Paragon’s Latest Market Update Newsletter

Percentage Declines in Prices & Dollar per Square Foot 4.15.09

Rent vs. Buy: Sample Analysis

Pricing, Buying, Selling & Negotiating SF Real Estate

The Previous Market Update Newsletter 

San Francisco Online Resources

Paragon’s Neighborhood Statistics Report (by zip code)

Below, median sales prices are calculated for 2-bedroom condos, 3-bedroom houses and 2-bedroom TICs in a number of SF neighborhoods over a variety of periods beginning with 1995 — when the last, great Sellers’ market began -– and ending with the six months following the financial market meltdown in September 2008. (Its effect began to show up in mid-October sales.) Median price is a relatively crude statistical generality – especially in SF with its huge variety in property type, size, condition, curb appeal and architectural style – but it can be useful in assessing macro trends in the market. However, remember: for a specific home, only a specific market analysis is truly pertinent.

Since October 15th, year over year, the number of sales has dropped 20% for houses, 35% for condos, 53% for TICs and 46% for 2-4 unit buildings. But that masks significant changes in buying trends: the number of houses sold below $1,000,000 actually increased 4%, while sales of more expensive houses plunged over 50%. People are generally buying smaller, less expensive homes, and then, only those that stand out as excellent values. Less appealing homes – which still sold in earlier years (virtually everything sold during the boom years) – are not getting reflected in the current figures.

Some of the more affluent neighborhoods had too few sales to be statistically meaningful. For example, in the last 6 months, all of Pacific & Presidio Heights, Cow Hollow and the Marina had only 19 house sales, of all sizes and prices. St. Francis Wood had only 6 and Sea Cliff only 4. Roughly 50 – 70% of buyers of upper-end homes – who would typically beconsidered “willing and able” – can no longer get better financing rates without very large down payments. When that changes, we’ll be better able to assess values in that market segment. In the meantime, it is dominated by buyers with lots of cash.

Further analyses of percentage changes in median and average prices, and dollars per square foot can be found here:

click here to see the “Percentage Declines Analysis”

Signs of Life

In recent weeks, the number of listings accepting offers has increased substantially, while the number of price reductions and expired and withdrawn listings – though still high by historical standards – has decreased significantly. Months-supply-of-inventory (MSI), an indicator of seller supply and buyer demand, has also declined. (The higher the MSI, the greater the buyer advantage.) Whether this will prove to be the beginning of

a durable resurgence for SF real estate or simply a springtime bounce, it is too soon to tell.

The area where most house sales are now occurring is Realtor District 10 (Bayview– ortola-Excelsior). Then comes District 2 (Sunset-Parkside), District 5 (Noe-Castro– aight) and Bernal Heights. District 10, with the greatest number of foreclosure sales, has been hardest hit by price declines, and has roughly as many sales as Districts 2 and 5 combined – so it has had a massive impact on overall median price in SF. (Which is one reason why the overall city median home price is virtually worthless as an indicator of changes in market values.)

Most condo sales are occurring in South Beach-SOMA, then District 5 (Noe-Castro– aight), and then District 7 (Pacific Heights-Cow Hollow-Marina). These numbers don’t include new development sales unreported to MLS – which would greatly increase the South Beach-SOMA sales numbers. The new developments are doing everything they can to move inventory right now.

Foreclosure Sales Update

Since mid-October 2008, 17% of house sales and 6% of condo sales in San Francisco have been REO (bank-owned) homes. The median sales price of an REO house during this period has been relatively stable at about $500,000; the median sales price for an REO condo has been $432,000. 78% of REO house sales have occurred in the less affluent south/southeast part of the city, stretching from Bayview to Oceanview. 85% of REO condo sales have been in the neighborhoods stretching south from SOMA along the east side of the city down to Bayview and across to Oceanview. The greater part of the city – northern, central and western neighborhoods – continues to be relatively

unaffected by foreclosure sales.

Renting versus Buying

Due to price declines, tax benefits and exceedingly low interest rates, the Rent versus Buy equation – which went badly out of whack during the runaway Sellers’ market – has been coming much more into balance. Here is a sample calculation comparing paying $2600 rent with purchasing a $650,000 home. Since any calculation depends on one’s assumptions regarding inflation, appreciation, interest rates, down payment, term of ownership, and so forth, please feel free to use the calculator referenced to perform your own calculation.

click here to see the “Rent vs. Buy Calculations

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Copyright ® 2009 CALIFORNIA ASSOCIATION OF REALTORS ® (C.A.R.) Permission is granted to C.A.R. members only to reprint and use this material for noncommercial purposes provided credit is given to the C.A.R. Legal Department. Other reproduction or use is strictly prohibited without the express written permission of the C.A.R. Legal Department. All rights reserved.

