-time home buyers looking to get into the housing market, or empty nesters looking for a pied-a-terre in the city. There's also a rooftop garden deck, a City CarShare pod, laundry room on each floor and leased parking/storage options. Though these studio cubes aren't for those who crave space, they are efficient. The building is also a half block away from Whole Foods, and is in walking distance of just about everything downtown.

Note to Developer: Skip the Stack

I saw the six newly renovated condos at 2401 44th Avenue several weeks ago, and thought they were nice in terms of overall condition and finishes. Targeted at empty nesters or first-time home buyers, these 2BR/2BA condos, ranging in price from $595,000-$685,000, seem like they would have been sold by now. But they've been on the market since May, and none have closed yet.

What it comes down to, according to the listing agent, is the issue of stacked parking and high homeowners association (HOA) dues. When developers are looking to ensure parking for all, they sometimes decide to install automated, mechanical lifts. In 44th Avenue's case, there are two levels of parking, and you press a button to operate the device so your car is in a position to be driven off the lift. Unfortunately, there isn't enough room in the garage for six, independent parking spaces unless you stack them.

The idea of having to drive on and off the device itself is deterring some potential buyers. And the feature costs money to maintain, contributing toward the high HOA dues (about $570 per month). The seller is currently offering pre-paid HOA dues as an incentive.

At the right price, these units will sell. But resale value will probably lag behind the average, given the parking situation and dues.