I returned to college after the birth of my son, Case, planning to put some of my dancer's training to work as a physical therapist (for anyone who's counting, he's now 17). Enrolling at the College of Marin, I discovered my previous science education left much to be desired. (Choreographers didn't inquire as to one's science background and a career in real estate was still several years away.)
Scanning the course directory, I strategically selected a geology class, believing it would be the path of least resistance (it wasn't). As the pedantic, white-haired professor loved to frequently remind us (speak really, really slow while saying this) "geological time spans millions of years . . ." which means that geological time moves more quickly than my teenager!
Last Friday I was reacquainted with the concept of "geological time" when I went to hear Howard Cook speak at the Oakland Association of Realtors offices in downtown Oakland. (No, I'm not implying that he spoke too long.) Mr. Cook is a partner at Bay Area Retrofit and was speaking to the complicated, yet compelling tax rebate programs currently being offered by the cities of Oakland and Berkeley.
The retrofit program doesn't apply to those of us living here in Piedmont - but does apply to anyone in Oakland or Berkeley who has recently bought, or is in the process of buying; however, the qualifying criteria is specific to each city and extremely time sensitive so act quickly if you are interested. For a detailed description of qualifying criteria, go to www.bayarearetrofit.com.
Cognizant that most of us in the room didn't have geological hours to spare, Mr. Cook (Howard) and his partners limited their remarks to a few digestible hours. (I think I speak for the handful of REALTORS who had gathered when I say, "thank you - we appreciated your brevity.") Still "geological time" was very much in the forefront as each partner spoke, in turn, about the Hayward Fault, which spans 40 miles and runs 20 miles deep.
According to Howard, "The Hayward Fault is continuously in motion, but its history shows a major tectonic event of a 6.9 earthquake or more, every 140 years (give or take 25 years)!"
Guess what? It's been 140 years since the last major event.
Here's some of what Howard had to say (I'm paraphrasing to save you all two hours):
To reach Bay Area Retrofit, call 510- 418-1676.
If you read last week's column (and let's assume for the sake of my ego that you did) I talked about the fact that the Piedmont market has fallen very little in value, relative to other years. This isn't to say prices haven't softened (they have) but not as much as the mainstream media would have you believe. Let me repeat last week's message: third quarter values in Piedmont sales were off by only 1.059%!
So why hasn't my neighbor's beautiful home sold yet? The difference in today's market is the lack of credit in the marketplace (the lender's ability to make loans) and the scarcity of options for jumbo loans (those loans over the super conforming rate of $729,000*). Sales requiring a loan larger than $729,000 are going to find it much tougher to fund than sales at the lower end of the scale. While jumbo loans are still available (hunting them down may prove profitable) - they take longer to process, require more money down, have stricter guidelines, and are currently short-term products only.
This is where seller financing comes into play. If you are in the position to carry back some part, or better yet, ALL of the loan to the buyer, you have just increased your buyer pool dramatically!
Because you've just made it possible for the well-qualified buyer to secure your home absent the traditional lender! Congratulations, you are now the bank and your home becomes the collateral for the loan. (This isn't a new concept, it's a reemerging one!)
That's interesting but I don't need a loan; I have CASH to spend!
Fantastic - you should be well-rewarded in the current marketplace. This is the time to take advantage of those homes at the high-end of the market as they will have far less competition at the table and will likely sell for less than they would have a few short years ago.
I also have a house to sell? Can I come out whole on my end and capture a discount on the other?
That depends. How long have you owned the home? If it is less than five years, the straight answer is - not likely.
Remember that markets are relative. When asking for a haircut on one end, you should expect the Buyer of your house to demand a similar shave on your end as well. However, the substantial savings on the UP leg and its increased appreciation capacity over the long term, should make up for any loss experienced on the selling end now.
