A Window Into A Listing

As you all know…the inventory out there really stinks. I mean virtually NO inventory at all. Consequently, the sellers around here are holding a whole bunch of cards when it comes to marketing their homes and getting offers. The house at 381 Boothbay is a great example of that. It’s one of the few houses to come on the market in Foster City this year priced under $1,000,000. It’s listed for $989,000. Having said that, it’s a pretty cute little house on a big 7296 sq ft lot. It’s a really nice lot too. The house is cute and fixed up, but only 1440 sq ft. It’s right across from the park.

The seller has a tad bit of leverage and I’m sure there’s been a ton of interest already. I’m sure because I requested disclosures for a client of mine and got a response yesterday in the form of an email. Here’s what it said:

“Thank you so much for your interest in the property located at 381 Boothbay Ave. As of today, over 20 disclosures have been downloaded, or emailed to agents of potential buyers. 
I currently have 3 offers, rest assured no offer will be responded too until after 4/23/2014.
No inspection reports are being provided by the seller, buyer is encouraged to obtain their own inspections. The TDS and seller supplemental is informative.”
WOW. 20 disclosure requests and 3 offers sent in already. (I can’t imagine sending in an offer that far before the offer date…but hey, I believe it happens).  These are houses that were selling for $800,000 just a couple of years ago…and back then there would be complaining because it was right across the street from the park. Go figure.
I may have said this before…AMAZING!

The Million Dollar Townhouse

The title above says it…but I’m sure plenty of you (me too!) can’t quite wrap our heads around it. That’s the prospect of townhouses in Foster City selling routinely for $1,000,000. Surely you jest you say! I clearly remember selling a townhouse on Juno Lane in Isle Cove that we listed for $395,000 and got the astonishing price of $402,000 for. We were absolutely amazed and I recall a neighbor being sort of annoyed with me because he thought we were crazy to be asking such an outrageous sum as $395,000 in the first place. I was clearly an idiot in his eyes.

Now we’re seriously looking at those same townhouses approaching the 1 million dollar mark…and I don’t think it’ll be long until that happens. Of course they’re already there at Promontory Point…but I’m not talking about Promontory Point! I’m talking about Winston Square and Bayfront Court and Bay Vista and Treasure Isle. Don’t believe me? Since the first of 2014 two units have gone over $900,000. A waterfront at 1115 Lord Ivelson sold for $930,000 (but the waterfront thing is sort of expected) and a unit in Treasure Isle at $728 Chebec that was listed for $868,000 sold for $955,000. That’s NON WATERFRONT townhouses.

Right now we have pending sales at 845 Balboa (Water…listed for $899,888), 391 Catamaran (No water…listed for $865,000) and 881 Cabot (no water…listed for $858,888). They’re all going to close over asking. I can’t wait to see where. It might not be this month or next…but sometime this year we’ll see a closing at or over a million for one of these townhouses. That’s absolutely freaking unbelievable! What’s more incredible though is the fact that we’ll get used to it and the standard for townhouses will be a million dollars. Just like the standard for single family homes is now about $1,300,000 in Foster City. You can be sure I’ll report on the first one that does…and don’t be surprised if it’s sooner rather than later.

 

A First

Just when I thought I’d seen it all…something new arrives! As you’ve all heard before and I’ve harped on continuously here on this blog, the market is totally crazy. That craziness seems to constantly be taken to new heights and this week it hit the stratosphere as far as I’m concerned.

I have a listing in San Francisco that’s a really popular multi unit building in lower Nob Hill. It’s a vacant building that’s been used entirely as units for the owners family for generations. It’s listed at $2,099,000 and like lots of other properties, it’s getting a ton of interest. 17 disclosure packets are out as of this post and I’m looking at offers next Thursday. Yesterday an agent both texted and emailed me and stated that her client just HAD to have this property…and if I’d be willing to help her achieve that goal she would pay me for that service. In other words, she offered me a bribe. Holy Cow! I thought. I immediately called my wife and told her…to which she replied; “Doesn’t that happen a lot?” “Hell no!” I said. That’s NEVER happened before!

People are now so desperate to secure a property that their agents are willing to offer bribes to achieve it. The State’s attorney general thought it was inappropriate for Title company reps to give real estate agents desk calendars and key chains thinking it would unfairly influence business…and now agents are offering cash bribes for consideration of their clients offer. AMAZING! I’ll just say this…I will not be accepting any inducement to assist anyone to get this, or any other property. Offers are due on March 20.

Technology

The last big item that’s powering this market is undoubtedly technology. In 2000 when this all really started booming, people didn’t use technology anywhere near as much as we do now. Plenty of people were downright intimidated by a computer. I clearly remember agents who didn’t want to enter their own listings because it scared them to do so. Now everybody uses the internet all day every day. It’s on our phones and tablets…it’s a 24/7 use. Because of that us there’s SO MUCH more participation in the wealth being created by players that are a part of it around here.

