Most of the country is having quite a lot of trouble, but San Francisco has held up. We have a strong diversified work environment and we balanced the budget. All of these things and a good strong tech industry has helped keep us above the fray. One good indicator of home prices is the County Assessors office.

The Assessor Recorder is the department that determines the property tax base. Phil Tang's office has received 1673 requests for lower property taxes based on reduced property values. 810 of those requests did get a lower appraisal by about $137,000. Thats an 11.5% drop in the value of those homes.

Most of the reductions came in the newer developments in SOMA, Potrero, parts of the Mission and Mission Bay. The Schiller index gives us an 12% drop in home prices for San Francisco, corroborating the city Assessor Recorders numbers.

In this environment I have to say that an 11-12% drop in values is somewhat of a relief. Lets hope that San Francisco can keep those losses to low and recoverable numbers.

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Howard Bell

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This is a very good project that has been fully supported by the Russian Hill Neighbors Association, a nonprofit neighborhood organization established in 1981 to encourage friendly association among Russian Hill neighbors and merchants and to respond to neighborhood concerns.

Greening the Broadway Tunnel-West was a $660k DPW project. The City awarded us $325k, but the funds were retracted because of major budget cuts. Some of that money has now been restored.

Greening: ($299k) -- planting twenty-eight trees up the sides of Broadway (just outside of and rising with the tunnel retaining walls), four planter trees on the pedestrian bridge, and fourteen trees in the median strip.

Cable Car Square on Hyde Street ($174k) -- A pedestrian pathway will lead from the SE corner of Broadway and Larkin (starting at Helen Wills Park) to an attractive square at the Hyde Street Cable Car stop. The pathway and square would be demarcated by special paving.

Traditional Ornamental Street Lamps ($187k) -- will help demarcate Broadway as an historic, grand boulevard.

Russina Hill is a beautiful and active neighborhood and I wanted to let readers know these floks exist....besides, the tunnel is really ugly, isnt it?

Donations can be made through PayPal or sent to RHN at the following address:

Judy Junghans,

Treasurer RUSSIAN HILL NEIGHBORS

1819 Polk St. #221

San Francisco, CA 94109

Voice 415-267-0575

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Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

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Everything after this week is old history. Still, it hasnt been all that bad for us.

Dataquick reports that bay area regional home sales had a slight uptick. No doubt due to bargain hunters picking up seemingly deep discounts of 30% or more. The nine-county region saw a total of 7,232 new and resale houses and condos sold last month, down 4.7 percent from 7,586 in July but just 0.9 percent lower than the 7,299 sales a year ago.

An "average" August sees just over 10,000. sales. The bay area median price of a home has dropped almost 32% since last year. The hardest hit being Contra Costa (down42%), Solano (down almost 36%) and Sonoma (down 31%).

San Francisco Home Prices

Dataquick reports that home prices are down almost 12%, from a median of $822,000 to $725,000. Given whats happening to the outer regions, we are not doing that bad. More than anything the credit crunch and the difficulty in getting jumbo loans to finance higher priced homes seems to be the culprit. The biggest reason for the relative health of San Francisco home markets is got to be the reverse commute that is bringing well paid jobs onto San Francisco.

Google, Apple, Ebay and Genetech all offer free round trip commuter buses to bring people than normally would likely live in the South Bay to san Francisco. They are populating the city with good jobs, seemingly untouched by the financial services crises. I cant see Google really hurt by all of this. San Francisco cant escape completely because we are the financial center of the west. We will certainly see job loss but the tech sector can hold us up. In fact, our credit rating as a city just went up! So, keep your fingers crossed...we just might escape this....

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Howard Bell

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Still Solvent After all These Years

Mayor Gavin Newsom today welcomed Moody’s upgraded bond rating for the City and County of San Francisco. According to its most recent ratings, Moody’s upgraded the City’s general obligation bond rating to Aa2 from Aa3 and revised the rating outlook to Stable from Positive. Moody’s also upgraded the City’s various general fund obligations to A1 from A2.

"We are proud that Moody’s has upgraded the City and County of San Francisco’s bond rating," said Mayor Newsom. "This rating is a statement about the strong, fiscal health of San Francisco, but we must remain steadfast in our commitment to financial prudence and sound managerial practices, in order to continue our terrific progress."

According to Moody’s, "Among San Francisco's strengths were an above-average resident socioeconomic profile, a highly diverse and robust revenue base, an exceptionally strong balance sheet at close of fiscal year 2006-2007, and a moderate debt burden with relatively rapid, direct debt retirement.

The ratings agency's upgrade came on the heels of the Mayor’s signing of the city’s $6.5 billion city budget last week, which closed a budget shortfall of $338 million.

