East Bay Real Estate

Each month C.A.R. provides Realtors valuable stats and trends in order to assist with providing information to our clients.  Here is a summary of their June 2008 report.

LOS ANGELES (July 25) - “Statewide home sales remained above the 400,000 level for the second month in a row, and up nearly 18 percent from a year ago,” said C.A.R. President William E. Brown.  “Following a 30-month string of year-to-year percentage decreases that began in October 2005, sales last month also posted their third consecutive year-to-year gain.

“Sales were driven in part by large shares of deeply discounted distressed sales in many parts of the state,” he said. “With lower prices and favorable interest rates, affordability also has improved significantly in recent months, paving the way for many buyers to purchase their first home.”

Closed escrow sales of existing, single-family detached homes in California totaled 420,550 in June at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 17.5 percent from the revised 357,890 sales pace recorded in June 2007.

• C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in June 2008 was 7.7 months, compared with 10.2 months (revised) for the same period a year ago.
• Thirty-year fixed-mortgage interest rates averaged 6.32 percent during June 2008, compared with 6.66 percent in June 2007.
• The median number of days it took to sell a single-family home was 49.1 days in June 2008, compared with 51.5 days (revised) for the same period a year ago.
• In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 2.9 percent, or 11 out of 385 cities and communities, showed an increase in their respective median home prices from a year ago.
• In the Bay Area the highest median home prices during June 2008 were: Los Altos, $1,595,000;  Burlingame, $1,575,000;  Mill Valley, $1,150,000;  Los Gatos, $1,143,000; Cupertino, $1,072,500;  San Carlos, $1,022,500; Danville, $965,000; 

June 2008 Regional Sales and Price Activity
Regional and Condo Sales Data Not Seasonally Adjusted

Median Prices By Region - Current Month vs. Year Ago

If you are truly a Buyer then lock your loans and buy.  If you need to sell your home do it now!  If you don’t need to sell your home, then get in to a wait and see mode until after the first of the year. Contact me today if you would like to see what is happening with prices in your neighborhood.  We are always standing ready to serve your real estate needs.

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The media headlines still are selling newspapers, but they don’t tell the “real story”!

What in the world are consumers supposed to do with the information they are getting in the media everyday?  Here is another July update.  We are still not dealing with a National real estate economy, it is ALL local.  And, it is even smaller that just local…it is made up of Micro-Markets. Here are a few of the news items I heard just last week - both locally and nationally.

• Inflation CPI - 1.6% for June…highest month in 26 years!
• Oil Prices: $4.50 per gallon.  Consumer decisions are dramatically changing daily.
• The U.S. is the world’s shopping center because of currency values.
• Iraq, Iran, Afghanistan, and Pakistan - “global hot spots”!  What are the solutions?
• Feds take over IndyMac! 90 more banks on “watch” list.  266 have closed since 2006!
• Feds prevent Fannie Mae and Freddie Mac from collapsing with billions of dollars of subsidies.  Who is really paying the bill? ( Just in case you don’t know the answer, it is you and me.)
• Blackhawk has 20-months of inventory as of July 1st.
• Brentwood has only 3-months of inventory as of July 1st.
• Dublin’s month’s of inventory is half of Danville’s.
• Antioch had 254 sales in June and Pleasanton had 61, even with similar populations.
• Predictions are Antioch, Brentwood and Oakley will have many more months of foreclosed and bank owned properties coming during the next year or more.
• Lafayette and Orinda home sales continue to thrive.
• 7,000 interest-only home loans will be turning over in Danville soon.  Many of these loans were granted with no income verification that is now not possible with lenders.
• Huge real estate opportunities are now available for first time home buyers, move-up and move-down buyers, and investor clients.
• From Pleasanton to Orinda…it is still a solid market in spite of all the economic chaos around us!

