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SAN FRANCISCO — A wealthy San Francisco couple notched a record nearly half-million-dollar buyout to vacate their luxury apartment of three decades, underscoring the lengths some landlords will go to to get rid of long-term tenants in a city with strict rent control and soaring market rents.

The $475,000 voluntary buyout is considered to be the largest in city history and reflects the high-value of the apartment. The tenants, a couple in their 60s with teenage children, had been paying $12,500 a month recently for a seven-bed, eight-bath apartment. It takes up most of a floor in a century-old building with expansive views of the bay, Golden Gate Bridge and nearby Presidio park. They declined to be named.

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San Francisco has among the strongest tenant protections in the country, which encourages tenants to hang on to apartments as market prices go up. While California has recently adopted rent control and other tenant protections, San Francisco approved its rent control ordinance back in 1979 as a way to alleviate the city’s housing crisis.

That means landlords can only raise rent on some properties a certain amount each year, with the current increase pegged at under 1%. Landlords cannot evict tenants without just cause, such as nonpayment of rent. Owners who want to move into their own single-family home must pay tenants to vacate. The maximum amount tenants in one unit can receive to relocate is $22,000, with an extra $5,000 for households with minor children or seniors 60 and up.

In this case, relocation costs did not apply; the landlord and renters reached a voluntary agreement for them to leave.

Steven Adair MacDonald, the lawyer who represents the couple, said reaction has been divided to a six-figure buyout that’s enough to purchase a home in most parts of the country.

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“Landlord attorneys think it’s an outrage, and on the tenant side, everybody’s excited, they think it’s great,” he said. But MacDonald thinks the landlord is the winner, as he will be able to rent the apartment for $25,000 a month and recoup the buyout amount in just over three years.

“After that, it will be gravy, so it’s a great investment,” said MacDonald.

MacDonald is also suing the landlord, Friedman Properties, on behalf of “fairly well-heeled” tenants in nine other units who have moved out since March, unable to bear the constant noise and dust from ongoing renovations in the building.

Marty Friedman, listed as the company’s authorized agent, did not respond to a phone call requesting comment. His attorney, David Wasserman, did not immediately respond to an email.

RELATED: The Bay Area county where pandemic home sales skyrocketed (and aren’t slowing down)

The Financial Times was first to report the agreement.

More than 300 tenant buyouts were filed with the San Francisco Rent Board in 2020. MacDonald said average buyouts are $50,000, and they are growing given the difference between market rent and length of tenant residency.

San Francisco rents declined during the pandemic, but still remain among the highest in the country. The average rent for a one-bedroom unit is $2,750, according to rental platform Zumper. The median sales price for a home is $1.5 million, according to Redfin.

Tenants groups say that without rent control, poor and working class residents would be driven out of San Francisco, unable to keep up with market rate rents.

Charley Goss, who handles government affairs for the San Francisco Apartment Association, said landlords accept that rent control is a part of doing business in the city. But there are situations where wealthier tenants hang on to a rent-controlled apartment, he said. The association represents about 4,500 landlords.

“Paying a half-million dollars to a wealthy person who’s been keeping a rent-controlled apartment in a city with a housing shortage and an affordability crisis kind of speaks to the way in which our local rent control distorts the market,” he said.

The video in the media player above is from a previous report.

Article source: https://abc7news.com/sf-housing-san-francisco-market-apartments-golden-gate-bridge/10919966/

Having spent the past 15 years immersed — some might say unhealthily — in San Francisco real estate, one conclusion I’ve drawn is that the most important factor in determining the state of the local market is inventory. Supply and demand. Inventory goes up, prices go down. All of the other stuff? Tertiary. Noise. Inventory goes down, prices go up.

For the past 15 years, save for a notable blip between 2008 and 2010, the available supply of homes for sale in San Francisco has hovered around historic levels of scarcity and then, amazingly, become even more scarce. Demand, though, has remained high.

Of course, this is a pretty simple, reductive way of looking at the market, but if you think about it, all the other factors — the tech bros, the earthquakes, and in the past year, the people fleeing The City for calmer climes — that’s the stuff that contributes to inventory fluctuations. It’s all about inventory.

Or is it?

I think it’s fair to say that since the pandemic began, industry experts and civilians alike have been looking for signs of what they felt an inevitable real estate market collapse. Surely in a world ruled by chaos and panic, a world in which potential homebuyers couldn’t even visit a listing in-person, people would simply hunker down and stop buying and selling houses for a while. Early prognosticators saw parallels between 2020 and 2008, when a lesser panic — this one financial — had would-be buyers huddling in corners, wallets clenched in both hands, instead of buying homes.

We know now that that something else happened. Inventory stayed scarce, as predicted, but buyers somehow became even more eager, especially in the Bay Area. Prices soared in San Francisco even as national media simultaneously ran daily stories about the demise of urban life. The buying frenzy seemed to exceed all frenzies that had come before, in part because we over estimated the paralyzing properties of COVID on real estate. People didn’t sit tight; they moved. Often they moved up.

