Bidding war in SF east bay area

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Bidding war in SF east bay area

David Song
Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes

Just offered for a friend on a run down SFR in fremont's nile district.

37286 3rd St. Fremont

List price: $750K

His offer: $869K

This house (1500 sf) needs complete rehab, and is right next to a school.

Here is the response from the listing agent.

Offers received in total, 28.

3 offers over 1 million dollars

3 offers 950-1 million

2 offers 900-950

13 offers 850-900

3 offers 800-850

3 offers 750-800

1 offer under 750


Mass exodus from CA? Are you kidding me?

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Cherisse B.
Member since 2020 · 27 posts · 27 votes
5y

I literally just made a post about the Miami Mayor billboard in San Fran. Miami may be clean across the country, but it could be the next frontier. (Maestro cue, "Bienvenidos a Miami" by Will Smith!)

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  • Ben HowardPro Member
    Real Estate Agent · El Dorado Hills, CA · Member since 2017 · 160 posts · 67 votes
    5y

    @David Song I have booked 138 showings to see a $499k home in Folsom, CA. There is no mass exodus, you are spot on.

    [email protected]916-390-7060
    3Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    5y

    They have not built houses in mass in decades in Calif it seems. Probably a million or two could bail and still have little impact for most if not all sfr CA locations. 

    1Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    Sometimes a little kindness goes a long way.

    We're in contract on a triplex in East Oakland. Each unit is a 2/1 and all three units are occupied with month to month tenants.  

    Buyer needs it as a primary residence as her loan states,.... her intent is to house hack. 

    Asking was 849K and it needs a little cosmetic work. 

    It had 8 offers.

    We were the 3rd highest offer at at 957K. Interestingly, none of the tenants wants to move out and of course they can't be "forced out" at this time due to everything going on.  

    There was an appraisal contingency and inspecton contingency and quite frankly we were shocked when we got the call from the listing agent. The buyer was very personable during the walk throughs, met all the tenants and they seem to like her. She has identified the unit she will use as her primary residence once she is able to move in and she is very insistent on this.   

    At present with all three units rented out, It literally meets the 1% rule! Yes it is in a "up and coming, blue collar, in a working class neighborHood" in East Oakland but she has no qualms with living there when she is able to move in. 

    5Reply
  • Fred K.
    Member since 2019 · 18 posts · 21 votes
    5y

    @David Song

    This is quite amazing. Genuinely curious, do we think this is sustainable?

    0Reply
  • Sattir Bitti
    Member since 2020 · 56 posts · 24 votes
    5y

    @Fred K.

    This area is an anomaly for decades....cant put affordability indexes or any other 1%,2% rules to bay area.

    1Reply
  • David Song
    OP
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    5y
    I think the bay area RE price increase in 2021 will be breaking record, on a Y over Y basis.

    Whether this is sustainable is open to debate. With the large amount of money printed, this increase may be just a correction for the devaluation of the currency.

    As for as this particular property in Fremont, I think whoever bought it at over 1 M price point is out of their mind. At this time, you can get a much better property than this one at >1M price level. When bidding war starts, sometimes buyers lose control of themselves and let emotion take over.


    Originally posted by @Fred K.:

    @David Song

    This is quite amazing. Genuinely curious, do we think this is sustainable?

    1Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    5y

    One of the most interesting things about Bay Area RE posts is reading thoughts and views from folks who don’t live in the area or invest here or even visited but have a “clear and cynical” view on the local RE, politics, weather, migration patterns etc.

    6Reply
  • Katrina Razavi
    Rental Property Investor · San Francisco, CA · Member since 2016 · 118 posts · 90 votes
    5y

    There seems to be a lot of movement within the immediate Bay Area i.e. SF city>>East Bay or Peninsula, hence the original post with the unimaginable number of offers. So although folks may be leaving the state, there's still solid demand and limited supply, and that tension is what dictates the local RE market and its prices, not one-off stories about folks packing up and heading to other states (which is happening, but it's clearly not impacting RE here). But there's an important question that hasn't been addressed about the reason why the Bay Area has been such a unique and strong market for the past ~10+ yrs. and it has to do with its main economic force that makes it desirable. The technology economy.