This is the “technical stuff” that consumers are hearing and they are scared about the future.  A Realtor’s job is to provide an action plan that moves real Buyers and real Sellers out of being paralyzed because of fear, and provide them the “rest of the story” of these headlines.  Here are some ideas to consider as you review these headlines;

• No matter what you read, it is a Buyers market today.  Even with multiple offers on bank owned properties…it is a Buyers market.  Yes, there are some dramatic price reductions in micro-markets such as Antioch, Brentwood, and Oakley.  However, prices are holding their own,  from Pleasanton to Orinda - and in this specific corridor there are still micro markets to watch, such as Blackhawk and Windemere.
• Sellers should only list their home for sale if they actually need to sell it within the next year.
• If a home is listed for sale it needs to be priced aggressively with current market conditions as the guide, and it needs to be in “turn key” condition.
• If you are a Buyer that needs to purchase a home within the next six months, lock your home loan TODAY!  It is predicted that mortgage rates will be going UP.  It is time to buy right now!  Good luck if you wait any longer.
• Buyers need to do their homework on VALUE.  All homes listed today in the East Bay are not overpriced.  There are actually Buyers and their Realtors who have done their homework.
• Enter into all of your negotiations with win/win as your ultimate outcome.

Real Estate is still one of the best long term deals in the Bay Area!  So, if you are Buyer, buy now!  If you are a real Seller, then design a price and the condition of your home to sell in weeks instead of months.  And…hire the most experienced Realtor you can find.  This is not the market for the faint of heart or the inexperienced!

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The East Bay rocked last night at Blackhawk Country Club’s Amphitheater with a Kenny Loggins Concert!

Who would have ever guessed that Blackhawk Country Club would be the location of an unforgettable world class concert with Kenny Loggins?  If you clear out tennis court #1, and set up tables on the court and all around the tennis court amphitheater you have the most wonderful and intimate setting for a concert.  Last night this location at the Blackhawk Country Club was another magical moment happening in the East Bay.  To a sellout crowd who paid some BIG dough for a ticket which included dinner, Kenny WOW’d them!  He and his band had the audience dancing in the isles singing along with 30 years of his many hit songs , and even a few new ones from his latest album - “How About Now?”.

Berkeley Honda and it’s owner, Steve Haworth, were one of the few corporate sponsors that allowed this evening to happen.  Steve and his company are key supporters of the Wheelchair Foundation.  Not only does Berkeley Honda sell one of the best cars on the road - Honda, they are committed to giving back to their community.  As you have read in my past articles, I want to hangout with people that have the values of “service above self”.  This company is one of them.  And, their leader, Steve Haworth, is leaving a legacy behind of being the auctioneer at many of the Bay Area’s key fundraising events…from the Lazerex Foundation annual dinner, to the Juvenile Diabetes Research Foundation auction held last year in Danville.  He is also the most sought after auctioneers at most of the school and sports fundraisers in the East Bay.  He personally has raised millions of dollars with his skills as an auctioneer in getting people to open up their check books and give BIG to causes that are critical to the service to our community, schools, and those less fortunate.  Within nine minutes last night Steve was able to have people contribute $40,000 to the Wheelchair Foundation as they purchased items such as a week’s trip for two to Paris, a two day Cal / Oregon football game event ending at the Claremont Hotel for four people, and even an two day wine country event for four people that went for almost $4,000!  He is a marvel to watch as he passionately involves the audience in contributing to this worthy cause.

In the audience was the president of the Wheelchair Foundation - David Behring.  David’s father, Ken Behring - who built Blackhawk Country Club, was so moved by those he has met over the years during his world travels that could not walk, that he decided to make a difference in their lives by providing them a wheelchair.  This simple idea has exploded into the world’s most effective organization that provides mobility to those less fortunate.  The Wheelchair Foundation is a nonprofit organization, headquartered in Blackhawk, leading an international effort to create awareness of the needs and abilities of people with physical disabilities, to promote the joy of giving, create global friendship, and to deliver a wheelchair to EVERY child, teen and adult in the world who needs one, but cannot afford one. This simple idea that Ken had five or six years ago has now delivered over 750,000 wheelchairs worldwide as it continues to keep its promise.  Several years ago they partnered with Rotary International - an international service organization that has created matching grants for the purchase and distribution of wheelchairs.  A person can now donate just $80 for a wheelchair, and these two foundations will pay the rest of the cost!  So, you can make a difference today by going to their website and contributing $80 knowing that the small amount of money you just gave provided mobility for someone who has never walked.  How cool is that?

