In order to buy a house you have to get your "house " in order.
There are lots of purchases that are highly prone to impulse buying: shoes on sale, puppies at the pound, and carrot cupcakes with cream cheese buttercream frosting come instantly to mind.
But houses? Not so much. Savvy, regret-free home buying, can take weeks or months of financial and lifestyle research and planning. If you want 2011 to be the year you become a homeowner, here are 5 things you should be doing, as we speak.
1. Minimize your holiday spending and save your cash. Instead of using the holiday sales to acquire a new winter wardrobe of cashmere sweaters, hold the discretionary spending down so you can give yourself the gift of homeownership! If you are serious about buying a home next year, don't run up additional credit card debt on gifts this year. Instead, make homemade cards or write holiday letters this year for everyone except the kiddos. And even for the kids, consider scaling back on the stuff, spending more of your time with them than your money, and getting started now saving toward your home purchase.
Kick start your 2011 home buying resolution by starting a "Home" savings account at an high-interest, online bank (the discipline-boosting goal is a bank that isn't super easy to transfer funds out of when you run low on cash), and set up an automatic deposit into it every payday. To get specific about your savings goal, if you're cash-flush, obviously a 20% down payment will get you top notch interest rates and provide you with the maximum ability to manage your monthly payments. If you're going to be more of a bootstrapping buyer, an FHA loan might be right up your alley - they offer a down payment of 3.5% of the purchase price.
All buyers should plan to have at least 3 percent of the purchase price saved up for closing costs, even if you want the seller to chip in. The lower-priced the home you want to buy, the more percentage points you should be willing to chip in for closing costs. It's easy for closing costs on an $600,000.00 FHA loan to run as high as $18,000 or more, considering transfer taxes, inspections, appraisals and mortgage insurance fees. So, even the scrappiest buyer should have a savings target somewhere around 6.5% of their target home's price. To buy a $700,000 home, for example, that would mean a savings target of around $45,000.
Ask me to help you clarify realistic "cash to close" expectations and savings targets for buying in San Francisco.
2. Research financing, areas homes, prices, agents and online. Smart home buying takes a lot of research and knowledge-gathering. Since most buyers find it much harder to qualify for a mortgage than it is to find a home you'd love to live in, start with studying up on home financing and what it will take for you to get a home loan (note: FHA loans are preferred by the average homebuyer on today's market who has less than a 10% down payment, so start your research there).
Also, start to develop a feel for home prices in a what-you-get-for-your-money type way, and start narrowing down the home styles and even neighborhoods that might fit your aesthetic preferences and lifestyle. If you're one of those rare buyers-to-be who is not already obsessively house hunting, hop on www.zephyrsf.com and start regularly checking out homes and neighborhoods, making sure to take advantage of the neighborhood ratings and reviews feature, which empowers you to surface what other folks think and say about an area.
3. Rehab your credit, if you need to. Go to AnnualCreditReport.com and check out your credit reports - from all 3 bureaus - for free. (Note - these will not give you your credit score for free - that costs extra, but it will give you the actual detailed credit reports.) Audit them for errors and do the work of disputing inaccuracies to have them corrected. Pay particular attention to: accounts that are not yours/you never opened, derogatory information that should have "aged off" your report by now (i.e., 7 years for late payments, 10 for bankruptcies) and balances or credit limits that are inaccurate (i.e., your credit card balance is listed at $2500, but you actually only owe $250.) These are the errors most likely to foul up your financing, so follow the instructions each bureau provides to correct them, stat. While you're at it, don't close any accounts, even if you are able to pay some down or off. Doing that
could actually make your credit score worse
4. Run your numbers. In the past, some overextended homeowners complained that they felt pushed into a mortgage they couldn't afford. Pundits blamed that on the real estate and mortgage industry, but I have witnessed firsthand many a homebuyer push themselves or their spouses into buying too expensive of a home. Eliminate this issue entirely by doing this - run your own numbers, before you ever even talk to a salesperson or start looking at homes beyond your means. (I assure you, once you see the million dollar home you think you can afford, the $250,000 home you can actually afford will be underwhelming.)
Get your monthly finances in order, and get a clear read on how much your monthly bills are - outside of housing. Decide how much you can afford to spend every month for housing, when you buy your home. Get clear on exactly how much cash you plan to have at hand to put into your transaction up front. When, in the next step, you begin working with a mortgage broker, you'll want to share these numbers with them, early on in your conversation, to empower them to tell you what home price you can afford - not based on their rubrics, but based on what you say you want to spend every month and what you want to put down.
