Can you feel the hustle and bustle? No, not with Real Estate (Real Estate is finally taking an overdue break) but with preparations for the holidays? Whatever celebration you honor, I suspect that most of you are busy shopping and wrapping presents, baking cookies, delivering goodies (yum), decorating, and donating to your favorite charities.
"Tis the season . . ."
While your kids will be tearing into packages come Christmas morning, I'll hopefully be skiing down the slopes in Steamboat Springs, Colorado, with mine. (Heaven.) Hey, I may have swapped Christmas for Chanukah when I joined Cliff's family 25 years ago, but there are some real advantages to the Jewish traditions and the simplicity of those eight days of lights. Let's just say that a menorah is certainly more portable than a tree, and who doesn't love a good latke? (I guess if you were wandering the desert for 40 years, you'd want to keep the load light too.)
It'll be my first time in Steamboat and I'm looking forward to getting away for a few days. So Merry Christmas, Happy Chanukah and Kwanza. Until we meet again in the New Year, I'm wishing you all a season of peace and joy.
Speaking of the New Year and how it pertains to Real Estate . . .
What do we expect 2015 to bring? Where are we headed?
And how did the market perform in 2014?
(I'm glad you asked.)
It just so happens that on Tuesday I attended the annual holiday luncheon hosted by First Republic Bank at the St. Francis Yacht Club in San Francisco. (Thank you Chad Rego for the invite.) First Republic always does an amazing job of laying out the economic landscape - both locally and globally - and then providing a forecast for the coming months and this year was no different. Alan Zafran, Senior Managing Director and Portfolio Manager of First Republic Investment Management, passed along his wisdom and experience that's well worth sharing. (It doesn't come with a bow, but it's a gift nonetheless.) I hope you find it as informative as I did.
In a nutshell, here's what Alan Zafron had to say:
In short, the East Bay is a great value by comparison to San Francisco, South Bay, and North Bay Area markets, where Palo Alto, Hillsborough, Los Altos and Marin all come in at, or near the TOP of the list as the most expensive communities in which to live.
Make no mistake, Oakland, Piedmont, and Berkeley saw great demand as well so while you won't necessarily find bargains here, you will absolutely find OPPORTUNITY. (Folks, that's the sound of knocking at your door.) With interest rates at all-time historical lows, no one expects much to change in 2015, although at some point, the market must hit its ceiling, according to our esteemed speaker.
Have we hit the top yet?
No one knows, but Mr. Zarnoff felt we were certainly getting near the peak. In a baseball analogy of a nine-inning game (and who doesn't love a good baseball analogy?) he surmised that we were in the seventh inning, suggesting that there is still time to buy before housing prices level off, OR begin to correct. (Keep in mind that ALL markets are cyclical, as evidenced by the 2008 crisis.)
As for Piedmont, in 2014? 142 properties traded on the MLS (Multiple Listing Service) with the top selling price coming in at $5,450,000 and the lowest price recorded at $810,000. The average selling price was approximately $1,867,000 and the median was $1,715,000. Again, with a booming economy and unemployment at its lowest rate in years, Mr. Zafron predicts NO decrease in values in the new year - barring any unforeseen circumstances, of course.
To give you some context, 2013's selling price in Piedmont averaged approximately: $1,614,000 with the lowest recorded price at $665,000 and the highest, at $4,900,000. (Days on market averaged 22 in both calendar years, but is always skewed by those few houses that languish; 22 days doesn't accurately represent the speed of the market by any means). Only 117 homes traded on the MLS in 2013 compared to 149 homes in 2014. Evidently, Sellers took advantage of a red-hot market and were rewarded in kind. Were you among them? (Happily, I was.)
Thus inventory was up, but so too was Buyer demand. In nearly every case, multiple offers were presented, driving the sales price to 25-35% above the list price and sometimes, well, WELL beyond. Whether this is welcome news or not, it's going to be the same for the foreseeable future until housing stock catches up with those willing and able to buy.