So, what does Kenny Loggins, Berkeley Honda, and the Wheelchair Foundation have in common - hearts of service.  Don’t forget…to whom much is given, much is required.  There are opportunities around us everyday where we can make a difference.  It is just a matter of paying attention and then acting.  Last night was one of those unforgettable moments.  Until next time…

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It looks like September 1st will be the date that KW will be moving to The Rose Garden in Danville.

 I mentioned last month that the rumor was true…Keller Williams Realty - Danville was moving in the next few months in order to expand their office because of the growth of the Realtors choosing to be a part of the dynamic business model Keller Williams has created.  Well, I just saw a temporary sign at the Rose Garden to confirm that it is TRUE.  I walked up the stairs through the construction workers and had Ann Marie take a photo of me in front of the sign just to prove it.  I also spoke with Kristin White late today, the Team Leader of the Danville office and they are planning on moving into the Rose Garden Center in early September.

She let me know that they have close to 190 Realtors already in their Danville office on La Gonda Way,  and they expect to find a few more GREAT Realtors in the next five months that will bring their agent count to over 225!  This is the company that received the East Bay Business Times “Real Estate Company Of The Year” award last year because of their contribution to the real estate industry and to the East Bay community. With many real estate companies down-sizing and even exiting the local markets, Keller Williams is expanding.  Their business model is to “lead with revenue”.  They do not bet on the future, they only spend money that they have.  And, a part of their business model is the Agent Leadership Council, which is made up of 12 Realtors from each office that are in the top 20% of sales that are invited to be the Market Center’s “board of directors”.  They are the ones that represent the Realtors in the office with any policy or financial decisions, again, knowing that any business must lead with revenue.  Because of this financial model, the Danville Keller Williams office has been able to keep ALL of their costs down in a manner that is now allowing them to take advantage of the current real estate markets and fill the void that continues to be created by down-sizing, consolidations, and companies that are closing their doors.

The East Bay Business Times ranks the real estate companies each year for production and agent count.  Keller Williams Realty has moved from 14th spot three years ago to the 6th spot two years ago, and now to the #3 spot this past year among all East Bay real estate companies.  They have their eyes focused on being the #1 market share leader within the next few years in the East Bay.  Keep your eyes out for their RED signs.  They seem to be popping up all over!  When you stop in at the Rose Garden make sure you say hello to the gang at Keller Williams.  You may want to also check out the GREAT restaurants that have aready opened there.  And,  there are so many more fun businesses coming…from a day spa, to a skateboard company.  And, you can always stop by Navlet’s to pick up some plants for your home.  I guess the words that come to mind with this move for Keller Williams is… “Welcome Home!”  Your East Bay life style detective remains on duty!

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Jim Walberg’s perspective on the status of the East Bay real estate markets - what do the statistics really mean today?

In my lifetime, there has never been a real estate market like the one we are experiencing in the East Bay today!  The dynamics of this market are incredibly complicated with global factors impacting all aspects of our community. Some of the most critical of these factors are:

The mortgage melt down!  There have been almost 300 national lending institutions close their doors in the past year because of creating irresponsible mortgages - almost giving money away to anyone who could fog a mirror.  Greed and avarice were key factors for the mortgage industry for the past several years.  It is now payback time for the irresponsible lenders.

The world price of oil!  Who would have ever dreamed that oil prices could be manipulated by speculators and world events, such as Iran shooting off missiles this week. Because of this one event oil prices skyrocketed.  It cost Iran $5 a barrel to get their oil into storage tanks.  It is in their self interest to create instability in the world so a barrel of oil costs $150, instead of $30 on the open markets.  They are making BILLIONS of dollars a day.  Who would have ever dreamed that what is going on with oil would so dramatically impact the economic health of our national economy, and our local housing markets?

The world currency markets!  Who could have imagined that the world currencies are so much more valuable than the U.S. dollar today?  Euros - 60% higher; British pound - 100% higher: Swiss Franc - 40% higher; Canadian dollar - 4% higher.  The U.S. is the shopping center for the world because EVERYTHING is on sale for them that has a price connection to the U.S. dollar.

