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Housing prices have been growing less and less affordable across the U.S., and no city is a more fitting poster child for that trend than San Francisco.

Paragon Real Estate, a San Francisco real estate company, examined the local multiple listing service and calculated that the median housing price in the city has risen $205,000 since the end of 2017, the highest six-month gain in at least a quarter century.

Paragon said that a surge in both the asking prices for homes and the bids being placed by buyers, coupled with a multi-year decline in the number of homes listed for sale, have contributed to the surge in prices. Housing activists in the Bay Area have grown more vocal in calling for more available housing in the region.

On a percentage basis, the median home price in San Francisco rose 14.5% over the past year to $1.6 million. That’s more than double the 7.2% rise in 2017, but not as high as the 26.1% rise in housing prices in 2000, during the peak of the dot-com bubble. It’s also below the 20% rise in 2007, just before the housing market crashed.

Homebuyers who can’t afford such inflationary housing prices might consider buying a condo. The median price for San Francisco condos rose by $71,000 in the first half of 2018, a comparative bargain.

San Francisco may offer an extreme example of rising home prices, but it also reflects a broader trend in the U.S. The average home price in U.S. stands at around $260,000, after having risen for the past six years, Paragon said.

There are signs that the affordable-housing problems that many residents in San Francisco struggle with are recurring in other cities, albeit at a smaller scale. Home prices across the U.S. are by some measures at their least affordable levels since the financial crisis.

In May, U.S. housing prices rose 7.1% year-over-year, CoreLogic said. A separate survey published this week of property-market analysts showed that they expect prices in 20 of the largest cities to rise another 5.7% this year, followed by a 4.3% rise in 2019 and a 3.6% rise in 2020. Those increases are equal to about double the current inflation rate.

Article source: http://fortune.com/2018/07/06/san-francisco-real-estate-price-rising-record/

A sophisticated scam targeting homebuyers robbed a couple of their life savings, and real estate experts say everyone shopping for a place to live is at risk.

NBC Bay Area spoke with multiple homebuyers who fell victim to the same scheme: hackers, intercepting emails and spoofing agents, conned them into sending their down payments to the thieves’ bank accounts. By the time the victim realizes what has happened, the money — and the crooks — are long gone.

Among the victims is Cindy Bernal. The San Jose grandmother told us she has had enough of the cost of living in the San Francisco Bay Area.

“Our rent is currently $1,500,” she said. “They’re going to raise it up, double.”

Cindy’s daughter and grandchildren live in Ohio, where housing is substantially cheaper. She found an ideal new home for herself and her husband: a three-bedroom, 980-square-foot house south of Cleveland. The asking price: about $28,000. Not enough for even a down payment in much of Northern California, but typical of the rural Midwest.

“I put in an offer the same day with the agent, and that was it,” Cindy said.

To Cindy’s delight, her offer of $25,400 was accepted. She decided to pay cash — one payment, with no mortgage — and it came from her retirement savings.

“I was just happy when I got the house,” Cindy said.

On May 10, Cindy says she got an email telling her where to wire the down payment funds. She followed the instructions, transferring the $25,400 payment to an account at a bank in Mesquite.

Four days later, Cindy’s life turned upside-down.

Her real estate agent called early the morning of May 14 with alarming news: she needed to head to her bank, immediately.

“I said, ‘What’s going on?’” Cindy told us. “He goes, ‘It was a fraudulent account. The other Realtor’s account was hacked. You need to run to the bank now, and stop the transaction.’ I just ran out the door and ran to the bank and turned off the transaction, and I thought it was done from there.”

Her ordeal was far from over. After days of back-and-forth with her bank in California and the bank in Mesquite, Cindy learned the funds were drained from the fraudsters’ account. Less than $250 remained of her life savings.

“It’s gone,” Cindy said, between tears. “I have $244.39 out of $25,340. And that’s all I had. That was my retirement fund. I pulled out all my money.”

