Property Values in West Portal and Inner Parkside

Eric Castongia-2655 16th Ave.Property Values in West Portal and Inner Parkside-Third Quarter 2014

The market is great, but maybe not as great as you hope.
This summer was a strange one; strange in that it was more normal. Over the last two years, the market plowed right through summer, overbids, multiple offers and all. This year we still had good market activity, but it slowed down-offer dates came and went, in some cases without offers. My observation is that buyers are tired and sellers are wanting to hit the market at the height. Call me conservative; I suggest cautious optimism in the sale of your home.
• At the end of the third quarter 2014, 13 homes had sold. Of the 13, 11 of them sold for more than asking, 10 of them with multiple offers. Compare that to the second quarter where 11 had sold; nine of them received multiple offers and all 11 sold over asking price. This highlights the importance of pricing. Both of the homes that sold below asking in the third quarter had started too high, not letting the market determine price.
• Of the 13, 38% of them reportedly sold for all cash, compared to 10% in the second quarter. If we look to the first quarter, 30% of the sales were reported as all cash. I am dragging the first quarter back into the comparison to shed some light on what may have happened in the second quarter. Did we see a lull? Buyers felt more emboldened to get financing, than to pay all cash; in the third quarter cash was back.
• The amount of the overbids in the second quarter ranged from a low of $51,000 to a high of $467,000 over asking (which in that case was nearly 28% over the asking price). Note that this home sold for 37% percent over its 2007 sale price. I should further note that the high was the exception, not the rule.
• At the end of the third quarter, all properties that were on the market sold, as opposed to the second quarter, where there were two properties that had not sold. Both had been tenant occupied and one of them was in the foreclosure process. This is significant in that even the overpriced properties sold, so there were outside influences in those two properties that made them less desirable, or salable. Note to sellers, get rid of those problems before you go on the market.
• I have seen several instances where sellers have a higher expectation for the value of their home than the market will bear. It’s an expensive lesson for a seller; those homes usually sell for less than they would have if priced correctly to start with.
• As for property values quarter to quarter, it looks like West Portal proper and Inner Parkside, have seen a 2-4% increase in values. This smaller increase could be a result of less on the market and fewer buyers in the market in the Summer.
• The area I call North of Ulloa (NoLoa), which is Inner Parkside North of Ulloa St., is where the majority of sales in the neighborhood occur. I figure we have seen as much as a 15% increase between the last two quarters. My theory is that market pressure is to thank. Prices in West Portal and Inner Parkside have priced many people out. Even the Sunset is seeing sales of a million dollars or more, so the market is squeezing NoLoa up in value. I expect that rate of appreciation will slow down and fall in line with West Portal and Inner Parkside.
• The marketplace is not seeing every property selling at the same level of frenzy as it once was. The best answer remains for sellers to do everything they can to minimize their homes quirks, get rid of problems if possible and price the home for the market, not for their desired outcome.

Eric Castongia, CRS, BRE No. 01188380, Residential Sales Specialist at Zephyr Real Estate provided the information in this article. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service and Eric’s observations in the marketplace. Eric can be reached by e-mail at, or via mobile phone at (415)307-1700.

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West Portal Real Estate Market 2013

West Portal Real Estate Market goes up for another year

The West Portal/Inner Parkside 2013 Year-End Real Estate Market Update

By Eric Castongia, Zephyr Real Estate

Eric Castongia

This was an interesting year to look back on.  In looking at the analysis I did for 2011 and 2012, it’s amazing how far we’ve come!  In 2011, we had price reductions, withdrawn listings and properties sat on the market.  In February 2012, we roared back to life and we’ve been running ever since, although I felt a pause in the fall.   Even over the holidays this year, we saw properties come on right up to Christmas and then they sold right away.

