SubMedian

Comments turned off due to overwhelming spam

2010-02-22T08:36:00.000-08:00

Turned the comments off because the only ones commenting were spam. This blog is primarily for archival purposes anyways (now that the house hunt is over). If you are dying to comment, send me an email and I will be happy to add your contribution, or will reply, one or the other. Thanks for reading! :)

Finally got one

2009-10-07T03:13:00.001-07:00

Well we finally got one. We just got the keys and haven't moved in yet. Despite the market conditions we didn't get a steal, paid over asking, and in fact the home didn't appraise so we had to bring some extra money to close as well as convince the sellers to come down a little. On the other hand the home needs only a paint job and a chimney sweep, is big enough for our family of four, is close to things that are important (school, shopping, park, friends, backyard), far from things we don't like (noise, crime) and is as good a fit for our needs as we could hope for. Most of our new neighbors have lived in the neighborhood for ten years or more so we have a nice stable piece of San Francisco to call home.
With two little ones in desparate need of a yard we weren't in a position to wait anymore and frankly we were just out of patience. Our criteria was what can we afford right now that we can bear to live in for the next ten years. And on that front we are satisfied. The big lesson I have walked away with here (which will make the realtors happy) is that what you pay for a house has no correlation to it's actual value. As some of you probably know we have spent literally years bidding on foreclosures, fixers, probates, stale fish, etc trying to get a bargain and have come up empty handed every time (I haven't blogged about the last couple misadventures but there have been a few and one in particular just about broke our heart). But the times we were denied did give us more time and eventually our savings caught up to the point that we could actually compete and in the end we wound up buying in a normal deal with normal sellers putting our well-over-asking offer in the day it listed and even then apparently not having the highest offer, but winning because we offered a damn fast close.
The asking price, the comps, everything you think you know about a property is meaningless when it comes to the final price. It all boils down to whether you are in a class that has a lot of other buyers. As a family looking for a family home in a city that isn't exactly loaded with quality inventory for families, we eventually learned we were going to have to either pay more than we would like, or not have anything at all. If you are in the market for a condo, or something on the top end of the market I think it's a different experience, but reasonably priced homes appropiate for a family with young children are tough nuts to crack.
Anyways I'm happy to start worrying about lawn care now. Home depot has new meaning to me and I can't wait to make my first visit there with serious intent.

On a side note, those who have enjoyed my Rent vs. Buy spreadsheet will be pleased to learn that I have nearly completed converting it into an iPhone app. I'll make an announcement when it's available on the Apple store.

Didn't Get It.

2008-07-17T16:20:00.001-07:00

Not a huge surprise, we were lowballing and we knew it.

I'll provide all the details once escrow has closed (I don't want to mess with someone else's house purchase mid deal). This house should be a fascinating object lesson.

Putting a bid on a house today...

2008-07-15T09:50:00.000-07:00

It's a long shot as we are lowballing, but wish me luck anyways. I'll provide the deets once the whole story is complete...

Chasing The Bottom Line At The Potrero

2008-07-14T15:11:00.001-07:00

This blog ignores condos, but we're making an exception just once:

On May 1st of this year The Potrero launched a sales incentive "No Mortgage Payments for 1 year". They said the offer "must end June 15th", and that they only had 25 units left.

On June 9th they extended the offer to July 15th, and announced they are "nearly 90% sold out" and that there's "no better time to buy a home at The Potrero".

On July 14th, they announced "for the month of July only, we are offering a special collections of homes at special prices.* The Broker comission rate on all remaing homes is now 4%". Oh and now they are officially "90% sold" instead of "nearly 90% sold".

The Potrero is 165 units, which means that over the course of 10 weeks they managed to move an additional eight units. So they are moving around 3 units a month (down from around 4 a month at the end of December), during peak season (spring/summer) and with their biggest incentive yet on the table. Keep in mind that their stated goal was to move 12 units a month, and for a while they were selling 18. I'm assuming what's left are the leftovers nobody wanted and is going to be even harder to sell. At this rate it's going to take some serious work to get this all closed up and finished by the end of 2008.

