East Bay Real Estate

Once you get on the Slipper Slide Of Fear, it is difficult to get off!  Please stay off that slippery slide!

So, I picked up USA Today  last Saturday on my flight to the Luxury Real Estate  Fall Conference in Philadelphia where I was a presenter. The USA Today headline was, “FEAR is a slippery slide!” In some of my past comments I have used the sailor’s mantra, “Do not be fearful!”   It still applies today,  in spite of an almost 900 point recovery on the Dow Jones the past two days.  Don’t forget…once one steps on the “slippery slide” of fear,  the momentum carries you away very quickly.

The voice of experience, the voice of the local authority, and the voice of credibility can still prevail.  And, we are the ones that need to be that voice. I just completed a walk from the Philadelphia Ritz Carlton  to Constitution Hall, the Liberty Bell, and other reminders of the work our founding farthers did on our behalf 230+ years ago. What an inspiring day!  ( You may recall this is the organization who is the acknowledged authority of luxury real estate!  It was founded by Brian Losh with a vision of connecting the best luxury Realtors in the world - 1,900 members from 63 countries.)

Do you think they were afraid? Of course they were. But, the consequences of letting fear paralyze them from action was not an acceptable option. Instead of the “slippery slide” of fear taking them away from the liberty and freedom they so dearly wanted for our country, they discovered - step by step, the actions needed to create the most incredible democracy in our world’s history.  It was very hard.  Thousands of lives were lost as part of that payment for liberty.  And, the founding fathers never lost site of end result that was required - FREEDOM!

There is a book I have enjoyed reading several times - “The Tipping Point”. They have a very insightful analysis of Paul Revere’s ride in Boston a few days before the Revolutionary War was officially declared.  His ride was so effective that it mobilized the citizens along his route in a manner that called them to action in stopping the British from confiscating their arms stored in Concord. Did you know there was a second rider who was sent in a different direction to alert another section of Massachusetts immediately prepare to defend Concord. Does anyone remember his name? In fact, I had never heard of him before I read “The Tipping Piont”. He was totally and utterly ineffective to a call to arms.

What was the difference between these two men with similar intentions? Paul Revere was one of the most respected local authorities on what was happening within the colonies which he believed required a liberation movement to break away from British Rule - even if it meant war. I would like to be as effective as Paul Revere during these uncertain economic times. We are the local citizens calling our “citizens” to action in order to work through the financial crisis we are in.  Will you join me as we serve our clients and communities, and help them off the “Slipper Slide Of Fear?” ( You get bonus points if you email me with the other freedom rider’s name whose ride was a waste of time. )  Contact me with your thoughts.  Until next time…

No Comments yet »

There is a mixed bag of critical information for Buyers and Sellers to consider for the 4th quarter.

There are MANY factors that are still mixing together that makes it critical for consumers and Realtors to understand the economics of how these factors will impact their decisions regarding Buying and Selling real estate in the San Francisco Bay Area.  And, as you read my report remember that all real estate is LOCAL!  Here are just a few of the factors that will be impacting the 2008 fourth quarter real estate sales in our Bay Area region.

