Sunday, May 25, 2014

The Most Expensive Real Estate Market in the United States

The Fed printed money that is flooding into Silicon Valley is working its way north to San Francisco with ferocity.

San Francisco is the most expensiv real estate market in the United States, according to Ken Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley.

The San Francisco Chronicle reports:
After getting outbid on three houses, Shura Kelly decided not to mess around with 117 De Montfort St.

True, it was off of Ocean Avenue in Ingleside Heights - not the Sunset District where she and her firefighter partner, James "Denis" Quirke, grew up and would have preferred to stay. But the Sunset had become too expensive and the little Marina-style 1920s house had charm: original gumwood, beveled glass doors, a sunny kitchen and a spacious backyard with potential.

Kelly, who runs a doggy day-care business, and her partner "came in strong" with an offer of $810,000, 35 percent over the asking price of $599,000.

The good news was that they beat out 46 other offers. The bad news was that someone else offered more than 50 percent over asking. The sale closed April 11. "I thought for sure we had it but someone went bananas and offered $910,000 for a house in the Ingleside," Kelly said.

Kelly's frustration is par for the course in a housing market that, with the exception of a few San Francisco neighborhoods, has now surpassed both the early 1990s dot-com boom and the run-up to the 2008 crash. Prices have climbed 33 percent since 2011, with many neighborhoods exceeding that.


  1. New York Times’ New Editor Buries Important Story on Private Equity Fee Shenanigans on Holiday Weekend

    Make no bones about it, the Morgenson story, which comes on the heels of a Wall Street Journal exposing industry leader KKR’s far too clever and potentially impermissible dealings with its house consulting firm, KKR Capstone, discloses important new fee abuses, including getting paid for services never rendered.

    One of the things that the broader public may not realize is that the normally complacent investors in these funds, known as limited partners, have been pushing back against the fees charged to them by the private equity firms, who in industry parlance are called general partners. Thus this fee chicanery is particularly important because it reveals a concerted effort by the general partners to out-fox the limited partners and continue to extract more in rents from the limited partners than they think is warranted and thought they had agreed to pay. It’s an up-market version of Elizabeth Warren’s famed “tricks and traps.” . From the Morgenson story:

    “In some instances, investors’ pockets are being picked,” Andrew J. Bowden, director of the S.E.C.’s office of compliance inspections and examinations, said in a recent interview. “These investors may be sophisticated and they may be capable of protecting themselves, but much of what we’re uncovering is undetectable by even the most sophisticated investor.”

    Actually, what Bowden is suggesting is worse than Warren’s objections to sneaky hidden terms in impenetrable consumer contracts. While Bowden says that the general partners are waging a successful document/deal structuring complexity war against limited partners, his “pockets are being picked” suggests the SEC is also seeing cases of flat-out embezzlement.

    The public assumes that the private equity kingpins get rich by virtue of their success fees, the 20% (or more in some cases, typically after a hurdle is met) that they get when their investments show a profit. It is much less widely known that general partners charge a raft of other fees, including transaction fees (which are on top of the fees paid to investment bankers and funding sources) and monitoring fees (which are in addition to the management fees). The exhaustively researched new book Private Equity at Work by Eileen Appelbaum and Rosemary Batt explains where the general partners’ income really comes from:

    the fed allowed rollover of unsustainable debts, too...

  2. Where are these people getting the money?

    Salaries are flat.

    Even if they are getting the money from their gambling winnings in the Fed's Wall Street Casino, that means they have to sell to buy the homes. and if people are cashing out of the stock market to buy homes then...

  3. How does a fireman and Kelly, who runs a doggy day-care business afford to make an offer of $810,000?
    Is this a doggy day porn business?

  4. Really real estate sector is growing management is so important. It includes a lot of facts. Nowadays it is beyond words the necessity of a property manager.