April 2022: Q1 Sea Cliff - Lake Street Insider
As we enter the second quarter the market continues to move at lightning speed. The dynamic of strong buyer demand for an inadequate supply of housing continues. Volatility in the financial markets, troubling international events and Fed policy (to curb inflation) have yet to slow any market activity. But, I’d expect to see some buyer enthusiasm taper as rates continue to climb. I think it’s realistic to see interest rates at 6% year-end. As hedge against the rising rates on 30 year fixed mortgages, I’d suggest buyers consider an ARM as bond yields are inverting (generating some attractive rates). The more concerning market dynamic may be that buyers are so fatigued by competition and “losing out” that they pull out of the local market altogether or seek housing in other geographies. I’m starting to see some of that already – on a listing by listing basis, as offer dates do not produce the expected number of offers. We’ll likely see a trend towards “quality vs. quantity” when it comes to offers on properties (that set offer dates) over the next two quarters.
As if inflation and wavering consumer confidence was not enough to negatively affect the market, the state is looking to increase top end taxes (again). Although state coffers are overflowing with revenue, AB2289 would levy a 1% annual tax on worldwide net worth over $50 million and an annual tax of 1.5% for a resident whose worldwide net worth exceeds $1 billion. The tax would apply to art, collectables, real property, pension funds, financial assets held offshore, farm assets, funds and stocks. Again, the state seems to think any earnings – regardless of where earnings are generated, are fair game. I’d say this one is likely an overreach.
As far as first quarter activity in the City, the demand in the sub-$5M category was very strong and any house without “issues” sold quickly, with multiple offers. Sound familiar? The $10,000,000+ category has seen much less activity – very similar to the fall ‘21 market. For reference, there are 14 homes available in San Francisco in the $10,000,000+ category. The median days on the market is a lengthy 214. Where are the buyers? Many are looking – but most are either (a) looking for perfection or (b) looking in other Bay Area markets.
Looking at our corner of the City, the Lake Street Corridor continued its torrid pace and the price per foot median is up 15% (in a quarter!). On the other hand, Sea Cliff was down to one single transaction – well below the 13 sales in the prior quarter. There are properties available in Sea Cliff; both on and off market. But, many accelerated sale plans to last quarter vs. selling in the first half of this year. Otherwise, any property in Sea Cliff that is listed should and will sell quickly unless it’s poorly marketed, flawed (meaning challenges to outlooks and or condition) or improperly priced.
Speaking of Sea Cliff properties, 224 Sea Cliff is back in the news (and still available). It appears the property received an “anonymous complaint” from someone stating they saw falling rocks from the cliff to the beach below. This alone is a bit preposterous as the beach below is inaccessible from Baker Beach unless the tide is very (very) low. But, after a quick investigation, the SF Bay Conservation and Development Commission (a state body that regulates protections for the bay) alleges that the property’s stairway down to the beach is itself illegal and extends well outside the property line. Last word at the end of February is that the Planning Department and Bay Commission were jointly investigating the stairs. If an owner was occupying the property I think they could make a strong case adverse possession. This place must be cursed.
On to the numbers for the quarter.
The top sales of the quarter.
That is it for now.