This means that we will be able to borrow and fund more programs at less cost. Interresting how san Francisco can do it and the state is busted. This city closed a budget shortfall, I have to hand it to all the reasons why. The mayor, proximity to Berkeley and Stanford and all those Googlers who help keep the bars and restaurants open in times like these.

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Howard Bell

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The national numbers are clouding the fact the the number of foreclosures is actually declining in many parts of the country. "Jay Brinkmann, MBA's chief economist and senior vice president for research and economics. Increases in foreclosures seen in California and Florida overshadow improvements seen in states including Texas, Massachusetts and Maryland, he said." (via MarketWatch.com) Amazingly, California and Florida account for almost 40% of all foreclosures nationwide. If you remove those states you find states where improvement in the declines are starting to show. Maryland showed improvements as well as Michigan and other states.

Heres the Catch

According to the Mortgage Banking Association, its seems that these foreclosure rates are being driven by housing related issues. High prices and unqualified buyers without enough at the margins to withstand a downturn without losing their homes. Now the mortgage problem is working its way through the entire financial services industry. First the banks, then the investement banks and now the insurers. The loss of jobs from these mergers and break ups will be staggering. We could we see another wave of foreclosures due to economic rather than housing related issues. I would think the hardest hit areas would be the large financial centers of the Northeast. I wonder if this will significantly harm Fabled San Francisco. As the financial center of the west, we could expect to see some loss there too. Any thoughts?

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Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

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 With option pays, borrowers have four separate payment choices every single month. Yes one month you can choose to pay interest and principle and another month partial interest, in case you wanted to live above your means. hmmm...how many did that do you think The option arm mortgage adjusts frequently, every few months or even every month, based on the London Interbank Rate (LIBOR) plus a little for the lender

Used as a 30/15 Year Fixed

A payment based on a 30 year amortization table, if made every month, will pay off the mortgage, in 30 years of course. You could treat this as a 15 year mortgage as well. Interest Only Payment The principal balance remains unchanged after the payment is applied.

Negative Amortization

A partial interest payment where part of the interest is deferred and added to the principal balance. This is negative amortization. Your mortgage balance is actually increasing, not being paid down

Here is a chart from Credit Suisse showing us that the increase from the orignal teaser rates are just in front of us. Pay Option Mortgages.

Billions in total Pay Option ARMs outstanding, 60% issued in California reseting in 2010 and 2011.

Another Tsunami

This is the second wave of foreclosures and home auctions that the resets trigger beginnig mid to late 2009 into 2010-2011. I If you have one of these and want some reliable info, go to the Federal reserve board and pick up this pamphlet. The reason why WAMU is on the ropes and why Country Wide failed is because the 2003 - 2004 pay option arm loans are recasting and then going 90 days late. But all you need to know is pay option arm loans have a teaser payment that will last until the loan goes 110%-125% of original value and then the loan recasts to a fully amortizing loan.Im afraid to look...

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Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

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 What do you do with older historic buildings...Well the Ritz Carleton has built eight floors of luxury apartments onto a building that was once the tallest skyscraper west of the Mississippi.

690 Market

A new approach to real estate that has been unfolding at 690 and also at Ghiradelli Square has been fractional ownership. Most of these fractional ownership condos are starting at a million and they are targeting or perhaps creating a new demographic. You can buy 1/12 of this beauty at an asking of only $ 279,000.

Its a beautiful 2 bedroom 2.5 bath living space. The developers have found a niche that targets people who want the amenities of a first rate hotel or spa combined with the right to be there in full tenancy, at least part of the year. The buyer has use for a minimum of 21 days use per year, unlimited space-available per diem days, reciprocal use at other RC Club Resorts. Its a hybrid club/condo and has almost sold out. You can have a a RC club or resort experience in the heart of downtown San Francisco with investment potential. Really an interesting idea.

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Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

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  Inflation Concerns Ease and Rates Drop

30-year fixed-rate mortgage: Averaged 6.52 percent with an average 0.7 point for the week ending July 31, 2008, down from last week when it averaged 6.63 percent. Last year at this time, the 30-year FRM averaged 6.68 percent.

The 15-year fixed-rate mortgage: Averaged 6.07 percent with an average 0.6 point, down from last week when it averaged 6.18 percent. A year ago at this time, the 15-year FRM averaged 6.32 percent.

Five-year Treasury-indexed ARMs: Averaged 6.07 percent this week, with an average 0.6 point, down from last week when it averaged 6.16 percent. A year ago, the 5-year ARM averaged 6.29 percent.