• Mortgage interest rates have been adjusting downward this past week. The markets believe that inflation is not the BIG factor at this time, even though in August it was at a 27 year high. The biggest inflation factor was the price of oil. The speculation on that commodity has cooled down dramatically bringing gas prices down, therefore lower the inflation rates.
• Short Sales and REO sales are bringing down the median price for homes in the Bay Area. What this means is that appraisers are one of the BIG hurdles when purchasing a home, because in some communities there are so many distressed sales that it is the trend impacting those homes for sale that are not in a distressed condition. For example, communities such as Antioch/Brentwood/Oakley are receiving appraisals on any home sale that are based on a much lower median price trend because of the number of distressed sales.
• Positive reports on the housing markets helped regain some confidence in the past week. Preliminary Growth Domestic Product estimates showed the U.S. economy growing at a surprisingly healthy pace while the Consumer Confidence Index posted its second straight monthly gain. However, here is the catch that needs to be watched. The GDP may be a false indicator because most of this gain is generated from exports because of the world taking advantage of the weak dollar. Remember, on Friday the unemployment figures are now up to 6.1% - the highest in five years. So, the GDP is growing but that growth is not creating new jobs.
• All of the housing sales indicators are showing that we may be getting close to the bottom of housing price corrections. However, there is a wild card that may be showing up soon - pay-option adjustable-rate mortgages may show a dramatic increase in defaults in 2009 after the payment option period expires. This could be the second wave of defaults with most of these in higher priced communities.
• Remember that all real estate markets are local! The national averages do not mean anything in the Bay Area, or any other specific geographic area. The local markets are the real indicator to watch. Within a 25 mile radius in the East Bay the markets are as different as night and day. It even gets more specific by city. Some of the communities that are on fire right now are Danville, San Ramon, Dublin, and Pleasanton. The very large sales activities in Antioch/Brentwood/Oakley are still caused by the Short Sale/REO properties that continue to flood the markets. As much as 45% of the sales in these communities are distressed sales. As opposed to Danville where they are 8%. Do you see how “local” the real estate markets really are?

So, how does a consumer filter all of this information into actions?  If you are a Buyer, lock your loan and buy a house NOW.  If you are a Seller that does not need to sell right now, HOLD.  If a Seller needs to sell their home, then price it aggressively, prepare the home in turn key condition and get it SOLD.  A Seller will only hurt their chances for the best price if they do not pay attention to price and condition.  The longer a home stays on the market the likelihood of getting their expected price will decline.  One last thought for the day…there is no BAD market or GOOD real estate markets, there is just THE market we are in.  We are very effective at turning lemons into lemonade no matter what the economic conditions.  Contact me any time with questions, and I welcome your comments about my real estate market observations.  Until next time.

No Comments yet »

The value of borrowers homes may not be enough to pay off their loans.  Short Sales are now impacting appraisals of properties and the ability of borrowers to secure their next mortgage.

Not since the early 1990s have I seen so many Short Sales being processed.  The challenge today is that most Realtors servicing a Short Sale were not in business in the early 1990s.  In fact, most of the people working for the lender’s side of the Short Sale negotiations have never participated in this type of transaction.  This may be one of the reasons why less than 30% of the Short Sales actually close escrow.  We now have the solution  for borrowers considering this method of negotiating with their lenders.  Our real estate Team is looked upon as one of the most successful in actually completing the Short Sale process because of having a dedicated department to serve these difficult situations.  Ellen Muzzio has just joined our Team as our Short Sale Specialist.  She is the most experienced professional we have found regarding the successful management of a Short Sale.

A ‘short sale’ is when a lender accepts a discount on a mortgage to avoid a possible foreclosure or bankruptcy. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $700,000.   The value of the home in today’s real estate market is only $600,000.  The borrower hires a Realtor to sell it for current market value.  A Buyer presents an offer for $600,000.  The purchase offer is submitted to the lender for consideration.  This is a ‘Short Sale’.

Deciding to participate in the Short Sale process is a BIG decision for a Buyer.  It is usually triggered when someone is at the point of not being able to afford their home due to; high interest rates, dips in property values, divorce, loss of employment, decrease of income, etc., then they are forced to make a life altering decision.  I will be the first to tell that a short sale is bad, but a foreclosure is worse.  However, the Buyer may have the ability to save their credit from reflecting a ‘foreclosure’ as to simply having a ‘settled debt’.

Why would a lender today be willing to take such a loss?  Here are just a few of the reason:  First, banks do not like excess inventory and delinquent loans on their books. An opportunity to sell the property is very attractive in today’s real estate market.  Secondly, lenders know they could lose a substantial amount more if the property goes to foreclosure - a trust deed sale. There are many fees involved: i.e., property taxes, liens, repairs, etc. The lender may be better off taking the loss beforehand and be finished with the headache and liability if in fact it goes to a ‘trust deed sale’.

