It's been a BIG week for my son, Tristan, who not only hit a solid triple in yesterday's baseball game (that's him, running safely to third), but committed to Colgate University in upstate New York and most importantly, secured a lovely date for the Senior Ball! (She's darling.) Ah, to be happy, joyous and free again (young would be optimal too).
Of course, the months leading up to these victories have been less than happy and joyous, as Tris anxiously waited for news of his college acceptances and, for the first real time in his rather charmed life, dealt with a fair number of rejections before receiving the nod from several colleges on his list.
Cliff and I aren't new to this game; we've been down this road before with our elder son and knew that the right "fit" would present, but it seemed tougher this time around as the competition for schools becomes ever more global and difficult to navigate with each passing year. (I'm glad I don't have a third waiting in the wings.) Admittedly, Tristan's "stretch" list was far more ambitious than Case's, so that added a hefty amount of pressure that we didn't contend with the last go-round. Even so, in both instances, getting into college wasn't just about the number of applicants, the pedigree of the institution, or the expenses involved (yikes!), it was also a highly emotional journey fraught with anxiety and fear. (I'm still talking about the kids here; the parents are a whole other subset of crazy!)
Hmmm, that sounds a lot like buying Real Estate, especially these days when rejection is often the name of the game and deciding on a price to offer is often based more on gut, than on intrinsic value alone. (I agree, that's a tough road to hoe.) Wouldn't it be nice if the columns all neatly added up and it made sense? (Yes it would.)
So how does one maneuver the rocky landscape? Like the college hunt, buying a home begins with good analysis and a desire to find the right "fit." It also requires some soul searching and a clear understanding of what is within your reach. Make sure you and your mate are on the same page in this regard and you'll save yourself countless hours of research and writing.
Once the picture is clear and a property has been identified, we find reliable comps of nearby sales, determine the number of other interested parties, ask about the Sellers' requirements, preinspect when possible, thoroughly read the disclosures provided, seek out any additional information as needed, write a love-letter accompanied by adorable pictures (yes, this CAN actually be the deciding factor) set up financing WELL ahead of time, and then move in with determination and commitment. Sadly, anything less is really going to leave you at a disadvantage. In truth, home ownership is acquired by those who have a clear understanding of the marketplace, coupled with a strong desire.
So how does this year's market stack up to last year's thus far? In both instances, the market was exuberant and vigorous, but it seems even more heated this year and for good reason. Overall volume is down. As of April 23, 2014 - 60 homes had traded ownership, per the MLS (Multiple Listing Service). As of today, the number of pending and sold properties in Piedmont since January 1, 2015, sits at only 42. (These numbers don't account for any properties sold privately, off-market.)
While it's GREAT to be a Seller under such conditions, being a Buyer can be quite daunting, so for many, it's safer to simply sit it out. With fewer homes to meet the high demand, homes are selling for more money than last year, although not outrageously so (although it might appear that way to the casual observer). In fact, the average price in Piedmont at the end of the first quarter was approximately $664 per square foot, while this year, the price per square foot currently factors out to $681. It's a bump, but a reasonable one in light of the numbers. (It bears saying that now that you have the figures, it's wise to remember that homes don't sell by the square foot!)
What has changed somewhat is the pricing strategy which accounts for the multitude of overbids. Current practice dictates that a Realtor price a property below the anticipated market value in order to attract a bidding war. Unlike other negotiated markets in which a commodity is typically priced above where it will ultimately sell (think cars) our local real estate market sets a price below the anticipated sale and then bets on the market to carry the value UP! (Did you follow that?)
While this strategy may sound ridiculous, it actually works quite well given that the market has a keen sense of where a home ought to ultimately trade and DOES. Better to price a bit below the final selling price than to risk listing too high and losing your market share to the lower-priced home down the street. BTW - if you start too high, the market will NOT automatically carry the price higher; it doesn't work that way. Listen up Sellers: homes perceived as "overpriced" don't sell quickly in ANY market. For the uninitiated, this can seem like a bait-and-switch tactic. It isn't. It's simply supply and demand at work and unfortunately for Buyers, this year, there's less supply and more demand, so adjust your expectations accordingly and get ready to bid aggressively if home ownership is the desired goal.