5. Talk to a real estate and mortgage broker (1 of each). I am a Real Estate Broker with over eleven years experience helping buyers just like you. I can refer you to a couple of mortgage brokers and a mortgage banker that are trustworthy and will work hard for you. Ask your questions freely, remembering there are no stupid questions, and gauge the response time and the thoroughness of their answer, and that they communicate to you in a language you understand. After you have one of them pull your credit report you might want to go over with them any advice they may have about improving your score, what the rates you qualify for and what price range. Ask them how long it will take them to produce a pre-approval letter once you find a property you want to make an offer on.
Drop me an email, letting me know that you'd like to work on putting an action plan together for buying a home next year, and would like to talk with me about what action steps need to go on the list. Ask me to brief you on the timeline of a transaction in our market, and to point out for you things like when along the process you'll need to bring money in, when you'll need to miss work and come into their office or the closing office. I offer conveniences like digital document signing. Generally the local standard practices about which buyers like you will need to know. Depending on your target home purchase timeline, I might even want you to take a spin with me and look at a few properties to reality-check your expectations or narrow down a broad wish list and for us to get to know one another better.
I look forward to hearing from you in the New Year!
Thursday, December 9, 2010
Friday, November 12, 2010
Hayes Valley Land sales hint at real estate upturn
Robert Selna, SF Chronicle, Friday, November 5, 2010
A developer has agreed to pay several million dollars for property inherited by the city of San Francisco when the Central Freeway came down, suggesting the area's real estate is heating up again following a recessionary slump.
The two parcels sit between Octavia Boulevard and Gough Street, one on Hayes Street, the other two blocks north. As part of a city auction Oct. 26, the developer paid $5 million for one 17,000-square-foot plot and $3 million for another that is 11,000 square feet - more than the minimum bids of $4.4 million and $2.95 million, respectively, set by the city.
According to city officials, the buyer is DM Development. The company could not be reached for comment, but it is widely believed that it plans to build housing on the land.
The two lots are among 22 parcels that once lined the streets along the double-decker freeway, which began to be torn down in 1992 after being severely damaged in the Loma Prieta earthquake. Since 2002, the city has auctioned or attempted to sell the land, most of which is expected to be developed into housing units above retail space.
The auction results last week and strong sales at a new 31-unit condominium nearby have encouraged the city to auction three more parcels in the coming months. Once those are sold, the city will have nearly completed the distribution of the land.
The properties are an integral part of a neighborhood rezoning plan to add as many as 6,000 housing units while creating a walkable, thriving area accessible to public transportation.
New boulevard
Central to that concept is the new Octavia Boulevard, the poplar-lined thoroughfare that replaced a large section of freeway. Proceeds from city property sales are required to be used to pay off the debt incurred for the boulevard's construction.
The city's ambitious goals were slowed for years by debates over the plan's finer points, such as affordable housing, developer fees and parking space limitations. The bad economy has made if difficult for builders to obtain construction loans, but momentum appears to be building for new projects.
'Helping to heal'
"At one time the freeway bisected the area and developing the parcels is helping to heal the neighborhood," said Rich Hillis, deputy director in the Mayor's Office of Economic and Workforce Development. "A lot of the changes in Hayes Valley were sparked by the removal of the freeway and we think the developments near Octavia Boulevard will close out a project that has been successful."
The first freeway parcel development is nearing completion at the corner of Octavia Boulevard and Oak Street. Meanwhile, the LindenHayes condominium project has seen brisk sales since it placed units on the market in June, according to Doug Shaw of Union Pacific brokerage.
Shaw said the sales probably were aided by the fact that not much other new housing has come on the market in the past few months. But he noted that Hayes Valley increasingly is becoming upscale, continuing to add boutiques, restaurants and shops.
"There was an encampment under the freeway overpass and after that came down all the merchants here say it was like night and day," Shaw said. "Octavia is being touted all over the place as a brilliant project in urban planning."
Developers, however, caution that many of the former freeway parcels probably will not be developed for at least a couple of years. The city permitting process and a dearth of construction loans are likely to make progress relatively slow, they say.
Only real concern
"All the arrows are pointing in the right direction and we are bullish on the market; the only real concern is getting a construction loan," said Lou Vasquez, a partner with San Francisco-based Build Inc.. The company owns one 49,000-square-foot freeway parcel that runs from Laguna to Octavia streets and plans to build 150-200 housing units there, he said.