Now here's the rub: in business, it's not the first dollar you make that determines your profit, it's the last. That's where all the bottom line is, and that's what the developer is currently chasing. If you got a 10% markup, and you don't sell your last 10% of inventory, you didn't make any money!

As it is they were clearly hoping to be finished by February of this year, and now it's mid-July and they are still working that last 10%. While I don't think they are in danger of losing money, it's clear their profit margins are probably shrinking from what they were hoping for or expecting.

Submedian rent vs. buy calculator updated

2008-07-10T21:10:00.000-07:00

The most comprehensive calculator for San Francisco real estate just moved to Beta 2.5 folks. Added support for interest only loans among other goodies.
Enjoy!
http://spreadsheets.google.com/pub?key=pM4Gw0s2zSeAnOTnop5I7Lg

This is a big deal...

2008-06-13T08:07:00.000-07:00

So why is no one talking about this?

http://thefrontsteps.com/2008/06/11/stats-numbers-single-family-homes-may-2007-versus-may-2008/

Median prices down in every single district (with the exception of D8, which doesn't count since they only had 2 sales in the whole district), YOY, in the fabled "spring bounce" month of May.

One would think there would be 20 comments on this at least, and all the local blogs would be discussing this with great interest, yet there isn't a peep from anybody but me. Wussup with that?

Submedian Searches: Sunset in Spring

2008-05-05T21:15:00.000-07:00

For my next little "feature" I'm going to narrow my focus on a particular neighborhood to tell me something about the market for submedian single family homes (i.e. anything under $750k) with at least 2 bedrooms and see how things are holding up.

This week's featured neighborhood is the Sunset.

As of 9pm on May 5th, I got 29 results on one of my favorite sites Redfin.com. After eliminating the handful of condos and TIC's (I'm all about the SFH's here...) I have 22 SFH's. Some interesting data points arise when I take a closer look:

First of all I'm interested in how many homes are selling for more then they were purchased for. I'm frankly not surprised that out of the 13 homes that list the previous sale price 6, or 46% are listed for less then what they were previously purchased for. But what does this tell us about prices in general? Well, when we dig in a little deeper they tell us some interesting things:

Of the 6 homes that are listed for more then their previous purchase price, five of them were last sold in the 90's. That's a rather stark statistic: if you want to sell your house for more then you paid for it, you better have bought your home a decade ago.

Among homes showing a prior sale price, anybody selling a Sunset home purchased within the past five years is showing negative appreciation. And in some cases, it is drastic: 1491 43rd Ave is now listed at $720,000. It's high water mark was it's purchase for $875,000 in April 2005. That's a whopping $155,000 depreciation over three years. That's $4189/month not including taxes, maintenance, insurance, closing costs, commissions, etc.
Just to give you a point of reference here, you can find on craigslist today 2 and 3 bedroom houses and flats in that part of sunset for $2,000 - $2,500, today in 2008.

Intriguingly, the people who bought in the 90's seem to be suffering from another problem: greed. They have across the board higher listing prices then the newer homeowners, and are paying the price for their desire to hang on to those higher prices by having much higher DOM's: 54 is the DOM average for the people who have owned their homes more then five years, compared with 26 for the folks who are newer homeowners.

What's The Diff? Spring 2008

2008-04-27T10:31:00.000-07:00

So I'm perusing one of my favorite real estate blogs TFS (no, I don't get paid to plug it, I really do like it) and I stumble across this whopper in the comments:

"I feel sorry for people who were tricked into renting for the past 5 years while SF prices continue to go up."

That kind of broad, categorical, arrogant, and self satisfied comment deserves a reply that can match it ounce for ounce with pure snark. In other words, this was custom made for a blogger like me.

