According to “You’re Making Your Landlord Rich” by David Cross, California renters tend to spend more each month than homeowners. To bring it even closer to home, he reports that “Alameda County renters pay an additional $332/month.”
“I left my heart in San Francisco…As I Move to the East Bay”-- Trulia makes the case that buying in the East Bay will get you the best deal if you are switching from renting to buying in the Bay Area.
Try the New York Times buy or rent calculator to help you crunch the numbers.
Showing posts with label East Bay Real Estate. Show all posts
Showing posts with label East Bay Real Estate. Show all posts
Friday, June 15, 2012
Rent Disenchantment
Is it time to start thinking about
owning a home? Shelter-seekers in Northern California often choose to rent, but
there is some debate about whether or not renting is actually the best
financial option. Spoiler Alert: Real estate professionals tend to think buying
is the answer. Here are a few places where you can follow the discussion, look
at the numbers, and decide for yourself if renting or buying is the right
choice for you.
Friday, February 18, 2011
To Buy or Not to Buy: Condo Realities
by Tom Knight
So many clients have recently called me regarding the possible purchase of a condo that I thought it might be helpful to share my thoughts on the subject, particularly since I live in one. Most condos are significantly less expensive to purchase than houses in the same area, so it’s easy to understand their appeal. However, the old adage “caveat emptor” (buyer beware) applies even more to condos than to single family homes. That is because a condo is like an iceberg: there’s a lot more beneath the surface that you can’t see. Proceeding slowly is the best course of action, lest one encounter a collision of titanic proportions with possibly damaging condo realities. Just what are some of those hidden hazards?
When you purchase a condo you are actually buying the air space between the walls, floor and ceiling, and a fractional proportion of the entire “common area.” There are many rules about what you can and cannot do to alter your home, and indeed, rules about how you can even LIVE within it. The first rule of thumb is to become familiar with Homeowners Association (HOA), the quality of management, the financials of the association, and any history of litigation or special assessments. Then there is the question of monthly dues. How much are they, what do you get for your money, how often are the dues increased and by what percentage. Check out the rule book while you’re at it. If you are rock drummer, a condo is probably not your best bet.
Here are some general observations: very small condos, such as those found in large homes which have been divided into just a few living units, carry the greatest risk for special assessments and higher maintenance costs, while providing the fewest, if any, amenities. Old estate homes made into condos may seem incredibly charming and located in upscale neighborhoods, but keep in mind: that old plumbing, wiring, roof and foundation may need major renovations soon which could cost a bundle.
Condos quite recently built can be highly attractive. They seduce the young buyer with sparkling stainless steel kitchens, gleaming granite baths, and dramatic two-story vaulted living spaces. The architecturally designed abundant glass and steel features reflect the best of HGTV. They’re hip and cool and all that jazz. But beware, beneath the flash is often found a troubled HOA groaning under the weight of delinquencies and foreclosures. That’s because new complexes just sold a few years ago at the peak of the market are now worth only half as much, so expected contributions to the Reserve Fund do not meet projections. Down the road the money may not be there to do needed maintenance, and essential repairs might then be funded by special assessments. Not every new condo is in this financial bind, but many are. Detailed study of the HOA financials is required before purchase. One other thing about the newer condos: they are almost always multi-level homes, certainly not the best for young toddlers or seniors tilting towards the geriatrics ward.
Really large condos come in two flavors: high rise and sprawling. High rises can have spectacular views, but quite often the windows won’t open. That’s a no-no for my wife. And do you really want to haul your groceries up an elevator every time you go shopping? The sprawling complexes are often older, built when land was still cheap. Such places may seem more like apartments, and in fact, many were first constructed as such and subsequently converted to condos. If you remember your college apartment, didn’t you have to take your dirty clothes down the hall to the laundry room? Older condos may not have washer/dryer hookups in the units, truly a pain in the booty for many. Sound proofing in older buildings can be far below current standards, meaning you may be hearing more of the neighbors’ activities than you would care to (TMI). Older condos can be noisy. One advantage larger complexes have over smaller: the amenities are usually far superior. I live in a larger condo with 1246 homes. It has four swimming pools, multiple tennis courts with lighting at night, a gym, racquetball courts, a sauna, a steam room, pool tables and a very comfy clubhouse with a commercial kitchen you can use for those huge family reunions. I don’t think you’ll find those benefits in your 20 unit condo. You’ll be paying a club membership off campus for many such perks.
When it comes to financial risk, there is one really good thing about the big places: the financial burden is shared by many, so there is less risk of a catastrophic assessment. Another important consideration in this day and age: Our condo is large enough to provide full time security service, 24/7/365. I appreciate that when my wife is coming home from an evening meeting. Actually, there are quite a few reasons why I enjoy living in our condo. Convenience is a big one. We can walk to many shops, including Trader Joe’s (good turkey meatballs) and Trader Vic’s (home of the original Mai Tai). Starbucks and Chevy’s are next door too, providing appropriate beverages depending on where you are in your day.
We are located on the shores of the Bay. The Boardwalk affords a lovely area to stroll and bird watch simultaneously. I never have to mow the grass or do any yard work, but the 26 acre campus looks like a park. I can come and go as I please and don’t worry about a thing. Included in our dues is water, garbage, cable TV, insurance on the building, even free current movies at the Clubhouse, as well as the many other amenities I have already mentioned. We are at the foot of the Bay Bridge and can see the Toll Plaza from our balcony. If the traffic’s not bad we can be in downtown San Francisco in 15 minutes. It’s true that we hate to do laundry in the downstairs laundry room and our downstairs neighbor is a little strange, but overall we love our condo home and continue to enjoy living there each and every day.
