Zillow.com the website now best known for delivering bad news to delusional home owners announced today homes values have slide for the 7th consecutive quarter down 9.7 percent.

Zillow has San Francisco down 14.4 percent and Mill Valley, down 10 percent.

In San Francisco, Set-Up Proves a Tough Sell

SAN FRANCISCO -- Jeremy Burnett thought the five units in the building he spent more than a year renovating would sell quickly. But after 50 days on the market, the five units haven't received a serious offer. Now he has slashed prices more than 10% -- from $799,000 to $699,000 in the case of the most expensive unit -- and is offering a free Toyota Prius to the first buyer.

Mr. Burnett isn't a victim of the housing downturn. The San Francisco real-estate market has held up over the past year: On average, single-family homes and condos in the city sold at a higher price and at a higher rate in September 2008 than a year earlier, although prices are down slightly from August, according to brokerage SFResidence.

Buyers are bypassing Mr. Burnett's building mainly due to its tenant-in-common, or TIC, structure. Most TIC arrangements involve commercial real estate, where a group of investors each buy a fractional share of an investment property, like a shopping mall or office building, and share rental income and profits on any future sale. In the past year, many commercial TICs have suffered as rental income has declined in a slowing economy.

The problems facing residential TICs, which are found mainly in San Francisco, are different and reflect tighter mortgage underwriting standards. Banks across the country have pulled back from all types of mortgage lending, but especially for nontraditional types of mortgages. As a result, borrowing costs for TICs have shot up, causing home buyers to avoid the structure.

Sterling Bank & Trust FSB recently raised its rate for TIC loans to 7.75% -- a loan for a similarly priced condo would require only 6% to 6.25% interest -- and now requires a down payment of at least 20% of the purchase price. Other banks are now requiring 30% down. In the past, lenders required buyers to put 10% down.

Until 2005, purchasing a TIC required all of the buyers to attain a single mortgage, which they all shared. That meant that if one tenant defaulted, the others were on the hook. But several banks have since started offering so-called fractional mortgages, separate loans that make buyers responsible only for the unit they inhabit.

click here for the complete WSJ story...

The Vision Report - Bay Area Real Estate News from Jeff Brooks on Vimeo.

Sutter Heights condo just listed!

Check out this new condo that just hit the market. Beautiful, brand new, contemporary style with modern architecture—all these words come to mind when describing this new pad. Located in central SF, this home is great for those who work in the financial district or love being close to downtown. With the holidays coming up, I’m sure we’ll all be spending quite a bit of time shopping downtown. Just listed at $575k!

click here for the complete listing

As the economy slows, and technology improves are we once again on the cusp of a FBSO revolution?
It's a story that's been told a million times in my lifetime alone... but it the NY Times says it, it must be true..

The Faces of for Sale by Owner

Hal Ruzal personifies the do-it-yourself spirit.

He installed his own kitchen, built loft spaces for his office and sleeping area and tore down walls to convert his apartment in the meatpacking district from a one-bedroom to an open loft space. In the same vein, he is trying to sell his apartment without the aid of a real estate broker.

“The first five letters of broker is broke,” said Mr. Ruzal, 54, a mechanic at Bicycle Habitat in SoHo. “Say I get $525,000, a broker will get around $32,000 of that. I make $40,000 a year. For no work, they are getting about the same amount of money.”

Mr. Ruzal was referring to the 6 percent commission that real estate agents might earn on the sale of his 550-square-foot apartment, currently on the market for $525,000.

Since listing his apartment at the end of September on Craigslist.org with the tag line “Cheaper Than Renting,” Mr. Ruzal has spent every weekend walking around his neighborhood with a cardboard sign, shouting “Apartment for sale,” to passers-by and to diners sitting outside at the restaurant Pastis.

“You have to be original,” Mr. Ruzal said. “If you’re boring, you’ll just get passed over.”