As always, I spent less then 20 minutes on the research here. That's cause Redfin rules and makes a wiseass post like this totally easy. I've just included one example property from a variety of neighborhoods, but if I wanted to get all nerdy about it, I could probably go bezerk and do a gigantic mega post on all the properties that have experienced depreciation since their last sale within the past five years (there are TONS of them), but I don't have that kind of time. Oh how I long for some kind of Redfin/MLS/Trulia/HotPads/PropertyShark API that would let me crunch the numbers without having to do this by hand... (yes I am a full on geek), but I think all the sites who make a living collecting this kind of RE information probably aren't particularly interested in giving data access to people who might want to poke holes in the overly optimistic SF market. If I'm wrong though, and you are one of those sites, please feel free to contact me! :)

And to all the unlucky folks who are owners/former owners of these properties, my heart goes out to you, sincerely. The real estate situation in SF has been pretty stupid for a while, and you got caught up in it. That sucks, and being made a public example out of is probably adding insult to injury, but real estate is a public business and that's the breaks.

So without further ado, here is the Spring 2008 version of our popular recurring feature: "What's The Diff?"

Mission Massacre
1485 Valencia
list: $579k
last sale 2004: $679k
diff: -$100k

* This property is a single building that apparently converted to two TIC's. As such, the listing price ($579k) is for one TIC, while the entire building was sold in 2004 for $679k. Apologies to all concerned for the error. This is what 20 minutes of research on Redfin buys you I guess.

Sunset Savaging
2100 27th ave
list: $674k
sale price 2006: $805k
diff: -$131k

Miraloma Park Mugging
24 Coventry St
list: $699k
sale price 2007: $754k
diff: -$55k

Bernal Depths
826 Peralta
list: $649k
sale price 2005: $655k
diff: -$6k

OH NOES!!1! in Noe Valley
169 Grandview
list: $699k
sale price 2005: $699k
diff: -$51k

Not So Excellent Adventures in Excelsior
940 Cayuga Ave
list: $580k
sale price 2005: $720k
diff: -$140k

That's it for now. Heading down to Crossroads Cafe to drink some coffee, hang with my friends, and let the kids play outside for a while.

I'm back...

2008-04-27T10:18:00.000-07:00

Since Alex at the wonderful TheFrontSteps.com has gone back to his main blog, and while TheFrontSteps.org (a concept I think is brilliant) awaits the changes neccesary to become a more useful site from a blogging perspective, I have decided to restart the engines here.

To bring everyone up to speed: I'm a potential buyer with a family in tow. I'm currently preapproved for a loan that would allow me to purchase a median priced home in San Francisco (~$800k), which I guess puts me in the top 12% of income for the city. The problem for me is I can't really afford either the downpayment (I'm aiming for 10%) or the monthly nut on a median priced home, so I'm focused on homes that are priced less then the median price, hence the name of the blog: submedian.

I would ideally like to find a reasonably priced 3br 2ba SFH with a yard, so if any realtors have any pocket listings out there they want to run by me, I'm all ears.

This isn't my main gig, so postings, if they happen, will likely be on Sunday mornings. Like today. And right on schedule I have a post coming up momentarily...

The Front Steps breaks new ground

2008-03-01T10:01:00.001-08:00

TheFrontSteps.com has started a new website at thefrontsteps.org (and count me as someone who thinks this new website should take over thefrontsteps.com pronto!). It's a social network for SF real estate. Alex (owner of thefrontsteps.com) clearly used some premade build-your-own social network software, but you know what? It kicks ass! No one has done this before, and I have no idea why.
SF is ripe for a social network devoted to SF real estate, and I think this is going to be a winning idea. I'm so fond of it, that I am moving my blog postings over there for the forseeable future. So if you are looking for musings from me on the submedian market, head over to thefrontsteps.org and join the party. Make your own page, start your own blog. With everybody playing in the same sandbox the open exchange of ideas is about to get a lot more fun.
I'll keep this blog here for a while, just in case the plug gets pulled for some reason, but new postings will be at thefrontsteps.org. See you there!

Holy Crap! It's getting rough out there!