If you are thinking about buying a condo, check out these websites:
-Yahoo Finance: Home Buying Tips, “7 Questions You Must Ask Before Buying a Condo.”
-eHow: “How to Buy a Condominium.”
Tom Knight, Broker Associate
BERKELEY HILLS REALTY
(510) 710-1458
DRE#01441406
So many clients have recently called me regarding the possible purchase of a condo that I thought it might be helpful to share my thoughts on the subject, particularly since I live in one. Most condos are significantly less expensive to purchase than houses in the same area, so it’s easy to understand their appeal. However, the old adage “caveat emptor” (buyer beware) applies even more to condos than to single family homes. That is because a condo is like an iceberg: there’s a lot more beneath the surface that you can’t see. Proceeding slowly is the best course of action, lest one encounter a collision of titanic proportions with possibly damaging condo realities. Just what are some of those hidden hazards?
When you purchase a condo you are actually buying the air space between the walls, floor and ceiling, and a fractional proportion of the entire “common area.” There are many rules about what you can and cannot do to alter your home, and indeed, rules about how you can even LIVE within it. The first rule of thumb is to become familiar with Homeowners Association (HOA), the quality of management, the financials of the association, and any history of litigation or special assessments. Then there is the question of monthly dues. How much are they, what do you get for your money, how often are the dues increased and by what percentage. Check out the rule book while you’re at it. If you are rock drummer, a condo is probably not your best bet.
Here are some general observations: very small condos, such as those found in large homes which have been divided into just a few living units, carry the greatest risk for special assessments and higher maintenance costs, while providing the fewest, if any, amenities. Old estate homes made into condos may seem incredibly charming and located in upscale neighborhoods, but keep in mind: that old plumbing, wiring, roof and foundation may need major renovations soon which could cost a bundle.
Condos quite recently built can be highly attractive. They seduce the young buyer with sparkling stainless steel kitchens, gleaming granite baths, and dramatic two-story vaulted living spaces. The architecturally designed abundant glass and steel features reflect the best of HGTV. They’re hip and cool and all that jazz. But beware, beneath the flash is often found a troubled HOA groaning under the weight of delinquencies and foreclosures. That’s because new complexes just sold a few years ago at the peak of the market are now worth only half as much, so expected contributions to the Reserve Fund do not meet projections. Down the road the money may not be there to do needed maintenance, and essential repairs might then be funded by special assessments. Not every new condo is in this financial bind, but many are. Detailed study of the HOA financials is required before purchase. One other thing about the newer condos: they are almost always multi-level homes, certainly not the best for young toddlers or seniors tilting towards the geriatrics ward.
Really large condos come in two flavors: high rise and sprawling. High rises can have spectacular views, but quite often the windows won’t open. That’s a no-no for my wife. And do you really want to haul your groceries up an elevator every time you go shopping? The sprawling complexes are often older, built when land was still cheap. Such places may seem more like apartments, and in fact, many were first constructed as such and subsequently converted to condos. If you remember your college apartment, didn’t you have to take your dirty clothes down the hall to the laundry room? Older condos may not have washer/dryer hookups in the units, truly a pain in the booty for many. Sound proofing in older buildings can be far below current standards, meaning you may be hearing more of the neighbors’ activities than you would care to (TMI). Older condos can be noisy. One advantage larger complexes have over smaller: the amenities are usually far superior. I live in a larger condo with 1246 homes. It has four swimming pools, multiple tennis courts with lighting at night, a gym, racquetball courts, a sauna, a steam room, pool tables and a very comfy clubhouse with a commercial kitchen you can use for those huge family reunions. I don’t think you’ll find those benefits in your 20 unit condo. You’ll be paying a club membership off campus for many such perks.
When it comes to financial risk, there is one really good thing about the big places: the financial burden is shared by many, so there is less risk of a catastrophic assessment. Another important consideration in this day and age: Our condo is large enough to provide full time security service, 24/7/365. I appreciate that when my wife is coming home from an evening meeting. Actually, there are quite a few reasons why I enjoy living in our condo. Convenience is a big one. We can walk to many shops, including Trader Joe’s (good turkey meatballs) and Trader Vic’s (home of the original Mai Tai). Starbucks and Chevy’s are next door too, providing appropriate beverages depending on where you are in your day.
We are located on the shores of the Bay. The Boardwalk affords a lovely area to stroll and bird watch simultaneously. I never have to mow the grass or do any yard work, but the 26 acre campus looks like a park. I can come and go as I please and don’t worry about a thing. Included in our dues is water, garbage, cable TV, insurance on the building, even free current movies at the Clubhouse, as well as the many other amenities I have already mentioned. We are at the foot of the Bay Bridge and can see the Toll Plaza from our balcony. If the traffic’s not bad we can be in downtown San Francisco in 15 minutes. It’s true that we hate to do laundry in the downstairs laundry room and our downstairs neighbor is a little strange, but overall we love our condo home and continue to enjoy living there each and every day.
If you are thinking about buying a condo, check out these websites:
-Yahoo Finance: Home Buying Tips, “7 Questions You Must Ask Before Buying a Condo.”