And now, finally, as we edge toward what we hope isn’t a temporary normalcy, inventory has begun to rise. Surely this must mean prices are about to fall.

It’s tempting, for someone who likes staring at real estate numbers, to say that June’s 3.2 percent increase in available San Francisco inventory is an indicator of our return to normalcy, to trends that began in 2018 and 2019. This would point to a market softening, which is what almost everyone wants to hear, but I’m not so sure.

See, “supply” is only half of the most basic economic principle of “supply and demand.” There’s also demand; and even as local inventory rises, demand is rising faster.

According to the always reliable Patrick Carlisle, who’s been crunching local real estate numbers practically since Herb Caen was a boy and now does so for Compass, 60 percent of active listings received offers during Q2 of this year, the highest figure for any quarter dating back to 2016.

New listings are running higher than usual for this time of year (a not-to-be-sneezed-at 25 percent higher than in June 2019), but they were running about 50 percent above 2019 levels last fall and winter, and prices have not only not dropped, they’ve risen 15 percent.

Last winter, the San Francisco market had 11 months’ supply (MSI) of condominium and five months of single-family residence inventory (a measurement of how long it would take to sell the existing inventory of available properties). As of June, the MSI for condos was 3.5; for single family residences it was two, matching previous lows dating back to 2016.

The confounding part is that none of it should make sense. If you believe everything you’ve been reading nationally since last summer, demand should be falling — sharply — in San Francisco and soaring in Austin, Nashville and whatever yet-to-be-named small town in the Pacific Northwest hits the radar next.

And the latest story, of people leaving in 2020 (perhaps creating the weirdly brief collapse in the condo market?) then suddenly returning in 2021 (and maybe creating an unprecedented market for $3 million-plus listings?), doesn’t seem to add up. They left, sold their condos and are now returning and buying $3 million houses?

Last spring, more than one Realtor I know predicted a brief market uptick followed by a long, deep furrow, maybe lasting as long as five years. I’d hate to say that past year has proved them wrong, because what the past year has proven is that we’re swimming in uncharted waters where traditional market indicators may not always be what they seem. A 3.2 percent month-to- month increase in inventory might lead to a buyers’ market, but in unprecedented times like ours, you can’t be too sure.

Larry Rosen is a writer, editor, podcaster and recovering former Realtor. He is a guest columnist and his viewpoint is not necessarily that of the Examiner. The Market Musings real estate column appears every other week.

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Article source: https://www.sfexaminer.com/news-columnists/talking-about-inventory-in-unprecedented-times/

“There’s been a lot of uneducated headlines about ‘new cities’ and things of that nature,” Willow Village spokesperson Adam Alberti told SFGATE. “It’s not that big. It’s not a city; it’s a mixed-use project that connects the existing campus to the neighborhood.”

It’s true that Willow Village — planned to cover 1.6 million square feet at the current site of an industrial warehouse complex — is smaller than your average city, and will not be incorporated, but the site will include a supermarket, a pharmacy, cafes, a 193-room hotel and a “town square.” Surrounding the site will be 1.25 million square-feet of new Facebook office space and 1,729 apartments.

This kind of venture would have been called a “company town” a century ago — i.e. a settlement where all stores and housing are owned by one company, which also serves as the main employer. Those midcentury company towns became a symbol of the overreach of American capitalism. Many of the “utopian” settlements are seen as exploitative and controlling, with residents’ lives at the mercy of the corporation. After their decrease in popularity, and the collapse of the companies that built them, many ended up as all but ghost towns. 

Facebook prefers to refer to their development as a village, complex or neighborhood extension. 

“The ‘company town’ moniker is cute, but the residential units that are being built there will be open to the public,” Alberti said.

“Right now, they’re envisioned as being public,” he added when pressed on if any of the units will be designated for Facebook employees. “That’s not to say Facebook won’t lease some.”

After Menlo Park city officials pushed back during the comment period last year to make housing a priority, Facebook reworked their plans. The latest footprint has reduced office space and increased housing, and will provide both more affordable housing and housing for seniors. Around 320 of the units will be now be affordable homes versus 225 in the original plan.

The village will border East Palo Alto, a city with a largely Latino population and a median household income of $67,000, a per capita income of $27,000 and a poverty rate of 13.5 percent. Though the exact rental cost of those affordable units was not disclosed, the Willow Village spokesperson told SFGATE that they “will meet or exceed the city of Menlo Park’s affordable housing policies.”

“Listening, understanding and delivering the features that our neighbors most want has been central to our process at Willow Village,” said Mike Ghielmetti, president of Signature Development Group, the Oakland developers leading the project with Facebook. “Balancing jobs and housing, delivering the grocery store, helping manage traffic impacts, providing affordable housing, especially for our seniors, these were the priorities that our neighbors and Menlo Park leaders directly asked us to solve.”

