East Bay Real Estate

The Realtors Marketing Association welcomed Mayor Wilson to a packed house as he updated the membership on the issues of San Ramon.

Mayor Wilson has been the mayor of San Ramon for almost six years, and a member of the San Ramon City Council for nine years.  His leadership and direction of the future of San Ramon was recognized this year with the recognition of being named the 2008 “Citizen of the Year” by the East Bay Leadership Foundation.  At the weekly RMA meeting today he updated the audience on the quality of life issues facing the city of San Ramon and the Tri-Valley region.  Here is an outline of some of his remarks as written by Jim Walberg.

1. The Tri-Valley Realtors are the banner carriers of this community because they have their ear to ground as to what is happening on a daily basis within their communities. They are the “Yes We Can” community resource centers for the consumers.
2. Regarding budget issues; “Romance without the finances doesn’t make it!” He updated us that the San Ramon budget for up coming fiscal year was passed last Tuesday for $93.8 million. He also let us know that San Ramon has set aside a reserve fund of over 50% of the budget for any fiscal issues that show in the future. Most cities have a 5% to 10% reserve, but San Ramon’s fiscal responsibility to the citizens for to make sure when “rainy days” show up there are reserves to cover any deficits.
3. The two critical issues for San Ramon are: Safety and quality of education. San Ramon now has their own city police force instead of contracting those services with the County Sheriff’s office. Regarding the quality of education in our Valley, it is one of the best in the country. We are all so blessed to be a part of a community that has such high standards in all aspects of community life.
4. The San Ramon City Center Plan: WOW! Mayor Wilson dazzled the audience with the plans for the City Center; Theater Arts Center; 5-star hotel; shops; restaurants and cafes; living lofts, and much more. It will be a 2.1 million square feet of mixed use commercial and residential living. His opinion, and from what he showed us today, it will rival Rodeo Drive in Beverly Hills as a place to spend time in an elegant atmosphere. He even let us know that the fountain area will become an outdoor ice rink during the winter months as one now finds at the Rockefeller Center in New York City. ( I did ask him how one gets on the waiting list for one of the live-in lofts.)
5. The future management of the build-out of the City Center was discussed because Mayor Wilson is running for the State Legislature. Mayor Wilson assured us that Sunset Development and Alex Mehran - the developers of Bishop Ranch, are the developers of this project. Mr. Mehran will be investing more than $800 million into this project so be assured the project will completed with Mr. Mehran at the helm.
6. Tassajara Valley sphere of influence area from Finley Road to the Alameda County Line; San Ramon is positioning itself to be the city influencing this section of a very sensitive development area in our region. Mayor Abram’s vision for this area is to have it focus on vineyards, country inns/restaurants, and spas - similar to what has unfolded in the Napa Valley/Livermore Valleys.
7. Future development behind Home Depot; It was very interesting to learn that there are 830 homes planned for this northeast corner of San Ramon by 2011. It is being developed by Art Lorenzini. That was all the information Mayor Wilson had on this project.

We are all so blessed to live in a region that has such a high quality of life, world class education for our kids, and safe communities in which to live - plus, having community leaders like Mayor Wilson.

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Diablo Black Mens Group knocked them dead with the “Cobbler Shack” today!

OK, so I am the “rookie” with the Diablo Black Mens Group.  But, what I didn’t know is that their annual food booth at the San Ramon Wind Festival was selling peach cobbler and ice cream.  The “rookie” gets to be the ice cream scooper.  I am 60 years old and do you have any idea what scooping ice cream does to one’s tennis elbow and carple tunnel syndrome?  Well, I am at home tonight with ice on my right arm, a glass of wine in my left hand, and I have already taken three Advil.  Who would have even imagined that there would be such an action packed fund raiser within two weeks of joining this group.  And, I just completed the 18th Annual Blackhawk Food, Wine & Film Faire at the Blackhawk Car Museum for my Rotary club last week, which was another over the top event from an effort and planning standpoint.  You will find me down at Body Works in Danville this week for a serious deep tissue massage.

