Today’s Chronicle reports a rise in foreclosure activity within San Francisco’s more expensive communities. “Bleeding” headline aside, it’s actually a good article BUT you gotta read the whole thing. If you only read the headline or first paragraph, you may miss the point and assume that the San Francisco real estate market is in worse distress that it is.
Indulge me this analogy.
Recently, my friend caught a nasty cold and cough. (You know that one that’s going around!) Three weeks and mountains of medicine later, she finally recovered. I caught a similar illness and was better in about a week.
I like to joke that I have a heartier constitution. (Must be the Texan in me!) It’s not that I’m immune to illness, it’s that when I do fall prey to a bug, I tend to get less sick and recover more quickly….
Kind of like the San Francisco real estate market. It’s not that we don’t have distressed property here because we do have short sales, REOs, and foreclosures in almost every neighborhood. Our SF housing market has undergone a correction averaging about a 18-20% home price decline from the peak. There’s no doubt about that.
(In 2010, my team and I successfully negotiated multiple short sales & bank foreclosures for both sellers and buyers throughout San Francisco (Sunset, Soma or South of Market, NoPa or North Panhandle, etc), San Mateo County and Oakland)
And yet, our real estate market downturn in San Francisco has been shorter and MUCH less severe than the outer-lying Bay Area.
Please read the entire SFGate San Francisco Chronicle article on the rise in San Francisco foreclosures (alternate URL), by Carolyn Said, as it is quite interesting. Just in case you, like me, are just so busy doing fabulous things, here are my cliff notes.
“San Francisco, once a Teflon-coated real estate market, is experiencing more fallout as the housing downturn and foreclosure crisis grind into their fourth year. Despite enjoying one of the lowest foreclosure rates in California, San Francisco’s incidence of home repossessions and late notices is spreading throughout the city, hitting Pacific Heights mansions as well as Bayview fixers.”
Foreclosures rose in San Francisco in 2010, while they declined in most other Bay Area counties. The lag is largely due to its demographics, experts said.
While unsustainable sub-prime loans were the culprit behind the foreclosure tsunami in areas such as Antioch and Vallejo, they weren’t a big factor in pricey San Francisco. Instead, it’s the economy that’s hurting the city’s market now.
This is a delayed reaction relative to the rest of California,” said Andrew LePage, an analyst with real estate service MDA DataQuick. “The overall economic downturn hit a lot of people, particularly people of means such as those in San Francisco, relatively late in the cycle — and they had the money to ride out problems for a while. There was some risky (mortgage) funding in San Francisco that may have gotten people in trouble, but the subprime and other exotic loans were more on the other side of the bay where prices were more affordable.”
“In 2008, 58 percent of foreclosures in San Francisco were in Bayview-Hunters Point and surrounding areas,” said Adam Koval, editor in chief of real estate blog SocketSite. com. “Flash-forward to 2011 and it’s closer to 39 percent of foreclosure activity there. The rest is going upmarket, expanding out to other areas of San Francisco. The same is true of notices of default.”
Of course, other counties have a much higher rate of foreclosure. In San Francisco, the 709 foreclosures represented just 0.052 percent of all households, DataQuick said, while in Contra Costa the foreclosure rate was 2.3 percent. In the nine-county Bay Area, 1.78 percent of all households went through bank repossession in 2010.
Still, more people are falling behind on their mortgage payments. Some 1,885 San Francisco households received notices of default, the first step in the foreclosure process, in 2010, DataQuick said. That was down from 2009’s record number (Yes, SFHotlist believes that the housing recovery began last year.), but still more than double the historic average.