2008-01-17T12:45:00.000-08:00

DataQuick reports today that Bay Area sales ended 2007 at a more-than-20-year low, with last month being the slowest December since DataQuick started their stats in 1988!

Sales have decreased on a YOY basis for 35 consecutive months, and according to DataQuick the city of San Francisco saw a 24.4% drop in sales volume versus last year, and a 1.9% drop in the median sale price.

Intriguingly, there are still people out there who think RE is the path to wealth:

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages or with multiple mortgages has dropped sharply. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is edging up, DataQuick reported.

I'm calling this how I see it: clearly we still have some very foolish investors out there. There wil be some who will make money regardless, because even a broken watch is right two times a day, but many, if not most, of them will suffer a great deal for the mistake of buying at the start of a down cycle. We have a lot of room for downward momentum, and once it kicks in (I'm not even considering it an "if" at this point) a feedback loop will be established where buyers will grow increasingly reluctant to buy as prices drop further, which of course will only exert more downward pressure on pricing. As we are all seeing, real estate prices move slowly. So this can literally take years to play out, and in some cases, decades. You aren't going to see the bottom of the market until the volume starts going up significantly, and right now it's been 35 months (three years!!!) since we have seen any sign of that as compared to prior years. We have a large number of option resets headed our way, and a possible recession to deal with. There is a storm gathering here and a lot of people are going to get hurt. Be careful out there!!

Realtor Massacre - SFH sales volume down 27.9%

2008-01-16T10:08:00.000-08:00

The buzz this morning via sanfranciscoschtuff.com is the new SFAR (San Francisco Association of Realtors) report which shows a stunning 27.9% drop in sales volume as compared to December of 2006.

This is catastrophic for realtors. As I pointed out in the comments in this post on The Front Steps, it is much better for realtors if prices decline then if sales volume declines. You can't collect a commission if the house isn't selling! In this case we have 61 less homes sold within a single month. If all these homes were all priced at the median price of $800k that's $48 million dollars of sales that dissapeared. Which of course translates to roughly 2.5 million dollars in realtor commissions that evaporated out of a total pool of roughly 8.6 million. That's a lot of missing money for a single month!

If realtors had sustained volume by being more successful at encouraging owners to drop their prices they would have fared much better. For example let's say prices had fallen citywide a jaw dropping and unheard of 10%, the realtors would be looking at a loss of only $860k for the month.

So if you are a realtor, and you want your properties to move, I would strongly urge your clients to start dropping prices.

What's The Diff?

2008-01-06T13:19:00.000-08:00

We're going to start 2008 off with a bang here and start a new feature where we take a look at some of the pain in SF real estate. Looks like some folks have discovered that real estate doesn't always go up. Know some of the back stories? Share them with us!

Oops!
61 Ina Ct.
Last Sale: $730,000 (07/18/2007)
Asking: $650,000
What's the diff? $80k in about six months.

Even in Bernal Heights!
38A Elsie
Last Sale: $695,000 (08/25/2006)
Asking: $550,000
What's the diff? $145k in 17 months.

Another Bernal haircut...
277 Bradford St.
Last Sale: $775,000 (10/10/2006)
Asking: $675,000
What's the diff? $100k in 15 months.

Missing money in the Mission.
1800 Bryant #311
Last Sale: $739,000 (11/22/2005)
Asking: $625,000
What's the diff? $114k in 50 months.

Western Subtraction?
2529 Post
Last Sale: $756,000 (07/30/2007)
Asking: $669,900
What's the diff? $86k in six months.

Downside in Ingleside
230 Howth St.
Last Sale: $745,000 (08/31/2005)
Asking: $650,000
What's the diff? $95k in 52 months.

Keep in mind these are just the differences on buying and selling. Don't forget a true measure of loss would measure closing costs, sales commission, property taxes, carrying cost, etc. If you really want to measure the pain, use the infamous Submedian Spreadhseet and you'll see just how bad it really is.