All kidding aside, there was a ton of money raised by the DBMG for their scholorship fund the past two days at the San Ramon Wind Festival!  It was a lot of hard work, but it will contribute a significant amount of funds to scholorships to young African-American men starting college. We even sold out of the cobbler and ice cream by 3:30PM today because of the crowds that kept lining up for this great treat at the Festival.

So, I am through with the breakdown of the booth, loading the truck, and high-fiving the DBMG crew, and I am walking to my car.  I run in to lots of friends attending the event asking how it went with our fundraiser.  And, who should I run into is Dr. Brent Waterman - the doctor that assisted me with completing so many high endurance sporting events over the past 20+ years.  He is my chiropractor, and he is the past president of the Danville Lions Club and the past Lions Club member of the year!  Dr. Brent is not only a dear friend, but he is a giant in the world of community service in the East Bay.  He was standing in the middle of the walkway passing out coupons for the Taste Of Danville Event coming up next week.  I promised him that I would assist him in passing out the fliers to the real estate community.  And, I promised him that I would give the event a plug on my blog site.  So, here are the details.  It is the 14th Annual Spring Restaurant Walk in Danville - 6PM to 9PM.  It is the only “Progressive Dinner” in the East Bay;  The Peasant & The Pear; Tower Grille; Primo’s Pizza; Beverages & More; Starbuck’s Coffee; Sideboard; La Ultima New Mexican Food; Bridges Restaurant; Amber Bistro; Basil Leaf Cafe; China Paradise; FAZ; Masala Indian Fusion; and Taqueria El Balazo!  Can you believe the ticket price is ONLY $25!!!  Call (925) 275-1990 for tickets!  It is always a sellout, so call TODAY!  Your East Bay real estate detective continues to explore all of the events you will ever want to know about!!!

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I just got the confirmation…Keller William-Danville is moving to the Rose Garden Village!

So, my commercial Realtor friend, Gary Riele has finally confirmed to me that Keller Williams - Danville is moving from the Theater Arts Building on La Gonda Way to the Rose Garden Village at the corner of 680 and Sycamore Valley Road around August 1st.  As I mentioned last week, their lease was up and they decided not to renew it because of the building owner being unwilling to be their advocate to the Town Of Danville in securing signage on the building.  KW-Danville has been in their present location for five years without any public signage letting people know they are located in that office building.  Apparently enough was enough. 

With this move it will allow KW-Danville to consolidate all of their office space on one floor - over 7,200 square feet, have a location that puts them right in the middle of the newest retails center in Danville, and get signage on the building in several areas allowing anyone driving by or driving into the Rose Garden Village that a dynamic and growing real estate company is standing ready to meet all of their real estate needs.

Keller Williams Realty is the fourth largest real estate company in North America with over 90,000 Realtors serving customers from all over Canada and the United States.  It is a company who lives by value statements that they refer to as the WI4C2TS;

• Win - Win - Or no deal.
• Integrity - Always do the right thing.  ( What one does when no one is looking.)
• Customers - Always come first.
• Commitment - In all things
• Communication - Seek first to understand
• Creativity - Ideas before results
• Teamwork - Together everyone achieves more
• Trust - Begins with honesty
• Success - Results through people
• To an industry of traditional values Keller Williams Realty brings a new pinnacle of inter-dependent beliefs and values that their Realtors follow.  I know this to be true because I have experienced for over three years.  Let me know if would like to find out more about this amazing company with a specific business model for Realtors to follow everyday.  Until next time…

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So, Jim Walberg was snopping around today at the Rose Garden Retail Center In Danville In order to see which businesses were moving in.  And….