-eHow: “How to Buy a Condominium.”
Tom Knight, Broker Associate
BERKELEY HILLS REALTY
(510) 710-1458
DRE#01441406
Friday, November 13, 2009
Cash Buyers Flood the East Bay Luxury Home Market
At a recent Berkeley Hills Realty office meeting, the buzz was about a flood of cash buyers in our marketplace. Grapevine scenarios aside, we wanted to take a closer look at the actual data. After reviewing data for all of the homes listed over $1,000,000 (which have closed escrow within the last three months) we discovered a remarkably high percentage were all cash buyers. Below is a table which includes the researched sales.*
Through a search of tax records we were able to determine which homes had a recorded first deed of trust, which evidences a loan on the property. All recorded loans were noted. For the properties which did not have recorded loans, we contacted the listing agents directly to confirm that the offer was presented as "all cash." Our research confirmed that of the 42 homes listed in Oakland and Berkeley, 13 were presented with all cash offers. 31% of the buyers paid all cash. Nearly one in three homes in this demographic is selling to an all cash buyer. Many others had down payments that were greater than half the sale price.
Many of the homes received offers within the first weeks of marketing. As a result, some homes sold for more than their asking price. Buyers have returned, but they are not relying on government incentives to do it. The Economic and Housing Stimulus plans have not helped the upper end of our market. First time buyer tax credits and FHA backed conforming loan programs most often do not apply to homes sold over one million dollars. Currently, jumbo loans are more difficult to obtain and often have undesirable terms. There is nothing in the current bailout that supports the luxury real estate market. Cash has stepped into this void.
Local Realtors are still reflecting on the effect the influx of cash offers will have on property values in the area. Some sellers are willing to significantly discount the price of their property for the benefits of a sure thing and a quick close of escrow. In multiple offer situations, often an "all cash" offer is accepted even though it is not the highest offer the seller has received. Many believe cash is keeping neighborhood values artificially low.
Others feel that cash transactions help support property values because the post-mortgage-meltdown loan process often diminishes value. Banks are exceedingly cautious and our unique housing stock is difficult to appraise. Appraisers have trouble finding comparable homes which fit the lenders confined criteria. Buyers often renegotiate the contract price to reflect the lender's low appraisal.
Pending sales are up 20% over last year in the national market (see our last post.) More inventory is expected as the recession begins to create its own wave of foreclosures in the upper end, a market which had been the least affected by the original mortgage crash. In balance, any mix of buyers will help our housing recovery as faith in the market is restored and more homes exchange hands.
*Note: We have left the financial research off this chart to protect the privacy of the individuals involved. Data is pulled from the Multiple Listing Service. Berkeley Hills Realty may not have participated in the sale.
Editor's note: Luxury homes in Berkeley and Oakland are not unique in attracting cash buyers. A recent home located on Carleton in Berkeley received seven offers, five of which were all cash. This home was listed for $425,000.
Through a search of tax records we were able to determine which homes had a recorded first deed of trust, which evidences a loan on the property. All recorded loans were noted. For the properties which did not have recorded loans, we contacted the listing agents directly to confirm that the offer was presented as "all cash." Our research confirmed that of the 42 homes listed in Oakland and Berkeley, 13 were presented with all cash offers. 31% of the buyers paid all cash. Nearly one in three homes in this demographic is selling to an all cash buyer. Many others had down payments that were greater than half the sale price.
Many of the homes received offers within the first weeks of marketing. As a result, some homes sold for more than their asking price. Buyers have returned, but they are not relying on government incentives to do it. The Economic and Housing Stimulus plans have not helped the upper end of our market. First time buyer tax credits and FHA backed conforming loan programs most often do not apply to homes sold over one million dollars. Currently, jumbo loans are more difficult to obtain and often have undesirable terms. There is nothing in the current bailout that supports the luxury real estate market. Cash has stepped into this void.
Local Realtors are still reflecting on the effect the influx of cash offers will have on property values in the area. Some sellers are willing to significantly discount the price of their property for the benefits of a sure thing and a quick close of escrow. In multiple offer situations, often an "all cash" offer is accepted even though it is not the highest offer the seller has received. Many believe cash is keeping neighborhood values artificially low.
Others feel that cash transactions help support property values because the post-mortgage-meltdown loan process often diminishes value. Banks are exceedingly cautious and our unique housing stock is difficult to appraise. Appraisers have trouble finding comparable homes which fit the lenders confined criteria. Buyers often renegotiate the contract price to reflect the lender's low appraisal.
Pending sales are up 20% over last year in the national market (see our last post.) More inventory is expected as the recession begins to create its own wave of foreclosures in the upper end, a market which had been the least affected by the original mortgage crash. In balance, any mix of buyers will help our housing recovery as faith in the market is restored and more homes exchange hands.