Folks being a part of IPO money are certainly more plentiful now than ever before. How about the small number of WhatsApp employees about to take a slice of the 16 billion Facebook is giving them? Earlier this week I saw a 2 bedroom, 1 bath house in original condition on an average size lot in Menlo Park sell with 18 offers. It sold for $1,706,000! This kind of money is NOT flowing in Sacramento or Reno or Portland. It is relevant in this area.

The kind of wealth being created around here is fueling the boom we’re experiencing and I can’t see how this will all disappear. Can you? It actually feels like it has plenty of life left in it.

Population Growth

Last week we looked at the high cost to rent as a factor in causing the growth of prices in this market and why, in my opinion, it’s not just a temporary bubble….it’s a reestablishment in values. Today I thought we’d look at how population growth around here also impacts prices and will for some time to come. This chart above tells a bunch of the story all by itself. What it says is that between now and 2040 this area is going to boom. Frighteningly enough it says that as homes become less affordable more and more people are going to be forced to move out of the close in areas. It predicts San Francisco as actually losing population. Never the less…it shows San Mateo County as still increasing by 28% during this period.

According to the US Census the overall Bay Area is predicted to grow 30% by 2040…but housing units are only predicted to grow by 24%. Right now 87% of new housing around here is multi family dwellings. Apartments, condos, townhouses. In San Mateo County there really are VERY few new single family houses being built and, of course, that puts enormous pressure on prices of existing single family houses since SO MANY people want to live in a house.

Interestingly, the Bay Area leads the overall population growth of California by a bunch too. Of course, who wouldn’t want to live here given this area’s ability to support job growth. It’s the place you want to be if you’re in the information economy. None of this is radical news for any of you…I know.  I had a client tell me last week that they thought they could wait 3 or 4 years to buy a house. Of course they can…but are rents coming down? Is the population of this area declining? For those two reasons alone prices will increase just to keep pace with these trends. How could they not.

Renting

There are a number of factors right now that are contributing to the frenzy of growth in prices that we’re experiencing and I thought I’d talk about some of them in the next several posts. In my mind at least these factors all lead me to believe that this is more of a value reset…not a short term bubble. The first one that comes to mind for me is the problem with rentals in this area. Last summer I helped a client rent their townhouse at Bay Vista, it’s a 3 bedroom, 2.5 bath townhouse in 1290 sq ft. I ran one Craigslist ad…I got 25 applicants. We asked $3000 a month. Several parties offered up to 6 months rent in advance. Some offered over the asking price. I was shocked. You know what…it’s worse now!

I have a multi unit building I’m going to list in San Francisco. It’s got four units, a 4 bedroom place, two 3 bedroom places and a 2 bedroom place. I went to Craigslist to check and see what rents were going for on similar properties. The lowest rent I found in the area this building is was $4900 a month. That was for a 3 and 1…and based upon the details I figured it was really a 2 and 1 that the landlord was allowing the dinning room to be used as a bedroom. It was astonishing looking at these ads. Many places are listed for $6000 to $18000 a month. Studios are renting for $2800 a month.

A wonderful friend of mine told me today that she received notice that her apartment in Redwood City is going to take a 10% increase from $3800 to $4180. For an apartment just off of El Camino. Just to put that in perspective a bit, an $800,000 loan on a house at 4% has a monthly principal and interest of $3800 a month. That’s of course fixed…for all we know a 10% increase in rent could be coming every year of so to keep up with the demand of the market.

Needless to say, a whole bunch of folks do not like the idea of paying more in rent than they could purchasing. Lots of the buyers out there right now are in this category. I can’t see rents plummeting and as a result I’m thinking more people are going to be entering the purchase market. Why give a landlord $4000 or more a month when you can invest in an asset that’s paying off as well as real estate does?

$1,000,000

About 4 months ago somebody asked me if there were still houses in Foster City that could be had for under a million dollars. “Of course” I said…thinking of various Eichlers (particularly fixer uppers) as well as ranchers on busy streets and the neighborhood around Boothbay Park on streets like Chesapeake and Winchester. Well, what do I know? Nothing it would appear.

Since September 1 of last year only 3 houses sold under that glorious 1mil figure. One is attached in Williams Landing and I almost don’t consider that a house since it has an HOA and a shared wall. Even that one sold for $985,000. Another was on Beach Park and it went for $965,000. The third one was an Eichler…the one in the picture above actually, and it went for $875,000.