I ran into Gary Riele, the partner in the commercial real estate company, Straface Riele.  I asked Gary what he was doing there and did he know who some of the other business tenants were that may be moving in.  After some significant proding, he said that one of the companies about to sign a lease was the Danville office of Keller Williams Realty - the 4th largets real estate company in North America with over 90,000 Realtors.)  Currently, the KW Danville office is located on the corner of El Cerro and the 680 freeway in the Theater Arts Financial Center.  ( This was the building that was intended to be the arts center for the Town of Danville that ended up being a front for a financial scam which caused one or more of the principles to eventually be sentenced to jail.)

Gary said the problem KW Danville was having with the owners of their current office space is the Town Of Danville was unwilling to have any signage for their company, even though they were one of the largest tenants in the building.  The Town of Danville’s position is the building was approved as a theater arts center, not a commercial center for businesses.  Unfortunately for the owners of the building, KW Danville has apparently had enough after five years of no one knowing Keller Williams Realty is in that building, so they started investigating other alternative since their lease is up next month.  They want the community to know where they are and it appears they are going to pull it off at the Rose Garden Retail Center - the newest retail center in Danville at the corner of the 680 freeway and Sycamore Valley Road.

Beverly Steiner is the one of the three owners of this Keller Williams office and she was not available for comment about what I had learned from Gary Riele.  Kristin White is the Market Center leader and she was also vague about what seems to be unfolding.  I tagged along with Gary Riele as he was walking through the office space, and it appears the KW Danville is going BIG with this move.  They are taking on 7,200+ square feet of the second floor of the building in the Rose Garden Center which has the big deck on San Ramon Valley Boulevard.  As I walked through the open space of the their future office - no walls or ceilings are in yet, I was VERY impressed!  Apparently, KW Danville is preparing for over 250 Realtors to be a part of this real estate center!

What I know about the KW business model is that they lead with revenue, and because of this model, they are not being impacted by the current adjustments happening with home sales in the East Bay.  They only spend money they actually have.  This is allowing them to make this move with the full understanding that no other real estate company in the East Bay is in the expansion mode - they are generall downsizing and/or consolidating their office locations.  Since KW Danville is expanding against the trend of companies downsizing, they are committed to fill the void that is being created by those who are creating the “open space” within the real estate industry because of closing and/or sub-leasing their office spaces.

If I was going to make a prediction, I would say that KW Danville is the company that is poised to take over the lion’s share of the real estate market because they are coming from a place of support and belief in the health of the real estate market for Realtors who still want to have this business as their career.  The KW motto is, “Building careers worth having, businesses worth owning, and lives worth living.”  How in the world could any Realtor not find that appealing as a place to grow their real estate practices.

Your East Bay real estate detective is on duty and will update you as to what I find out about this rumor.  If it is true, I will let you know immediately.  Contact me anytime for any of your real estate needs.  Until next time…

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By Mary Nejedly Piepho:   When I took office in 2005, my priorities were to implement more prudent Contra Costa county spending practices, improve transportation, and preserve and enhance the county’s agricultural economic vitality.   Midway through my fourth year as Contra Costa County Supervisor, I am please to report success in each of these areas.

COUNTY BUDGET    County finances are an area of most concern.  When I came on the board, the county had been spending down its reserves and been placed on the watch list by the major bond rating agencies. My first day on the job, I was appointed to the Board’s subcommittee on finance and later chaired it.  Since then, the board has established more prudent spending policies, including reducing spending to match annual revenue (no deficit spending), limiting the growth of spending in good years to better position us for bad years, and routinely using multi-year budget forecasts to understand the financial implications of decisions.    Because of these policies, the rainy day reserve fund has grown from about $59 million at its lowest to more than $146 million total, and, the county has not only been removed from the watch list but the bond rating agencies (Moodys and Standard and Poors) have now assigned the highest short-term bond rating to the county.  The implementation of these spending practices has positioned the county to better weather the current economic storm we are facing this year. 