  • The total number of sales for 2013 was 64, a huge increase from the normal of around 50; that’s a 28 percent jump. 2012 was 50.  Even in a down market, 2011 saw 51 sales because of our consistency and built-in demand.
  • At the close of the fourth quarter of 2013, we had two active, two pending (not yet closed) and 18 sold (closed) properties.  Of the 18 sold, 16 received multiple offers and 16 sold over their asking price.  The amount of over bids ranged from as little as $25,000 to as much as $251,000.
  • Technically, no properties sold under asking, but if you dig a bit deeper, two of the sold properties had been reduced, then sold for over asking.  Another property sold at asking.
  • For a little perspective, at the close of the fourth quarter of 2012, we had 17 sold (closed) properties.  Of the 17 sold, 12 received multiple offers and all 12 of them sold over their asking price.  The amount of over bids ranged from as little as $2,000 to as much as $262,000.
  • There was one short sale this year and it is still pending.  In 2012 there were six.  It seems that property value increases and previous sales have flushed out most of the short sales and foreclosures.
  • There were four ‘failed to sell’ listings for the year; one came back on and is still pending (the short sale mentioned above), so net affect is three; in 2012, we had seven.  Again an indication of an accelerated market.
  • Interestingly, a property that had sold on 17th Ave. in 2008 for $1.3m, sold in the fourth quarter for $1.4m.  That’s a pretty good return considering that three of those nearly five years where in an economic downturn.  The property would have gone down between 2008 and 2011, then recovered between 2011 and 2013.
  • As you may know, my scientific method for establishing value is spreading sold properties from different quarters across my dining room table.  In that way, I can compare apples and apples and avoid median price, which I think is not too useful.
  • By my interpolation, property values went up year over year, but down quarter to quarter.
  • From the third quarter to the fourth, it looks like prices went down as much as three percent; that’s the pause I felt.
  • Year over year, we gained approximately four to eight percent.  That seems like a big spread, but consider this.  The target moves every single quarter.  I compare properties between quarters and the properties I compare change, because I have to find similar properties between quarters.  Since each house and block is different, we have little control in coming up with firm numbers.
  • Interestingly, list prices didn’t seem to change; it was the overbids that did.  Being part of the dotcom mentality, we have to take into account that buyers expect to overbid.  Note that I mentioned above that the minimum overbid was $25,000 in the fourth quarter, in the third it was $2,000.  Price your property near where you think it will sell and you won’t get activity, or a buyer.
  • I expect the usual first quarter bump in prices; there isn’t much inventory, so if you go on the market right now, you’ll likely get a premium.
  • If you read the national news, they expect equilibrium in the real estate market this year; I do not agree for San Francisco.  Our real estate market has always reacted differently and I don’t think this year will be any different.  We are still likely to see short supply and buyers staying the course trying to buy before interest rates go up.

Eric Castongia, Residential Sales Specialist at Zephyr Real Estate provided the information in this article. The content of this article is an interpretation of data from the San Francisco Multiple Listing Service and Eric’s observations in the marketplace.  Eric can be reached by e-mail at, or via mobile phone at (415)307-1700. DRE Lic. No. 01188380

How to look for hazard insurance

Obtaining hazard insurance on property has gotten more difficult, so please get started immediately on securing hazard insurance on your property.  This is because of the extraordinary losses that insurance companies have paid out from disasters and mold claims.  Obtaining insurance for properties that are older, have brick foundations, are mixed use or commercial buildings, or multiple unit buildings can be even more challenging. 
Since lenders require hazard insurance to be in place prior to close of escrow; unknown claims discovered prior to close and after you are in a purchase contract could be frustrating and expensive should you not be able to close escrow until insurance is secured.  While you are in contract, the sellers through their agent, should disclose (or be asked to disclose) any claims on the property and if possible, order a CLUE report from their insurance carrier to disclose any claims that may have been made.  The seller can order one from, or their insurance agent can provide one; we cannot get one on their behalf.