If it feels too heated to enter the race, take a "Gap Year" and grow into it. That's okay; you may not be ready. Not everybody is. In the end, jumping into the unknown is a bit like heading off to college; both require a leap of faith and the belief that it will all work out in the end. Except that with home ownership, you will know your roommates ahead of time and someone will likely be there to do the laundry. (Sorry Tris, you're on your own from here on out. I'll pay for the education.)
How can I help you?
"Oh my god!" Chad exclaimed as he scrolled through the construction photos on my phone. "At what point do they start putting your house back together?"
That's an excellent question. Looking at the ruins all I can hear is: "Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall . . . " I don't know exactly what I expected given the scope of the project, but you can literally see through the entire house and that includes the roof and attic as well.
In truth, there's almost nothing of the original structure left and what there is, still needs to be replaced due to significant rot and termite damage. Of course, I knew the house was a MAJOR "fixer" when Cliff and I bought it a year ago (I'm not totally soft boiled) and that it would need everything, but I didn't really believe it would need EVERYTHING!
IT DOES (!) and so, having come this far, the only thing to do is to push forward with conviction and faith, BUT I'd be less than honest if I didn't admit that there are moments when I wonder if ALL the king's horses and ALL the king's men CAN indeed put Humpty Dumpty back together again?
Of course, it doesn't help that I keep showing up only to find a single workman or two on the job site when what I'm hoping for is half a dozen strapping young men with power tools in hand. (Heck, give me the whole calendar!)
"Can't we at least clean up a bit around here?" I asked the sole individual in vain, looking for some small semblance of control, before calling my contractor and begging for more progress, more bodies, or at least more order.
"Well, it's a construction site," PJ patiently reminded me in his soft Irish brogue. "We'll definitely get it cleaned up when the drywall goes up, but in the meantime Julie, it's a construction site!"
"Unfortunately, we're in a holding pattern until the windows arrive PJ continud, and they're a month late so there isn't much we can do until they come in." And then the kicker, "Please try not to worry about it."
Uhhh, that's more easily said, than done as I look around at the demolition site that once was a home and a yard. For a gal who craves neat and orderly, this isn't exactly my best and finest hour. Plus, there's still so much to be done . . . Yes, I know there is progress being made (I have HUGE invoices that tell me so) but I wish I could see more of it in real time. You know like those HGTV shows that completely remodel a house in two weeks for practically nothing? What's wrong with that expectation?
Hey folks, this is where acceptance and surrender come into play. I've discovered that in the face of chaos, there's really no better solution for what's appears to be out of our hands than letting go . . . What's more, it's a message I'm often reminding my clients to adapt as they struggle with the pace and speed of the marketplace and the loss of bids that only a year ago would have easily secured them a home.
Here's the good news: the market is incredibly dynamic and while there still isn't enough good inventory to meet the high demand for Bay Area housing, more and more Sellers are starting to see the advantage of bringing their homes to market now to better capitalize on this golden opportunity, which means that we should start to see more balance as we progress through the spring market.
Moreover, with news that the Feds WILL finally raise interest rates (potentially by the third quarter) purchasing power will undoubtedly be affected for many, which means that competition may decrease just a wee bit. (Now I'm speaking Irish.) In the meantime, here's what you can control (drum roll please) . . . your intentions and your actions.
That's is? (Yes, that's it.)
In other words, no need getting worked up about the things we can't control (which is everything else). The market is what it is; lenders and service providers are backed up, Realtors are working round the clock, competition is intense, and somewhere, somehow, someone undoubtedly can spend more than you! That's the long and short of it. So get your financing in good order, diligently hit the Sunday Opens, give your Realtor specific and frequent feedback, and when you at long last, identify the home you want, put in a bid that decisively secures you the property. Shopping for a home may not be a fairy tale, but we can certainly strive for a happy ending!
How can I help you?
One Step at a Time! I hesitate to use the word "fanatic," but I'm kind of a Fitbit fan and one of the things that has really become clear to me is how much that little piece of hardware has changed my "perspective" on life.
To set the stage, my job requires a fair amount of paperwork. Since I'm highly detailed, I'm not only producing contracts, disclosures, letters, offer synopses and the like, but I'm printing and copying them for my files on a daily basis. (Yours, I'm usually sending electronically.)