The short sale negotiation with the lender is a difficult, frustrating and very time consuming.  A purchase contract from a Buyer is required to begin discussions with the lender.  This is the first step of many that will need to be successful taken in order of a lender approval to be secured.  A short sale approval is further complicated when there is a 1^st and 2^nd mortgage on the property.  Here is a list of the items a lender will require before they will even begin the negotiations. 

• A letter of hardship from the borrower.
• A copy of the purchase contract from a prospective Buyer of the property.
• Two years tax returns.  (If you have not filed, include that information in hardship letter)
• Two most recent paycheck stubs for each person on loan.
• Two most recent bank statements from the borrower(s).
• A copy of your mortgage statement(s).
• A signed borrowers authorization for our Short Sale Specialist - Ellen Muzzio, to communicate directly with the lender(s).

The outcome of a Short Sale will be up to the skill of the professionals managing the case on behalf of the borrower(s).  Again, it is not for the faint of heart, but it may be the best solution for a borrower in a very bad situation.  There are very important tax considerations for a borrower to also consider.  Before they even begin the process they will need to seek counsel from their tax and legal advisors.  Let me know  if you would like to learn more about how this may benefit your current real estate situation.  Until next time…

2 Comments »

Jim Walberg’s viewpoints regarding key factors impacting today’s real estate market results!

There are non-stop changes happening in residential real estate - locally and nationally.  Also, there are a multitude of factors that are involved in the current condition of residential real estate.  If one does not understand these factors then they will be stuck in the mental state of a “victim of the market”, or they will decide to be “paralyzed from taking action”.  Neither of these conditions will have a positive outcome.  Here are some of the pieces of the puzzle that need to be examined.  The observations are being done by a non-economist - me.

Mortgage Industry:  In the past 18 months over 250 mortgage lenders have closed their doors.  The result for the consumer is that there are VERY FEW choices left for securing a home mortgage.  In fact, the two emerging key players are Freddie Mac and Fanny Mae.  The remaining few banks and mortgage lenders have been badly damaged financially from the poor decisions they made in making the wrong bet on lending products and the belief that future appreciation would support some of the “creative” interest only and/or negative amortization loans. 

The result of the condition of today’s mortgage markets is an atmosphere of fear and over reactions as to who can be granted a home loan.  It is as if they want your first born child pledged as collateral before a home loan will be granted.  You had better have a GREAT credit rating and real money for a down payment if you want to purchase a home.

The good news within the remaining lenders is interest rates are still relatively low, even though they are contrary to what is happening with inflation rates - the highest in 20+ years!  What this means to me is that interest rates will adjust higher before the year is over, maybe right after the election.  The Feds may want to defer any more bad news regarding interest rates until a new president is elected.  They will let him deal with the realities of rising inflation rates.

Consumer Fear:  Remember my definition of FEAR?  False Evidence Appearing Real.  It has been a long time since home prices and interest rates have been so favorable.  If this novice economist is correct, a real Buyer needs to lock their loan today and purchase a home.  If a Seller does not need to sell their house they need to wait until a clearer picture of the future economy unfolds.  If a Seller needs to sell their home today then do it NOW!

World Issues:  What is happening in our local and National economy is not happening in a vacuum.  We are in a World neighborhood where what happens in oil markets of the Middle East impacts the Bay Area.  What is happening in Georgia, with the Russians in charge of their country because they want control of the oil pipeline running through Georgia, is impacting the economy of the rest of the world.  What is unfolding in China and India as major consumer of oil within the next few years will determine the price of our oil no matter how much the U.S. can come up with conservations numbers.     

So, are you getting a BIGGER picture that is causing your brain to take a moment to consider the issues that are impacting real estate and all other factors of our economic lives?  I hope so.  I welcome any of your thoughts about the experience you are currently having, and maybe even expressing what some of your fears are for the future.  Until then…I promise to not stop keeping an eye on real estate and sharing my thoughts.