So that's the gist of the marketplace: past, present and future . . . 2014 came in with a bang and only got better as the year progressed. As for 2015, whatever you decide to do with your own home sale, home search, home purchase, or home project, just know that I am here to be a resource, to provide guidance, and to bring clarity. Your continued support and referrals made my year and I don't take them lightly. Thank you very much and Happy New Year!
How can I help you?
(P.S. - You can follow my own renovation on my new blog: Renovation Riptide. I invite your comments and stories. )
It's beginning to look a lot like Christmas . . .
After an incredibly busy year, I've finally got time to take a breath, work on marketing for next year, see to some long overdue bookkeeping, bake cookies, deliver some holiday goodies and even do a little shopping. (Not today mind you, it's waaay too wet and windy!) Today, it's best just to bundle up and stay inside. (Baby it's cold outside.)
What's that mean for the market as a whole? It too, will take a brief respite, but unlike previous years when the typical selling pattern usually presents a measurable drop-off in value come October, November, December, the Bay Area market continued to deliver well into the fall and what's more, with real strength to boot. (Joy to the world!)
Good homes continued to see multiple offers even as the holidays became the priority for many people, taking them out of "active" status. Not to worry, Buyers who had been pushed out of the highly competitive spring market, saw this opening as an opportunity and responded in kind. In other words, supply and demand were comfortably at work, in spite of the holidays. ('Tis the season to be jolly.)
So what constitutes a "good home" you ask; "GOOD" being a highly relative term . . . (Deck the halls with boughs of holly.)
Homes, like people, range in style and shape dramatically, but the sweet spot for most Buyers seems to be the 3+bdrm/2+bth home with a welcoming yard. This is, and continues to be, the staple for the "nuclear" family with two kids, a dog, and two cars. Bonus spaces are always a plus as they provide flexibility for guests and home office. Moreover, many young families are moving towards an open floor plan (as compared to formal rooms) again for the flexibility and communal lifestyle they encompass. (Hail the new ye lads and lasses.)
Natural light, tree-lined streets, public parks, community centers and high-ranking schools all factor into "good" homes and highly-coveted neighborhoods, supporting the old adage: "location, location, location!" Thus, if you can stretch for a good neighborhood come time to buy, chances are you will be well rewarded come time to sell. (And heaven and nature sing, and heaven and nature sing.)
As families expand, so too do their needs and wants, and starter homes (2bdrms/1bth) quickly give way to bigger homes, bigger grounds, and BIGGER mortgages. These years center around school and camp activities, sport teams, swim/tennis clubs and family trips. STORAGE is key for this time of life, what with skis, bikes, cars, cleats, computers, tools, tents, holiday decorations and every manner of "must have" imaginable. Our garages rarely hold our cars any more, supplanted by the things we now own. (Oh, Holy Night!)
For "empty nesters," the bedroom/bathroom count doesn't change dramatically (returning kids after all) but the location often does. Gone is the need for a highly-prized school system, often replaced by proximity that favors an easy stroll to coffee, the movies, and friendly neighborhood dining. Storage remains at a premium (although I encourage my downsizing Sellers to divest from many of their belongings once the kids have gone off to college). Keep only what you use and love. Memories take up NO closet space and are highly mobile. (Our finest gifts we bring, pa-rump. pum-pum-pum.)
Condo living (a jumping off point for many first-time Buyers) returns to the forefront for those well-healed and wishing to travel instead of remaining root bound. Condos have the distinct advantage of ease of living (tending the garden is a thing of the past) and feature a comfortable, compact lifestyle. Just lock the door and go, secure in the knowledge that your neighbors are close by in your absence. Unlike the starter condo, these units tend to be far more luxurious, offering high-end finishes and often, breathtaking views. (Hark, the herald angels sing.)