Cindy is not alone. Dave Walsh, Treasurer for the California Association of Realtors, says the problem of real estate wire fraud is growing.

“It is a horrible situation that’s going on statewide,” Walsh said. “It’s going on nationally.”

Walsh says hackers are now targeting virtually every homebuyer, seller, and agent — in an effort to capture the huge sums of money trading hands.

“When you realize that’s the depth of the thieves’ efforts to get into — to breach these data firewalls — it’s endless,” Walsh said. “There’s bots everywhere now, and they’re simply attacking any server, including the real estate professionals’ servers, for any kind of data they can get.”

Using information they get from those private servers, scammers then fabricate documents that trick mortgage brokers, title agents, real estate agents, and consumers into wiring money to the wrong place.

The California Association of Realtors says home buyers need to protect themselves: 

Always call and verify everything, before sending any money.

Call your agent, the seller’s agent, the escrow officer, and the title company — everyone!

Double-check account names and numbers.

Call everyone again immediately after the transfer.

“If you just simply trust the wiring systems based upon getting a single call or a single email, there could be problems,” Walsh said.

As for Cindy, she hit a wall with banks, brokers, and even police. That’s when she turned to NBC Bay Area.

We contacted both Cindy’s real estate agent and the house seller’s agent. Both firms blamed each other.

The seller’s agent, Jeffrey First of First Realty, insisted he sent the proper financial instructions to Cindy’s agent before Cindy received the bogus instructions.

By email, First told NBC Bay Area:

The selling agent Brent Karlen received my email in the morning and did not forward that to his client. He opened this email on his cell phone, I believe that is where the breach occurred. He did forward the fraudulent email he later received later in the afternoon.

Cindy’s agent, Brent Karlen of RE/MAX Edge Realty, told Cindy that First was to blame. An attorney representing RE/MAX Edge Realty told NBC Bay Area by email:

Our preliminary investigation indicates that the fraudulent wire instructions were initiated by an unknown third party who was able to hack the email account of the listing agent, Jeff First of First Realty, and send a fraudulent email from this account to Brent Karlen. As the email came from Mr. First’s correct email address, Mr. Karlen had no reason to suspect that the email was not legitimate. 

NBC Bay Area asked both agencies what they will do to get Cindy her money back. Jeffrey First did not offer an answer. The attorney for RE/MAX Edge Realty provided this statement:

RE/MAX Edge has fully cooperated with Ms. Bernal and the authorities and will continue to provide any assistance it can as the investigation continues with the goal of helping Ms. Bernal be made whole by the party or parties responsible for the fraud.

Article source: https://www.nbcdfw.com/news/local/Homebuyers-Beware-Hackers-Targeting-Real-Estate-Transactions-487437611.html

If you thought you could never afford to buy a home in San Francisco, this could be your chance.

The city is holding a lottery for up to $375,000 that you can use toward a down payment on a house or condominium.

RELATED: Expert discusses using cryptocurrency to buy Bay Area real estate

It’s open to low and middle-income buyers. You do not have to live in San Francisco to enter, but you have to buy a home in the city.

The deadline to apply is July 31 and you have to attend a homebuyers workshop.

Click here for more information.

Article source: http://abc7news.com/realestate/san-francisco-lottery-could-help-you-buy-a-home/3711475/

Bay Area rents have yet to hit a ceiling, fueling the debate over a November ballot measure to allow price controls on more California properties.

Rents increased in June across the region, led by a 2.5 percent median increase in Oakland from the same time last year, a 1.7 percent increase in San Jose and 1 percent growth in San Francisco, according to a study by Apartment List released this week.

Rents across the state are up 2.1 percent from last year, continuing a trend that makes California home to some of the most expensive communities for renters.

Housing affordability is “absolutely a major issue in the Bay Area,” said Chris Salviati, housing economist for Apartment List. He noted that new construction has not met the growing demand for housing in the region. “Overall, we need to increase the supply of all housing.”

