Tuesday, July 21, 2009

Rightsizing Your East Bay Home

Money can't buy you love... but setting aside financial stress can bring you happiness. The economic downturn has added stress to many Bay Area pocketbooks. But, for many it has also granted new perspective. There seems to be a paradigm shift in the East Bay market away from "keeping up with the Joneses" and toward "seeking a simpler life." Michael Jansen of Small Living Journal writes the following:
Downsizing is a common discussion point among those seeking a simpler life. Learning to live with less and reducing your impact and dependence on your surroundings can bring you more peace, freedom, and happiness. Many people seem to have chosen lives so complicated and costly that their surroundings actually provide more of a burden than a benefit. For these folks downsizing will be the direction they will travel if they desire a simpler life. Finding the balance between too much and too little is rightsizing.
The East Bay holds some wonderful "simple life" advantages. Known for the Berkeley Bungalow, the area has an eclectic supply of "rightsized" homes. Our climate and local offerings also contribute to this quality of life equation. The idea of shopping for the evening's meal can be a great adventure in an area with ample access to farmer's markets, fresh bread and specialty cheese and meat markets. Buyer's location preferences have shifted toward such urban amenities. A big Bay view has always been valued, but now often takes a second place to a high Walk Score. Our Bay Area lifestyle gives rightsizers reason to rejoice!

If rightsizing appeals to you, your new home search starts with one basic question: What is important to you? Often a determination of what is important is achieved by the process of elimination. Start with the dream and then whittle it down to the necessities:
  1. Write down everything you every imagined a home could be. Then, prioritize that list. The things you need for health and safety get the highest points. Things that make a positive impact in your daily life are next. Bells and whistles fall to the bottom.
  2. Next, analyze your prioritized list against your life goals. Ask yourself questions that are meaningful to the life you want, such as: Would one less bedroom allow you to travel more? Could you live with less yard if it meant you could walk to work or BART? Adjust your list accordingly.
  3. Finally, take your list to your Realtor. Talk to your Realtor to see if the sacrifices are worthwhile. In some instances, downsizing may put you into a more competitive price bracket and your sacrifices may not buy you the desired benefits. Conversely, you may not have to give up any space to "downsize." You may find that accepting some disadvantage in the location (BART or busy street for example) may allow you to keep your square footage requirements high while you lessen the expense. See one rightsizing example at www.1116KeyRoute.com.
Your Realtor can also help you calculate the costs of moving. A purely lateral move (neither upsizing nor downsizing) may cost as much as 10% of your home's value through costs associated with the transaction. To realize a financial benefit , your new home will have to cost 90% less than your current home's worth. Your Realtor can give you an indication of your current home's value to use as a starting point. Looking at the available inventory in a lower price point will give you further education. Let us help you to live the life you have always wanted. Your dream house should be about YOUR dreams.

Sunday, July 12, 2009

An Early Summer Snapshot of the High-End North Berkeley Market

I recently was on the listing side of two wonderful, "very Berkeley" Arts & Crafts homes in North Berkeley. Neither of them had classic floor plans, but both had tremendous amounts of original wood and wonderful period details, multiple fireplaces, updated kitchens and larger than normal lot sizes. With a bit of planning and prompting, our local paper featured these homes in the Real Estate sections during their marketing period. That special marketing, an individual website for each property with lots of photos, plus marketing to a specialized group of Arts & Crafts and period home buffs, resulted in huge attendance at the open houses.

One was priced well IMHO, based on the comments I received from agents (though numerous buyers thought it was priced too high). The sellers had followed my advice on price, as well as on presentation. The property was vacant and staged in a manner that fit the home. This home also had spectacular views, both of Mt. Tam and Marin and also a direct view of SF. We received four offers, and it closed $150K above list price.

The second home was priced a wee bit high, again IMHO. That price was driven by the financial situation of the sellers. They also continued to live in the home, but did pack away many of their possession. Though I welcomed more than 300 people during two Sunday open homes, that property received two offers, and went just $1K above list. Interestingly, that home closed today at $1.4M, in an ALL CASH sale. Until quite recently it would have been rare indeed to see cash sales at such a high amount. But as jumbo loans become more difficult to acquire, especially in a timely fashion, we’ve seen more cash sales in Berkeley in the high end.

One obviously cannot determine a trend from just these two examples. But from my experience of living and working in North Berkeley for many years, I know that the differences in behavior were somewhat predictable. Now more than ever, buyers are very sensitive to prices that they perceive to be too high, even if by only a small percentage. They also are intolerant now of deferred maintenance or even a lack of updating that they would feel to be required. Two or three years ago buyers were much more forgiving of these aspects. Buyers have read so many stories about it’s being a buyers’ market, and they want it to be so. In North Berkeley right now, the special properties are still very much in demand, and the inventory of such properties is low. As I write this, there is one new listing at just over $2M, and five listings at $1.2M or higher that have been on the market for at least three weeks. What a great opportunity for brave sellers who are willing to trust their agents and the data, rather than listening to the prevaling news of doom and gloom!