BTW, Crocker Amazon, Excelsior, Bayview? Just too damn many to list. Seriously, there must be over a hundred properties in the city right now selling for less then what they paid for. Just a year ago that would be inconceivable.

Where the hell am I?

2007-12-21T13:03:00.000-08:00

Sorry folks, was traveling for a couple weeks, and now hunkering down for the holidays. Light posting until 2008, but I'm definitely here, and definitely keeping up with the comments. I have some great properties I'm going to be highlighting soon, so don't forget about me.

Doom & Gloom... or is it?

2007-12-03T23:24:00.000-08:00

A recurring meme I see among SF housing bloggers and commenters is to label the concept that prices may be susceptible to declines or stagnation in the near future as "doom & gloom".
I think this label is funny, and perhaps gives away something about the people using it. Because what they are calling doom & gloom looks a lot like a beautiful sunshining day to me.
One comment I was reading today was from a homeowner who was quite secure in that whatever the future brought, their home had already appreciated 35% since they purchased it a couple years ago. They too were using the "doom & gloom" label to generalize those that thought prices were coming down. While I was stewing on that, I started thinking about what it would really feel like to a homeowner if housing prices started to move in a negative direction.
It occurred to me that while housing market pricing typically moves very slowly, that doesn't mean you can pull out on a moments notice if things take a turn for the worse, because the reality is that selling a house takes a while, even if done quickly. And therein lies the problem: history is full of people who hung to real estate a little too long, and couldn't get rid of it in time when the tide turned. The event that sets all of this off could be an external force, such as an economic downturn, or even a recession, which leads to a significant amount of job loss, which in turn leads to a number of people needing to cut the fat and reduce those $10k monthly housing costs.
Once critical mass is reached among sellers, an interesting effect occurs: buyers stop buying because they see the writing on the wall. They know all they have to do is wait and prices will come down further. Meanwhile desperate sellers find themselves increasingly cornered. Eventually they start to capitulate, only to find the first couple of rounds of price reductions aren't enough and only exacerbate the situation. This leads to more price reductions, and unless they wise up and price their home very competitively, they chase the market all the way to the ground. And in short order you start to see some very sudden price changes across the board.
As an example, Miami has a number of sellers who were confident in the gains they had already achieved and their ability to extract those gains in an emergency. Sadly, many did not realize these gains, holding out for the market to turn upwards again, only to be buried under even larger losses, until finally they lost their equity completely and their house was foreclosed.
Yes, that was doom and gloom for the seller, but when it has all shaken out, there will be some very happy buyers for whom this was a very sunny event.

An interesting proposition, and a mystery...

2007-12-01T14:36:00.000-08:00

624 10th Ave. presents itself as both an interesting set of options as well as a mystery.

The flat is a Richmond 3 bedroom 1.25 bath TIC in a 2 unit building. It is currently asking for $699,000. There are no pictures of the interior, so we don't know much about the size of the bedrooms, but judging by the bay windows it looks likely to have a nice sized living room.

The notes state that building has separate water and PG&E meters, which make it "perfect for fast track condo conversion". Another option is to keep it as a rental unit, as it is currently occupied under section 8 for $2500 a month. Supposedly the tenant is fine with vacating for the new owners (given 60 days notice) but the buyer can renew the contract with section 8 if they so choose. The question is why would they want to? And it is that question that brings us to the mystery: the notes claim the building has "no rent control!". Perhaps someone can explain to me how a two unit building built in 1919 escaped rent control? A quick check with the SF Tenants Union reveals that

"2-4 unit, landlord occupied buildings used to be exempt from rent control.
Pursuant to 1994's Proposition I, these buildings have had full rent control protection since May 1, 1994. "

but I can't find out if there is any special rule exluding a building from rent control if the building is not occupied by the owner.