Most see the recession as a temporary bump on the neighborhood's inevitable path toward gentrification. That concerns some residents involved in the area's planning.
High-end housing
The development of new high-end housing and the steep rents along the Hayes Street commercial strip already are starting to make the area unaffordable for working-class people, said Jason Henderson, who chairs the planning and transportation committee of the Hayes Valley Neighborhood Association.
Affordable housing
While there are public and private efforts to create new affordable housing, some residents question whether that can make much of a difference. They note that zoning in the area requires developers to rent or sell 15 percent of new units built in the area at below market rates. But builders also can meet the affordable housing requirements by providing the equivalent of 20 percent of the new housing at below market prices in other parts of the city.
"I'm of two minds about the economic boom in the area," said Henderson. "I believe it's only being (delayed) by the national financial crisis. I also know that we have to be more aggressive about affordable housing; it's a challenge we will face in the coming years as waves of people come in here."
A developer has agreed to pay several million dollars for property inherited by the city of San Francisco when the Central Freeway came down, suggesting the area's real estate is heating up again following a recessionary slump.
The two parcels sit between Octavia Boulevard and Gough Street, one on Hayes Street, the other two blocks north. As part of a city auction Oct. 26, the developer paid $5 million for one 17,000-square-foot plot and $3 million for another that is 11,000 square feet - more than the minimum bids of $4.4 million and $2.95 million, respectively, set by the city.
According to city officials, the buyer is DM Development. The company could not be reached for comment, but it is widely believed that it plans to build housing on the land.
The two lots are among 22 parcels that once lined the streets along the double-decker freeway, which began to be torn down in 1992 after being severely damaged in the Loma Prieta earthquake. Since 2002, the city has auctioned or attempted to sell the land, most of which is expected to be developed into housing units above retail space.
The auction results last week and strong sales at a new 31-unit condominium nearby have encouraged the city to auction three more parcels in the coming months. Once those are sold, the city will have nearly completed the distribution of the land.
The properties are an integral part of a neighborhood rezoning plan to add as many as 6,000 housing units while creating a walkable, thriving area accessible to public transportation.
New boulevard
Central to that concept is the new Octavia Boulevard, the poplar-lined thoroughfare that replaced a large section of freeway. Proceeds from city property sales are required to be used to pay off the debt incurred for the boulevard's construction.
The city's ambitious goals were slowed for years by debates over the plan's finer points, such as affordable housing, developer fees and parking space limitations. The bad economy has made if difficult for builders to obtain construction loans, but momentum appears to be building for new projects.
'Helping to heal'
"At one time the freeway bisected the area and developing the parcels is helping to heal the neighborhood," said Rich Hillis, deputy director in the Mayor's Office of Economic and Workforce Development. "A lot of the changes in Hayes Valley were sparked by the removal of the freeway and we think the developments near Octavia Boulevard will close out a project that has been successful."
The first freeway parcel development is nearing completion at the corner of Octavia Boulevard and Oak Street. Meanwhile, the LindenHayes condominium project has seen brisk sales since it placed units on the market in June, according to Doug Shaw of Union Pacific brokerage.
Shaw said the sales probably were aided by the fact that not much other new housing has come on the market in the past few months. But he noted that Hayes Valley increasingly is becoming upscale, continuing to add boutiques, restaurants and shops.
"There was an encampment under the freeway overpass and after that came down all the merchants here say it was like night and day," Shaw said. "Octavia is being touted all over the place as a brilliant project in urban planning."
Developers, however, caution that many of the former freeway parcels probably will not be developed for at least a couple of years. The city permitting process and a dearth of construction loans are likely to make progress relatively slow, they say.
Only real concern
"All the arrows are pointing in the right direction and we are bullish on the market; the only real concern is getting a construction loan," said Lou Vasquez, a partner with San Francisco-based Build Inc.. The company owns one 49,000-square-foot freeway parcel that runs from Laguna to Octavia streets and plans to build 150-200 housing units there, he said.
Most see the recession as a temporary bump on the neighborhood's inevitable path toward gentrification. That concerns some residents involved in the area's planning.
High-end housing
The development of new high-end housing and the steep rents along the Hayes Street commercial strip already are starting to make the area unaffordable for working-class people, said Jason Henderson, who chairs the planning and transportation committee of the Hayes Valley Neighborhood Association.
Affordable housing
While there are public and private efforts to create new affordable housing, some residents question whether that can make much of a difference. They note that zoning in the area requires developers to rent or sell 15 percent of new units built in the area at below market rates. But builders also can meet the affordable housing requirements by providing the equivalent of 20 percent of the new housing at below market prices in other parts of the city.
