potrero view

April 2009

Potrero Hill Real Estate Market Relatively Sound

By Sarah Harper

Potrero Hill’s real estate market is, traditionally, quite stable.  According to local real estate broker Mary Lace, the Hill boasts a “great area, great weather; people don’t move frequently!”   This is a “destination neighborhood,” one which potential buyers specifically seek-out for its fabulous views, gorgeous weather, proximity to other City neighborhoods, freeway and Caltrain access, and a fined-tuned sense of place.  Potrero Hill suits a wide range of needs, which attracts and retains residents over the long term.

Still, the Potrero Hill real estate market isn’t immune to the great recession, which has debilitated most other Bay Area markets.   According to Hill-based real estate agents Hallie Bradford, Mary Lace, Melinda Lee, Susan Olk, and Michelle Stephens, real estate sales are sluggish.  Although people with money continue to buy, Bradford notes that San Francisco property prices declined late last year, with homes selling for roughly 10 percent less than the previous year.  Potential buyers are proceeding cautiously, and properties are remaining on the market an average of 80 days; more than two months longer than the two weeks it typically took to sell a house during the first half of the decade.  

The condominium market, historically the first to feel the effects of a slowing economy, has suffered, and even single-family homes, which over the past decade have sold quickly on the Hill, are taking longer to sell.  Potrero Hill, like the City in general, hasn’t experienced a notable surge in foreclosures, since San Franciscans tend to sell before they’re forced into an eviction.  However, in general poor market conditions have induced property owners to stay where they are, only selling if they have to.

The market’s slow place mirrors the nation’s sluggish economy.  According to Lee, the Potrero Hill real estate market changed dramatically in the fourth quarter of 2008, slowing a bit right before the October credit crisis, and then screeching to a halt later in the quarter.  Buyers, having difficulty obtaining loans, didn’t buy, and sellers, unable to get good prices, didn’t sell.      

Nonetheless, Potrero Hill housing prices have shown a much smaller decrease than other San Francisco neighborhoods.  Lee emphasized that the Hill’s fourth quarter sales – during which she represented two distressed properties – highlight the neighborhood’s enduring desirability.  Lee also noted that current price declines are indicators of the last decade’s high flying market.  Now, with fewer properties on the market than years prior, prices are muffled and homes are selling closer to their true value.  “We’re pricing things closer to what we think they will sell.  Whereas marketing techniques traditionally price a bit below the market [to generate competition], current techniques aim for creating closer-to-value prices,” said Lee.

According to Stephens, buyers’ environmental concerns are playing a larger role in their real estate purchasing decisions, particularly related to a property’s proximity to mass transit and neighborhood services.  Since Potrero Hill offers environmentally friendly commute options, including quick access to Caltrains and the Third Street Muni line, the neighborhood is attracting buyers who want to reduce their carbon footprint.

Bradford, Lace, Lee, and Olk all noted that the current market in part reflected the normal ebb-and-flow that’s inherent to real estate, in which sales typically slow during winter months and pick-up in the spring.  In any economic climate, according to Lace, the bottom line is the “seller’s motivation and the price you put on it.”  While the adage “location, location, location” holds true, and Potrero Hill’s North slope remains the community’s hot spot in real estate, sellers need to be realistic in their pricing no matter their location, since buyers are more cautious about getting their monies’ worth.  “You have to price to the market now, and you’ll be fine,” said Olk.

Although the market may not change much before the end of the year, real estate experts are hopeful that 2009 will present tremendous opportunities to buyers.  Bradford emphasized that “now is the time” to enter the housing market.  The economic stimulus package provides additional tax credits for first-time buyers – those who haven’t bought property over the last three years - interest rates and prices are low.  “San Francisco is a different animal,” Olk stated.  “We will recover quicker than the rest of the country.  The recovery will come along fine, but the opportunity won’t be what it is right now.”

 Subscribe to The Potrero View

All rights reserved. Copyright © 2006 The Potrero View.

Content on this site may not be archived, retransmitted, saved in a database, or used for any commercial purpose without the express written permission of The Potrero View or its Publishers.