Voters will consider lifting restrictions on rent control by local cities — a  law known as Costa Hawkins. The law generally bans cities from imposing controls on single family homes, condominiums and new construction, depending on when a city enacted rent control. Cities are barred from capping rents on properties built after 1995, and cannot limit rent hikes on empty units.

The ballot proposal would allow cities to apply rent control to new apartment buildings.

Renter rights advocates say the measure would help stabilize the runaway housing market, and prevent families and middle class workers from being forced out of their homes.

“The most critical thing that rent control can do is drastically slow down displacement,” said Stephen Barton, former director of the City of Berkeley’s housing department and adviser on the campaign to repeal Costa Hawkins.

Barton believes cities will be able to balance the needs of property owners and renters with changes to Costa Hawkins.

Property owners are fighting the repeal of Costa Hawkins, saying it will hurt their businesses, discourage new construction and make affordable housing even more scarce.

The California Apartment Association has been lining up allies to defeat the measure. The State Building and Construction Trades Council of California last week announced it opposed the proposition, joining the state NAACP, Chamber of Commerce and several veterans organizations.

Rents have risen steadily since 2011 across the country, although the trend is more pronounced in the Bay Area.

The median rent in June for a two-bedroom apartment was $2,610 in San Jose, $2,200 in Oakland, and $3,070 in San Francisco, according to Apartment List. San Francisco and San Jose were the two priciest major cities in the country for renters, followed by New York and Oakland.

Several Silicon Valley cities remain red-hot. The median price for a two bedroom in Sunnyvale was $2,910, an increase of 4.4 percent. The price for a similar apartment in Santa Clara went up 4.8 percent to $2,760, according to Apartment List.

In the East Bay, the median price in June for a two bedroom in Fremont was $3,750, a 5.7 percent jump from the previous year, while a two bedroom in Richmond went for $2,690, a 3.7 percent increase.

Monthly prices have gone up year-over-year in San Jose for the last 15 months, Salviati said. He added that growing wages have blunted some of the impact of the higher prices.

Article source: https://www.mercurynews.com/2018/07/03/steady-rise-in-rents-fuels-debate-over-november-referendum/

The flurry of value-add apartment investing in recent years has sparked a countermove by public and private entities that are pooling their capital and stepping in to slow the erosion of the country’s low-income housing stock. Added to that, new private equity funds are popping up to take advantage of tax breaks created by the Tax Cuts and Jobs Act of 2017 aimed at incentivizing investment in designated low income Opportunity Zones. The combined result is a surge in capital flowing into social impact investment funds.

The shrinking supply of unsubsidized affordable housing in the Minneapolis metro was one of the main drivers behind the launch of the Naturally Occurring Affordable Housing (NOAH) Impact Fund last year. The fund, which is a subsidiary of the Greater Minnesota Housing Fund, kicked off with $25 million in funding, with plans to continue growing with future funding phases. Some of the participating investors include the McKnight Foundation, as well as Bremer Bank, Sunrise Banks and Western Bank, which is a division of American National Bank.

“The funding community, including the private banking world, absolutely understands why this housing stock is important to our economy and important to our social outcomes in the region,” says Rachel Robinson, NOAH fund manager.

Accessing unsubsidized affordable housing is a growing challenge in the Minneapolis metro where market rate vacancies at 2.2 percent have unleashed a wave of value-add investors. The regional fund provides low cost equity financing to public or private investment groups who are buying non-subsidized affordable housing and commit to preserving affordable rent levels. Generally, the fund is targeting class-B and class-C apartments with 50-plus units in the Minneapolis-St. Paul metro that rent for about 60 percent of area income.

Although investors are receiving a return on investment, they all are making the capital available with the expectation that there will be social impact, says Robinson. Overall, the fund provides 10-year equity financing at a hurdle return of 6.5 percent. “We are really passing through our cost of funds to developers,” she notes. Since the fund was launched, it has helped to preserve 429 units at six properties in three separate transactions.