Lack of consumer confidence!  Consumers today are in a state of PANIC and FEAR as to what is happening with soaring expenses.  It cost the SUV owners almost $100 for a tank of gas.  The cost of fuel is causing cost of goods to rise in all sectors.  The major airlines and U.S. car manufacturers are losing billions each quarter because of their business models not taking into account the issue of oil prices on their profits.

So, how do all these factors impact the East Bay real estate markets?  What are both Sellers and Buyers facing today as they make real estate decisions?  What are the trends that should be paid attention to in our East Bay micro-markets?  Here are some of my thoughts. Sellers need to have their homes in turn key condition and priced for value or they will sit on the market for months.  Home pricing and appraisals ARE being impacted by short sales and banked owned properties.  Months of inventory used to be the statistic that told us if it is a Buyers market or a Sellers market.  Today “months of inventory” is so mingled with short sales and bank owned properties that it is now not a correct indicator as to what type of market we are in.  So, forget months of inventory,  we are in a BUYERS market today!

The current market statistics are so confusing right now because of all of the above factors.  How about three months of housing inventory in Brentwood and over 20 months of inventory in Blackhawk Country Club!  Dublin’s months of inventory is half of Danville’s.  Antioch had 254 sales in June and Pleasanton had 61.  Are you getting a better picture of the chaos in how to intepret what in the world is going on in our micro-markets.  June Pending sales in the East Bay are up 4%,  and months of inventory in the East Bay dropped 7% in June.

Here are some of my conclusions.  In some communities the majority of their sales are bank owned or short sales.  This is creating huge opportunities for first time home buyers,  move-up and move-down buyers, and investors.  Because of the current economic climate a very confusing time has been created for Buyers and Sellers.  Hire the best Realtor you can find to guide you through the current East Bay real estate “mine field”.  Until next time…

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Realtors are sometimes referring to “short sales” as fake listings!

So, we have two “short sale” listings in our inventory.  The only reason why we agreed to take on these two projects is because the owners are friends of ours. And, because I had managed “short sales” as a Realtor when the worst recession in California history started in late 1989 and lasted for about four years.  Boy, has the “short sale” world changed since 1989!

The economic condition of the mortgage meltdown this time is not just in the East Bay and California, it is a national experience.  A “short sale” refers to a seller who does not have enough money to pay off their mortgage given the price of the home in today’s real estate market, and they don’t have the money to even make the monthly mortgage payments.  There are several keys for Buyers to consider if they are going to submit a purchase offer on a property listed as a “short sale”.

1. 1.  A “short sale” is only possible if the mortgage holders are willing to sell it for less than is owned to them.  The banks are the ultimate decision maker, not the current owner.
2. 2.  It is critical for a Buyer to know as much as possible about the ability of the Seller to actually have the mortgage holder agree to the “short sale”.  The current statistics show that only about one out of 20 “short sale” purchase offers ever make it to closing because the banks will not approve a “short sale” if the borrower still has money stashed in other places, such as savings.
3. It is also important for the Buyer to check out the experience the Realtor has who is representing the “short sale”.  Do the Realtors involved know what they are doing?
4. Has the process with the mortgage holder progressed to having an appraisal done on the home?  If the process hasn’t progressed to this stage it could be months for this step to be completed, if it ever is.
5. 4. The Buyer needs to understand the poor odds of closing escrow, and the amount of time it will take to work through the process - typically months.  5.  If the Buyer is able to make it through the “mine field” of the mortgage holder’s decision process they may get the deal of their life.  But remember the statistics that only 5% of them ever close.
6. A Buyer also will need to typically sign bank agreements letting the Buyer know the bank is selling the home in an “as is” condition, and the bank will not be doing any repairs that may be discovered in a home inspection.

The Buyers also need to be aware of the difference between a “short sale” and an “upside down” Seller.  The difference is BIG!  If an “upside down” Seller must sell their home, the mortgage holder will expect the Seller to take every last cent they have in their savings, 401(k), and even see if they can borrow money from their friends and family to make up the difference of the loss that the mortgage holder will be taking.  The bank won’t approve it if the Seller has cash available anywhere! ( One of the lenders on the “short sale” that we represent even asked ME to consider contributing money to them AFTER the close of escrow in order to minimize their losses!  This was a first for me - a demonstration of what type of desperate measures lenders are taking to see if it makes sense for them to take a BIG loss.)