| Address | Original Price | Sold Price | % | DOM |
| | | | | |
| 1149 | $1,200,000 | $1,080,000 | 90% | 108 |
| | $1,295,000 | $1,300,000 | 100% | 9 |
| | $1,249,000 | $1,100,000 | 88% | 40 |
| 634 | $1,150,000 | $1,225,000 | 107% | 15 |
| | $1,195,000 | $1,178,500 | 99% | 12 |
| | $1,265,000 | $1,225,000 | 97% | 14 |
| | $1,090,000 | $1,260,000 | 116% | 16 |
| | $1,150,000 | $1,025,000 | 89% | 15 |
| | $1,075,000 | $1,177,000 | 109% | 9 |
| 715 THE | $1,600,000 | $1,492,500 | 93% | 39 |
| | $995,000 | $1,070,000 | 108% | 10 |
| 435 PANORAMIC WAY | $1,350,000 | $1,169,000 | 87% | 76 |
| | $1,800,000 | $1,544,000 | 86% | 69 |
| 14 THE UPLANDS | $1,340,000 | $1,147,000 | 86% | 89 |
| 60 THE UPLANDS | $1,490,000 | $1,450,000 | 97% | 28 |
| | $2,200,000 | $2,100,000 | 95% | 20 |
| | $1,075,000 | $1,110,000 | 103% | 18 |
| | | | | |
| | $1,295,000 | $1,226,000 | 95% | 13 |
| | $1,250,000 | $1,025,000 | 82% | 107 |
| | $1,195,000 | $1,174,000 | 98% | 20 |
| | $1,325,000 | $1,292,000 | 98% | 16 |
| | $929,000 | $1,007,000 | 108% | 9 |
| | $2,750,000 | $2,355,000 | 86% | 354 |
| | $1,650,000 | $1,465,000 | 89% | 137 |
| | $1,849,000 | $1,560,000 | 84% | 137 |
| | $1,250,000 | $1,185,000 | 95% | 93 |
| 5621 | $1,300,000 | $1,250,000 | 96% | 50 |
| | $1,375,000 | $1,300,000 | 95% | 13 |
| | $1,049,000 | $1,060,000 | 101% | 1 |
| | $1,080,000 | $1,060,000 | 98% | 11 |
| 9047 Broadway Terrace | $1,595,000 | $1,595,000 | 100% | 0 |
| | $1,199,000 | $1,150,000 | 96% | 38 |
| | $1,295,000 | $1,200,000 | 93% | 45 |
| | $1,625,000 | $1,240,000 | 76% | 55 |
| | $1,550,000 | $1,460,000 | 94% | 32 |
| | $1,125,000 | $1,062,000 | 94% | 14 |
| | $995,000 | $1,110,000 | 112% | 9 |
| 157 | $1,395,168 | $1,201,268 | 86% | 108 |
| | $1,650,000 | $1,425,000 | 86% | 94 |
| | $1,195,000 | $1,080,000 | 90% | 52 |
| 5651 Colbourn | $1,199,000 | $1,135,000 | 95% | 48 |
| | $1,495,000 | $1,495,000 | 100% | 13 |
| Totals | $1,360,337 | $1,280,125 | 95% | 49 |
*Note: We have left the financial research off this chart to protect the privacy of the individuals involved. Data is pulled from the Multiple Listing Service. Berkeley Hills Realty may not have participated in the sale.
Editor's note: Luxury homes in Berkeley and Oakland are not unique in attracting cash buyers. A recent home located on Carleton in Berkeley received seven offers, five of which were all cash. This home was listed for $425,000.
Monday, October 19, 2009
Market Update for East Bay Real Estate
by Tracy Sichterman
One of the parents at my daughter's school just asked me; "Are houses selling better this year?"
For most, the answer is yes. Houses that are priced well are selling quickly. Some with multiple offers. One house in Albany, at 1700 Sonoma, just closed for 124% of its asking price. It was listed for $625,000 and just closed for $777,000. This scenario is the result of optimistic buyers entering our Bay Area market-- which doesn't have enough inventory to meet the demand. As reported by our agents, activity at the open houses is also up significantly.
That said, there is a bit of a glitch in the high end market. As blogged about on Homegirl, by Tracey Taylor, a home in the Claremont district of Berkeley, at 2970 Avalon Avenue, just sold for 29% less than the original asking price. Truthfully, the original asking price of $2,950,000 may have been ambitious. The home closed last month for $2,100,000.
There are good reasons for the hurdles in the high end market. Jumbo lending is challenging-- post mortgage meltdown. In addition, many who would have chosen to "move-up' are finding that transition more difficult. In the past, bridge loans would have helped them access to their current home's equity. Now, homeowners are looking at the prospect of selling first to get the "cash in hand." Unfortunatly, this option forces them back into the rental market while they look to buy the new home. Many can not manage the extra move plus additional hassles this would require. This may be one reason our inventory is so low.
All told, buyers are still looking for a bargain. We have experienced several multiple offer situations where the seller did not get their full asking price. In the past competition from multiple offers would almost automatically ensure a sales price higher than the current list price. This is not always true today. There does seem to be a trend for these concervative buyers. The homes with low offers tend to have been on the market for longer than the traditionally short listing period. Price reductions may have brought houses within reach of the right buyers, but then the days on the market have kept those buyers acting cautiously. We also see many good homes that seem to miss the radar of initial competition. Deals are spotty with more competition in the market place... but the deals are still out there.
One of the parents at my daughter's school just asked me; "Are houses selling better this year?"
For most, the answer is yes. Houses that are priced well are selling quickly. Some with multiple offers. One house in Albany, at 1700 Sonoma, just closed for 124% of its asking price. It was listed for $625,000 and just closed for $777,000. This scenario is the result of optimistic buyers entering our Bay Area market-- which doesn't have enough inventory to meet the demand. As reported by our agents, activity at the open houses is also up significantly.