Right now I honestly am not sure if ANY house this year will sell for under a million. Seriously. Last week a 1470 sq ft house on Cumberland was listed for $989,000, it got a ton of offers and sold for $1,250,000. This place was on a huge lot, but it’s a small house just like the ones on Chesapeake. A house over there sold last year for $1,100,000 and I gasped at that. I gave out 28 disclosures on my listing on Schooner last week and got incredible offers on it yesterday. It’s simply amazing what’s going on here now and it’s inescapable that you’re most likely not going to be able to buy a single family house in Foster City going forward under a million dollars. What’s shocking to me, and is always confirmed when I host open houses, is just how much in denial people are about that fact. But that is the subject for another post.

 

Foster City 2013 Condo/Townhouse Statistics

Onward into the realm of the amazing and incredible. These numbers are actually pretty similar to the single family numbers. As I’ve mentioned before on this blog, condo/townhouses are a lot more difficult to draw conclusions about because there are problem projects and great projects and some are way up and others not so much. Thus that should be considered when thinking about the overall statistics about FC. Let’s get started…how about the total number of units sold. Here’s the history:

2006…240

2007…165

2008…112

2009…140

2010…143

2011…144

2012…156

2013 had a healthy 169. Not as high as 2006, but inventory was horrid. Still we sold a lot more than in 2008. In 2006 it was 41, 2007 was 40, 2008 was 55, 2009 was 70, 2010 was 50, 2011 was 72 and 2012 was 41. Incredibly, just like houses,  2013 was 20! I guess that’s what happens when you have far less short sales!! Now how about the average prices:

2006…$661,993

2007…$694,026

2008…$635,839

2009…$577,267

2010…$577,150

2011…$512,192

2012…$551,000

In 2013 the average sale price was $657,000. Not quite all time high territory but pretty darn good. Again, if you break down values into specific projects you’ll find that many FC developments did indeed hit all time highs. These are just the averages. Regardless, the direction we’re heading in leads me to believe that that high will be hit across the board in 2014.

Foster City 2013 Statistics

Well I knew before I even started to look at this that the 2013 numbers were going to be amazing and I was still surprised. Last year I wrote a list of categories, total number of homes sold and the median prices of single family homes in FC with comparisons to previous years.  Here’s the list of DOM:

2006…144

2007…117

2008…99

2009…110

2010…122

2011…124

2012…128

In 2013 there were 106 closed sales.

That’s actually about what happened in Foster City in the darkest days after the crash. That’s all about the lack of inventory too! Tons of buyers and very little inventory. Since we’re looking at numbers another good one are the days on market figures. In 2006 it was 37 days, 2007 was 31 days, 2008 was 48 days, 2009 was 65 days, 2010 was 43 days, 2011 was 55 days and 2012 came back to 34 days. In 2013 the number was an incredible 20 days on market. What’s most remarkable to me was the fact that 2006 and 2007, along with 2010 and 2012 were pretty darn good markets. Lots of multiple offers. Now how about the actual numbers…the average sales prices:

2006…$1,078,000

2007…$1,113,000

2008…$1,118,000

2009…$1,010,000

2010…$1,004,000

2011…$976,000

2012…$1,021,000

Hold onto your hats because the average sales price on single family in Foster City in 2013 was $1,236,000. Astonishing. Here’s another remarkable fact. The inventory right now is WORSE than ever. At this rate we could end up with 60 sale this year. I’m only just kidding…kind of. I can’t imagine a scenario where prices won’t continue to go up this year…outside of some national crisis again. This is a wild time folks.

 

Highs and Lows 2013-Condo/Townhouses

OK, let’s see how these did.

MOST EXPENSIVE CONDO/TOWNHOUSE:

740 Promontory Point #3206 You know the market has improved if this development is back over $1 million. This unit closed at $1,012,500.

HIGHEST PRICE PER SQUARE FOOT:

Even though it only went for $470,000, this 1 bedroom unit at 700 sq ft came in at $671.00 a sq ft. Last years high…$566.000

LOWEST PRICED CONDO:

There were a couple of these short sale condos that actually sold in the summer of 2012 but didn’t close until 2013. This one sold and closed in 2013 and went for $280,000. That more accurately reflects the year. Plus it’s a short sale at the Admiralty.

LOWEST PRICE PER SQUARE FOOT:

Well, I guess all the news from Promontory Point wasn’t good. This place sold for $790,000 and since it’s a 2264 sq ft unit it comes in at $348. Still, last years low was $250.

LONGEST ON THE MARKET:

This train wreck of a listing, a short sale too, was on the market from September 19, 2011 until it closed on September 13, 2013. An amazing 653 days.

GREATEST OVERBID:

849 Columba. This townhouse at Isle Cove was listed for $749,000 and closed at $900,000. $151,000 over asking.

GREATEST AMOUNT UNDER ORIGINAL LIST PRICE:

1151 Compass #202. This condo at Marina Green sold for $615,000…$20,000 under asking. It was one of the VERY FEW units that went under.