Buying UP in a down market may be the best time to realize your biggest gain - especially if you have owned your current home for several years. *Please note that the super-conforming rate is scheduled to be reset to $625,000 come January 1, 2009. IF you have a Refi on your loan coming due in 2009, you may want to take advantage of lower interest rates and the higher conforming limit NOW. You'll need to do this no later than December 1, 2008 in order to get the loan processed in time!
Please speak to your banker or an experienced mortgage broker.
Volume 71 - Dancing with the Gorilla!
As Wall Street meets Main Street, the Piedmont residential housing market remains a very stable investment. Looking at third quarter statistics for 2007, compared to the same quarter for 2008, the value of your home seems to be good and sound!
Last year, 23 homes sold in Piedmont between July 1 and September 30, 2007. The average list price was $1,797,217 and the average sales price was $1,772,304. Days on market (DOM) averaged 32 days. When I remove the $7, 600,000 sale on Sea View Avenue (which statistically skews the numbers) the average list price adjusts to $1,522,272 and average sales price adjusts to $1,507,409. DOM remained virtually the same at 32 days.
Although only 13 homes sold during the same time period in Piedmont this year - here is the good news: The average sales price adjusted only 1.059% to $1,422,870 - AND the average price per square foot was actually UP from $597 a square foot last year, to $614 a square foot this year! DOM was cut almost in half! Houses sold on average, in 18 days in the 3rd quarter of this year, compared to 32 days on average for last year. While equity in most stocks has fallen dramatically over the last few weeks,
Piedmont real estate seems to be holding its own! Isn't it nice to hear good news for a change?
Did the real estate market stand still the last few weeks?
Yes it did.
D0 we have market optimism?
Yes we do.
Here's Why . . . There are currently 23 Piedmont homes listed for sale on the MLS (Mulitple Listing Service) which represents a fair amount of inventory as we approach a late fall market and The GRUBB Co. is scheduled to bring on another seven homes in the next 10 days - so stay tuned (I'll be bringing you all the news)!
The least expensive listing is Tricia Swift's 2bdrm/1bth sunny "starter" home at 102 Oakmont Avenue for $695,000 and the most expensive property is a 6bdrm/5bth rambling estate with a private tennis court on Tyson Circle for 7 million! Between these two extremes, lies a more traditional price point averaging $2,210,208.
Here's even better news: Sellers are paying attention - especially to terms! In a market where liquidity is scarce and loans are tougher to come by than they were in the not-too-distant past, CASH will play a more significant role than it has previously - and so will seller financing!
Finally, anyone with a home on the market in today's climate is a bona fide Seller! These aren't people who are "testing" the waters. They represent motivated Sellers who are often willing to negotiate. Don't be shy! Sellers want and need to negotiate through the process. As your representative, it is my job to "frame" your offer in a way that respects the process and doesn't polarize the Seller. (It can be a delicate dance!)
However, any offer can provide an opportunity for true negotiation to take place. This is a very healthy environment! In spite of the uncertain economic landscape nationally, this may actually be the best time to purchase locally - but only if you are so inclined.
YOU have to be comfortable on the dance floor before taking on the Tango!
Volume 70 - Who Needs Permission?
Thrown by my inability to look into the future, I spent Friday cleaning out my closets in an attempt to control my own small corner of the world. For me, there's something incredibly calming about seeing everything in its proper place.
In spite of Congress' approval of the 700-billion dollar stimulus plan (plus!) none of us really knows how this will all shake out or what priorities will need to be reexamined. We do know it will take several weeks for the money to percolate through the system and several more to gauge the impact. In short, this isn't a quick fix!
In the meantime, buyers are reluctant to take that first step into the market. Worried that sales prices will correct further (in spite of strong bay area sales) buyers are holding back until someone else makes that first bold move.
Everyone is waiting for permission. Hmmm.
While waiting makes sense from an emotional point of view, it doesn't necessarily make sense from a financial one.
When a buyer and a seller meet at the negotiation table - without competition - there is obviously, much greater parity. Without the pressure of another offer in the wings, buyers can negotiate terms and conditions with a receptive Seller (Isn't that nice for a change?) Buyers, here is the market you have been pining for, so good news - I am giving you permission . . .
