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September 2009-
For the most part the more desirable locations of San Francisco have seen a small drop in value mostly because those sellers usually have the ability to hold their property during tough times and this results in fewer sales. This makes it tough on appraisers as they cannot find comparables sales for those properties that do sell. This all may change in the coming months as some are guessing the problems of the commercial market may finally hit some wealthy companies and individuals.
A recent article in the Chronicle explained that over $500 billion dollars worth of commercial real estate loans are due in the United States in the next two years. Bloomberg reports that this year alone $165 billion in loans need to be refinanced or sold when occupancy rates have dropped dramatically and equities have virtually disappeared. This could be the real impact of the recession even as the stock market and economy seem to be recovering.
How this affects the residential market and loan rates is the key. A guess might be that rates stay low as few consumers are able to qualify and banks cannot get the money out for an investment return. The safe bet might be the 30 year fixed rate loan but the smart bet might be the conservative 11th district adjustable with a small margin. The 11th district rate is only 1.59% and with a margin of 2.2, which equates to a rate of only 3.79%. Some lenders will have a floor rate of 4.25% or 4.5%-might be worth the gamble.
Most buyers are worried about value and whether they are paying too much. Study the market and know what sold but I would worry more about location than price. This is the time to get the best location you can afford and protect your invest with the desirability of the home you buy. If your circumstances changed and “you had to sell”, your location is going to help recoup your investment dollars even in the toughest of markets. In case you weren’t listening-“Location, Location, Location”
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