"I'm of two minds about the economic boom in the area," said Henderson. "I believe it's only being (delayed) by the national financial crisis. I also know that we have to be more aggressive about affordable housing; it's a challenge we will face in the coming years as waves of people come in here."
San Francisco sees boom in tech workers
By Mike Swift, 11/08/2010
Mercury news
San Francisco has the Golden Gate Bridge, the fog and the tourists. And increasingly, the city also has the geeks.
Just ask Harold Liss, a 26-year-old software engineer who walks three blocks through the Mission District each morning to catch the Yahoo shuttle bus to Sunnyvale, passing knots of other tech workers waiting to catch private shuttles south to Google and Facebook.
"I wanted to live in the city," said Liss, who believes the corporate bus systems at Yahoo and other Silicon Valley companies are "absolutely" helping to fuel a growing population of computer workers in San Francisco. "There is more to do; things are walkable; you don't need a car. There is a lot of great food, a lot of good parties, and you have everything you need in a really small area."
San Francisco's population of computer workers has boomed in the past four years, a Mercury News analysis of census data shows, with the city adding more resident computer workers even than much larger Santa Clara County, the heart of Silicon Valley. Newly released data show that San Francisco gained about 8,600 computer workers from 2005 to 2009, a 51 percent jump, compared with a 7,300-person, or 12 percent, increase in computer workers living in Santa Clara County. The data count workers where they live, not where they work.
With about one in 12 adult residents working in computer-related occupations, Santa Clara County has by far the highest concentration of computer workers in California, and among the highest in the nation. And as companies like Google, Facebook and Cisco Systems add jobs in the valley, that isn't likely to change anytime soon. Among U.S. counties, only much larger Los Angeles County and somewhat larger King County, Wash., the home of Microsoft, have more computer workers than Santa Clara County, 2009 census data show.
"Look at Facebook, they could they have gone to San Francisco. But they came to Palo Alto, to the valley, to flourish," said Phil Mahoney, executive vice president with Cornish & Carey, broker for Moffett Towers, which has struggled for tenants in the down economy.
"There is still a very small fraction of the (tech) employment that's in SOMA, versus the valley as a whole," Mahoney said, referring to San Francisco's South of Market Area. "Just one street in Sunnyvale has pretty much the total employees that the city has, and that's Mathilda Avenue," with the headquarters of Yahoo, Juniper Networks and NetApp.
But with the fast growth of San Francisco-based social networking companies like Twitter, Zynga, Yelp and a host of startups, and the free bus networks operated by big companies that allow tech workers to live in the city and commute painlessly to Silicon Valley, San Francisco now has the third-highest concentration of computer workers among California counties.
Some companies see a San Francisco address as a growing advantage in the cutthroat competition to lure engineering talent, if only because more of that talent now resides in the city. Zynga, the software gaming company that makes the wildly popular "FarmVille" and other social games on Facebook, tripled in size to 1,200 employees in the 12 months preceding September. Citing San Francisco's "unique ability to attract the combination of top creative and tech talent," Zynga recently signed a lease for 270,000 square feet of space in SOMA.
"We think it's going to speak much more to the culture at Zynga than being located someplace less exciting," said Dave Wehner, Zynga's chief financial officer, adding that "being in San Francisco is a differentiator" in the intense competition to recruit talent.
Google's free private buses transport an average of about 2,000 riders a day, up from about 1,200 daily riders in 2007. The Google Shuttle delivers Googlers to Mountain View from San Francisco, and as far north as North Berkeley, as far east as Pleasanton and as far south as Santa Cruz.
Yahoo's buses prowl through the Mission District and a number of other city neighborhoods, pulling over every 10 blocks or so to ingest clusters of workers waiting on the sidewalk, before turning onto Highway 101 and motoring to Sunnyvale. Like Google's buses, the Yahoo buses run on biodiesel, giving environmentally conscious employees another reason to feel good about their commute, besides comfortable seats, the cup holders and the Wi-Fi.
The Yahoo shuttles transport about 225 San Franciscans each day, starting pickups as early as 6:08 a.m. Facebook does not disclose the number of San Franciscans its shuttle delivers to the company's office in Palo Alto, while eBay's private shuttle delivers about 150 workers a day to San Jose.
Liss said there has always been a tech presence in his 31/2 years in San Francisco. But he's noticed it a lot recently, such as his recent birthday party that drew people who work at Google, Twitter and Yahoo.