Preserving low-income housing stock

Both national and regional funds are emerging to preserve low-income and non-subsidized affordable housing across the country. In December, the Low Income Investment Fund (LIIF), National Affordable Housing Trust (NAHT) and Morgan Stanley launched a new $100 million initiative aimed at protecting affordable housing for low income families across the country. The initial pilot made $30 million immediately available to non-profit affordable housing providers through the Fund to Preserve Affordable Communities (FPAC).

“The main goal for us is to ensure long-term affordability and to preserve these properties and to enable non-profit developers to continue doing the work they had been doing,” says Melissa Garcia, director of national lending initiatives at LIIF. The FPAC funding helps non-profit housing developers fill a gap in the capital stack and raise leverage when acquiring properties. The partnership with Morgan Stanley gives FPAC access to bank interest rates and a lower blended capital cost. For example, FPAC recently provided a one-year bridge loan on a project at a rate of 5.9 percent.

To date, FPAC has closed on two loans, including a $7.5 million loan to help finance the acquisition of a 306-unit property in the San Francisco Bay Area, and a $9.5 million loan made to help finance the acquisition of a 120-unit property in Princess Anne, Md. As LIIF works to expand the fund, the group is talking to other potential investors, including banks that could count those efforts towards fulfilling their Community Reinvestment Act (CRA) requirements. 

LIIF has also been involved in the creation of another regional fund in the San Francisco Bay area in conjunction with the Metropolitan Transportation Commission (MTC) that will target the preservation of currently unrestricted affordable housing. The MTC recently approved $10 million to seed the Bay Area Preservation Pilot, which is expected to launch later this year.

“Seeing a transit authority commit money towards affordable housing is indicative of how prevalent this affordable housing crisis has become in the public’s mind,” notes Garcia. “This is something that needs to be addressed by more than just the affordable housing sector. We’re pleased to see a range of stakeholders step up to help solve this problem.”

Tax Act fuels impact investing

Private capital is also pouring into new investment funds that have been created to reap the tax benefits of investing in low-income “Opportunity Zones” that have been certified by the U.S. Department of Treasury. “The big incentive for investors is the ability to defer capital gains and also have tax elimination on any investment that they make into an Opportunity Zone,” says Derek Uldricks, president of Virtua Capital Management, which provides capital formation functions and investor processing for funds sponsored by Virtua Partners.

Specifically, investors can defer capital gains on the sale of any type of asset—whether it is real estate, art or stock, by rolling proceeds into an Opportunity Zone investment. They receive a tax reduction of up to 15 percent on current capital gains taxes and no capital gains taxes on appreciation if the investment is held for 10 years.

Virtua Partners was one of the first funds out of the gate with the introduction of its Opportunity Zone Fund I that launched in June. The fund has a target capital raise of $200 million, which it is raising from primarily accredited investors, high-net-worth individuals, family offices and other qualified purchasers. In order to qualify for the tax advantages, investors have to “substantially improve” properties or businesses they are investing in within those designated zones. Virtua plans to achieve that by focusing specifically on new development projects in rental apartments, limited-service hotels and single-family rentals. Specifically, the fund is developing more moderately priced apartments that will serve white collar or blue-collar workers versus high-priced luxury apartments.

The core mandate for fund managers at Virtua is to maximize returns for investors, while minimizing risks, notes Uldricks. “There also is some impact to what we’re doing. Some of our projects would have had a harder time developing if it were not for our program,” he says. “Effectively, what you’re doing is providing a tax subsidy for investors, which brings down the overall cost of capital.”

The tax incentives will help spur more capital to projects that perhaps were not feasible in the past, which will produce a strong economic and social impact in these Opportunity Zones, he adds.

Article source: http://www.nreionline.com/finance-investment/more-real-estate-funds-aim-preserve-affordable-housing-boost-economic-development