Common wisdom might suggest that in an economic downturn, Mr. Ruzal and others taking the for-sale-by-owner, or FSBO (pronounced FIZZ-bo), route, would do better with a broker’s knowledge of the market and powerful advertising reach. On the other hand, at a time of cutting corners, the savings implied by a FSBO sale may appeal more than ever.

click here for the complete story...

Median home prices fall around US in Q3

Today's report on skidding home prices singles out the Bay Area out as the second most expensive with an average home price of $615,700, and the state of California as in their words, home to "The steepest declines in single-family home prices."

The report sites the, Riverside-San Bernardino-Ontario area, where the median price of $227,200 dropped 39.4 percent from a year ago, followed by Sacramento-Arden-Arcade-Roseville at $212,000, down 36.8 percent from the third quarter of 2007, and San Diego-Carlsbad-San Marcos, where the price dropped 36.0 percent to $377,300

Below is the complete story from the fine folks at the Associated Press...

WASHINGTON – Home prices fell in a record four out of five U.S. cities in the third quarter as low-cost foreclosures flooded the market and the U.S. housing market's decline spread throughout the country.

Among 152 metropolitan areas included in the trade group's survey, 120 posted declines in median home sales prices compared with a year ago, the National Association of Realtors said Tuesday. Nationally, sales fell by almost 8 percent in the third quarter compared with the same period a year ago.

Sales of foreclosures and other distressed properties made up around 40 percent of transactions in the quarter, bringing down the median price by 9 percent from a year ago to $200,500.

Sales fell in all but four states in the Realtors' group's report. The exceptions were Nevada, California, Arizona and Virginia, where buyers have been able to snap up foreclosed homes at a bargain.

"A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago," Charles McMillan, the Realtors group's president, said in a statement.

That's especially true in places like Sacramento and Riverside, Calif., where prices were down 37 percent and 39 percent, respectively, from last year. The two California cities had the largest annual price declines in the report.

A nasty brew of strict lending standards, falling home values and a tough economy is filtering through the housing market. By the end of the year, foreclosure listing service RealtyTrac Inc. expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.

Meanwhile many economists believe the economy has fallen into a recession that could be the worst downturn in more than two decades. As layoffs accelerate, that's likely to put further downward pressure on housing prices.

Freddie Mac said last week that rising unemployment rates, tightening credit and deteriorating economic conditions "contributed to a substantial increase in the number of delinquent loans," including loans made to borrowers with strong credit.

Freddie Mac has 28,000 foreclosed properties on its books, while its sister company, Fannie Mae owns 67,500.

On Tuesday, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said "it is essential" to use some of the funds in the government's $700 billion financial rescue program to stem the tide of foreclosures.

I know first hand homes are selling. While hanging out waiting for an agent yesterday I saw to signed contracts go by. And another top agent I spoke with has two pocket listings in the 2.5 million dollar range that she expects will sell before going on the MLS. Yes, things have been worse, but folks are buying... The story below is from the Wall Street Journal and proof that folks are buying..
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Home Sales Up 66.7% in Southern California

Drop prices low enough and the buyers will come. Home sales in Southern California rose again last month, according to a report released today by San Diego-based MDA DataQuick. The real estate information service reported that in October 21,532 houses and condos closed escrow in six counties in California — Los Angeles, Orange, Riverside, San Bernadino, San Diego and Ventura. This was up 5% from September and 66.7% from last year. More than half of all sales were on homes that were foreclosed on at some point in the previous 12 months. Typically real estate sales slow down from September to October.

At $300,000 the median home price in the six-county region was at its lowest since April 2003.

Readers, do you think rising unemployment and declining consumer confidence will impact SoCal home sales next month, or will we continue to see buyers jumping into the market?
–Emily Friedlander

Housing affordability more than doubled in California in the past year, according to a report released Thursday.

The California Association of Realtors said the percentage of households that could afford to buy an entry-level home in the state rose to 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago.

CAR’s First Time Buyer Housing Affordability Index measures the percentage of households that can afford to purchase an entry-level home.