That said, there is a bit of a glitch in the high end market. As blogged about on Homegirl, by Tracey Taylor, a home in the Claremont district of Berkeley, at 2970 Avalon Avenue, just sold for 29% less than the original asking price. Truthfully, the original asking price of $2,950,000 may have been ambitious. The home closed last month for $2,100,000.
There are good reasons for the hurdles in the high end market. Jumbo lending is challenging-- post mortgage meltdown. In addition, many who would have chosen to "move-up' are finding that transition more difficult. In the past, bridge loans would have helped them access to their current home's equity. Now, homeowners are looking at the prospect of selling first to get the "cash in hand." Unfortunatly, this option forces them back into the rental market while they look to buy the new home. Many can not manage the extra move plus additional hassles this would require. This may be one reason our inventory is so low.
All told, buyers are still looking for a bargain. We have experienced several multiple offer situations where the seller did not get their full asking price. In the past competition from multiple offers would almost automatically ensure a sales price higher than the current list price. This is not always true today. There does seem to be a trend for these concervative buyers. The homes with low offers tend to have been on the market for longer than the traditionally short listing period. Price reductions may have brought houses within reach of the right buyers, but then the days on the market have kept those buyers acting cautiously. We also see many good homes that seem to miss the radar of initial competition. Deals are spotty with more competition in the market place... but the deals are still out there.
Friday, September 25, 2009
How my Coffee Shop Increased the Value of my Home
Fifteen years ago, Buyers looking for the Bay Area "dream house" were likely to tout a bay view as a must-have. In today's market a view is nice, but more and more buyers are willing to sacrifice a fleeting glimpse of the Golden Gate Bridge for the more practical ability to walk to a local coffee shop.
A new study, Walking the Walk, came out in August 2009 with a subtitle; "How Walkability Raises Home Values in U.S. Cities." The research shows that homes in walkable neighborhoods are worth more money in nearly all metropolitan areas. And yes, coffee shops count. The Walk Score algorithm used in the study looks at 13 categories; coffee shop, grocery store, movie theater, park, bookstore, drug store, clothing/music store, restaurant, bar, school, library, fitness and hardware store. The study author, Joe Cortright, states, "An additional one point improvement in average Walk Scores adds between $700 and $3,000 to the value of a typical house, holding all other factors constant" (Remind me to tip my barista.) Berkeley Hills Realty Agents know from anecdotal experience that this is true, and now we are happy to have direct data to point towards.
Local amenities not only support the value of our housing stock, but also add to the joy of our daily lives. It just feels good to live and work in a vibrant community with diverse offerings. Not so good, however, is watching this marathon recession take its toll on our local treasures.
Noticing too many vacant tables at our favorite restaurants, impassioned Bay Area Realtors have recently taken up the cause. Via twitter and facebook a couple of Berkeley agents with the handles @berkhills and @serkes have started a proactive campaign. The first Realtor Feedup happened last night in support of our local restaurants. Realtors met at a local British style pub, the Kensington Circus, to start a weekly movement in direct support of our local eateries. The intent is to support a new local restaurant each week-- by arriving in mass and paying by cash.
Support your favorite walkable businesses and protect the value of your own home while you're at it. Better yet, form your own dinner club and pay in cash. It doesn't cost you any more to pay cash, but it does save the restaurant on bank charges.
To find out your homes walkability rating via the algorithms used in the "Walking the Walk" study, go to WalkScore.com. If you wish to participate in the next East Bay Realtor Feedup, we are headed to Bistro 1491 this next Thursday at 6:00. To get breaking Realtor Feedup updates, follow @berkhills and @serkes on Twitter.
A new study, Walking the Walk, came out in August 2009 with a subtitle; "How Walkability Raises Home Values in U.S. Cities." The research shows that homes in walkable neighborhoods are worth more money in nearly all metropolitan areas. And yes, coffee shops count. The Walk Score algorithm used in the study looks at 13 categories; coffee shop, grocery store, movie theater, park, bookstore, drug store, clothing/music store, restaurant, bar, school, library, fitness and hardware store. The study author, Joe Cortright, states, "An additional one point improvement in average Walk Scores adds between $700 and $3,000 to the value of a typical house, holding all other factors constant" (Remind me to tip my barista.) Berkeley Hills Realty Agents know from anecdotal experience that this is true, and now we are happy to have direct data to point towards.
Local amenities not only support the value of our housing stock, but also add to the joy of our daily lives. It just feels good to live and work in a vibrant community with diverse offerings. Not so good, however, is watching this marathon recession take its toll on our local treasures.
Noticing too many vacant tables at our favorite restaurants, impassioned Bay Area Realtors have recently taken up the cause. Via twitter and facebook a couple of Berkeley agents with the handles @berkhills and @serkes have started a proactive campaign. The first Realtor Feedup happened last night in support of our local restaurants. Realtors met at a local British style pub, the Kensington Circus, to start a weekly movement in direct support of our local eateries. The intent is to support a new local restaurant each week-- by arriving in mass and paying by cash.
Support your favorite walkable businesses and protect the value of your own home while you're at it. Better yet, form your own dinner club and pay in cash. It doesn't cost you any more to pay cash, but it does save the restaurant on bank charges.