Since you can't see my little piece of carved-out real estate here at the The GRUBB Co., imagine a tiny cubicle in the center of the room upstairs, with a community printer and copy machine on opposite walls. In short, my in-house days are spent racing from my desktop to the printer to the copy machine and then back to my desk - over and over and over again - in something akin to an M-shaped pattern. (Think mouse in a maze and you've essentially got it right, except there's no cheese at the end.)
Here's the great part; what use to annoy me as being a highly inefficient design, now adds up to thousands of steps each day (no kidding). Ditto for the parking lot at Target, the last floor at the cineplex, the three blocks to Witter Field, or any other "walk" I'm forced to take in the name of legal parking. (Ain't life grand?)
Now, I need only receive a little buzz when I hit the 10,000 step mark and I feel as if I've conquered the world. That little black band not only makes me feel productive, it tells me so with a little grahic message and some exclamation marks: WAY TO GO!!! (Clearly, I'm easily motivated by outside stimuli.) Like Yurtle the Turtle I keep rising higher and higher with each passing day. To date, I've conquered the steps in the Empire State Building and well beyond (I'm obviously their target market) so you see, it's ALL about perspective. As you might imagine, "perspective" is vitally important come time to buy or sell a property. In a market that is all but defying explanation, it can be hard to maintain a healthy dose of sanity around the stories one hears . . .
"Can you believe how much that house went for?!?"
"Did you hear that there were more than 27 disclosure packets out?"
"Did you hear they got X number of offers . . ."
Or conversely . . .
"Did you hear they only got one offer?"
Leaving the dejected sellers to feel as if they were the last kid asked to dance at the seventh-grade Cotillion. (Okay, maybe I'm still just a little tender.)
For your own sake, let's put it all in "perspective." Just a few short years ago, the banks had nearly failed, stocks had tumbled, retirement plans had lost BILLIONS, and Real Estate, along with every other investment we held near and dear, had absolutely taken an unexpected hit, leaving many people "short" and forced to sell. In fact, in many parts of the country, real estate values still haven't returned to their pre-2008 values.
Thankfully, that's not true here in the Bay Area, where we've not only rebounded, but surpassed the high market values of 2005 - 2006. If you have successfully sold your home, consider the sale a win. Take note, pat yourself on the back, and give thanks. If you are in a position to buy or sell Real Estate anywhere in the Bay Area, you are truly one of the blessed. Yes, should you sell, you will undoubtedly compete with others on the buy side, but for many of you, your profits will more than make up for the heavy competition. In fact, you'll very likely be the ALL CASH Buyer wielding the HEAVY hammer come time to jump.
What's more, comparatively speaking, Oakland/Piedmont/ Berkeley are all still undervalued when compared to our like-kind neighbors up north, down south, or across the Bay Bridge. Based on the MLS (Multiple Listing Service) the median price for a home in Alameda county factors out to $697,000 - well, WELL below homes in San Francisco ($1,154,000), OR Marin ($1,023,440), OR San Mateo ($1,200,000), OR Santa Clara ($915,000). (Don't you feel better already?) Which isn't to say that these numbers aren't daunting, especially for first-time home buyers, but the East Bay still represents smart value and Oakland, in particular, is only going to get better and better over the next decade. (Evidently, we're the new Brooklyn.) Yes, I know I'm partial when I extol the obvious benefits of East Bay living, but I know from where I speak. Having spent the first 18 years in The City and the last 12 in Piedmont, it's easy to talk the talk, but I've also walked the walk, and there are few communities as diverse and dynamic as ours. Or to quote Mr. Rogers, "Would you be mine? Could you be mine? Won't you be my neighbor?" Hey "neighbor," I've not only worn out a few pairs of shoes getting to know my neighborhood, but I've done the necessary footwork to understand the ins and outs, and the ups and downs of the marketplace (Did I mention I have the Fitbit record to prove it?)and here's what I've learned along the way (clocking all those hard- earned miles) that will hopefully save you countless steps and a tremendous amount of time on your way to home ownership: it makes little difference in the long term, what you pay for your home in today's world. (It's true.) Yesterday was yesterday. Tomorrow will be tomorrow. Today's market IS the only one in which you can work, so make the best of it and try not to fret about the past or the future. It will all work out in the end. How can I help you? (I'll be taking next week off as so many of you will be on vacation. Happy Passover or Easter. Enjoy your down time.)
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.