Speaking of views: bay views, city views, water views and canyon views are always highly desired, but depending on how high UP the hill one has to travel to gain the view, they aren't currently as popular as they once were here in the Oakland Hills. (in San Francisco, VIEWS will forever remain king.) While these ridge homes offer dramatic sight lines, they often isolate the homeowner as well, sending hill dwellers down to Starbucks and Peet's with their laptops in tow. In the end, maybe it's not coffee we crave, but a sense of community that matters more. (We three Kings of Orient are.)
Whatever the physical package, be it a Tudor, Traditional, or Contemporary; a cabin, an igloo or a yurt, "good" homes should be well maintained and inviting. For those past their prime (and there are too many in my opinion) they should offer great bones and character, not to mention an ideal location. A run-down home next to the freeway is going to be an incredibly tough sell - no matter the timing or price. Given that a home is typically your single largest investment, it pays to keep it in good standing. Don't you agree?
Looking back over my own sales record this year, the homes that most often delivered MAJOR punch were all emotionally engaging and usually had wonderful yards that provided that desirable, quintessential, indoor/outdoor living for which California is so famously known. Fabulous gardens, patios and decks add space and options to a home that the majority of families really DO want and will clearly compete for. In short, the outside spaces, while often overlooked, are well worth the investment.
Turn offs? (I'm glad you asked.)
Dark, dank, musty, small rooms, poor light, confusing design, cheap finishes, no curb appeal, bad location, choppy floor plan, old wallpaper, dirty carpet, pet odors (!), cracked foundations, BIG unknowns, and poor presentation. (Away in a manger, no crib for a bed.)
Remember, you have one chance to make a good first impression and this is never more important than when you go to sell your home, so please, hire a professional. It's truly penny wise and pound foolish to do otherwise.
BTW - if a sale is on your radar for 2015, now is an excellent time to begin getting it into shape for next Spring. With interest rates still at historically low levels and barring any unforeseen circumstances, the Real Estate industry believes we will see a repeat of 2014. (Fa, la, la, la la!) In other words, we expect a highly exuberant marketplace in 2015. And that's all "good. "
How can I help you?
P.S. - I not only "talk the talk," I "walk the walk." You can follow my own renovation on my new blog: Renovation Riptide. I invite your comments and stories. (Dreidel, dreidel, dreidel, I made it out of clay.)
Based on my son's ACT scores and his excellent high school GPA, I'm fairly certain Tristan is bound for a good college next fall,
BUT there are those moments, when I have just the slightest doubt . . . Yesterday I received a call from him during the storm asking where his rain coat might be. "Um, did you try the coat closet in the front hall?" I asked, sure of the answer.
"Oh, right, I'll look there." (Good thing he's handsome too.) ??????????????
Maybe it's just me, but shouldn't the coat closet have been the first place he looked - rather than the last? It's not as if there are mounds of clothes all over the house and piles to sort through. In fact, I'm a gal who prides herself on having everything in its place. (I like the illusion of control even when I know that it's truly an illusion.) At the risk of sounding like a "mom," (eye roll please) it just seems that Tristan should start with the obvious choice and then branch out from there. Ditto for the text books, the backpack, the permission slips, the baseball bat, the mitt, the uniform, etc, etc,. etc. (you know the drill). Maybe it's a "Y" chromosome thing; his dad has the same issue so I suppose my son comes by this trait honestly. (Evidently, the apple didn't fall far from the tree.)
Perhaps the obvious isn't so obvious after all. But here are some things that should be obvious to every Buyer and Seller before entering the marketplace, and if they aren't, let me count the ways:
1) Market value is based on supply and demand - NOT on what an agent, an appraiser, or GodZillow says. The "Zestimate," although a catchy title, is frankly, the bane of every Realtor's existence. Consider it one tool only, and not necessarily an accurate measure of the market value of your home, or of your future home.