    Why has the Bay Area been a tech hub (and likely continue to be one?)- 

    The Bay area is a tech hub not just b/c big companies have massive HQ's here (Google, Apple, Facebook, etc) but b/c of the high quality universities that attract some of the smartest people in the country  (i.e. Stanford, UC Berkeley), the talent and research that occurs at these institutions is a strong incentive for these companies to still maintain a presence here. i.e. they have a great talent pool to hire from. Even if that presence reduces a bit, it definitely won't vanish.

    In the same way that venture capital won't vanish from the Bay Area.  Will it become more accessible to those outside of the Bay Area? Likely (which is a good thing).

    There are other cities like Austin, Boulder, Raleigh that have a bourgeoning tech scene for similar reasons, but it will take a while for them to establish themselves to a Bay area caliber.  For that reason, I'm not holding my breath on Miami becoming the next Silicon Valley. 

    5Reply
  • Sattir Bitti
    Member since 2020 · 56 posts · 24 votes
    5y

    @Justin Thorpe

    😁..

    Read this yesterday...

    Of the $123.6 billion in U.S. VC funding in 2020, $26.4 billion went to Silicon Valley, $20 billion to San Francisco and $67 billion to California. A lot of that investment went into well-known startups including Bay Area decacorns (private companies worth at least $10 billion) like Stripe, Instacart and Robinhood.

    I Lived in bay area...bay area is anomaly for a reason..

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    @Brian Garlington : yes, actually securing 0.8-1.0 rent ratio multi family still exist in bay area, especially north bay area.

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    @Fred K.

    This area is an anomaly for decades....cant put affordability indexes or any other 1%,2% rules to bay area.
    >>>

    It's all started because of the huge wage. Just image an individual contributor at google is making 500k with stock options, they're not even manager. Even a company that doesn't give the stock option, starting salary these days is 140k-160k for junior-level programmer/tester. Now it's not uncommon for both husband and wife to work on the same field so household income is > 250k, they can afford anything 1 million.

    It has a trickle-down effect to many industries, especially construction. The construction wage is higher as well compare to other states. The painter in bay area could afford to buy a one million house from their hardwork as the labour cost is very high.

    The affordability index in bay area is actually still at low range which is 33% compare to Miami 44%. So bay area local economy is very robust, while in Miami, the house is  expensive due to cap compression + massive investment from South America.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    Didnt the people in Detroit say NO WORRIES car companies aint going anywhere.

    Over time Bad Politics Matters
    >>>
    In Bay Area, the economy is not developed by the gov. but by the entrepreneur and the availability of very qualified engineers. You can find any level of engineers in the Bay Area.

    Also Detroit is single level industry that mainly manufacturing. The tech industry is actually multiscope , from simple software to biotech engineering. the company that creates spreadsheet and DNA analysis they're located in the same zip code.

    Beside, all politics all politician are bad in nature anyway, so it's no longer a main factor.

    2Reply
  • Tim Ryan
    Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes
    5y

    @David Song Yeah, doesn’t really makes sense does it. As a rental it doesn’t come close to sit on that with negative cash flow for years and hopes of appreciation. As a flip, investors can’t compete right now with the owner-occupant who is driving these prices up due to low inventory and historically low interest rates. Growth markets out of state for Cali investors is the only way.

    0Reply
  • Tim Ryan
    Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes
    5y

    @Cherisse Buddy That’s great advertising!

    0Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @David Song

    Tell then to buy 10 investment properties for $100k each in Columbus and then in a few years they can buy their dream home by 1031ing their single families.

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
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    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @David Song:

    Just offered for a friend on a run down SFR in fremont's nile district.

    37286 3rd St. Fremont

    List price: $750K

    His offer: $869K

    This house (1500 sf) needs complete rehab, and is right next to a school.

    Here is the response from the listing agent.

    Offers received in total, 28.

    3 offers over 1 million dollars

    3 offers 950-1 million

    2 offers 900-950

    13 offers 850-900

    3 offers 800-850

    3 offers 750-800

    1 offer under 750


    Mass exodus from CA? Are you kidding me?

    You could buy a block of homes in Columbus, Ohio for that money

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • AJ Smith
    Rental Property Investor · Oakland, CA · Member since 2020 · 11 posts · 15 votes
    5y
    Originally posted by @Remington Lyman:
    Originally posted by @David Song:

    Just offered for a friend on a run down SFR in fremont's nile district.