TRANSPORTATION    Improving traffic congestion and safety is a challenge through out District 3 and the county.  From Discovery Bay to San Ramon, and all points in between, people want their roads and transportation infrastructure improved to meet peek hour demand.  Safety on Vasco Road is paramount. Thanks to aggressive enforcement, sustained public education and the flexible delineators installed at my request, there were no fatal accidents on Vasco in 2007 and accidents dropped significantly. These are numbers we can all live with.    This year, the Highway 4 Bypass will be completed which connects Highway 4 in Antioch with the Marsh Creek Road/Walnut Blvd./Vasco Road area. Widening Highway 4 to the Antioch Bridge and E-Bart are fully funded and will be completed by 2015.  The fourth bore addition to the Caldecott tunnel is also progressing at a rapid pace and will provide further transportation relief to our county’s residents.    Our local trails also encourage another mode of transportation.  While trails have traditionally been considered recreational amenities, they are evolving into a “green” commute alternative.  I have been working with Supervisor Glover, East Contra Costa cities, the East Bay Regional Parks District and local water agencies to develop an East Contra Costa County Trail Master Plan. 

AGRICULTURAL VITALITY    Preserving and enhancing the county’s agricultural heritage is very important.  Working with local farmers, we have moved forward many initiatives to help incentivize local growers and drive up their economic abilities. Two changes will make it easier for winery and olive oil producers to open tasting rooms and allow growers to sell value-added products such as jams and dried fruits at roadside stands.     The latest initiative, Buy-Fresh, Buy-Local, will connect East County growers with potential customers in other parts of the County, particularly those with poor access to locally grown, fresh fruits and vegetables.   It also encourages county departments to purchaser locally grown produce for use in our county’s food delivery system.

FAR EAST COUNTY COMMUNITY ENHANCEMENTS  The future of the Byron Airport is laid out in the recently released Byron Airport Master Plan. In May, another step was taken towards making the master plan a reality when Byron Jet Center broke ground on the first phase of the nearly 70,000 square foot expansion. 

These are just a few of the major accomplishments that have been completed since I took office in 2005.  Thank you so much for the support you continue to provide me and my Team.  I look forward to being of service to Contra Costa County for many years to come.

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A white East Bay Realtor / Community activist, and a white graduating college senior continue to blur the color lines of our world.

History was made last week as Jim Walberg  - an East Bay Realtor was inducted into the Diablo Black Men’s Group, and Joshua Packwood (a U-Tube Link) was chosen as the Valedictorian of Morehouse College - the all-black men’s college outside of Atlanta, Georgia. Both of these men are white and both realize that color lines are drawn by everyone, and they hoped that it would not prevent them from making a difference in worlds in which they live and serve. Both me subscribe to Martin Luther King, Jr.’s statement, “We are prone to judge success by the index of our salary or the size of our automobile, rather than by the quality of our service to others and our relationship to humanity.“

The Diablo Black Men’s Group

The Diablo Black Men’s Group began in the mid 1990’s as an outlet for Diablo Valley African American men. By 1999, the group had evolved into an organization of men who wanted to see their collective influence to enhance the lives of their members and families as well as make significant contributions to the community in which they live. They encourage each member to appreciate liberty and all that it encompasses, including embracing community involvement.

DBMG is committed to support activities with the goal of improving the health and welfare of their citizenry. In addition, DBMG is actively involved in promoting the education of the impact on heart disease, prostate cancer awareness, and health screening of African American men in collaboration with the Alta Bates Summit Ethnic Health Institute, Kaiser Permanente Hospitals, and the American Cancer Society with support from the ChevronTexaco Corporation. Additionally, DBMG helps socially and economically challenged Bay Area youth pursue cultural and educational opportunities through their college scholarship programs.