Sacramento County rose from 68 percent in the second quarter to 71 percent in the third, considerably higher than the 46 percent it recorded in the third quarter of 2007.

San Francisco was the least affordable, but the index there rose from 18 percent last year to 35 percent this year.

Statewide, the minimum household income needed to purchase an entry-level home priced at $287,760 in the third quarter of 2008 was $56,100, based on an adjustable interest rate of 5.91 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. That would peg the monthly payment including taxes and insurance at $1,870 for the third quarter of 2008.

In Sacramento, that entry-level home was $180,170, with a monthly payment of $1,170, requiring a minimum qualifying income of $35,100.

Statewide, the minimum qualifying income was 44 percent lower than a year ago when households needed $100,500 to qualify for a loan on an entry-level home.

Deal just listed in SF!

Deals like this are hard to come by in San Francisco. This beautiful single family home just listed in the Oceanview neighborhood. Home includes 3 bedrooms, 1.5 baths, formal dining room, spacious living room (which is great for the upcoming holidays), updated kitchen and bathrooms. What a delight if you’re hosting this year! Plus, it has easy access to the 280 freeway and close to SFSU, SFCC and Stonestown Mall! Just listed at $539k.

Click here for the complete listing...

With banks unloading a record number of foreclosures, Bay Area home sales soared and the median price plummeted in October, according to a real estate report released Thursday.

Most of the action - and the bargains - were in areas where bank repossessions have become a fact of life. Almost half of all existing homes sold were foreclosures. Their bargain-basement prices sent the Bay Area median tumbling 45 percent during the past year to $375,000, according to research firm MDA DataQuick of San Diego.

Despite an economic crisis and a stock market plunge, the fire-sale prices pulled more buyers into the market. A total of 5,624 resale homes changed hands in the nine-county Bay Area in October, up 66.2 percent from a year ago.

"People searching for that bargain were pretty committed; even after all the disturbing news on the economy and financial markets, they decided to pull the trigger," said Andrew LePage, a DataQuick analyst. "Perhaps it reflects the number of people who feel like real estate right now, in relative terms, is not a bad place to park their money."

click here for the complete story...

About a year ago I wrote in this blog that brokers all over the City and Marin were telling me operations had to thin; the traditional brokerage office had outlived it useful life and needed to be shut down if they were to survive... one broker from Pacific Union told me he expected they would keep one central office in Marin and agents could use it for client meetings, picking up paperwork and for meeting with a broker for whatever reason... The bottom line was technology was now meeting the needs for an office... I can tell you first hand that very few agents these days actually make it to the office these days...

Now a year later the folks at Inman News are repeating the same story... but seeing how a year has passed and very little has changed, I'm not sure how quickly any of this will happen.

SAN FRANCISCO -- The housing bust and technological change don't have to spell doom for the traditional real estate brokerage model, but companies that thrive will do so by boosting their presence in the virtual world while cutting costs associated with their brick-and-mortar operations.

That's the perspective of Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC, Realogy Corp.'s ambitious bet on the traditional brokerage model.

Speaking Monday in San Francisco at the The Fisher Center for Real Estate and Urban Economics annual Real Estate and Economics Symposium, Chris talked about the factors that make some brokerages vulnerable during the downturn and what others are doing to profit from change.

Chris emphasized her own company's extensive presence in the world of online social media, portraying Better Homes and Gardens Real Estate as a brokerage that's equipped to compete in the changing landscape.

Better Homes and Gardens' company blog and the company's presence on social networking sites like Facebook, Twitter, YouTube and Flickr generate leads from real estate agents and brokers who want to become part of the Better Homes and Gardens brand, Chris said.

But the Internet and online social media is also becoming the preferred method of reaching consumers. Chris said social media will "rule" because of heavy adoption by 18- to 34-year-old "echo boomers."

"That means 'bye-bye' to real estate TV advertising," she said.

Click here for the complete story...

