FOGGY VIEWS

Exciting things are afoot at the contruction site of the Walt Disney Family Museum in San Francisco’s Presidio.   Click the link below to get the Museum’s latest update.    Here’s a nugget that caught my attention:

The soil below the building had not been disturbed since the barracks were built in 1897. For that very reason, archaeologists were on hand during the excavation to carefully monitor the removal of soil and make sure that any artifacts were retained and recorded. And it’s a good thing they did, for so far the contractors have found bottles, bullet casings, and even pajamas from the Alcatraz Laundry, as well as a San Francisco tour book for soldiers stationed in the Presidio. Every artifact that is found will remain in the care of the Presidio Trust Archaeology Department.

Read more:

http://disney.go.com/inside/mainattraction/080722/index.html

A lot of buyers are finding that they can afford more house now than they could’ve hoped for a year or two ago.  Certainly, there are tremendous buys out there.  But, on the contrary, most sellers aren’t going to give their homes away. Not all sellers are willing to deeply discount their asking prices.  Buyers need to be aware of this before they go into an offer hoping to deeply discount it without fully understanding the appropriate local comps.

So, enough said, let’s get into our market updates for the week:

• East Bay—The theme in Berkeley?  “Bring on the listings!”  This market is enduring what the Peninsula and the City saw for some time—low inventory.  In fact, they only have 2-3 months of core inventory in their market.  Oakland reports that good inventory isn’t sitting long and cautions sellers to decide if they are truly motivated to sell if a listing doesn’t go under contract in the first month.  Castro Valley, after months of rapid fire REO activity, is starting to see listing inventory grow again.  Our Livermore office is reporting that one Agent wrote an offer on a Tracy REO listing that had 22 offers.  The Tri-Valley seems to be relatively unchanged week over week with still plenty of buyers who are just holding out for the value.
• Monterey County—After coming off a slow, three day weekend which is typically our Monterey heyday, we were surprised to find that this week was surprisingly strong. Activity picked up and we had 14 deals go into escrow.  Yet another example of how difficult this year is to predict in real estate.
• North Bay—REOs continue to be the driving force for much of Sonoma County.  This week our Petaluma office reported that they had 22 new sales, 16 of which went into multiple offers.  The majority of that activity was in the below $500K mark.  Again, welcome home first time home buyer.  We’ve missed you!  Nearby Marin is a mixed bag.  San Rafael agents are seeing price points drop to all time lows thanks in large part to the flurry of REO activity.  In our more affluent Marin markets, things have gotten a bit quiet.  Opens seem to be seeing less traffic and deals aren’t as plentiful in Greenbrae and Mill Valley.  But I also chalk that up to a lack of inventory in some areas.  So we’ll see how it plays out over the next few weeks as inventory levels increase a bit thanks to the summer doldrums. 
• Peninsula—It seems reality has finally sunk in for many sellers along the Peninsula and they are finally shifting their price points to reflect current market conditions.  Price points are now more in line with today’s trends and buyers seem to be more pleased with their positioning and are starting to get in on the market. Sellers, though resistant at first, seem to have come around and, after coping with the reality of the offers they’ve been receiving, are coming to realize this may be the current “value” of their home.  In Menlo Park, Palo Alto and Redwood City, markets that have been plagued for at least a year by low inventories, are witnessing an increase of inventory by more than 50% year over year.  San Mateo, on the contrary, is reporting pending sales up 22% for July (from 2007) and closed sales are up 22% (from July 2007).
• San Francisco—The market seems to be picking up after the 4^th of July slowdown.  In fact, we had 13 multiple offer listings among our five San Francisco offices this week.  Not bad folks!  But while some listings are getting multiple offers, typically prices aren’t going much over asking, if at all.  We are also seeing some listings that sit.  Demand for well-located and desirable properties is constant but anything less than that is languishing and driving inventories (in some neighborhoods) up.  Sellers beware of this fact as you prepare your home for sale.  You need to properly position your home BEFORE it hits the market or, in all likelihood, it could go relatively unnoticed—even in our beloved City.
• Santa Cruz County—A market plagued by REOs, Santa Cruz County has definitely seen its share of falling prices.  In fact, the median price has dropped $150,000 over this time last year and unit sales are down 29.5% from the first half of 2007 versus the same period of 2008.  But going to my glass half full reference, if buyers don’t see the opportunity that is presenting itself here, they better start!
• Silicon Valley—A mixed bag.  Cupertino saw a huge surge this week with their pendings increasing from seven to 19!  An anomaly?  It’s hard to say.  This market seems to change with the wind and we never know from one week to the next whether inventory and sales will be up or down.  Silicon Valley is also seeing its fair share of price reductions as sellers begin to come to the reality of today’s market conditions.  Sellers who seem to prevail are those who price their homes competitively from the start and don’t test the waters.

