The 2-4 World
by Erika Burke
The final quarter of 2006 provided what might be expected from the holiday sales period for 2-4-unit sales in San Francisco. Transfers numbered 147, which is 26 less than the prior quarter. Properties were on the market for an average of 60 days. Pricewise, 80% or 118 properties sold for over $1 million, and the average sales price was $1,400,434, up by 1%. The total sales volume was $205,863,812, down by 10.52% from the prior quarter.
Coldwell Banker was followed by Pacific Union/GMAC Real Estate and Zephyr Real Estate with highest total dollar volume in the city, for a combined 46% of market share. Coldwell Banker had 57 listings, Zephyr had 36 and Pacific Union/GMAC had 30, carrying 38% of all market listings.
Notable Sales
Nina Hatvany of TRI Coldwell Banker held the record for highest dollar volume, with a 2.5% share of the market due to her sales at 2234-36 Vallejo St. (an upscale 2-unit behind a grand mansion, which sold at asking for $4,950,000) and 311 Lincoln Way (a 2-unit selling for $1,115,000, slightly under asking). Whether Hatvany brings us her usual high-end listing or mid-range, she worked her way into the top spot this holiday season.
Veronica Karns of Coldwell Banker gets the fourth-quarter fortitude designation for selling 1392-94 Pacific Ave. after 276 days on the market. It sold for $1,300,000, slightly under asking. This was a mixed-use property with a charming full-floor remodeled flat and roof deck above a commercial space used as an art gallery, and a two-car garage accessed through the rear alley. Every property has the right buyer waiting to find it, no matter how long it takes.
Howard Chung from ML Squared Real Estate brought us the highest sales price to list price ratio with 212-14 Anza St. at Masonic Avenue, asking $899,000 and selling for $1,050,000—16% over asking. Initially receiving several offers below asking, he attributes the final sales price to the property being a classic deferred-maintenance exterior, in an excellent location and a contractor-purchaser planning to condo convert. Howard’s listing gets the “ya’ know this property needs work” curb appeal award.
It is a matter of taste as to the property with the most curb appeal. Highlighting a classic, ornate stick Victorian is always a San Francisco standout and lucky Susan Ferry of Coldwell Banker brought 272-274 Hartford St. to market. Featuring two units with an unwarranted studio, this property exhibited an ornate exterior, storybook detailing and a fantastic multicolor paint scheme. Ferry reported that the property had the look and feel of a single-family home due to its position at street level and huge owners’ unit, plus it had the additional bonus of income via the second unit.
Honorable mention goes to Harry Clark from Zephyr Real Estate for 79-81 Valley St. Who could miss the yellow-chartreuse double entrance doors on that listing? Clark said the seller is an architect who uses this as his signature color, even on interior walls, highlighting his modern interiors behind unaltered, yet refreshed, vintage exteriors. Perhaps we will soon see posters for “Doors of San Francisco,” and Clark’s client will have paved the way.
Two Units
Taking the lead in multiunit sales once again was the two-unit category, with 95 2-unit transfers in the fourth quarter of 2006. This number represents 65% of all 2-4-unit properties sold in that quarter. The average sales price was $1,386,013, an increase over last quarter of $95,219—a 7% rise. The average per unit sales price was $693,006, up 14% from the third quarter. The total dollar volume was $131,671,225 (6% less that the prior quarter). The average days on market was 58, 5 days more than last quarter. The average sales price over list price was at 99%, an indication that we are in a normalizing market. Of the 95 properties sold, 27 brought in overbids, 19 were at or just over asking, and 49 properties closed below asking, indicating that buyers are negotiating and sellers may be asking slightly more for their units than the fourth-quarter market dictated.
The bulk of sales activity was in the following areas: Noe Valley transferred 13, Bernal Heights and Potrero Hill had 6 each, and the Inner Richmond and Inner Sunset had 5 each. Russian Hill brought the highest average sales price ($3,070,000) and Outer Parkside the lowest ($900,500).
Despite the passage of Proposition H last November and its ramifications for multiunit purchasers (required relocation payments), 2-unit sales remain strong. Prop. H may contribute to sellers adjusting asking prices to reflect the buyers’ ability to move into this coveted type of property, always attractive for its condo-conversion fast track.