    37286 3rd St. Fremont

    List price: $750K

    His offer: $869K

    This house (1500 sf) needs complete rehab, and is right next to a school.

    Here is the response from the listing agent.

    Offers received in total, 28.

    3 offers over 1 million dollars

    3 offers 950-1 million

    2 offers 900-950

    13 offers 850-900

    3 offers 800-850

    3 offers 750-800

    1 offer under 750


    Mass exodus from CA? Are you kidding me?

    You could buy a block of homes in Columbus, Ohio for that money

    You get what you pay for 

    3Reply
  • Joe Daigle
    Member since 2020 · 69 posts · 21 votes
    5y

    Every few years the media does the “ sky is falling “ rant about who’s moving out of California.  But when you look at the net number for California inflow/outflow it’s always positive inflow.  

    As a native I’ve heard that whistle for decades.  Like Mr Song said, most are retirees and people that can’t afford to live there.  Which is good for the economy.  Because the inflows are usual younger and higher income people that want to be in California.  

    Our properties haven’t had a sustained vacancy problems since 2009.  Every door has an average tenant stay at 7 years.  So don’t believe the hype. 

    2Reply
  • David Song
    OP
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    5y

    @Joe Daigle Bay Area is the best RE investment market in US, in my view. There is not another place that can compete with the Bay Area in terms of total return by appreciation and rental cash flow. 

    1Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    5y

    @David Song

    I know at least 20 people who came to this country with a couple of thousand dollars in their pockets and are now sitting on 8 figure net worth a portion of which has come from smart investments over the years in Bay Area RE. Of course it’s all hard to explain in traditional metrics that are more popular on this forum which are measured by “X” doors and Y windows etc.

    2Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    Show me a market other than SF Bay Area where you can clear $180,000/year-$200,000/year in gross rent by owning three SFR's that draw a long line of A++ tenant applicants (some with Wikipedia entries) eager to stay long-term due to exceptionally low supply, have very low maintenance/repair costs due to the mildest weather in the U.S. (both winter and summer) and have taxes essentially fixed by state law based on purchase price (i.e. no annual tax assessor surprise).

    1Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    5y

    @Joanne Tsai

    I am waiting for the data myself but my contacts in the NYC broker community are reporting elevated interest from renters across the board for early summer move-ins. It’s plausible given how vaccinations are running. JPMC is projecting an end to the virus over the next 60 days. John Hopkins same things. If you have a NYC tenant moving, the timing might be good for you. I think there will be a coiled spring effect here.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    @David Song: bay area is not just the best real estate investment in the country but also the ticket for retirement. Why ? Here's the factual data: The appreciation rate in real estate is 4x than wage growth. The appreciation is 1.6x higher than the national average. People can retire from the appreciation alone.

    Last year I just refinance a house, just after I finished the refi the house going up again for another $100k. In OOS, they can only give me free $500-$600 CF per unit per month, and that's with so much drama :) LOL

    The only thing that I think is weird is the micro condition in Bay Area. For me a place like Fremont , Palo Alto and South Bay/San Jose is sucks big time (have property in there). Reason is expensive house price but living quality is lower and school district is considered bad. Now the place in East bay, house price is cheaper, school district is A+ and view is awesome. So expensive doesn't mean good school district in Bay Area. You drive slightly farther away from your office and one can get better home/living condition.

    1Reply
  • David Song
    OP
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    5y
    Originally posted by @Justin Thorpe:

    @David Song

    I know at least 20 people who came to this country with a couple of thousand dollars in their pockets and are now sitting on 8 figure net worth a portion of which has come from smart investments over the years in Bay Area RE. Of course it’s all hard to explain in traditional metrics that are more popular on this forum which are measured by “X” doors and Y windows etc.

    That is very true. Bay Area investors typically have bigger pockets than other regions, due to higher income, higher appreciation. BP, however, is dominated by new investors who are brainwashed into OOS and TK. Sad.

    3Reply
  • Jonathan Yan
    Member since 2018 · 2 posts · 0 votes
    5y

    Thank you for your post David. Very Insightful

    0Reply
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