Both pricing and presentation are vital in today’s market.  Buyers seem to be only noticing two things: new inventory, and new price reductions. If you want your home to remain competitive in today’s market, you need to consider this fact.  I urge sellers to not test the waters when placing their home on the market.  Homes that sell will be priced competitively and presented in the best light possible. 

Gov. Schwarzenegger signed a bill to implement double-fine zones on two major San Francisco thoroughfares.    The two roads affected are 19th Avenue (between Junipero Serra and Lake Street) and Van Ness (between Golden Gate and Lyon Street).  Both stretches have been dangerous areas for pedestrians.   The new fines, which go into affect January 2009, will range from $137.50 to $2750 (depending on the specific violation).

This bit of information is welcome news to Seniors and anyone dealing with the loss of a spouse (see below):

——————————————————

(Note: The following article is from Daoro, Zydel & Holland, CPAs and consultants, San Francisco.)

Before a change in the law late in 2007, an exclusion of up to $500,000 of gain on the sale of a principal residence was available only to taxpayers who filed a joint return and met certain other tests.

Those tests included:

• At least one of the spouses owned the home for two of the last five years;
   
• Both spouses used the home as a principal residence for two of the last five years;
   
• Neither was ineligible for the full exclusion because of the limit on using the exclusion once every two years; and
   
• If one spouse died, the sale of the house must have taken place in the year of death to get the full benefit.

Under the change in the law, effective in 2008, the surviving spouse now may use the full $500,000 exclusion as long as the sale occurs not later than two years after the date of death of the other spouse. This is valid provided the other tests previously mentioned were met immediately before the spouse’s death. In addition, the surviving spouse cannot remarry until after the sale of the house.

The Federal Reserve has adopted rules to give home buyers more protection from the types of shady lending practices that have contributed to the housing crisis and propelled foreclosures to record highs.

Read more:

http://www.examiner.com/a-1486565~Fed_adopts_plan_to_curb_shady_mortgage_practices.html

Inventory is still pretty high in Northern California, but it looks like things are beginning to level off.  The number of listings on MLS in June dropped by 1.4 percent in the San Francisco Bay Area and 3.9 percent in Sacramento since May.  Meanwhile, the Real-Time Housing Market Report announced that home prices declined only eight-tenths of a percent over the past three months. 

So it looks like buyers are slowly starting to come around and take advantage of some excellent values out there.  The Market Composite Index, a measure of mortgage loan application volume, showed a 7.5 percent increase in the first week of July compared to the previous week.  Rates on 30-year fixed-rate mortgages increased to 6.43 percent that week from 6.33 percent the week before week.  NAR is expecting that rate to rise gradually to 6.5 percent by year’s end and then hold steady for most of 2009.

The Pending Home Sales Index shows that the west has been slowly improving this year.  We saw our largest increase this April after an 8.3 percent increase over March.  While it’s true the PHSI slipped 1.3 percent in May, it’s still two percent higher than May 2007.  In addition, May saw double-digit pending sales gains over the same month the previous year for Sacramento.

Air conditioning or open houses?  It seems that was the dilemma of the week.  So let’s see if folks braved the heat, or stayed indoors.   The following is based on data provided by the many Coldwell Banker offices throughout the area:

-          East Bay – Highs and lows, ups and downs—that basically sums up the region over the past week.  Overall, the East Bay is reporting an increase in inventory, but more inventory could mean more interest.  In Orinda and Oakland, sales are still pretty strong and agents are praised for not letting the heat keep them inside.  The Castro Valley office says several of their agents spent days on end showing properties from morning ‘til night.  In Berkeley and El Cerrito, open houses brought in 70 to 200 people!  In San Leandro, one agent stopped counting after 72 groups came through one of his open houses.  Unfortunately, a brief cold front set in and the same agent held an open house in Livermore on Saturday and didn’t have any visitors.  Still, Livermore is enjoying improvements with a decline in active inventory and an increase in pending sales from the week before.  Looks like even triple digits aren’t keeping potential buyers from looking for their ideal homes.

