Nothing to do with real estate

The Vancouver Olympics opening ceremony was so Canadian I'm afraid others may not "get it". But I have to say, although many things make me proud to have been born and raised in Canada, listening to kd lang sing Leonard Cohen's Hallelujah gave me goose bumps.  Unfortunately, the idiots at NBC won't allow bloggers to embed the clip of that performance although you can find it here (apologies in advance for the lead-in commercial and the need to install Silverlight)!  YouTube has her equally fine performance from the 2005 Juno awards:

Zillow (Item 2)

A client sent me a link to a property he saw on Zillow he thought would be worth looking at.  But I couldn't find the address in the MLS.  My first thought was maybe it was a private sale but there was nothing in the tax database for this property.  After a little bit more research it turns out the street name in the Zillow listing is completely wrong -- Zillow says "Kearny" but the property is actually on "Kirkham" -- on the opposite side of the city.  And, it sold almost six months ago while Zillow says it's still active.

I know it seems like I'm picking on Zillow today but this is a potential problem for almost all of the web sites purporting to provide current and accurate listing information.  Virtually all of the listing information comes from the local Multiple Listing Service.  Zillow and others take that information on a periodic basis and load it into their own database, massage it, and then present it to the consumer.  Some sites, like Zillow, allow people who claim to be owners or agents to modify property "facts" and to post for sale listings directly to their site.  As far as I can tell there is very little vetting of such information or the identity of the person posting it.

Another reason why getting information directly from the MLS is your best bet for timeliness and accuracy.  Don't get me wrong -- the MLS is not perfect but it does have strong self-correcting mechanisms from the membership and the association which includes imposing fines on the agent/broker if inaccurate information is allowed to remain.

Zillow and Other "Automatic Valuation" Sites (Item 1)

I've always been skeptical of Zillow's home value estimates.  By now most people interested in real estate understand that, at best, Zillow's mechanism for estimating the value of a particular property results in an approximation.  But I think it's worse than that.  I was researching a property for a client this morning.  It's a 1-br/2-ba basic loft condo in SOMA, bank-owned, priced in the mid $400K range.  Zillow says it's worth $100K more than that.

However, a quick search of the MLS shows three sales in the same building within the last six months for similar units (bd, ba, size) in the mid $400K range.  That should put the estimate for this unit at the very low end of what Zillow calls it's "Value Range" which I think should be renamed "Guesstimate Range".  Even a computer program should be able to figure out that recent comparable sales in the same building should be the primary data to use when estimating value.  And there is no recent sales data that would possibly support a value above $600K.

I know that Zillow and all the other "Automatic Valuation" sites have extensive disclaimers such as: "A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal. Use it as a starting point to determine a home's value."  Zillow's own data says that it estimates the final selling price correctly within 10% less than half the time.  It's estimates on three out of ten properties are off by more than 20% compared to the final selling price. 

The problem is that the "starting point" they refer to more often than not is a long and  tedious explanation from your real estate agent about why the estimate should be ignored.

Ellis Act Evictions "Up"

Channel 5 carried a story on Friday (http://cbs5.com/local/north.beach.evictions.2.1427811.html) that included a quote from Supervisor David Chiu:

"We have had a very marked increase in Ellis Act evictions," said David Chiu, the President of the Board of Supervisors who represents North Beach.

Data published by the San Francisco Rent Board in its annual eviction reports (http://www.sfrb.org/index.aspx?page=9) show an almost unbroken decline in Ellis Act evictions since 2005.

Unless Chiu is privy to information not yet published by the Rent Board, he seems to be pursuing legislation to limit property owners from adding garages to their property with the hope that it will curtail a growing trend in Ellis Act evictions that isn't supported by the city's own data.

There seems to be a growing trend in city government to propose legislation based on flimsy, anecdotal or non-existent facts and data and this seems to be another example.

Although I'm in the real estate business, I'm not a landlord or a tenant so I have no personal ax to grind.  No one can help but feel sympathy for the tenants mentioned in the story. But this is one of the consequences of city policy that places the burden of providing subsidized rent for low income and disadvantaged residents on the shoulders of individual landlords and building owners.

As reported elsewhere, some of the residents in the building that was the subject of the channel 5 piece have been there for many decades and for the last 30 years (since rent control was originally enacted) have been the beneficiary of below-market rents. The burden of that subsidy for all that time has fallen on the landlord, not the collective citizens of the City of San Francisco.