If you are purchasing a condominium, there is a master insurance policy on the complex and this is an issue of which you should not have the same concern as when you are buying the entire property.  You should still consider getting a condominium contents policy, however, to cover the contents in the case of fire, theft, or other disaster.  Be sure to note that you may need an ‘HO-6’ policy that would cover appliances, kitchen cabinets, fixtures and finishes.

When shopping for insurance, make sure you talk to several insurers.  Generally, you will have a better grasp on what are important features in policies by talking to multiple people because you’ll know what features and exclusions each policy have.  Here are some things to consider:

  1. Look for exclusions in coverage.  For example, rental property coverage is much more limited; you will need a specific landlord policy and perhaps a separate liability or umbrella policy.
  2. Earthquake insurance is extra if available.  It is offered by the California Earthquake Authority 30 days after you close escrow.
  3. Look for dollar limitations on claims.  Even if a policy claims to be guaranteed replacement, there are caps on the policy-find out what they are to avoid being under-insured.
  4. Special items of value might have to be scheduled separately; things like antiques, jewelry, computers, or firearms in order to be covered.
  5. If an insurer offers actual cash value, make sure you ask what this means.
  6. Understand the liability portion of your policy and what it covers and does not.  You may need a separate umbrella policy if it is not sufficient.
  7. Look at the deductible on your policy.  By raising it, you may be able to reduce your premiums.
  8. Discounts are generally given when multiple policies (i.e. house and auto) are issued by the same company-check into whether this is possible.
  9. Discounts are also sometimes given when you have smoke detectors, alarm systems, dead-bolt locks, etc…  Also see if group discounts are given.
  10. Many insurers may not insure properties that are not bolted to their foundations, do not have circuit breaking electrical systems, or are on brick foundations; this will limit the available insurers for your property, which may also be more expensive coverage.  For tough to insure properties, this may be a government sponsored plan, such as the California Fair Plan.
  11. Be sure to review your policy limits annually to stay up to date.  Insurance might have some sort of cost of living rider, but it is usually not sufficient to maintain adequate insurance coverage.
  12. Make your home safer and keep up maintenance.  Keep roofs in good repair, take care of items which could lead to a claim such as cracked and heaving sidewalk tripping hazards, consider seismic retrofitting.
  13. Be careful in the claims you make.  Insignificant work may be better taken care of out of your own pocket, rather than risk being canceled by your carrier, or making your property difficult to sell when a new buyer has to get insurance.
  14. For personal property, it would be unusual to have an insurer offer replacement value-be sure and ask.

Items in list above inspired by Realtor Online Magazine, reprinted with permission of the NAR, copyright 2003.  All rights reserved.

Selecting how to hold title to your new property

The form of ownership chosen in your purchase, known as the vesting (holding title), will determine who may sign various documents and future rights of the individuals in the transaction; it can have an effect on one person buying as well as multiple people. You may have already heard some of the terms, joint tenancy, community property, tenants in common, sole ownership, or held in trust.

These rights associated with each type of vesting involve such matters as: real property taxes, income taxes, inheritance and gift taxes, transferability of title, exposure to creditor’s claims and significant probate implications in the event of death.

Before you can close escrow (or get loan documents), you must have selected a method of ownership.  Please get started on that process as soon as you begin the search for property.  Living trusts for instance, can take months to set up, so your preparation is important.

I urge you to speak with your attorney and/or tax advisor as soon as possible for vesting questions.  Your advisor may make recommendations which require partnership agreements, trust documents, wills, or other such documents.  Since these decisions and the accompanying documents may take time to be generated, I urge you to start this process immediately so that they may be accomplished prior to close of escrow.

All cash offers are destroying the real estate market

461-2nd-St-01-682x1024We roared out the real estate slump in a matter of a few months at the beginning of 2012 and it has been an up trajectory ever since. We went from properties taking longer to sell, to a flood of buyers and not enough properties in a very short time frame. Since that time, the lack of available homes to buy has maintained a situation of multiple bids and over asking offers. We have seen this in the Bay Area before, but not nearly so aggressive and without any sense of the ultimate value of a home.