At any rate, the last listed sale (with a price) on Property Shark was $324k in 1991. Clearly at that price, between the sale, and what they made in rent, those owners did very well. But what does it look like for the new buyers? Plugging the numbers into our spreadsheet reveals that if we change the sale price to reflect the same appreciation the previous owners enjoyed over the past 16 years of 8.3% (which seems to me to be an exceedingly unlikely event), we will wind up with a sale price of $2 million in 2023. Assuming the same tenant lives in the house for 16 years from 2007 paying $2500 a month with 1.5% annual increases, the owner will be poorer to the tune of $138,000 (or $656 a month). He would have better off if he had just rented the place himself! And if property appreciation actually slows down a bit (as opposed to going into reverse, as some fear) to a more typical 2.5%, the owner will be out $867903, or $4113.29/month!

Wow that was fast! And an update...

2007-11-29T17:42:00.000-08:00

Thanks to Alex @ The Front Steps for linking to my previous post. I sort of assumed it would be a long time before anyone would visit this blog, so I'm a little shocked to see all the people downloading the spreadsheet I made only a matter of hours after posting it. This internet thing is crazy, isn't it? And as a huge fan of TFS, I'm more then a little flattered.
Welcome TFS readers, and I hope you'll come back and visit.

There have been a couple suggestions and comments made at TFS, so I thought I would port them over here, so anybody else happening to stumble across this blog would have some idea of what's happening, and that way I won't wind up answering the same questions over and over again.

anon8mizer makes several great points regarding taxes on capital gains. It's going to take me a little bit to assimilate these into the spreadsheet, as some of these are somewhat complex, and I'll need to make sure I understand them fully before coding the formulas. But I will do so.

bevel444 wonders why I don't have a field for rent increases. That's a good point. The short answer is that I am a bit myopic (as well as more then a bit lucky) and due to a wonderful landlord who our family adores, my own rent has not budged a penny in over five years.
But obviously, I'm the exception, not the rule, so I ~~will add~~ have added in a field to adjust for rental increases. I think those of you looking for this to wildly tip the scales will be dissapointed. In SF most apartments are rent controlled and any apartment that is rent controlled can only have an annual increase of half of the Consumer Price Index, which for this year is only 1.5%.

DGee points out that higher tax rates (i.e. higher incomes) can result in greater savings for owning. This is true, and is one of those things that makes me want to say in a church lady voice "isn't that special?". It's essentially welfare for the wealthy, right? Or am I missing something? You buy a fricking nice ass house, and my country gets less tax revenue. Nice.

James wonders if there is someway to share the spreadsheet without forcing people to be authenticated. He says they all need to give me their email. James: I don't get the emails. Don't see them at all (or if I do, I'm not aware of how). I'm on blogger, not typepad (I think! new to this blogging business...). At any rate, I'm still thinking about a better way to do this, and if you or anyone else has a suggestion, I'm all ears.

Anyways, enjoy, and keep the feedback coming.

Ending the argument: An easy to use spreadsheet to determine the true monthly cost of ownership

2007-11-28T22:57:00.000-08:00

It is often the case when perusing the local blogs, that I'll notice "comment battles" will break out over whether x property made money, or how a particular owner would have faired if they had rented instead. Invariably someone will posit some theory, and then someone else will point out what they forgot, and then someone else will point out what they forgot, and it isn't long before the first posters point is forgotten, and the conversation drifts aimlessly along the lines of "tastes great - less filling" without any sincere effort to assemble all the information together and get a definitive, or at least semi-definitive answer.
I've decided to fill in the breach. I don't claim it's the be all end all, but it's a simple easy to use calculator that can at least give you a rough idea of whether a given property came out ahead, or might even help you decide if buying a particular property is in your best interest:

http://spreadsheets.google.com/pub?key=pM4Gw0s2zSeCXIvKktNGLbg

I'm looking for feedback, so if you see something I left out, or some way to improve it, let me know.

[update: I am working on creating an editable web based spreadsheet for everyone to use. In the meantime, you can edit the spreadsheet by following these instructions (thanks anonymous for leaving this tip in the comments!):
Go down to the blue links at the bottom and click either Edit or Google Docs. You may have to sign in or register but once the file opens in a new window click on File and then Copy. A new spreadsheet will open where you can edit the cells.]

