October 2021: Q3 Sea Cliff - Lake Street Insider
Now that Labor Day is in the rear view mirror and we enter the final quarter of ‘21, we are in the busiest, most exciting couple months of the year as it relates to real estate activity. Inventory is up; more so than last fall. The high inventory can be attributed to the “COVID-effect;” creating a lot of movement for families within and out of San Francisco. The high inventory count should allow opportunity for buyers and sellers alike. If you are a seller and you have a home that checks all the boxes (i.e. move-in ready, outdoor space, some level of privacy); you will most likely stand out above the competition. If you are a buyer; you will definitely have choice. With choice, buyers have some negotiating room with true sellers.
Quickly looking at the San Francisco market, the top end has cooled a bit. For reference, looking at home sales of $6M+, we had 31 sales in ‘Q2 and in ‘Q3 we realized only 16 sales. Currently, there are 40 homes available priced $6M or more. As the top end of the market is typically the tail that wags the dog, is this the start of a new cycle or just an anomaly? The stock market, Fed policy and a resolution (or not) on the pending $3.5 Trillion Bill will set forth a path on what to expect in ’22 as it relates to top end optimism, spending and growth. If the Bill passes with the proposed taxation on unrealized gains, that will be bad news for investors; from real estate to tech and all segments in between.
On to our corner of the City. Last quarter I reported that we had “zero to little” inventory in the neighborhood. How quickly things change. Although not unexpected, the post Labor Day inventory has quickly trended upward and I know of several more homes coming before year end. As of this writing, there are six available homes in Sea Cliff (with an additional three in contract) and five available in the Lake Street Corridor.
The Lake Street Corridor realized some big sales in ‘Q3. There were eight sales and six of them were over $4M+ and three cracked the $5.7M barrier. One indicator of how hot the Lake Street Corridor is in terms of motivated buyers is the days on the market for the sold homes. The median days on the market: seven days. In Sea Cliff there were four sales although several homes were available. I expect several of the available homes in Sea Cliff to sell in ‘Q4, but not all of them. Look for more inventory in the neighborhood after the rains subside at the end of ‘Q1.
On to the numbers for the quarter.
The top sale of the quarter was 40 Sea View Terrace. It sold off market. The home traded at a premium although it’s likely going to get updated. The new owner could gain hero status if the hometown baseball team wins the series this year. Sea View Terrace is a desirable street as (a) its perched high up in the neighborhood and (b) is very quiet and affords privacy and (c) has superb views.
Last quarter (and going back a couple years) I reported on the troubled 224 Sea Cliff. It just won’t go away. The massively leveraged home was scheduled for auction back in July (and then cancelled) and the senior lender rescinded their notice of default. Now, there is a new notice of trustee’s sale starting at $4,808,210 (filed by a junior lender). Sound like a bargain? No. If you won the auction at ~$4,8M, you’d still have to wipe out/assume the loan(s) of approx. $15,000,000. Last time I looked, there were some seven different lenders on the property. I though the lenders would be ready to move on take some form of a loss three quarters ago. Not so, they appear ready to play this out (keep in mind this is primarily private debt, not institutional).
Keep your eyes on the Giants starting on Monday. This could be the year we bring home the pennant and hopefully the World Series trophy. Four time champs in 11 years...that would be legendary.
That is it for now.