The information contained herein is believed accurate as of April 13, 2009. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice. Advice in specific situations may differ depending upon a wide variety of factors. Therefore, readers with specific legal questions should seek the advice of an attorney.

JOSHUA TREE, Calif.

ON the front porch table was a pile of rocks and blue cast-glass nipples fitted with aluminum collars that looked like the tops of space-age baby bottles. Bullet holes puckered the glass of several window panes. A swing rigged from a galvanized water tank groaned in the dusty wind. And Suzie, a dog who splits her time between this property and a neighbor’s, tipped her food out of its cast-iron skillet and thrust a wet nose into a visitor’s hand.

 “I like stuff that has a patina, and that you can drive a hand-truck into,” said Randy Polumbo, who owns the house, which also has a bathroom ceiling made from ammunition cases and a loft railing made of rusty mattress frames. (“Rust never sleeps,” a sign tucked into a shrine-cum-garden of cactuses, rocks and old handguns observed.) Mr. Polumbo, a sculptor with a day job as a high-end contractor in Manhattan, is part of the most recent wave of artists for whom Joshua Tree’s cinematic bleakness and fringe Americana are aesthetic catnip.

Cleaved by the Twentynine Palms Highway, the town’s lunar landscape — Flintstonian boulders set off by the curious shapes of the Joshua Tree, the yucca relative from which this town takes its name — features a local architectural vernacular of midcentury stone-and-wood shacks.

These were embellished in the 1970s by off-the-grid hippies and survivalists, who supplied add-ons like rooms made from half a geodesic dome or a Quonset hut. They were further refined by contemporary artists like Andrea Zittel in the 1990s, as well as newer pioneers like Mr. Polumbo, who began to use the town’s end-of-days vocabulary in their own work.

Mr. Polumbo’s handmade “trash house,” as he describes it, fits easily into this environment. But it couldn’t be more antithetical to the sleek perfectionism of the rarefied Manhattan environments that his company, 3-D Laboratory, has made for architects like Santiago Calatrava, Maya Lin and Rafael Viñoly.

It amuses Mr. Polumbo — “A LEED-accredited professional” in his day job, he said, referring to the construction industry’s standard for measuring building sustainability — to note that back in New York, the phrase “green construction” generally refers to the latest technologies and costs a fortune.

“Out here,” he pointed out, “people have been off the grid and making do in their bootleg houses for decades.”

Mr. Polumbo recalled a neighbor’s recipe for making hot water: paint an oil drum black, leave it outside and run a hose from it. “And what could be greener,” he continued, “than building out of trash, as they’ve been doing here since the ’70s?”

The other day, Ann Magnuson, the performance artist, explained how “ingenuity is king in Joshua Tree.” On the phone from her home in Los Angeles, Ms. Magnuson, a part-time resident here for the last five years, described the local agora, the swap meet in next-door Yucca Valley at which the town’s disparate tribes congregate every Saturday to pore over offerings like rolls of rusty barbed wire, broken ’70s-era furniture and pulp paperback novels.

It is a measure of the strong libertarian streak that unites this contrarian crowd — “the tweakers and the Los Angeles hipsters,” Ms. Magnuson said, ticking them off, “the right-wingers, Marines, art folks, granola-eaters, rock climbers and gun freaks” — that everyone finds a uniquely personal use for what’s there. For Mr. Polumbo, the swap meet has yielded two prospectors’ pans that he turned into sinks and a blacksmith’s forge that became a cabinet.

“In Joshua Tree,” Ms. Magnuson said, “everything gets reconstituted. It’s certainly a place where the concept of outsider art is in, and Randy polishes it to a high sheen.”

Mr. Polumbo arrived in 2004 for a one-month artist’s residency at a ranger’s station in the Joshua Tree National Park. He had been making art out of found items, wind-up mechanisms and what he calls “libidinal objects” — sex toys, condoms, bright blue Viagra pills — that he turned into puckish and lovely whirligigs and gizmos.

