Are you interesting in living in San Francisco? San Francisco is a great place to live and there are many San Francisco homes for sale. To help us better understand the opportunities in buying a San Francisco home I have interviewed Kelvin Kam who is the Managing Broker at Sequoia Real Estate in San Francisco.
Tell me a little bit about yourself?
“My name is Kelvin Kam and I’m the Managing Broker at Sequoia Real Estate. I began my career as a real estate investor, purchasing close to 50 properties across 7 different states in the mid 2000’s. As the market started to turn, I refocused my energy towards building a real estate company in San Francisco, where I thought the market would be more insulated from the economy’s downturn. I found out that even though home values declined more slowly than in other parts of the country, San Francisco were still vulnerable to market changes. In fact, today, 50% of my business is from investors purchasing homes from the foreclosure market.”
How has the current economy influenced the homes for sale in San Francisco?
“Even though prices have dropped in San Francisco, desirable homes will still receive multiple offers within the first 2 weeks on the market. It’s simple supply and demand. People still want to live here, and comparatively, there aren’t that many homes on the market. There has always been a shortage of homes here, and it’s even more pronounced in the current economy. Here are the reasons why there is a shortage of homes: 1) Many people buy in San Francisco with the intention of keeping the property for many years–to live in, pass on, or as a long-term investment. 2) Homeowners who financially don’t have to sell right now have seen their house decline in value over the last couple of years, and are waiting for a better time to sell. 3) It takes banks at least six months before initiating the foreclosure process for those who can no longer afford to pay their mortgages. 4) And even after the bank forecloses, the banks will sit on their inventory of homes to prevent a flood of homes on the market.”
What is the price range and average square footage for a moderate to upscale San Francisco home for sale?
“In San Francisco, there are a number of districts and the price range will vary depending on the neighborhood. For example, an upscale Richmond home can cost $1.2M. But the same home a few blocks away in the Lake District will easily be over $1.5M. When comparing homes within a specific neighborhood, renovated homes will cost 10-20% more than a home in its original condition. San Francisco homes that are considered “affordable” are priced under $800K and are usually less than 1500 square feet.”
How does a buyer determine what type of San Francisco home would be financially and geographically right for them?
“Financially, a buyer needs to be realistic about what he can afford. Home prices are predominantly determined by neighborhood. So if you can’t afford a certain neighborhood but don’t mind being a few blocks outside of it, you could take money right off the purchase price. Another way to decrease purchase price would be to buy a fixer upper – just make sure you know what you’re getting yourself into by getting inspections and estimates before your final purchase. In regards to the type of home, a potential homeowner basically has three options: a TIC (Tenancy in Common), condo, or single family home. For those not familiar with TIC’s, they are basically a way to buy a property with other parties. For example, two friends could buy a house together and share ownership. In San Francisco, it became pretty common for multi-unit homeowners to list their properties as TICs with each unit having its own listing price. For example, instead of listing a two-unit building for 1.4M, a realtor might list it as a TIC, with each unit priced at $800K. It meant relative affordability for buyers, and a faster sale and possibly higher total sales price for sellers. When the market was inflated, TICs were the last affordable option for those who couldn’t afford homes or condos. Today, TIC’s and condos will be generally less expensive than houses, but require an additional monthly Home Owners Association fee.”
“There are several main geographical considerations for homebuyers in the City. 1) Neighborhood. San Francisco is divided into 85 districts, each with its own unique feel – culturally, historically, and geographically. 2) Weather. The City also has several different microclimates, which can change throughout the day. In the middle of August, the Sunset District by Ocean Beach can be covered in fog, while Potrero Hill is a sunny 72 degrees. 3) Schools. The public school assignment system is currently lottery-based, but that is slated to change to a more district-based approach in the next year; so that can be a very important consideration for families with children. 4) Proximity to public transportation and freeways. Because many people commute within or out of the City for work, access to public transportation or freeways can also lead to a search for a home in a particular part of town. 5) Walk ability. Among other factors, walk ability includes how “walkable” a neighborhood is to parks and recreation, public transit, businesses, schools and workplaces, and how pedestrian and bike-friendly it is. A native realtor can be a fantastic resource to help people sort out their options based on their preferences and budgets.”
What are the advantages and disadvantages of purchasing a San Francisco home?
“I’m biased because my wife and I are native San Franciscans and we will likely never move out of the City; so aside from the usual character, charm, amenities, and natural beauty unique to San Francisco, we have strong family ties to the area that go back for generations. Because of such exorbitant home prices and property taxes, you really have to love living here to buy; but you’ll also know that your home will hold its value and steadily increase over the years. Consistent with high prices, most can afford something much smaller (easily half the size) than a home outside of the City for the same price. Also, in many cases, the homes are attached (that is, they share walls on both sides) versus detached. Lastly, because of smaller lot sizes, backyards are commonly smaller. Despite these disadvantages, home ownership in San Francisco can still be one of your happiest and best investments.”
What advice would you like to leave for someone who is interested in purchasing a San Francisco home?
“Like I said, you really have to love San Francisco to buy here. Once you’re ready to plant roots, it’s important to explore neighborhoods and keep an open mind. Finding your dream home in the City is nearly impossible, but with some flexibility, you can find one you love that is consistent with your preferences and budget. So even if you don’t get to have that grand Victorian in Pacific Heights, the Edwardian TIC in Cow Hollow may be just what you were looking for. Understand that buying a home is a process, and hang in there. Finally, find a realtor who knows San Francisco real estate, who is accessible, and who you feel comfortable with. A good relationship with your realtor can make all the difference. Good luck, and I’ll see you at Open House.”
Thank you Kelvin Kam for the interview. For more information on San Francisco homes for sale you can contact Kelvin Kam at his website www.kelvinkam.com.