 An added hurdle is when a property has a second deed of trust holder as part of the mortgage package.  The second deed of trust holder can nix the deal because of not agreeing to have their portion of the mortgage wiped out. ( Usually, the second deed of trust is the one that takes the biggest hit on a “short sale”.)  Also, a bank may want to take the risk of just foreclosing on the property and see if they can get some of their losses back from private mortgage insurance. 

 As you can see, it is very risky for a Buyer to enter into a “short sale” mess and come out the other end of a completed home purchase.  If you are one of these Buyers who are even considering the purchase of a “short sale”, make sure you select the most experienced Realtor you can, and then cross your fingers and pray a lot.  Until next time…your East Bay real estate detective is on duty.

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June 20, 2008 was the official date of the start of the California fire season, and Jim Walberg found himself right in the middle of the mess. 

“If I told you that 526,707 acres have burned in California since June 20th would you believe me?  Well, believe me.  Here are some further sobering stats regarding our fire season that is just three weeks old with over $350 million spent so far with a State budget for fighting fires this year at about $100 million!  Yikes!!!”

1. Number of California fires: 1,783 with 332 fires still burning.
2. Over 20,260 people have been assigned to fight the California fires.
3. There are 1,641 fire engines in service; 531 fire crews; 331 dozers; 429 water tenders; and, 118 helicopters on duty.

Last Wednesday my wife and I took our daughter down to Santa Barbara City College so she could register for the Fall semester - one of the most beautiful California college campuses we have ever seen.  It slopes right down to the Pacific Ocean.  While we were there we also assisted our middle son to move from one of his college housing to another one.  We anticipated a fun family weekend, with our oldest son driving up from Loyola-Marymount University to join us in the celebration of his 22^nd birthday since we were already in Santa Barbara.

Well, it didn’t work out the way we planned.  We left about 5:30AM on Wednesday morning in order to be at SBCC before noon so our daughter could participate with her counselor in organizing her class schedule.  As we came down Highway 101 entering Goleta, we noticed a few puffs of smoke trails coming from the coastal mountains with Goleta at their base.  In the car we noted that we were sad to see another small fire given there has been over 1,750 California fires since June 20, 2008!!!  What started out as a few puffs of smoke on just a few acres of land turned into a State disaster over the next three days!  Now, close to 9,000 acres have burned with Governor Schwaszenegger proclaiming a state of emergency in Santa Barbara County as a result of what they are now calling the Gap Fire.

Governor Schwarzenegger said. “California has the best firefighters in the world, and I also want to commend them for their dedication under such difficult circumstances. Thanks to their hard work, we are making progress in containing the more than 1,000 current fires, and through our local, state and federal coordination and resources, we will put these fires out and help our affected communities recover as quickly as possible.”  One of the keys to having only a few structured burned in the Gap Fire was the work of homeowners in these Santa Barbara foothills complying with the “100′ Defensible Space law”… keeping burnable debris at least a 100 feet from all sides of your home and property.

So, we were staying at a very nice hotel in Goleta with the sky turning dark during the day as if it was dusk.  Ash was raining down on everyone, and the fire burned through several power stations which had all of the electricity in Goleta do down.  There were over a 1,000 people evacuated to shelters such as the Goleta High School gym.  We were not prepared for being in a hotel with nothing but our cell phones working - not even a candle.  I remembered we had an earthquake survival kit in my car.  What I didn’t remember is that it was over 15 years old.  When I opened it up everything had spoiled or evaporated.  So, one of the benefits of our experience was to immediately create a shopping list at Home Depot the next day for five complete emergency kits that would sustain two people for three days in any emergency.  I went to Home Depot on Friday morning and put the kits together for each of our three kid’s cars and one each for my wife’s and my car.  If you don’t have an emergency kit in your car, put one together today.  Obviously, they call them “emergency kits” because you never know when you will need them.  We were unprepared.  Are you?  If not, take care of it this weekend.  Until next time…a bit singed and still coughing.  (The photos on this posting are from AP News, and SBCC website.)

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