In an effort to do their best at winning, buyers have showed up with trunks full of money; hence the all cash offer. No loan, no appraisal, no problem. All cash offers are sexy and everyone loves it when they can say that a buyer wanted their home so much, ‘they paid all cash!’ This is happening at all price levels; even those homes over $1 million.

So now the logical question you ask, is ‘why is that a problem?’ A buyer with cash legitimately wanted my house. I didn’t want to worry about an appraisal or financing contingency.

My experience has been that there is usually one cash offer in a sea of offers on a property; everyone else needing financing. To give an example, a house is on the market and receives four offers; one all cash, the other three need financing. The lack of inventory and the fact that several of those offers have probably lost in competition before, prices continue to go up in each successive offer in an effort to be more competitive. The all cash offer swoops in, may get a bit of a break in price and gets the home. You can see how a buyer would get tired of losing out, bidding higher and higher every time they find a home that they like well enough to live in and never be successful.

The choice for these three unsuccessful buyers is to; 1) leave the marketplace; 2) lower their price range and expectations (and push buyers out of that lower price range); or 3) leave the area, going into another more forgiving market. The long term affect will be fewer bidders (we are already seeing this happening, as well as offer dates coming and going with no offers), prices will adjust downward and then, I think, the all cash buyers will get something else, lower prices. The competition has been reduced, so prices have to come down.

All this being said, there are legitimate reasons to accept an all cash offer. If they were the highest, or if the condition of the property warrants all cash, then by all means, go for it.

In the spirit of full disclosure, I have counselled sellers to take the all-cash offer when it was a little under the highest offer with financing. We all want the deals to go through with fewer problems, but it is time to challenge that thinking.

It is time for sellers and agents alike to throw a buyer a bone. If they have a strong offer, give them a chance to buy your home with financing and put the all cash buyer in a back up position. The winning buyer will be so thrilled at the chance to get out of the grind, they will likely jump through whatever hoops they have to.

The long term effect will be maintaining a healthy, strong market place in which everyone can participate. By taking this approach, I anticipate that we will maintain the seller’s market for a lot longer and you will still get top dollar for your home.

Property inspections are important

Most of the properties for sale in San Francisco are not new.  With such a large purchase, it is not recommended to buy a property without inspections, even if the property is new.  I feel this is important because an inspector takes an unemotional look at a property and can give you an idea of conditions to watch for that, if they aren’t issues now, could become so in the future.

The most common inspections I recommend are outlined below.  Other inspections may be warranted based on the findings of these primary inspections and on the disclosures provided by the seller. Other inspections may include roofers, furnace contractors, chimney and fireplace maintenance, sewer inspectors, hazardous substance experts, mold inspectors and structural, or soils engineers to name a few.

For my buyers, I provide a few documents to help you select inspectors, such as the Buyers Inspection Advisory, and Zephyr Real Estate Recommendation Regarding Inspections, that highlight the many types of inspections available to you to give you the opportunity to select additional inspections which may be prudent.

You should plan to attend all inspections so that you can see for yourself any problems that might surface.  Your attendance also makes review of written reports much more comprehensive and easier to understand.

The costs of inspections are paid by the buyer.  Inspections usually are conducted in the first 10-15 calendar days of the escrow period. I can provide you referrals, schedule inspections and provide you with average inspections costs.

Structural Pest Control Inspection-A licensed structural pest inspector will examine the property for any evidence of problems such as: termites, dry rot, earth to wood contact, excessive dampness, fungus damage and beetle infestation.  The inspector will provide to you a written report identifying any problems, along with a bid for any corrective work.  This is a critical inspection because this type of damage can be very costly to repair and may require immediate attention. The cost of correcting pest control work is sometimes negotiable.