2) Market value changes over time, which means values may go UP or DOWN, depending on the economics and stability of the surrounding marketplace and of the prevailing interest rates. (It's important to note that a 1% change in the interest rates typically translates to a 10% decrease in spending power for a Buyer.) Don't worry about "timing" the marketplace (I'm not sure it's even possible) but DO understand the volatility of the marketplace.
3) Real estate markets are highly localized. What's true in one area, isn't necessarily true in another, which is why you should always work with a local agent instead of a friend or relative who is out-of-area, no matter how well-intentioned. Choose an agent who knows the lay of the land, has relationships with the other agents in the area, and has closed many transactions successfully in the neighborhood you seek. That high school friend you just reconnected with on Facebook means well, but doesn't necessarily serve you well. Those are two entirely different things. Whom you choose can make or break your sale so work locally!
4) A local lender is almost as important as a local Realtor, especially in a highly competitive marketplace. In competition, the experience and reputation of the lender are often the tipping points between your offer and another. Quicken online? No doubt they are great, but save this impersonal avenue for the refi down the road, when it won't matter who the lender is or how quickly they can perform.
5) The recent sale of the house down the street SETS your comparison - even when your house is "much more special." (Let's just assume for argument's sake that it is.) Granted, there are exceptions to this rule, but they are few and far between. It's unrealistic to expect a million dollars more than your neighbor's sale unless your home has outstanding characteristics that truly set it apart. Conversely, if you have less to spend than the market commands, geographically expand your search or reset your expectations to better align with market realities. In other words, work the odds instead of the long shots.
6) Agents can't guarantee an outcome or promise a result (although we dearly wish we could). Wouldn't that save a tremendous amount of anxiety, uncertainty, and time for everyone involved? (Yes, it would.) DO be suspicious of Realtors that try to "buy" your listing by giving you a highly inflated number or by telling you they already have your buyer in their pocket. (They usually don't and duel agency rarely favors you even if they did.) He/she will eventually work that number down when the market fails to deliver, but you will have lost valuable time in the process.
7) Painting and staging aren't merely suggestions; they are now standard practice. Unless your house is magazine worthy (instead of piled high with magazines!) the dollars spent to bring your home to market "camera ready," typically return high dividends. (93% of ALL buyers begin their search online.) Moreover, unstaged listings pale by comparison to their staged counterparts, and your final sales result will be markedly different. (Staging isn't necessarily the norm for major "fixers" that really need more than just cosmetic face-lifts. In this case, you may actually be misleading the consumer by covering up the faults and you'll undoubtedly be throwing good money after bad. Inspect only and disclose thoroughly.)
8) Disclosures and inspections aren't designed to frustrate you; their function is to protect you. The more you disclose and correct upfront, the fewer hurdles you will have on the back end. No one likes renegotiations during the escrow process - especially the Sellers. Disclose, disclose, DISCLOSE! (Did I say disclose?)
9) Time is of the essence! You don't want a protracted sale as in: "Let's just throw it out there and test the market to see if we get our price." IF your agent has done his/her job correctly, has prepared the property appropriately, has thoroughly exposed the listing to the Broker community and the general public, then your house should sell within a few swift weeks (not months). Homes that linger, unfortunately chase the market down, thus, the relationship with your agent should be short and memorable for the BEST results. The longer a house sits on the marketplace, the less successful the outcome.
10) Good preparation - on both the buy side and the sell side - is the key to being able to move swiftly and jump on any opportunity. Last year, I began to prepare my own home for sale at Christmas in spite of my husband's mild objections; thus when the spring market bloomed earlier than usual, Cliff and I were fully primed to take advantage of it - and did. On the flip side, the Buyer who has ALL of their documentation to their lender and has a mortgage guarantee in place, can be first in line when the right home comes along, and to quote Martha Stewart: "That's a very good thing."
So now you're in the know. If these items weren't obvious before, they certainly should be now. How can I help you?
(Hey, I'd love to hear your "obvious" insights. Pass them along and I'll share your comments in a follow-up column. )
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.