So the bad news just keeps getting worse... Not only are housing prices continuing their record slide to the point where we could all afford a home in Pacific Heights, but San Francisco had the worst month of any of the big cities, prices down 3.9 percent from the previous month.

As for the average price of a home, only Vegas and Phoenix have fallen faster... San Francisco is down nearly 30 percent for the year...

Here's how CNNmoney.com sees the story....

NEW YORK (CNNMoney.com) -- The home price plunge stayed on a record pace this summer, according to a widely watched gauge of national real estate markets released Tuesday.

The S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. That eclipsed the previous record of 15.1% set during the second quarter.

Prices in Case-Shiller's separate index of 10 major cities fell a record 18.6%, while its 20-city index dropped a record 17.4%

With foreclosures soaring at record rates, the economic picture dimming and job losses ramping up, all the elements were in place to push prices lower.

"The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals." says David Blitzer, Standard & Poor's spokesman for the indexes, in a press release. "All three aggregate indices and 13 of the 20 metro areas are reporting new record rates of decline. . . . Prices are back to where they were in early 2004."

The 10-city index is now 23.4% off its peak price, which came in June 2006; the 20-city index is down 21.8% from its July 2006 high and the national index has fallen 21% since the third quarter of 2006.

Home prices in the 10-city index have fallen for 26 consecutive months. The decline has broadened over the past 12 months, with prices dropping in every city of the 20-city index during September.

click here for the complete story...

Home sales increased 117.1 percent in October in California compared with the same period a year ago, while the median price of an existing home fell 39.9 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“Statewide sales increased significantly in October to 552,750 homes on an annualized basis, the highest sales level since late 2005,” said C.A.R. President James Liptak . “The record gain stemmed primarily from extremely large increases in regions with a high concentration of distressed sales.

“Most October sales likely opened escrow prior to the beginning of the ongoing freeze in the financial markets. We won’t have a clear picture of the full impact of the fallout until November and December sales are reported,” Liptak added.

Closed escrow sales of existing, single-family detached homes in California totaled 552,750 in October at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 117.1 percent from the revised 254,650 sales pace recorded in October 2007. Sales in October 2008 increased 9.5 percent compared with the previous month.

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during October 2008 was $311,060, a 39.9 percent decrease from the revised $517,240 median for October 2007, C.A.R. reported. The October 2008 median price fell 1.9 percent compared with September’s revised $316,960 median price.

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I just got of the phone with my favorite mortgage guy and he tells me business for him at least should start picking up soon... I was advised to gather my paperwork because he expect rates to dip below five percent for 30 year fixed mortgages. With HUD's decision to raise limits on conforming loan in high cost areas, the Bay Area now caps at $625,000 instead of $417,000... below is a copy of the HUD press release from earlier this month.

If you're a mortgage person, I would love to hear from you... Where do you see things headed?

HUD ANNOUNCES NEW, PERMANENT FHA MORTGAGE LOAN LIMITS
New limits range from $271,050 to $625,500

WASHINGTON - U.S. Department of Housing and Urban Development Secretary Steve Preston today announced the new Federal Housing Administration (FHA) mortgage loan limits for single-family homes as prescribed by the Housing and Economic Recovery Act of 2008.

Beginning January 1, 2009, FHA will insure single-family home mortgages up to $271,050 in low cost areas and up to a maximum of $625,500 in high cost areas. The February 2008 Stimulus Package temporarily raised the FHA maximum to $729,750 through December 31, 2008. The new $625,500 maximum, however, represents a significant increase over the $362,790 limit that was in effect prior to the Stimulus Package.

click here for the complete release...

The Residences at the Jackson Square

Lookin’ for a home in the Financial District? The Jackson Square just might be the place for you. They’ve got nine different floor plans, ranging from loft-style to townhouse-style penthouses, so you’re guaranteed to find one that suits you. These lovely condos just listed a few blocks from the Embarcadero and truly rare. Also within walking distance to the great shops and restaurants in Chinatown, Telegraph Hill, and North Beach.

click here for the complete listing...