In the park, he said, “I got interested in how Native Americans made stuff with just sand and fire.” He began casting glass, from bottles and telegraph insulators he found in the desert, into natural shapes: corn, for example, or insect shapes like a mosquito hawk or a cockroach. (Roaches have been a persistent theme for Mr. Polumbo: in the 1980s, when he was attending the Cooper Union, he said, he liked to catch the roaches in his apartment on Avenue D and gold-leaf them.)

Mr. Polumbo also got hooked on the area. After he finished his residency, he bought a couple of acres in nearby Burns Canyon, where he fashioned a house out of shipping containers and a restored 1937 trailer. His daughter, Nico LeMoal Polumbo, now 11, called it “Boring Land” until she met a snake or two and tried out the giant porch swing he’d hung from two beams.

He soon fell in love with a local artist and musician, Shari Elf, with whom he started a gallery, Art Queen, on Twentynine Palms Highway. (On April 11, a show of Ms. Magnuson’s work — 30 pieces made in 30 days — opens there.) He completed another residency at the national park, and began to commute at least once a month from Manhattan. He was not in town, however, in early July 2006, when a wildfire destroyed 61,000 acres in San Bernardino County, including his container-house compound in Burns Canyon. “The name should have tipped me off,” he said.

IN 2007, Mr. Polumbo bought this property — 2 1/2 acres and a tiny rock cabin — for $120,000, at the height of the market. From the front porch, he noted the constant breeze and the presence of a huge cactus that looked like either a prop in a Road Runner cartoon or a giant phallus, depending on your point of view. “Given the nature of my work, it seemed like an omen,” he said.

A bronze plaque stamped with the words “A Place in the Sun Ferryhaven” stolen by a neighbor, was returned after Mr. Polumbo moved in. “When we met, he said, ‘You’re pretty cool — you should have it back,’ ” Mr. Polumbo recalled.

In all likelihood, the house is an early example of a “jackrabbit homestead,” the collective name for a hand-built or prefabricated cabin erected on a five-acre plot sold by the government for a nominal fee between 1938 and the 1960s, as a result of the Small Tract Act of 1938. (Kim Stringfellow, an artist and associate professor at San Diego State University who is working on a cultural history of the homesteads, explained that the act was part of an effort “to dispose of so-called useless land,” and that the structures provided shade for the area’s ubiquitous jackrabbits, “who liked to lounge around them,” hence the name.)

When he bought the place, Mr. Polumbo planned only to install a septic system and fix some holes, he said, “to make a crash pad of the most rustic variety.” But he started sketching and lugging stuff around, and shipping things out from New York, and the project began growing.

To snatch some northern light, he built an 18-foot-high addition with a clerestory. In it is the kitchen, the living room and his bedroom, along with a loft level that serves as a guest room. The new bits have something of a “Lost in Space” vibe, which largely derives from a serpentine room divider and a sofa made of rocks and mortar, upholstered in a midcentury textile.

“I had very specific rules,” Mr. Polumbo said, “to use nothing new except steel — it’s already a recycled material. And no paint and no Sheetrock.”

Friends arrived to help him build, this being the sort of place where many locals are likeminded artists with time on their hands and a need for cash. Mr. Polumbo isn’t sure, but he estimates that he spent a lot less than $90,000 on the place.

It’s an amount in distinct contrast to what his company bills back home, where prices range from $500 to $800 a square foot. “We have a saying at work,” Mr. Polumbo said. “Less isn’t more, it’s way more.”

He described the precision of a job for Maya Lin, a Park Avenue apartment sheathed in American brown elm that was only available in sections, or “flitches,” that are three and fifteen-sixteenths inches wide. In what would seem to be a technical and mathematical impossibility, the place was made without a visible seam or half-flitch. “We challenged Maya to find one,” Mr. Polumbo said, “and she couldn’t.”

There was no such effort in Joshua Tree. For a bathroom window made of mortar and tequila bottles, Mr. Polumbo, who is not a drinker, deputized a team of Patrón fans, who imbibed 18 bottles.

For months, the two elderly proprietors of an antiques store collected wine bottles for Mr. Polumbo, who embedded them in the walls, butt-ends facing in, along with beer and soda bottles, to approximate the effect of stained glass. (Their eagerness, and the volume of their haul, prompted him to speculate that his project was perhaps not the most healthful.) One also donated a pair of eight-foot stained glass windows, salvaged from a church. An artist friend from New York flew out to build a tentacular chandelier out of flashlights and blue gels, from Mr. Polumbo’s design, and a local artist put together two more pendant lights out of mechanics’ lights.

