Noe Valley Voice June 2009

'For Sale' Signs Abound in Noe

By Corrie M. Anders

"For Sale" signs are everywhere in Noe Valley these days. It's hard to travel a block without seeing a real estate sign sprouting in a front yard or nailed to a building.

So what's going on? Isn't Noe the neighborhood where everybody wants to buy, no matter the price?

It's the economy, silly, to butcher a phrase used by former President Bill Clinton.

The swollen inventory of homes for sale this spring--the largest in recent years--is the legacy of last fall's mortgage meltdown and the near collapse of banking and lending systems around the globe.

Still reeling from the recession, and under no pressure that they won't be able to find the homes they want, buyers are cautious. They are taking their time signing contracts with home sellers, and driving hard bargains when they do.

That is not to say that buyers have disappeared from the Noe Valley landscape. They haven't. In fact, real estate agents contend that housing activity picked up a bit during the second half of May, especially for properties with price tags under $1 million or over $2 million.

Howard Reinstein, manager of the Clipper Street office of McGuire Real Estate, cited the example of a fixer-upper in the mid-$900,000 range that attracted nine bidders. "It's a good sign," he said.

Randall Kostick, general manager at Zephyr Real Estate, said he was seeing "large populations of people going through open houses" during weekend tours. "I don't know if they're buying, but they're out looking," he said.

Loans Harder to Get

Nonetheless, there remain a lot of properties on the market. Kostick noted there were 68 Noe Valley homes for sale in April, the last month for which full data was available. That figure was nearly double the 37 homes on the market in April of last year and nearly triple the sparse 25 homes for sale in April of 2007, when properties were snapped up in less than 20 days.

"The number of 'days on market' has almost doubled," said Ben Coleman, owner of Century 21 Hartford Properties.

He said the slow pace of sales was due in part to the difficulty of obtaining loans in Noe Valley, where million-dollar homes are the norm.

"First of all, the bottom fell out of our financial markets, and you couldn't get loans" for high-end homes, Coleman said.

Since the bubble burst, lenders have imposed far tougher standards for so-called "jumbo" loans--those higher than $729,750.

"It's a tougher nut to crack, and you need a higher income," said Coleman of the more stringent loan requirements. "So with job losses and people concerned about where their next meal is going to be and where they're going to live, [buyers] have been reluctant to take a step forward."

Some Properties Still Overpriced

Since Jan. 1, Bay Area high-tech companies have slashed more than 11,000 jobs, and Noe Valley has a large population of residents who work in the industry. So could lost jobs and foreclosures explain the newest crop of real estate signs in Noe Valley?

"I don't think it's a job-loss issue," said Coleman.

Instead, he and other real estate agents classify the stock of homes for sale as:

* Homes that have sat unsold for several months, some of them since last year;

* Properties whose owners have the time to wait in anticipation that the economic situation will improve and reward them with higher prices; and

* Homes that hit the market each spring--a seasonal occurrence. Their owners time their sales so they can move during the summer.

A few of the properties in the first category may be languishing because they are overpriced. A buyer purchased a Duncan Street home in April after it had slumbered on the market for nearly six months. The final price paid was $2.4 million, almost 16 percent below the $2,850,000 asking price.

The 22nd Street home of the late Noe Valley artist Mark Adams has been on the market for a year. The unusual property is a former fire station that had been renovated into a four-bedroom, four-bath home, while keeping the brass fire pole. Its price has recently been reduced from the original $6,375,000 to $5,975,500.

Hope Springs Eternal

As potential homebuyers and the simply curious trooped through an open house on Jersey Street one recent Sunday, Zephyr real estate agent Stefano DeZerega noted that he was seeing more owners who were starting to feel comfortable about selling their homes.

They "have been sitting on the sidelines a little bit, waiting to see what was going to happen. That was last fall and winter when things really slowed down," DeZerega said. "Now I think that some people feel that we've hit bottom, and we're heading up and they can get a good price."

Jamie Howell, office manager at Hill & Company's 24th Street branch, agrees.

"In January and February, even March and April, people tended to shy away from listing in a marketplace that was driven by negative emotions," he said. "I think what we saw was fear of pink slips, a fear of the bear market on Wall Street continuing, of big corporations and Detroit falling apart."

But as confidence in the economy has started to return, he said, "people began to list again."

Two owners who listed their properties in May through Howell's office looked like seasonal sellers. One was the owner of a $549,000 Dolores Street condominium who was relocating to Palm Springs, and the other was an "empty-nest" couple downsizing from their 27th Street home, priced at just under $1.7 million.

"There are some prime opportunities out there," said Coleman, with the typical exuberance of a real estate salesman.