No Comments yet »

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.

2 Comments »

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…

No Comments yet »

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…

2 Comments »

With 1,100+ members from 60 countries, this is the organization to find and market your East Bay luxury properties!

Last week at the Grand Del Mar in San Diego, California, the Who’s Who In Luxury Real Estate produced their Spring Conference where they highlighted the latest technology to be used by both the Broker/Realtors and the consumers in luxury real estate markets.  Jim Walberg and Ann Marie Nugent were part of this exclusive group of 240 participants from all over the world sharing their best practices in serving the needs of their luxury propety clientele. One of the important breakout sessions I attended was facilitated by Pat Hoferkamp - President of Burgdorff Realtors headquartered in New Jersey.  She presented the mission / vision of her company and reviewed the best practices they use in creating a luxury experience for both their Realtors and their customers.  It was worth every moment of the session. An added feature of the conference was having Ben Stein as the keynote speaker on Thursday night. ( You know, the world famous writer, director, and actor.  His comments about the importance of owning real estate was actually compelling to the point of him getting a standing ovation.  In addition, he was darn funny.)

Who’s Who In Luxury Real Estate was founded by John Brian Losh almost 20 years ago.  He had a vision of gathering the best Broker / Realtors in the world into one organization in order to create a synergy in the luxury real estate markets worldwide.  Each selected member has been recognized as a leader in the marketing of distinctive and luxury properties, committed to high performance, professionalism and quality service.  The members are truly the “Who’s Who In Luxury Real Estate!  Not only has Mr. Losh succeeded, but today it is the dominant luxury real estate network in the world!

Mr. Losh commented, “As I interview brokers and work with organizations through my consulting services, I continue to be profoundly impressed by the quality and integrity of the people represented in Luxury Real Estate. I am pleased to see a steady increase in the use of our logo in print advertising, and our 50% growth over the past year. Each year we set high goals and work diligently to improve the network in every way.  I am confident that doing business with any one of our Broker/Realtors would be a delightful and rewarding experience.”

He also said, “Each year I travel to all sections of the United States; the villages of New England, the resorts and cities of the East Coast, the great state of Texas and the Gulf, the deserts of the Southwest, the grandeur of the Rockies and America’s heartland, and this year to Europe and Asia. As a result of this effort, we have added many excellent firms from all over the world.”

By the way, the Grand Del Mar has created a breathtaking resort!  It is San Diego’s newest 5- star resort destination. From its Tom Fazio-designed golf course and The Villas, to a luxurious spa and award-winning dining, The Grand Del Mar delivers a world-class resort experience.  This is a must resort for those seeking the BEST level of service and amenities I have found in California.  I promise you will be hearing more about the developments of the Luxury Real Estate’s world wide expansion of members and luxury property opportunities. We were honored to be invited into this exclusive organization last year  Until then…

3 Comments »

East Bay real estate prices are NOT being helped by new home developers “dumping” their unsold homes!

The East Bay real estate markets continue to feel the impact of the price corrections, and the credit meltdown that have occurred. However, there is another BIG factor effecting real esate prices, too - new home developers “dumping” their unsold inventory.  We just assisted a family in the sale of their San Ramon home that was only two years old - 3-bedroom, 2-bath, 1,600 square feet, 2-car garage, and on a 3,500 square foot lot.  They needed a larger home because of their growing family and they wanted to stay in the community because of the great school district.  They sold the home for a fair price and came out with some profit from when they purchased it. It was in a great location in San Ramon and in walking distance from two great schools.  We began their home search two weeks before the close of escrow on thier San Ramon home.  As part of the home search process we suggested they check out several of the new home develops as options. What an education we all received! (Remember, in order to get the benefit from us regarding negotiating with a New Home builder, you need us to go with you to the new home develop and register you in during your FIRST visit. If that does not occur you will be on your own, and the commission paid to us by the new home developer is not refunded to you.  That increases their net profit and they love it when a Realtor is not representing you!)

