Market View

Your Bumpy Ride as a Landlord

by Jay Greenberg

The first quarter of 2003 is behind us now. The war in Iraq has shifted into a rebuilding phase. The San Francisco apartment sales market seems to be on cruise control. Interest rates and consumer confidence are the driving forces that are holding values steady. The rental market is a different story. This aspect of ownership continues to be a very bumpy ride, requiring a lot of time and energy.

In the five-to-nine-unit sector, dollar volume and numbers of sales are almost identical to last year. In 2002, we had 21 sales in the first quarter versus 20 sales in this year�s first quarter. The difference in dollar volumes than $1 million.

In the 10-plus-unit sector dollar volume is down approximately 27 percent and the number of sales is down approximately 16 percent. In 2002, we had 12 sales in the first quarter versus 10 sales in this year�s first quarter. There is a noticeable difference in dollar volume. In 2002, we saw $27.1 million in sales for the first quarter versus $19.7 million in sales for the first quarter this year.

In my opinion, values are holding steady and sales activity levels are good. Sales activity means more than dollar volume and number of sales. Activity includes the number of calls on my new listings, number of showings and number of offers received. Well-priced buildings are selling quickly with multiple offers and poorly priced buildings are being ignored. Historically, the first quarter is the slowest time of the year for sales. Considering our sales statistics and first quarter history, as well as the anticipation of war and its effect, I am pleased and confident with our sales market.

The recession has hit corporate America hard, and the consumer has felt the impact. However, the current economic malaise rests with corporate America, while the consumer is the strength of our current economy. Interest rates are at a 40-year low, and investors are continuing to utilize this window of opportunity.

In the first quarter, we continue to see a slight decline in population and number of jobs in San Francisco. The decline in population in the first quarter was less than 1 percent. These numbers tell the story for our rental market. These are tough times for landlords. I spent the first quarter of this year tracking the rental market. I have compiled a tremendous amount of information regarding rent comparables, rental resources, average time to fill vacancies and much more valuable information. If you are not buying or selling now, the rental market is probably the most important aspect of ownership today. If you are an owner of San Francisco apartments buildings and would like to receive a copy of this survey or discuss the information mentioned, feel free to call me.

Partial list of sales for February and March 2003:

Sales Price	Units	Sq. Ft.
2411 Post St. — $750,000	6	5,550
501 38th Ave. — $2,100,000	18	15,150
1301 Leavenworth St. — $1,250,000	16	8,750
2730 Sacramento St. — $3,185,000	12	11,250
1908 Fillmore St. — $2,550,000	11	11,100
1825 Ellis St. — Non-Disclosure	18	11,850
136 Guerrero St. — $1,875,000	12	7,164

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Jay Greenberg is a real estate broker with Marcus & Millichap. He can be reached at 415-391-9220 ext. 300.