Hmmm . . . Guess what?
You don't need my permission, nor do I have the authority to give it.
Frankly, the more I encourage you to buy OR to sell (even if I believe the circumstances merit it) the less credible I become. YOU are the only one that can decide your level of risk, your confidence in the marketplace and your desire to participate in it.
Until then, I am here to inform you, to advise you, and to assure you to the best of my ability. My job isn't to sell you a home - my role is to give you advice you can trust! While I can't control the outcome of the market, I certainly can control my efforts and my intentions with respect to my actions and with regard for yours. So I am here to support your decision - whatever that decision is; buy, sell or sit it out - it's up to you.
In the meantime, with closets well organized, I have now moved on to the drawers in my home. I will be here when you are ready. Just give me a call!
After last week's pragmatic overview of the market in The Perspective, I received a quick response from my long-time friend Vivian, who migrated to Terra Linda (Marin) a few years before I moved my family to Piedmont. Vivian and I exchange a frank debate about real estate on a weekly basis and she wanted an update about the future of the market (who doesn't?). Of all my friends, Vivian is typically the one who always sees the glass as half full, so I wondered if her concerns reflected the average homeowner's feelings. From the discussions I've had all week - they do . . .
Before responding, I wanted to get a true read on sales activity in the North Bay (remember, markets are local!). Picking up the phone to speak with my colleague, Val Rogers of Frank Howard Allen in Marin (firstname.lastname@example.org) I inquired about her recent experience in the market there.
Val who sells home in Ross (the Piedmont of Marin) Kentfield, Greenbrae, Mill Valley, Tiburon, Sausalito, Novato and Terra Linda and has more time in the trenches than just about anyone I know. I consider her not only a good friend and a mentor but also a finely tuned barometer of the marketplace and of our industry as a whole. "Prices have adjusted 10-12% in Marin and they are holding steady," Val said. "By no means, are sellers 'giving away' their properties. They simply have too much equity in them and don't need to. Good properties continue to jump off the market in Marin." (Whew, that's been my experience here in the East Bay as well.) Together this is what we concluded: Should sellers enter the market? That depends. What are the sellers' goals and motivation and are their expectations realistic? If yes, then there are still plenty of well-qualified buyers. While many REALTORS often advise sellers to wait until the spring, we really have no idea where the market will be in 2009. If you need to sell, you should move forward.
Should buyers enter the market? Absolutely - After years of competing in a Sellers' Market, take advantage of the highly-anticipated Buyers' Market! (My employer, DJ Grubb, believes we have already hit the bottom!) What if the market continues to correct? It very well may, but holding out for "the bottom" may cause you to lose the unique home that fits your needs and requirements NOW. If you plan to stay in the home for several years, any further adjustments should be irrelevant in the long-term. If you plan to sell within a few years - rent. Are loans tougher to come by? Yes, they are, but liquidity does still exist. Meet with an experienced mortgage broker or your local banker before entering the marketplace to find out what steps you need to take in order to secure funds. Accorging to Diane Crosby of La Salle Finance, interest rates are expected to drop significantly next week! www.lasallefinance.com Is cash king in this market? Often - but not always. Cash is important to strengthening the terms of your offer - especially if it eliminates the appraisal condition or speeds up the close significantly - but cash doesn't trump a full price offer. (All offers are all cash to the seller at the close of escrow. How many days would you wait for an extra $25,000, $50,000 or $100,000? Thirty? Fourty-five? Even sixty? (Me too). It is a mistake to think that just because you have an ALL CASH offer, you are entitled to a wholesale price. All things being equal, a seller will likely take a slightly lower 'ALL CASH' offer in front of a highly-leveraged one (especially now) but a seller won't take it in lieu of a higher offer (practically and emotionally, sellers don't like to discount their homes.) Here is our collective bottom line . . .
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.