A few weeks ago, Scott Monteith, the local artist, was painstakingly washing the dust off the blooms in “The Garden and Grotto of Manifest Destiny,” an installation of Mr. Polumbo’s that features glowing festoons of Easter-egg-colored rubber sex toys set inside a 1980s-era military vehicle. If you don’t get too close, its “blossoms” look like a fantastic Martian garden. (It is fitted with 6,000 L.E.D.’s, and powered by solar panels.) The “Grotto” has been a hard-working art piece: it traveled to the Burning Man festival in August and to Art Basel Miami Beach in December. Now it is powering Mr. Polumbo’s house through an extension cord.

Despite the abundance of enormous phallic items glowing, whirring or just flapping in the wind out here, Mr. Polumbo’s demeanor is hardly that of a macho artist. He speaks softly, with demure, downcast eyes, about the most embarrassing things. “I like the pretty-ugly continuum, like some cheeses and sex acts,” he said.

He recalled the day he went shopping for the ingredients for his first “Buttercup” — a bouquet of rubber sex toys in candy colors lit by L.E.D.’s and powered by solar panels, a clear precursor to the Grotto. “It was a store in Chelsea, and I took a friend because I was scared,” he said. “We had filled a cart, and the owner came up to us and said, ‘I don’t know what you’re doing, but I’ll give you a 30 percent discount.’ ” (Now, Vibratex, a maker of sex aids, is a sponsor of Mr. Polumbo’s work.)

The architect Lee Mindel, who described Mr. Polumbo’s contracting as “three-dimensional sculpture,” observed that under his “buttoned-up, churchlike demeanor is the most wonderfully demented, obsessive and thorough mind.”

For Shelton, Mindel & Associates, Mr. Mindel’s firm, Mr. Polumbo’s company built a triplex on Central Park West that Mr. Mindel called “one of the most complex and complicated spaces in New York. It was a maze of a miasma.” It also won an American Institute of Architects award for interiors last year. Now, Mr. Mindel said, the two companies are working on a celebrity penthouse “that we are taking through a sex change.”

Recently, Mr. Polumbo’s mother, Sarah Zacks, a former bookstore owner, was visiting from her home in Providence, R.I. Ms. Zacks was knitting her son a pair of socks in desert colors and remembering his earliest creations: boats made of the wax from Mini Babybel cheeses and twigs.

“He could do anything,” she said.

A bowling pin hanging from the ceiling, which was fitted with a tiny propeller, whirred suddenly, startling a visitor, who peered at the wall behind it. Tucked into the rocks was an artist’s wooden model, the bendable kind sold in art stores, embedded in a resin-filled condom.

Ms. Zacks sighed. “Naughty Randy,” she said.

The next San Francisco International Film Festival
takes place April 23–May 7, 2009

Founded in 1957, the San Francisco International Film Festival is the longest-running film festival in the Americas. Held each spring for two weeks, the International is an extraordinary showcase of cinematic discovery and innovation in the country’s most beautiful city, featuring some 150 films and live events with more than 100 filmmakers in attendance and nearly two dozen awards presented for cinematic excellence. The Festival attracts an annual audience of more than 80,000.
 
Highly anticipated by its loyal and passionate audiences, championed by civic and community leaders, admired and adored by filmmakers and closely watched by industry professionals, SFIFF is one of the most important events in the Bay Area’s cultural calendar and an important stop on the international festival circuit.
 
The International is deeply rooted in the strongest and finest traditions of appreciation of film both as an art form and as a meaningful agent for social change. It is a cultural treasure for Bay Area audiences, who embrace new ideas, compassionate humanity and world citizenship. SFIFF features a bonanza of narrative feature films, live action and animated shorts, television and theatrical documentaries, experimental work and a variety of new digital media, as well as a smart lineup of industry panels and seminars, awards events, onstage tributes, retrospectives and the highly acclaimed Schools at the Festival program, which brings 4,200 students in grades 1–12 into the festivities. More than 80,000 filmgoers attended the 2008 Festival, which played at eight venues throughout an enthusiastically responsive Bay Area. Remarkably intimate for a festival of its size and scope, the International combines a range of marquee premieres, international competitions, hard-hitting documentaries, digital media work and star-studded gala events.

Visit Festival site
Download Festival Miniguide