San Francisco Housing Battles

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Let’s begin with Sacramento’s density bonus bill, the California affordable housing law which has been called a developer giveaway by some city officials and San Francisco housing activists. The question is whether this bill will produce sufficient affordable housing and the limits advocated in the bill are what is in question.

The bill allows developers to build larger market-rate projects as long as they include 5 percent or more of affordable housing units in the project (on-site). Because these numbers are insufficient in San Francisco for example, city officials are resisting the bill. Thus far no San Francisco projects have successfully used the state density program.

San Francisco also adopted a resolution in April 2016 to exempt it from the bill because San Francisco represents a California city in which 25% of units built are affordable housing. The bill’s sponsors rejected that resolution.

In San Francisco, the increase in employment and influx of large numbers of people over the last several years have put immense pressure on the housing market and in essence created the housing crisis. The question here is whether these trends are continuing as it appears that the current housing market is softening with many new developments on the market and in the development pipeline.

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How Rising Interest Rates Affect Home Buyers?

Interest Rates have been expected to rise for some time and the Fed has announced that they will rise slowly throughout 2016. Even though, we are still in a low-interest rate environment and will likely continue in it for some time.

 

Overall, rising interest rates will continue to have little effect on buyers. The main effect will be in the amount of down payment home buyers will have to bring to the table. While gradual interest rate rises are unlikely to affect home buyers in substantial ways, knowing that banks continue to have strict and sometimes unforgiving underwriting procedures in place is even more important and can have a bigger impact on what home buyers can actually buy.

 

It is also essential for home sellers to be aware of the current interest rate environment because it will help them to price their home correctly. In addition home sellers benefit from knowledge about the interest rate environment by better understanding the buyer pool.

©SFRE 2017

 

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From Gas Station to Condos

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Land is difficult to find and at a premium in San Francisco and the rest of the Bay Area. In that light it comes as no surprise that a number of gas stations are being redeveloped into condos. This also falls into the ‘highest and best use’ category as the new zoning allows for more density. More units accommodate more people where previously no residents lived, generally in great locations like 998 Harrison, 1198 Valencia and 390 1st Street in San Francisco.

 

Of course, in order to build on those sites a number of hurdles must be cleared, among them the contaminated ground the gas stations are leaving behind. The ground must be remediated. Although that is pricey, labor-intensive and requires extensive reports, developers are keen on developing these lots.  See all current and currently proposed building sites on former gas stations here.

 

With disappearing gas stations, where will consumers fuel up their cars? Or perhaps San Francisco will actually develop a coherent transit policy that addresses this issue.

 

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30 Van Ness

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The site at 30 Van Ness is city property. San Francisco owns this site, which potentially could be developed as residential units or as office units or as a combination of both. Currently city agencies are occupying the building but that arrangement ends in 2019. The City & County of San Francisco brought the site back on the market after a previous offer by Related California, a private developer, was rejected by the Board of Supervisors in 2015.

 

Interestingly, the City & County of San Francisco is not putting an asking price on the site. San Francisco in essence wants to see what offers come in that will include a higher than 20% affordable housing ratio. Developers interested in the site, which sits at the confluence of two major transit lines and roads, will have to calculate risk and reward for any project on the 30 Van Ness site.

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Selling A Property in San Francisco

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You might think that selling a home, a condo, TIC or multi-unit building in San Francisco is quite straightforward, given the high demand for property in San Francisco.  In reality, it takes deep local knowledge of the San Francisco real estate market and its idiosyncrasies.

 

Market knowledge combined with statistical analysis and preparation that includes anything from clean-up to staging to effective marketing etc. often means your best option is to work with a qualified realtor who brings all of these things to the table. Make sure you trust the realtor you work with and make sure to price your property correctly.

 

Selling a home in San Francisco requires preparation, starting with the items mentioned above. Beyond that consider providing a home inspection report, a pest report or both to the prospective buyers. Doing so is part and parcel of your strategy to obtain the highest possible price for the property. Most home buyers in San Francisco are sophisticated and tend to have excellent agents, which means that any defects your property has are likely to come out anyway. It sets a good tone to be upfront and can circumvent a number of otherwise unforeseen disagreements, roadblocks, and negotiations.

 

Last but not least, consider moving out of the home prior to putting it on the market. Doing so will eliminate getting stressed about showings and make your transition easier overall.  For additional tips or to discuss your specific circumstance, feel free to call or e-mail us.
©SFRE 2017

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SoMA Zoning Changes

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The city of San Francisco’s idea is to re-zone or upzone the central portion of the SoMA district in order to accommodate new jobs, and new affordable-rate as well as new market-rate housing.

To fund these changes and growth designs, which are planned around the Central Subway line, San Francisco is seeking some $2 billion in fees from developers. These proposed fees are based on an economic feasibility study done by the Planning Department and Seifel Consulting.

See this page for more details on the plan. Once public comments have been heard and considered, the plan could potentially receive votes as early as this November.

 

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Obama’s Call to Build More Affordable Housing

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The lack of affordable housing ails American cities, including San Francisco and the Bay Area. Word of this has reached the outgoing Obama administration and President Obama recently addressed the issue by calling on communities to stop opposing and resisting new development. The Obama administration even released a housing toolkit to provide concrete strategies to increase housing production and by doing so address income inequality.

 

Obama specifically addressed restrictive zoning laws. While San Francisco has addressed some of the president’s concerns and recommendations, there is definitely work to be done in San Francisco. Affordable housing is sparse in San Francisco; a quick look at the city’s current listings reveal this. More affordable housing in San Francisco is planned but the timeline is long and it may not arrive in time.

 

A word about income inequality as it applies to affordable housing: the term affordable housing refers to housing for working professionals, some of whom make $100,000 salaries yet are still unable to afford to live in a city like San Francisco. The term does not refer to subsidized and public assistance housing. Zillow data reveals that those professionals just referenced are seeking to maintain their quality of life in more affordable places than San Francisco and the Bay Area.

 

©SFRE 2016

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