To find out your homes walkability rating via the algorithms used in the "Walking the Walk" study, go to WalkScore.com. If you wish to participate in the next East Bay Realtor Feedup, we are headed to Bistro 1491 this next Thursday at 6:00. To get breaking Realtor Feedup updates, follow @berkhills and @serkes on Twitter.
Friday, November 28, 2008
A Week for Giving Thanks
At a time when "unprecedented" is being used to describe numerous economic events, an $800 Billion stimulus package was announced this week. The intent is clear enough: to encourage spending on new mortgages with interest rate reductions, and easing the terms by which Americans can incur more consumer debt. There is something curious to me about the premise. Interest rates were already quite attractive, hovering around 6% when historically the number to beat was 7%. In working with first-time buyers in particular, I see the dramatic differences between those who have been able to save money, and hence have had the 20% down payment required in this newly conservative lending environment, vs. those who have been unable to save.
Encouraging additional spending is clearly what economists feel is required at this juncture to reenergize an economy traumatized by huge swings in major indicators. We’ve grown eerily accustomed to the stock market being either up or down several hundred points each day, oil prices that were in "unprecedented" territory falling to half those amounts within a few months, foreclosures dominating sales in many areas and unemployment at levels not seen for decades. The intensity of the news and the volatility of major indicators are truly enough to have all of us on edge, uncertain, cautious.
I would love to assist buyers in purchasing homes in our wonderful East Bay area with its continued strength. So while I would normally welcome measures that would make it easier for buyers to enter our housing market, I can't help but feel that this latest measure, including $200 Billion set aside to make it easier for consumers to get further into debt with credit cards, is contrary to the best long-term interests of families as well as the over-all economy.
Some of those would-be buyers are convinced that our housing market will devalue further, and are unwilling to enter it until prices even in Berkeley, Rockridge and Albany are in bargain territory. It almost seems that some of these folks must be sure that the seller is experiencing pain before they are willing to buy. So far no precipitous drop in sales prices has occurred, and without that mythical crystal ball no one knows for sure if it will. My personal belief is that we may see a bit more softening, reflecting itself primarily in homes taking longer to sell. My guess is that we'll see much more optimism in our housing market after the inauguration. Bargain hunters might want to take advantage of these last months of a lame-duck administration and seasonal slowness mixed with the likely interest rate advantages from these latest stimulus attempts.
I'm currently in contract with buyers who wanted to establish a home together and were actively looking over the past few months. They know there is some risk that the value of their new home could go down soon after they purchase, but they are confident in the long-term stability of this area. They are looking forward to painting the walls something other than white, and planning a garage conversion to add space when they eventually have children. In this week of Thanksgiving I thank them for injecting some optimism in my daily experience. I thank them for being clear that buying a home is something quite different from buying stocks, and that while it is an important financial commitment, the emotional commitment is just as important, if not more.
So while this year has already brought us economic upheaval unseen since the Great Depression, even as we enter into the Not-so-great Recession we still have much for which to be thankful. We do see foreclosures in our area, but still in small numbers, especially as compared to some neighboring counties where the majority of properties are foreclosures or short sales. We live in an area of intense natural and architectural beauty. We are surrounded by an endless variety of delicious items. The life of the mind is active here. And let us not forget, even as the sun forces its way through the fog, it sets behind the Golden Gate, in this area that trully is paradise.
Encouraging additional spending is clearly what economists feel is required at this juncture to reenergize an economy traumatized by huge swings in major indicators. We’ve grown eerily accustomed to the stock market being either up or down several hundred points each day, oil prices that were in "unprecedented" territory falling to half those amounts within a few months, foreclosures dominating sales in many areas and unemployment at levels not seen for decades. The intensity of the news and the volatility of major indicators are truly enough to have all of us on edge, uncertain, cautious.
I would love to assist buyers in purchasing homes in our wonderful East Bay area with its continued strength. So while I would normally welcome measures that would make it easier for buyers to enter our housing market, I can't help but feel that this latest measure, including $200 Billion set aside to make it easier for consumers to get further into debt with credit cards, is contrary to the best long-term interests of families as well as the over-all economy.
Some of those would-be buyers are convinced that our housing market will devalue further, and are unwilling to enter it until prices even in Berkeley, Rockridge and Albany are in bargain territory. It almost seems that some of these folks must be sure that the seller is experiencing pain before they are willing to buy. So far no precipitous drop in sales prices has occurred, and without that mythical crystal ball no one knows for sure if it will. My personal belief is that we may see a bit more softening, reflecting itself primarily in homes taking longer to sell. My guess is that we'll see much more optimism in our housing market after the inauguration. Bargain hunters might want to take advantage of these last months of a lame-duck administration and seasonal slowness mixed with the likely interest rate advantages from these latest stimulus attempts.
I'm currently in contract with buyers who wanted to establish a home together and were actively looking over the past few months. They know there is some risk that the value of their new home could go down soon after they purchase, but they are confident in the long-term stability of this area. They are looking forward to painting the walls something other than white, and planning a garage conversion to add space when they eventually have children. In this week of Thanksgiving I thank them for injecting some optimism in my daily experience. I thank them for being clear that buying a home is something quite different from buying stocks, and that while it is an important financial commitment, the emotional commitment is just as important, if not more.