Morehouse College 2008 Valedictorian

Founded over 144 years ago in Atlanta, Georgia, Morehouse College has focused on the mission to develop men with disciplined minds who will lead lives of leadership and service. A private historically black liberal arts college for men, Morehouse realizes this mission by emphasizing the intellectual and character development of its students. In addition, the College assumes special responsibility for teaching the history and culture of black people. Founded in 1867 and located in Atlanta, Georgia, Moorehouse is an academic community dedicated to teaching, scholarship, and service, and the continuing search for truth as a liberating force.

Editors Note: Some of the Morehouse College graduates who have made a significant difference in our lives and the world: Martin Luther King Jr. led the country through one of its most transforming civic movements; David Satcher resuscitated the issues of health care disparity and access; Maynard Jackson taught the world the value of diversity and equal access as the first African American mayor of Atlanta; Donn Clenendon scored in the history annals and was part of a miracle when he was named a World Series MVP; and Shelton “Spike” Lee continues to challenge how the world views blacks in life with critically acclaimed films. These are just some of the Morehouse Men.

In 2004 Joshua Packwood became one of the “Morehouse Men”. The 22-year-old from Kansas City, Mo., graduated on May 18th with a perfect 4.0 GPA and a degree in economics. He could have gone elsewhere, to a school like Columbia, Stanford or Yale, but his four-year journey through Morehouse has taught him a few things that they could not have learned at any other university, and he makes it clear that he has no regrets. The Morehouse College professors chose the Valedictorian, and he was their candidate of choice because of his academic accomplishments and his contribution to the college. He graduated as a Rhodes Scholar finalist, and will be joining Goldman Sachs in New York City.

“I’ve been forced to see the world in a different perspective, that I don’t think I could’ve gotten anywhere else,” he said. “None of the ‘Ivies’, no matter how large their enrollment is, no matter how many Nobel laureates they have on their faculty … none of them could’ve provided me with the perspective I have now.“

It is important for all of us to make a positive difference in worlds we live in everyday. Now it is your turn. Let us know what you are doing with the legacy you are leaving behind…

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The Danville/Sycamore Valley Rotary Club has been a key supporter of community service in the East Bay for almost 20 years!

Rotary International is a worldwide community service organization that addresses both local and international community service needs. The Danville/Sycamore Rotary Club was chartered in April of 1989. Today it has a membership of about 55 business and professional people who have a keen interest in Service Above Self as a personal value statement. Over the past years, Danville/Sycamore Valley Rotary has raised over $500,000 in funds in order to give back to local and international service projects – from providing dictionaries to all of the third graders in the San Ramon Valley Unified School District, to delivering hundreds of wheelchairs to non-walkers in Mexico with the Wheelchair Foundation headquartered in Blackhawk. It has won the Community Service Award several times from The Town Of Danville.

Service Above Self is a “virus” that is caught because of the modeling of parents and friends during a person’s life time. Jim Walberg caught this virus from his parents who were constantly involved in local and worldwide service projects as long as he can remember. Kirk Bailey is also one of those people who caught the “virus” at a young age. His roots are in Northern Nevada, but he grew up in Walnut Creek. After his college studies, Kirk moved to Tahoe and started a real estate publishing company in the Reno/Tahoe area. That launched a very successful career in the publishing business. He was a member of the Reno Rotary Club because of wanting to give back to those less fortunate. What he didn’t know when he joined the Reno Rotary Club was his grandfather was a former president of the club. His dad is also a long time Rotarian, and Kirk continues the tradition of Service Above Self.

Kirk moved back to the East Bay several months ago to launch a new and innovative real estate magazine that will be delivered to the homes in Alamo, Diablo, Danville, Blackhawk and San Ramon in just a few weeks. Since he arrived back he has been checking out local Rotary Clubs in which to continue his community service. Yesterday, May 13th, the Danville/Sycamore Valley Rotary Club inducted Kirk as their newest member. Jim Walberg was his sponsor and Jim’s real estate company is already one of the charter members of Kirk’s new real estate publication, HomeFolio.