The total dollar volume in this sector was down by 6% during the holiday quarter, though the per unit and average sales prices were up, with days on market increasing marginally. It was a strong holiday market in this sector. It’s a lesson that next year you should market your property while on vacation. Agents and sellers alike should welcome a working holiday season when the results are this good.
Three Units
During the fourth quarter of 2006, 29 3-unit properties transferred, 11 less than the last quarter, for a total dollar volume of $42,600,699—a sizeable 32% drop, which still represents 22% of all 2-4-unit transfers. The average sales price was $1,468,990, down $60,912. Price per unit was $489,663—30% less than a 2-unit. Three-unit buildings stayed on the market for an average of 63 days, 6 less days than the prior quarter. The list-versus-sales price went down by 1% to 100.18%, which indicates 3-unit sellers are pricing right and buyers are paying full price. Eureka Valley and Dolores Heights showed five 3-unit sales, with the Marina District showing the highest average sales price of $2,550,000 and the Inner Mission having the lowest at $930,000.
Four Units
The holiday quarter saw 19 4-unit properties transferred, 4 less than the last quarter, for a total of $24,889,888 in dollar volume, which is less than a 1% drop from the prior quarter. Four-unit buildings represent 7.3% of the total 2-4-unit sales volume. Average number of days on the market was 63—19 more days than the third quarter. The average list versus sales price at 99% shows that bidding for these units has remained constant and less than half of all 4-units sold were at or over asking. The average sales price was $1,309,994, up by 1.03% from last quarter. At $327,498 per unit, the cost per unit was 47% less than for a unit in a 2-unit property. The Inner Mission and Inner Sunset showed three sales each, with all other areas only selling one 4-unit each. Haight-Ashbury brought the highest average sales price of $2,150,000 and the lowest came from SoMa for $767,500.
The Big Picture
We saw some downswings from the third to the fourth quarter, notably the dollar volume of 3-unit sales and the upswing of days on the market for 4-unit properties. However, the average median sales price was up significantly for 2-unit properties (showing us that holiday homebuyers are ready to nestle in for the winter months), and 3-unit properties are moving more quickly. List versus sales prices hovered at 1% to 2% below asking. It seems like sellers are pricing for what has become a normalized market, which should bring buyers out as they realize they may not have to compete so vehemently for properties.
During the week surrounding Christmas, 12 multiunit properties, or 11% of the 35 properties transferred in December, closed. Granted, 52 properties transferred in October and 53 in November (75% of the total), but December has a good chance of keeping up with the prior months with your help in 2007. The small shifts in statistics for each unit’s sector individually don’t demonstrate a determined seasonal decline, though for the quarter we sold 16% less multiunits with 10% less dollar volume. On a positive note, the previous third quarter showed an increase of almost 7.5% total sales volume over the second quarter, so we’ve only really come down 2.5% in average dollar volume over the last two quarters. The glass really is half full in San Francisco, especially in multiunit sales. Let’s see if things get even better in the first quarter of 2007.
Total dollar volume for 2-4-units sold in 2006 was $891,110,097, compared with 2005’s $1,182,775,448, for a difference of $291,065,351. This represents a 24% decline in total business in 2006 versus 2005. Also in 2006, 653 units were transferred for an average market time of 54 days, compared to 891 transfers with an average market time of 42 days in 2005, meaning 27% fewer transfers in 2006. Average sales price was $1,364,640, up from 2005’s $1,326,796, for a 1% rise in 2006 and an average list versus sales price of 101.21%—a more normal market than 2005’s 106.40%.
A significant and across-the-board slowing began during the second quarter of 2006. After the initial drop, statistics remained constant during the final three quarters. Sales volume and number of transfers dropped an average 25% this year compared to the sales intensity of 2005. The average sales price has not seen a significant change. From the look of things, 2007 promises to bring average sales prices and a fresh perspective that we’ll all be busy negotiating San Francisco’s lucrative 2-4-unit market.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. Erika Burke is a realtor with a 25-year background in sales and marketing. She specializes in the sale of San Francisco multiunit properties with Zephyr Real Estate and can be reached at 415-279-1135 or erikaburke@zephyrsf.com. Copyright © 2007 by SF Apartment Magazine. All rights reserved.