One-year Treasury-indexed ARMs: Averaged 5.27 percent this week with an average 0.6 point, down from last week when it averaged 5.49 percent. At this time last year, the 1-year ARM averaged 5.59 percent.

Commentary

Look at the price declines of oil and gold as well as building materials and you see the kind of inflationary pressures easing necessary for rates to ease. During the recent Fed meeting, rates were held steady and the markets rallied by more than 300 points.

Much of the price built into commodities was speculative and if the slowdown is real we will all see inflationary pressures drop. Oppenheimer's oil analyst thinks that oil could drop below $75 a barrel, the Saudis think that oil should be priced at $80. If we can see an economic slowdown, then the Fed can reduce rates and hopefully get back to the housing crises as the number one priority.

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Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

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Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

  30-year fixed-rate mortgage: Averaged 6.63 percent with an average 0.6 point for the week ending July 24, 2008, up from last week when it averaged 6.26 percent. Last year at this time, the 30-year FRM averaged 6.69 percent.

15-year fixed-rate mortgage: Averaged 6.18 percent with an average 0.6 point, up from last week when it averaged 5.78 percent. A year ago at this time, the 15-year FRM averaged 6.37 percent.

Five-year Treasury-indexed hybrid ARMs: Averaged 6.16 percent this week, with an average 0.7 point, up from last week when it averaged 5.80 percent. A year ago, the 5-year ARM averaged 6.30 percent.

One-year Treasury-indexed ARMs: Averaged 5.49 percent this week with an average 0.5 point, up from last week when it averaged 5.10 percent. At this time last year, the 1-year ARM averaged 5.69 percent.

The spike in rates is attributed to rising inflation. Consumer prices increased year over year 5%. The Fed's priority conclusion is that inflation is far more dangerous than the housing crises. It would love to manage both, but given the choice they will live with foreclosure rather than the long term across the board wealth destruction of high inflation.

Thanks for Reading

Howard Bell

www.yourpropertypath.com

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

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Trade talk for the San Francisco real estate industry.

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A Summary of Rent Board Regs for Sublets and Roommates

The regulations the rent board imposes on owners and managers of property in San Francisco are confusing and can lead to costly mistakes. The rent board has a series of small articles that make quick summary of complex situations. You should always consult an attorney before taking actions, to be sure the law has not changed and to be sure that your action is not putting you in the way of a legal action.

Sublets: If the lease is silent of the issue, then it is generally allowed. Many leases or rental agreements contain a "consent clause," which requires that the landlord approve a new roommate or subtenant.

Get an Application: Generally, you should take an application on each new roommate and run a credit report. If they have been evicted before or they have a history of non payment/late payment, I think you should reject. Be careful to apply the same rules to the roommate that you apply to all new tenants. The rent board will not allow an "unreasonable" withholding of consent to a replacement. A tenant may request the landlord to consent to a new replacement roommate only one time per existing tenant residing in the unit in any 12 month period.

Landlord Increases:  A landlord cannot raise the rent when additional people move into in a unit. There is an exception and a right to petition for a rental increase if an owner can show increased costs due to new roommates. "Master Tenants" If the unit is rent controlled in San Francisco, a tenant may not take on new roomates and charge them more than a proportional share of the rent.

6.14: Section 6.14 provides for an unlimited rent increase on remaining occupants when the last original occupant vacates the unit, as long as the landlord timely served all remaining occupants with a written "6.14 notice. Always issue the new tenant a 6.14 within the first 30-60 days. This will preserve your right to raise rent to market rate when the last "original tenant leaves the unit.

Costa Hawkins: When the last original occupant no longer permanently resides in the unit, the landlord may impose an unlimited rent increase on a lawful subtenant or assignee who did not reside in the unit prior to January 1, 1996.

Exception: A co-tenant, as opposed to a subtenant, is not subject to such a rent increase, regardless of when the co-tenant moved in. A co-tenant is someone who has an oral or written agreement with the landlord, or who has become a tenant by the conduct of the parties such as the landlord's acceptance of rent. This is why you should never accept checks from any person not on the lease. You should also never respond to any maintenance requests or other landlord tenant activities from any person not on the lease. Your behavior can be used to determine whether a roommate is actually a tenant and therefore has all the rights of a tenant.

Evictions of Roommates: A master tenant can evict a roommate without just cause, ONLY if the master tenant has given written notice to the roommate that they are not subject to the just clause rules, prior to the tenancy. Master tenants must comply with state law unlawful detainer procedures in order to evict a subtenant. Only landlords are allowed to evict their tenants. A master tenant is considered a landlord in relation to his or her subtenant.

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Howard Sobel

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