Kirk not only has been a member of Rotary for several years, he has walked the talk of service by participating in Rotary International’s Polio Plus program that has vaccinated the children of the world since 1985 against polio. As of today over 99% of polio cases have been eliminated from the world because of their commitment to this project. Two years ago, Kirk traveled to Africa to participate in one of the inoculation projects, which profoundly changed his life and intensified his commitment to Service Above Self. The Danville/Sycamore Valley Rotary Club is honored to welcome Kirk to their club and looks forward to his contribution to improving the quality of life within our East Bay community and the world.

If you would like more information about Rotary and how you may get involved in this important group of professionals who are giving back to their communities in significant ways, please contact Jim Walberg and he will provide information for you. Congratulations, Kirk!

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The Wall Street Journal article from May 6 is the most well thoughout explanation on the status of the current housing market.

By CYRIL MOULLE-BERTEAUX -
May 6, 2008; Page A23

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what’s going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in “months of supply” terms. That’s the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won’t stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they’ve been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one’s income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today’s house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets’ perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets’ perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now. I realize that many of you may have opinions about how the real estate markets are impacting you personally and I welcome your comments. Until next time…

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One of the key challenges in current market conditions is short term memory!

I am about to get on my soapbox and address one of the key issues that is happening in the East Bay real estate markets - SHORT TERM MEMORY!  There are only a handfull of Realtors who are serving the East Bay who were also here in 1989 - 1994.  Because of that, there is a large population of Realtors who have no memory of largest recession in California history that was taking place in the early 90s.  The defense industry generally left the State.  California’s economy at that time was based on the revenue from the defense industry.  So, when it left, there was a huge income void with California. 

The economic factors impacting East Bay real estate are much different today, but the effects are similar in many of our markets - declining prices, tightening of credit for home loans, businesses downsizing, loss of jobs, increased divorce rates, and so on.  So, we are having a similar experience as the early 90s, but for different economic reasons.

Here is a prediction for you to consider…“We will have a similar experience with our real estate in about ten years.”  The reason I predict this is because of short term memories.  Our current economic conditions are complicated, but let’s pretend they are because consumers were hooked into the banks providing a “FREE LUNCH” with mortgage money.  Remember, there are no free lunches!  The mortgage industry was giving money away without any checking to see if the borrower could pay back the money.  One of the aspects of our real estaet market that they were betting upon was the non-stop increase in values that had accellerated to galactic speed in the early 2000s.  There is no way that appreciation spike was sustainable and a house of cards began to crumble with many people standing in amazement as the debris started falling on top of them.  Still the median home price in California has jumped from $450,990 in 2004 to $588,970 in 2007!

Now we have banks and lending institutions that don’t know what to do with the mountain of foreclosures and bank reposed homes.  One of the reasons why there is so much chaos within the banks is because there are very few bank employees, if any, that were at the banks.  So, there is no LONG TERM MEMORY at the banks as to how to serve this current economic consequence of them lending money without any basis of customers paying the loans back.  It took almost two years in the early 90s for the banks to get their act together and figure out how to efficiently and effectively manage the sale of the real estate they were taking back.  Hopefully, it won’t take them that long this time around.

Last week the Wall Stret Journal posted an interview with Mr. Mervyn King, the head of the Bank of England.  He shares a similar opinion I have regarding the short term memory issue and why he is convinced we will have a similar experience in the next ten years.  Regarding this topic, he said, “Optimism takes over.  It’s a natural human instinct to interpret success as a sign of one’s own ability, rather than good luck.”

Here is the GREAT NEWS on May 4th…Interest rates are GREAT!  Inventory is shrinking so Buyers are understanding the urgency to make decisions instead of wondering around hoping they prices will decline further, and the East Bay real estate markets, espcially in the San Ramon Valley are doing very well this year regarding pricing and a lowering of days on the market.  It is time for Sellers to become Buyers as fast as possible.  And it is time for Buyers, to jump in with both feet and buy a home!  As always I welcome your comments.  Until next time…

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