The new plans also added a large glass dome housing a “collaborative area” for Facebook workers that leads to a two-acre elevated community park, bearing a striking resemblance to the Salesforce Park in downtown San Francisco or the High Line in New York.

“Raised 30 feet above ground level, the park stretches along an approximately one-quarter-mile long open space overlook with walking and biking trails and landscaping spanning roughly 50 to 80 feet wide,” Facebook says. “It will provide views south over Willow Village and Town Square, north to the wetlands and east towards the bay, and feature children’s play areas, shading canopies, and seating.”

Facebook says the changes, made in response to community concerns, also “reduced traditional office space and number of planned employees onsite by approximately 30 percent.”

“We have always believed that Willow Village will be most successful through significant collaboration with the community,” said John Tenanes, vice president of real estate for Facebook. “Our investment in this process is essential to ensuring that Willow Village will serve the whole community — not just at buildout, but over the long term.”

Facebook is not the first tech company to move into building mini-towns this year. Google recently got approval to develop “Downtown West,” an 80-acre city within a city in downtown San Jose. Meanwhile in Texas, Elon Musk’s SpaceX is buying up property in the remote bayside town of Boca Chica on the Rio Grande, to outrage and allegations of bullying from some longtime residents. 

SAN FRANCISCO, Calif. (KRON) – Zillow economist Nancy Wu says home values in the Bay Area are rising, with more than 2/3 of listed properties selling over the asking price within the span of a week.

She also notes inventory is increasing, with more properties being listed.

“Inventory is up 6% from April as of May, and up 25.6% from last year. But keeping in mind that a year ago, 2020 May, that was when the pandemic was taking full force and inventory was very low as people were taking their homes off the market in the Bay Area.”

Wu says the fact that more properties are hitting the market now could be a good thing for buyers who have been frustrated by constantly being outbid by other people who are willing to go far above the asking price and pay with cash.

“61% of homes sold above their list price in March, and that’s compared to 46% that sold above list price in march 2020. So, a lot of homes in the Bay Area are selling above ask.”

Oakland realtor and president of the bridge association of realtors, Jeffrey Neidleman says bidding wars and the reopening of the economy is leading to a recent decrease in buyers.

“We’re seeing some buyer fatigue for sure.”

A trend he expects may continue for a few more weeks before interest in buying picks up toward the end of summer – into the Fall.

Realtor Jeffrey Neidleman, “open houses are not as busy. we’re seeing, perhaps, less offers coming in on properties.”

Still, Zillow says Bay Area home values are up 3% in the past month.

Article source: https://www.kron4.com/news/real-estate/bay-area-home-values-rising-realtor/

Rents in San Francisco increased 3.2% month-over-month in July, though they’re still down 14% from pre-pandemic levels, according to new data from Apartment List. That puts median rents in San Francisco at $2,341 for a one-bedroom apartment and $2,708 for a two-bedroom. San Francisco’s year-over-year rent growth lags the state average of 5.9%, as well as the national average of 10.3%.

Oakland had only a modest growth in prices in July, inching up just 1.5%, according to Apartment List. The East Bay city is still down 13% compared with March 2020 levels. The area’s other major metro, San Jose, is also down 7% since the pandemic began. 

This means that outside the Bay Area, no other major metropolitan area has rents discounted more than 5% compared with March 2020, according to Apartment List data.

“The Bay Area is now really the only market in the U.S. where rents are still meaningfully discounted compared to pre-pandemic levels,” said Chris Salviati, a housing economist at Apartment List. “Rents in San Francisco are currently 14% below March 2020 levels, but even here things are rebounding rapidly, with an increase of 17% since January wiping out half of the pandemic discount we were seeing in December. If things continue on this trend, it won’t be long before Bay Area rents are right back to where they were before the start of the pandemic.”

While this sounds optimistic for the landlords out there, these new lower prices might be here to stay. Zumper found that rental prices fell in July by 2.5% compared with the previous month and all three of the Bay Area’s primary cities still rank in the top 10 of the largest year-over-year declines. “Not only that, but of the 21 Bay Area cities that Zumper tracked for this report, only one has a median one-bedroom rent that’s positive compared to the previous year,” the report said.

San Francisco also could lose its title as the most expensive city in the nation soon. With New York rents rising more quickly, the median price for a one-bedroom apartment in the two cities only stand apart by $40 — San Francisco sits at $2,720 and NYC sits at $2,680, according to Zumper’s figures.

“If the Delta variant ends up delaying a number of office reopenings in the Bay Area and New York continues to show resilience from the implications of work-from-home trends, you could see New York pass San Francisco as the most expensive market in the country,” said Jeff Andrews, data journalist at Zumper.  “However, New York rent is nearing the level it was at a year ago, while San Francisco is still down, meaning the fundamentals would likely push it past New York again when and if the pandemic gets more under control.”