These burdens can fall particularly hard on a small building owner/landlord. It's one thing for a large landlord with hundreds of units to be able to sustain the cost of a certain number of below market tenants. It's something entirely different if you own a two or three unit building in which case just one long-term tenant is going to impact you disproportionately compared to the large landlord.

It shouldn't be a surprise to anyone that a long-time landlord and property owner might one day want to sell their property and recoup some of that rent subsidy. In fact, this is one of the usual arguments in favor of rent control -- the property owner will eventually make up for it with the increased value of the property.

If our City deems it appropriate public policy that tenants should be spared the vagaries of a free market approach to rents and that they should be permanently guaranteed a place to live at subsidized rents, the City should find a way to spread that burden in an evenhanded way across the entire population.

Signs of a Recovering Market?

The statistics we report from MLS data in San Francisco shows some interesting and hopeful signs that the overall market is beginning to recover. 

The 4th quarter of 2009 showed an increase in the number of properties shown in four of five categories of properties we survey and all five categories are up substantially compared to the 4th quarter last year (yes, I know, the last quarter of 2008 was a horrible time and you would expect the number of sales to be low but since then sales have risen steadily).

Click here to see the entire report in PDF.

Prices are still down -- in most cases average sales prices for 2009 are where they were in 2003/2004.

Click here to see the larger version.

So it seems that like much of the rest of the economy, there are tentative signs of recovery but it's likely to be a long, slow process.  Which is probably a good thing overall when it comes to real estate.

A "Gift" from the MTA?

Despite all the recent hoopla over the proposed plan to extend parking meter hours, we seem to be the beneficiaries of a gift from the SF MTA – meters along our block of Market St. now allow up to two hours of parking. I don’t want to talk about it too loudly because … but at least you can now park on the street without having to run out to feed the meter every 55 minutes.

Waiting Periods for Re-establishing Credit

Here's some information from our mortgage partner, Prospect Mortgage, on waiting times imposed by Fannie Mae for approval of mortgages for people who have had bankruptcies, foreclosures etc.:

FNMA- Waiting Periods for Derogatory tradelines; BK's, Foreclosures, Deed in Lieu, Pre-Foreclosure

• Bankruptcy (Chapter 7 or Chapter 11)

A four-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action. Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit, measured from the discharge or dismissal date of the bankruptcy action.

• Bankruptcy (Chapter 13)

A distinction is made between Chapter 13 bankruptcies that were discharged and those that were dismissed. The time period required to re-establish credit for Chapter 13 bankruptcy actions is measured as follows: This policy recognizes that borrowers have reestablished credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a two-year time period to elapse. A borrower who was unable to complete the Chapter 13 plan and received a dismissal will be held to a four year time period for reestablishing credit. Exceptions for Extenuating Circumstances: No exceptions are permitted to the two-year time period after a Chapter 13 discharge.

• Multiple Bankruptcy Filings

For a borrower with more than one bankruptcy filing within the past seven years, a five-year period is required to re-establish credit, measured from the most recent dismissal or discharge date. Note: The presence of multiple bankruptcies in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default. Exceptions for Extenuating Circumstances: A three-year time period is required to re-establish credit, measured from the most recent discharge or dismissal date. The most recent bankruptcy filing must have been the result of extenuating circumstances.

• Foreclosure

A five-year period is required to re-establish credit, measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower. Additional requirements apply after five ears up to seven years following the completion date: Exceptions for Extenuating Circumstances: A three-year period is required to re-establish credit, measured from the completion date of the foreclosure action. The additional requirements listed above apply after three years and up to seven years following the completion date, except the minimum credit score of 680 is not required. • two years from the discharge date, or • four years from the dismissal date. • The purchase of a principal residence is permitted with a minimum 10% down payment and minimum representative credit score of 680. • The purchase of a second home or investment property is not permitted. • Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time. • Cash-out refinances are not permitted for any occupancy type.

• Deed in Lieu of Foreclosure

A four-year period is required to re-establish credit, measured from the completion date (the date the deed-inlieu was executed). Additional requirements that apply after four years and up to seven years following the completion date: Exceptions for Extenuating Circumstances: A two-year period is required to re-establish credit, measured from the completion date. The additional requirements listed above apply after two years and up to seven years following the completion date.

• Preforeclosure Sale

A two-year period is required to re-establish credit, measured from the completion date. Exceptions for Extenuating Circumstances: None.

Brian Fisher
Northwest Regional Underwriting Manager
818-854-1454 blackberry 818-661-1712 fax