Monday Morning Real Estate Update — Monday November 23, 2020
By: Mykel Ferrantino
Tags: San Francisco, Real Estate Investments, Real Estate

Monday Morning Real Estate Update — Monday November 23, 2020

In this week’s Podcast: Climate Change and Real Estate Migration, The San Francisco Rental Market and The Overall State of the Real Estate Market in San Francisco. Mykel Ferrantino Nov 24, 2020·5 min read

Podcast Transcript of Never Too Late To The Game’s Monday Morning Real Estate Update, November 23, 2020.

IT’S TIME TO START MAKING BETTER DECISIONS ABOUT WHERE TO LIVE WITHR RESPECT TO CLIMATE CHANGE

Last week I talked about how a number of Silicon Valley Tech Companies and Individuals have packed up and moved their operations to Miami.

What’s odd about this is that downtown Miami floods every day and that situation is only going to get worse.

On November 10th, ProPublica published an article on how Climate Change will make parts of the US uninhabitable. Here’s the title: “Climate Change Will Make Parts of the U.S. Uninhabitable. Americans Are Still Moving There.”

It’s really that second sentence fragment that got me. It really makes you wonder, exactly How will history look back on this time?

We have climate change deniers, science deniers, people who refuse to wear masks during a pandemic and Nurses who speaking out — because they are shocked by Covid19 patients who deny they have the disease with their very last breath.

So, really, its not all that surprising that Americans are moving to the equivalent of climate no-fly zones. Okay, maybe a little surprising that techies are moving, because, well, they should know better.

The ProPublica article names Phoenix, Houston and Miami in the first paragraph. The article is also saying that the southern third of country is headed for disaster.

The consequences for the southern third, are acute, nothing short of disaster for wildlife, agriculture and human life.

San Francisco will see also changes. In fact, we are seeing them already. It is almost December and we’ve only had a day of rain in San Francisco — and I eat breakfast and lunch on my balcony almost every day — because it’s unseasonably warm.

This past Friday, my cousin in New Jersey posted a picture on Facebook of him enjoying time by an outside fire at 7:00pm. He told me it was only 50 degrees.

I grew up on the east coast (Philadelphia) and for over 30 years, 50 degrees in November at 7:00pm was rare. I don’t really need elaborate studies to tell me that the planet is heating up.

My real estate advice: before you move, check the climate data on ProPublica I think you’ll find it surprising — especially the interactive maps. If you are nearing retirement, don’t make your decision based on the weather. Sure, the warmer destinations are alluring but do you really want to be dealing with constant fires, flooding and storms during your retirement?

THE SAN FRANCISCO RENTAL MARKET

As a real estate broker, there is nothing I like more than selling a multimillion dollar property. Yet, I have talked a number of investors out of buying apartment buildings in San Francisco. Not because of the rent control laws or other city and county regulations — but because of the cost of the real estate itself and its relationship to rents that have been unsustainable for many years. Something had to break — and it did.

The secret to owning apartment buildings is to buy and be in a positive cash flow immediately. Many professionals disagree and insist that the real money is in the anticipated appreciation and not the monthly cash flow. Why not get a little of both?

Setting aside the fact that the most successful San Francisco landlords I know, have all inherited their properties. When you pay nothing for a property — you get to eat the icing and the cake too.

San Francisco rents are currently at 2009 / 2010 rates, representing a greater than 30% drop since Covid19.

The San Francisco Apartment Association aggregates the average cost of rents for 10 neighborhoods and they have separated new construction in SOMA (I eliminate those numbers) when I average them out to just one number for each category.

Tech unintentionally turned its back on San Francisco. First Tech created the environment that made it possible for unsustainable rents to exist in the first place — and now with remote work and tech has crashed the San Francisco rental market.

Many landlords and investors played the future appreciation game and so they overpaid for their investment properties. It never occurred to them there would ever be a shortage of tenants. This ignorance is now also at work with respect to climate change as mentioned above.

A careful analysis of the San Francisco market and you arrive at why there are so many condos for sale: many of them were rentals or AirBnB’s.

If you recall, San Francisco topped out at the highest rents in the US, with a one bedroom costing nearly $3,900 per month. So what do these averages tell us?

They tell us that there are still landlords with their head in the sand.

San Francisco Real Estate By The Numbers

STAY POSITIVE & KEEP HOPE ALIVE

Together we will get through this time, together we will co-create a better world, a better community and a better economy that we all know in our heart’s is possible.

If you would like to hear my Podcast of this article, please visit Never Too Late To The Game’s Monday Morning Real Estate Update for November 23, 2020.

You can also find me on Spotify, Google, TuneIn, Stitcher and Apple Podcasts.

If you’re a buyer, seller or investor in the Bay Area and looking for an agent, you can contact me on Facebook or leave a message or text at 415–787–7350.

I have a great team with a lot of resources behind me at Keller Williams where I am a broker associate — and this means that you will also have a great team and resources behind you.

CA Broker’s License is #01884928.