"I think the growing trend is to live and work in the city, if you can," Liss said of San Francisco's tech presence. "It's definitely a growing, homogeneous social circle."
Mercury news
San Francisco has the Golden Gate Bridge, the fog and the tourists. And increasingly, the city also has the geeks.
Just ask Harold Liss, a 26-year-old software engineer who walks three blocks through the Mission District each morning to catch the Yahoo shuttle bus to Sunnyvale, passing knots of other tech workers waiting to catch private shuttles south to Google and Facebook.
"I wanted to live in the city," said Liss, who believes the corporate bus systems at Yahoo and other Silicon Valley companies are "absolutely" helping to fuel a growing population of computer workers in San Francisco. "There is more to do; things are walkable; you don't need a car. There is a lot of great food, a lot of good parties, and you have everything you need in a really small area."
San Francisco's population of computer workers has boomed in the past four years, a Mercury News analysis of census data shows, with the city adding more resident computer workers even than much larger Santa Clara County, the heart of Silicon Valley. Newly released data show that San Francisco gained about 8,600 computer workers from 2005 to 2009, a 51 percent jump, compared with a 7,300-person, or 12 percent, increase in computer workers living in Santa Clara County. The data count workers where they live, not where they work.
With about one in 12 adult residents working in computer-related occupations, Santa Clara County has by far the highest concentration of computer workers in California, and among the highest in the nation. And as companies like Google, Facebook and Cisco Systems add jobs in the valley, that isn't likely to change anytime soon. Among U.S. counties, only much larger Los Angeles County and somewhat larger King County, Wash., the home of Microsoft, have more computer workers than Santa Clara County, 2009 census data show.
"Look at Facebook, they could they have gone to San Francisco. But they came to Palo Alto, to the valley, to flourish," said Phil Mahoney, executive vice president with Cornish & Carey, broker for Moffett Towers, which has struggled for tenants in the down economy.
"There is still a very small fraction of the (tech) employment that's in SOMA, versus the valley as a whole," Mahoney said, referring to San Francisco's South of Market Area. "Just one street in Sunnyvale has pretty much the total employees that the city has, and that's Mathilda Avenue," with the headquarters of Yahoo, Juniper Networks and NetApp.
But with the fast growth of San Francisco-based social networking companies like Twitter, Zynga, Yelp and a host of startups, and the free bus networks operated by big companies that allow tech workers to live in the city and commute painlessly to Silicon Valley, San Francisco now has the third-highest concentration of computer workers among California counties.
Some companies see a San Francisco address as a growing advantage in the cutthroat competition to lure engineering talent, if only because more of that talent now resides in the city. Zynga, the software gaming company that makes the wildly popular "FarmVille" and other social games on Facebook, tripled in size to 1,200 employees in the 12 months preceding September. Citing San Francisco's "unique ability to attract the combination of top creative and tech talent," Zynga recently signed a lease for 270,000 square feet of space in SOMA.
"We think it's going to speak much more to the culture at Zynga than being located someplace less exciting," said Dave Wehner, Zynga's chief financial officer, adding that "being in San Francisco is a differentiator" in the intense competition to recruit talent.
Google's free private buses transport an average of about 2,000 riders a day, up from about 1,200 daily riders in 2007. The Google Shuttle delivers Googlers to Mountain View from San Francisco, and as far north as North Berkeley, as far east as Pleasanton and as far south as Santa Cruz.
Yahoo's buses prowl through the Mission District and a number of other city neighborhoods, pulling over every 10 blocks or so to ingest clusters of workers waiting on the sidewalk, before turning onto Highway 101 and motoring to Sunnyvale. Like Google's buses, the Yahoo buses run on biodiesel, giving environmentally conscious employees another reason to feel good about their commute, besides comfortable seats, the cup holders and the Wi-Fi.
The Yahoo shuttles transport about 225 San Franciscans each day, starting pickups as early as 6:08 a.m. Facebook does not disclose the number of San Franciscans its shuttle delivers to the company's office in Palo Alto, while eBay's private shuttle delivers about 150 workers a day to San Jose.
Liss said there has always been a tech presence in his 31/2 years in San Francisco. But he's noticed it a lot recently, such as his recent birthday party that drew people who work at Google, Twitter and Yahoo.
"I think the growing trend is to live and work in the city, if you can," Liss said of San Francisco's tech presence. "It's definitely a growing, homogeneous social circle."
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