So while this year has already brought us economic upheaval unseen since the Great Depression, even as we enter into the Not-so-great Recession we still have much for which to be thankful. We do see foreclosures in our area, but still in small numbers, especially as compared to some neighboring counties where the majority of properties are foreclosures or short sales. We live in an area of intense natural and architectural beauty. We are surrounded by an endless variety of delicious items. The life of the mind is active here. And let us not forget, even as the sun forces its way through the fog, it sets behind the Golden Gate, in this area that trully is paradise.
Tuesday, October 21, 2008
Bigger Down Payments Create Challenges for Larger Homes
Some fast facts that make smaller homes easier to purchase in today's precarious lending market:
The current conforming loan limit is set at $729,000, but expected to reset as of January 1st, 2009 down to $625,000. Traditional financing is available for conforming loans with only 10% down. Down payments as low as 5% will still be possible under $625,000 with the help of FHA. The last day to qualify for the $729,000 loan is December 1st, 2008. If you act now, a qualified FHA buyer with 5% down ($38,250) can buy a $765,000 home and receive a reasonable conforming loan rate. After December 1st, qualified buyers with a 5% down ($32,500) can only buy a $650,000 and still receive a reasonable conforming loan rate.
Jumbo loans up to $1,000,o0o currently require a minimum of 25% down payment. Loan amounts from $1-1.5 million will require a minimum of 30% down. This means a jump today from a conforming $729,00o home to a $730,000 loan will require 20% more in down payment.
Today's buyer with $38,250, looks to buy the $765,000 house under the conforming loan guidelines. Say the buyer can not find a home that suits him in the price range. December first comes and goes. Time for a visit to the lender in the hopes of increasing the price range to $835,000 to meet his needs. Under the new Jumbo requirements the buyer will need 25% down ($208,750) to qualify. This buyer's wish to increase his search parameters by $70,000 is going to require digging deep. He will have to come up with an additional $170,500 down payment in the new year to accomplish his new search. Add volatility of the interest rates and the monthly payment may also increase dramatically even if the loan amount has not increased due to the larger down payment. Enter Mom and Pop: See the NYT article, Mixing Money and Family.
Jumbo rates are more expensive when buyers do qualify for them. Creative financing used to bridge the gap with second mortgages. Today, second mortgages are available up to $350,000, but only at a total loan to value ratio of 70%. This means a minimum of 30% down. These are equity line second mortgages with current rates from 4.75-5.5%.
Many clients looking to purchase larger homes do have assets. Often they already own a home with existing equity. This equity had been tapped in the past during a home purchase, based on an assumed rental value of the property. Now, in order to qualify without carrying the debt of both residences; Borrowers must retain 30% equity in the current house. They must have a signed rental agreement as proof of the rental value. They must have rental deposit verification. And they must show six months of PITI in reserves required on the current residence. Given these new restrictions, we may see more sale of house contingencies in our future. More likely, home buyers may be forced into an already bloated rental market as they seek to liquidate the equity from one property (selling first) as they strive to purchase their next home in a still competitive market. Beyond the financial stresses this often adds the stress of a second move.
Thanks to Ted and Tom from MPR Financial for helping sort out the details.
The current conforming loan limit is set at $729,000, but expected to reset as of January 1st, 2009 down to $625,000. Traditional financing is available for conforming loans with only 10% down. Down payments as low as 5% will still be possible under $625,000 with the help of FHA. The last day to qualify for the $729,000 loan is December 1st, 2008. If you act now, a qualified FHA buyer with 5% down ($38,250) can buy a $765,000 home and receive a reasonable conforming loan rate. After December 1st, qualified buyers with a 5% down ($32,500) can only buy a $650,000 and still receive a reasonable conforming loan rate.
Jumbo loans up to $1,000,o0o currently require a minimum of 25% down payment. Loan amounts from $1-1.5 million will require a minimum of 30% down. This means a jump today from a conforming $729,00o home to a $730,000 loan will require 20% more in down payment.
Today's buyer with $38,250, looks to buy the $765,000 house under the conforming loan guidelines. Say the buyer can not find a home that suits him in the price range. December first comes and goes. Time for a visit to the lender in the hopes of increasing the price range to $835,000 to meet his needs. Under the new Jumbo requirements the buyer will need 25% down ($208,750) to qualify. This buyer's wish to increase his search parameters by $70,000 is going to require digging deep. He will have to come up with an additional $170,500 down payment in the new year to accomplish his new search. Add volatility of the interest rates and the monthly payment may also increase dramatically even if the loan amount has not increased due to the larger down payment. Enter Mom and Pop: See the NYT article, Mixing Money and Family.
Jumbo rates are more expensive when buyers do qualify for them. Creative financing used to bridge the gap with second mortgages. Today, second mortgages are available up to $350,000, but only at a total loan to value ratio of 70%. This means a minimum of 30% down. These are equity line second mortgages with current rates from 4.75-5.5%.
Many clients looking to purchase larger homes do have assets. Often they already own a home with existing equity. This equity had been tapped in the past during a home purchase, based on an assumed rental value of the property. Now, in order to qualify without carrying the debt of both residences; Borrowers must retain 30% equity in the current house. They must have a signed rental agreement as proof of the rental value. They must have rental deposit verification. And they must show six months of PITI in reserves required on the current residence. Given these new restrictions, we may see more sale of house contingencies in our future. More likely, home buyers may be forced into an already bloated rental market as they seek to liquidate the equity from one property (selling first) as they strive to purchase their next home in a still competitive market. Beyond the financial stresses this often adds the stress of a second move.