General Contractor’s Inspection-Among other things, this inspection covers major systems, structural elements, safety features, and code compliance.  Good inspectors will take the time to give you an orientation to the building, including how to operate and care for the furnace, where you will find the shutoff valves for the gas and water lines and where to go if you blow a fuse or trip a circuit breaker.  Accompanying the contractor during the inspection gives you the opportunity to ask questions and to get valuable maintenance tips.  The general contractor’s report will alert you to possible problems but, unlike the structural pest control report, will not include price estimates for any needed corrections.

Underground Storage Tank Inspection-The City of San Francisco requires an owner of real property to make a reasonable effort to locate and remove abandoned underground storage tanks (UST), as they may contain hazardous or environmental waste. Because the owner of record of a piece of property is responsible for any tank found on the property, I strongly recommend you ask a contractor specializing in locating such tanks to inspect your property to avoid your inheriting a tank already on the premises. The contractor will provide an estimate to remove a UST if found, which can be expensive.

Laws affecting the sale of your property

There are numerous codes, statutes and laws governing the transfer of Real Property.  Some are quite easy to handle, while others have implications that can be catastrophic if not handle correctly.  Your real estate professional should assist you understanding and complying with each law.

San Francisco City Requirements

  • Energy & Water Conservation
  • Report of Residential Record
  • Hazardous Waste Disclosure
  • Smoke Detector and Water Heater Ordinance
  • Rent Control Ordinance
  • Underground Storage Tank Disclosure and remediation if necessary
  • Sewer lateral where required

Federal Requirements

  • Foreign Investment in Real Property Tax Act

State Requirements

  • Seismic Hazards Mapping Act
  • Earthquake Safety Disclosure/Hazards Report
  • Real Estate Agency Relationships Disclosure
  • Real Estate Transfer Disclosure
  • Environmental Hazards Disclosure
  • Condominium Disclosures
  • California Real Estate Withholding

Prudent things to do

  • Order a CLUE report to disclose any insurance claims that may have been made
  • Have a pre-sale structural pest inspection performed on the property
  • Consider other pre-sale inspections such as: sewer, furnace, roof and fireplace

Will an insurance claim affect my sale?

Obtaining hazard insurance on property can sometimes be a challenge.  This is because of the extraordinary losses that insurance companies have paid out from disasters and mold claims.

Since lenders require hazard insurance to be in place prior to close of escrow, unknown claims discovered prior to close could be frustrating and/or expensive through a delayed close date, or renegotiating the purchase price should the buyer in contract on your property not be able to close escrow.

Its prudent to order a CLUE (Comprehensive Loss Underwriting Exchange)  report from your insurance carrier to disclose any claims that may have been made on the property over the last five years.  Your insurance agent, for a small fee, can order this document for you, or you can order it yourself online from can obtain one free report a year by signing up on the site, which does require a social security number to order the report.

I am ready to sell my property

The good news is that San Francisco is and has been for a long time, a very desirable place to live.  Supply has historically been short of demand, so prices remain stable in down markets and appreciate in up markets. With equity in property and changes in personal financial ability, many homeowners find it possible to make the next move-either moving up, or accumulating property for retirement.

There are many things to consider in the sale of your property, such as establishing the target market, marketing schedule, and an appropriate list price that will generate maximum exposure to the property.  If you are selling a property to purchase a replacement, timing will be even more important. Then there is the discussion about what repairs, remodeling, or market preparations are needed.

You may need to refinance to pull cash out for a down payment (if that is possible financing wise-that will depend on what is available at the time), or find out what you can afford once you sell. Check out my posting on this site ‘Getting started with financing’

The key to making the marketing and sale of a property go smoothly is when there is planning and preparation.  That means getting your house looking ship-shape and ready for interested buyers to view, and having presale inspection reports and disclosures available for review when marketing begins.

A comprehensive list of the items that should be considered to be accomplished to make your home the most presentable for a prospective buyer can be found in my posting on this site ‘Presenting your Property Checklist’