The home they sold was built by Linnar Homes.  They learned if they purchased their next home from Linar’s new home division they might qualify for some incentives. That was an understatement. They just completed their purchase contract on a new home built by Linnar Homes in San Ramon.  Here is the summary of what we were able to negotiate.

• Price: only $140,000 higher than the sale of their present home - $785,000!  Two months ago this same home was listed for over $1,000,000 with Linar!!!
• 3,300 square feet, 4-bedrooms plus a den, 3-baths on a 9,000 square foot lot, plus a 3-car garage!
• Located in an upscale community in Danville!

This transaction just changed all the comparable sales within that neighborhood - dropping home values of those that purchased at the original price by over 20%!  This is now the new comparable price that appraisers will be using when confirming sales prices of homes for the mortgage company.  So, are you starting to understand the impact of new home developers “dumping” their unsold inventory on the price of your home?

Another example is happening in Dublin right now.  Greenbrier Homes has a small new home development that they have been selling new homes in for several years.  We have a listing in this small little subdivision built along an open space trail system along a creek.  It is beautiful.  Our clients bought their new home one year ago.  It is the best floor plan, they purchased the upgrades that were offered in order to make it even more sellable, and it is a corner lot facing the creek.  The home is listed for $749,000 and it is beautiful.  Greenbrier Homes has one last new home to sell.  It is the same floor plan as our listing, and it has all of the comparable upgrades.  Last week Greenbrier announced they were selling it for $649,000!  Our clients just took their home off the market and have concluded that they will not be able to sell it for a year or more because of the new comparable sale this event will create.  Business is business.  Any developer can sell their new homes for any price they want to.  My comments are meant to have you understand an additional factor that is having an effect on the prices of some of the communities in the East Bay.  Do you have any similar experiences you want to share?  Let me know…leave a comment below!

No Comments yet »

For the first two months of 2008, there is a dramatic increase in home sales!

If Buyers are awaiting the “bottom” to hit the real estate markets in the Tri-Valley and San Ramon Valley, they may have waited two months too long!  Again, remember that all real estate is a local economy, and in some cases actually a micro-economy. There are not only differences within regions of the East Bay real estate markets, there are even micro-economies within zip codes.  What we are noticing is a dramatic increase in opened escrows in the Tri-Valley and the San Ramon Valley!

The real estate reporting firm for the Bay Area is DataQuick. Their statistics for the first two months of 2008 show an increase in sales in all but a very few communities in the East Bay real estate markets! Plus, the median home prices have also increased. One of the most dramatic increases have occurred in Pleasanton with a 128% jump in opened escrows compared the first two months of 2007. “Most encouraging are that the increases we found in units sold, pending sales, and median prices have occurred throughout the southern and eastern portions of the two East Bay counties, and are not limited to the traditionally stronger geographic markets,” said Melrose Forde, the 2008 president of the Bay East Association Of Realtors. “Traditionally, real estate sales activity is seasonal. These market statistics show that we’re moving out of the slow Winter months into the more active buying and selling seasons,” Forde said.

It is obviously too early to see if this is a trend in the East Bay real estate world, but it again demonstrates that the generalizations that are made in the media regarding real estate sales are not the basis a Buyer is to use for their buying decisions.  Remember, all real estate markets are “local economies”.  Another factor that is going to be a key factor is mortgage interest rates.  With the Fed’s interest rate reductions last week in the short term lending world, it will not have a direct effect on consumer mortgage rates. It does have an impact on consumer confidence. And, with the fears of  inflation still lingering, it is expected that interest rates may even rise by one percent by the end of the year because of the inflation factor.

So, the Buyers who are waiting for the “bottom” may want to notice that it may be already here. And, if they want to get the best mortgage rate of the year, today is the day to buy a home in the East Bay real estate markets! Even Sellers need to pay attention to becoming Buyers as soon as possible, so they do not miss out on the real estate opportunities that are currently present. Contact me if you would like to further discuss these trends I am noticing.  Until next time….

/

/

No Comments yet »