What the hell is a median, and why should I care?

2007-11-17T11:20:00.000-08:00

Often times, as I peruse the various blogs around real estate, particularly ones that are focused on the Bay Area, I will see many misconceptions about what exactly the definition of "median" is. And this misconception isn't limited to amateurs and newcomers, as even professional Realtors (such as here, and here) are prone to confusion about the term.

It's a fairly common mistake to confuse median with mean (more commonly known as "average").

In simple terms, the median is literally the number in the middle.
So in a three number set such as {1, 9, 10}, the median is 9, while the mean (or average) would be 6.66 (1+9+10=20, 20 divided by 3 = 6.66).

If there are an even amount of numbers in a set, the median is taken by dividing the two in the middle by 2. So in a four number set {1,8,9,10} the median is 8.5 (8+9=17 divided by 2 = 8.5). While the average in this case would be 7.

So how does this apply to San Francisco real estate, and why should we care? Well because San Francisco has a mix of properties selling at very different price tiers. And the result, as I am about to show, is that trying to determine short term market trends by looking at median prices can give you some very misleading answers.

Let's imagine 3 different scenarios:

Scenario 1
If you have 1,000 properties sell for $1,000, then the median is $1,000 and the average is $1,000.
Scenario 2
If you have 999 properties sell for $1,000, and one property sell for $2,000,000 then the median is still $1,000, but the average is now $2,999.
Scenario 3 (i.e. the "mix" scenario)
If you have 250 properties sell for $500, 250 properties for sell $1000, 250 properties sell for $2000, and 250 properties sell for $1 million, then your median is $1500, and your average is $250,875.

Obviously no one is buying a house for $250k in scenario 3, they are either paying a lot less, or a lot more, and that's why medians are used more often then averages in RE, because it tells us what people are actually paying, and it's a lot less susceptible to being manipulated by the top 2%.

Now, using these same scenarios, let's say all properties go down in price by 20% and also the bottom portion of the market doesn't sell at all due to a 25% reduction in sales volume.

What does that do to our medians and averages?

Scenario 1
Median and average both drop to $800.
Scenario 2
Median drops to $800, average drops to $2932
Scenario 3 (i.e. the "mix" scenario)
Despite a catastrophic bust in real estate, the median has risen to $2000, and the average has also risen to a whopping $534,000. Weird isn't it? Prices are down 20% and sales volume is down 25%, but the median went up 33%, and the average went up 112%!

When you have a relatively small sample size like we have in SF, and wide variances in pricing tiers based on micro-neighborhoods, it is really difficult to extract anything useful out of a city wide median or average, and that's assuming all things are equal. Add in the value of property improvements and it's just plain impossible. Prices could be going up city wide, or just in nice neighborhoods, the lower priced property could just not be selling at all, quality could be improving, or it could be a mixture of any or all of these. In short: there's no way to tell what the market is doing just by looking at median prices.

Welcome

2007-11-16T16:06:00.000-08:00

So what is this blog all about? Well if you are anything like me, you live in San Francisco, and you love it. You want to raise your kids here. You want to spend your life here. Perhaps most importantly, you want to buy a house here. There's just one little problem: like most San Franciscans, you aren't particularly wealthy. And while you might be able to afford a modest home in this market, you don't neccesarily want to bet your life savings that it will keep it's value and not trap you in a tiny dump for the next ten years of your life or more.
There are plenty of local blogs about fancy houses and nice condos, and this blog may feature the occasional nice place too. But the point of this blog is to focus on affordable housing, or as close as San Francisco gets to it. It's to talk about great deals, and interesting strategies, upcoming neighborhoods, and ways to make it work for people who don't have six figure incomes, and maybe have a kid or two in the mix as well.
The goal here, and it's a lofty one I admit, is to be a blog for the rest of us. I hope you find it worth your time.