Thanks to Ted and Tom from MPR Financial for helping sort out the details.
Wednesday, September 3, 2008
Berkeley Homes Sold Prices for August 2008
The East Bay real estate market remains strong, as evidenced by the recorded sales in Berkeley for the month of August. Note that the statistics for Map Area 8 are skewed by one anomoly. Most areas averaged less than thirty days on the market and many sold for more the the asking price. We captured Berkeley to give a snapshot indication of the market for the month of August. Oakland, Albany, El Cerrito and Kensington statistics are also available upon request.
| Address | Original Price | Sold Price | % | DOM |
| Berkeley Map Area 1 | ||||
| 2206 ROSE ST | $695,000 | $695,000 | 100% | 16 |
| 1185 GLEN AVE | $1,549,000 | $1,180,000 | 76% | 32 |
| 644 CRAGMONT AVE | $1,495,000 | $1,400,000 | 94% | 40 |
| 699 HILLDALE AVE | $735,000 | $810,000 | 110% | 18 |
| 954 GRIZZLY PEAK BLVD | $975,000 | $950,000 | 97% | 29 |
| 996 CRAGMONT AVE | $789,000 | $785,000 | 99% | 30 |
| 1175 OXFORD ST | $899,000 | $910,000 | 101% | 19 |
| 1291 GRIZZLY PEAK BLVD | $699,000 | $801,000 | 115% | 19 |
| 28 SENIOR AVENUE | $890,000 | $890,000 | 100% | 15 |
| 774 NEILSON ST | $599,000 | $535,000 | 89% | 14 |
| 2707 ROSE ST | $599,000 | $725,000 | 121% | 18 |
| 145 FOREST LN | $990,000 | $981,300 | 99% | 11 |
| 590 CRAGMONT AVE | $995,000 | $900,000 | 90% | 24 |
| 798 WILDCAT CANYON RD | $935,000 | $925,000 | 99% | 13 |
| 2652 SHASTA RD | $1,150,000 | $1,020,000 | 89% | 0 |
| 355 ARLINGTON AVE | $879,000 | $920,000 | 105% | 12 |
| Totals | $14,873,000 | $14,427,300 | 97% | 19 |
| Berkeley Map Area 2 | ||||
| 1357 Northside Avenue | $620,000 | $599,000 | 97% | 68 |
| 806 CONTRA COSTA AVE | $849,000 | $833,700 | 98% | 28 |
| 1064 MONTEREY AVE | $789,000 | $703,000 | 89% | 40 |
| 1703 VINE ST | $699,000 | $758,000 | 108% | 17 |
| 1921 CAPISTRANO AVE | $1,050,000 | $1,175,000 | 112% | 13 |
| 1347 CURTIS ST | $729,000 | $719,000 | 99% | 29 |
| Totals | $4,736,000 | $4,787,700 | 101% | 33 |
| Berkeley Map Area 3 | ||||
| 1301 MILVIA ST | $698,000 | $764,300 | 109% | 24 |
| 1511 ROSE ST | $650,000 | $620,000 | 95% | 66 |
| 1844 VINE ST | $799,000 | $785,000 | 98% | 10 |
| Totals | $2,147,000 | $2,169,300 | 101% | 33 |
| Berkeley Map Area 4 | ||||
| 1219 EVELYN AVE | $394,900 | $363,900 | 92% | 7 |
| 1140 CEDAR ST | $749,000 | $810,000 | 108% | 16 |
| Totals | $1,143,900 | $1,173,900 | 103% | 12 |
| Berkeley Map Area 6 | ||||
| 2210 7TH ST | $679,000 | $620,000 | 91% | 58 |
| 941 BANCROFT WAY | $514,900 | $477,500 | 93% | 20 |
| Totals | $1,193,900 | $1,097,500 | 92% | 39 |
| Berkeley Map Area 7 | ||||
| 1531 OREGON ST | $399,000 | $350,000 | 88% | 79 |
| 2928 Otis | $529,900 | $565,000 | 107% | 10 |
| 2430 BONAR ST | $619,000 | $624,000 | 101% | 12 |
| 2302 CALIFORNIA ST | $539,000 | $591,000 | 110% | 16 |
| 1324 TALBOT AVE | $375,000 | $415,000 | 111% | 9 |
| Totals | $2,461,900 | $2,545,000 | 103% | 25 |
| Berkeley Map Area 8 | ||||
| 1708 OREGON ST | $649,500 | $515,000 | 79% | 305 |
| 1402 DWIGHT WAY | $549,000 | $554,000 | 101% | 10 |
| 3020 MARTIN LUTHER KING JR WAY | $439,900 | $439,900 | 100% | 0 |
| 1525 PARKER ST | $595,000 | $588,000 | 99% | 0 |
| Totals | $2,233,400 | $2,096,900 | 94% | 79 |
| Berkeley Map Area 10 | ||||
| 2925 ASHBY AVE | $850,000 | $790,000 | 93% | 48 |
| 2436 STUART ST | $529,000 | $555,000 | 105% | 20 |
| 365 PANORAMIC WAY | $929,000 | $949,000 | 102% | 13 |
| 2805 PARKER ST | $750,000 | $760,000 | 101% | 10 |
| 76 PLAZA DR | $1,195,000 | $1,285,000 | 108% | 12 |
| Totals | $4,253,000 | $4,339,000 | 102% | 21 |
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