-          North Bay – Things are fairly steady, with Santa Rosa buyers taking advantage of foreclosures and listings with price reductions.  The Greenbrae office reported multiple offers on listings in Larkspur and Novato. Southern Marin is still holding its own regarding price, although units are off due to fewer properties coming on the market. Only 12 properties sold in June in Sausalito and Tiburon, however ASP increased to $2,440,000.

-          Peninsula – Yes, it was another slow week due to the holiday. But as the Burlingame office points out, once agents return to the office and begin scheduling appointments, things begin to pick up.  Open houses have been fairly well attended, likely due to the low inventory.  The big victory this week came from the Menlo Park-El Camino office with eight offers on a $1.8+ million listing. In the end, it sold for $2.2 million and the seven buyers who missed out are still looking!

-          Monterey – Steady as she goes.  Multiple offers and lots of open houses these past weeks.  Maybe folks are looking to beat the heat by moving to the coast.  It’s pretty hard to resist a cool sea breeze when we’re baking up north. -               

-          San Francisco – Overall this week was fairly slow after the holiday weekend.  The Market Street office did report multiple offers on a $2+ million listing which, at four offers, was the highest of the week.  The Lombard office also reports that “deals continue to be ratified very close to asking.”

-          Silicon Valley – There are mixed reports coming out of this region this week.  The phones are ringing like crazy in at the San Jose Willow Glen office where an increase in sales has agents enthusiastic.  But elsewhere around the Silicon Valley, offices say things are still pretty slow after the 4^th of July holiday.  Maybe folks are still recovering from too much fun at their holiday BBQ’s.  There’s still cause to celebrate though as the majority of offices report listing inventory is steady or decreasing and overall sales are mostly increasing.  The Los Altos office had a well attended open house this week and with their new inventory reports that “the general feel is upbeat.”  

Overall we‘ve seen higher priced communities remaining steady or moderate increases in price while inventories remain low.  Our more densely populated suburbs in the lower and medium price ranges are offering opportunities with price reductions, short sales, and foreclosures. It will be important to stay in close contact with your mortgage partners as FannieMae and FreddieMac will be in the news all week, as well as the federal seizure of IndyMac Bank.  More on this next week.

I just received the following note from the Laguna Honda Neighborhood Association regarding a neighbor requesting a variance to build a deck:

Does anyone have any opinions on this matter?   Be aware that you can present those opinions at the public hearing on this case to be held on Wednesday 7/23 at 9:30am at City Hall, 1 Dr. Carlton B. Goodlett Place, Room 408.

Below is the latest snapshot on the state of real estate in the Bay Area based on data provided by the Coldwell Banker offices serving the territories:

-          East Bay – The East Bay remains a market full of mini microclimates.  Take Castro Valley for example.  This market has been full steam ahead since late Spring which launched a flurry of REO sales.  This week was no different.  In fact, one Agent reported that for the first time in nine or ten months, there were more Agents representing buyers than there were listings.  There are buyers everywhere that are taking advantage of the REOs and lower prices.  Nearby Fremont concurs noting that they are enjoying a typical summer market with increased listings and increased sales—again, largely in part due to REOs.  The Walnut Creek office reports that pending sales are up 300% in East Contra Costa County—one of the Bay Area markets hit highest by foreclosures.  The affluent East Bay community of Orinda is what surprises me this week.  They reported 15 ratified offers—three of which went into a multiple offer situation.  All but one of the nine East Bay offices reported that sales activity were steady or increasing. 

-          North Bay – Yet another market enjoying the benefits of the flurry of REOs, Sonoma County continues full-steam ahead.  Our Petaluma office reported that multiple offers are “dominating our marketplace” with five of 13 offers going into multiples.  Our Santa Rosa office concurs reporting that the majority of their open escrows are in the entry level market—another sign of REO flurry.  Neighboring Marin has been hit the least by REO activity but, thanks to its lack of buildable land and its global destination locale, remains a relatively stable market.

-          Peninsula – We saw a much slower week along the Peninsula than we have in recent weeks.  But in all honesty, we can’t really complain.  The Peninsula has been its own mini microclimate through much of this real estate downturn with its most common problem being lack of inventory.  Somehow the Peninsula has almost weathered the storm with very little effect to its bottom line.  A couple of bright spots for the week:  The Menlo Park El Camino office reported that there was strength in all price ranges this week—$290,000 to $7 million.  Oh, and that $290,000 listing received 13 offers!  The Palo Alto office reported that multiple offers are occurring about 80% of the time in Palo Alto proper.  Not bad for a market that had a “slower than usual” week.

-          Monterey – This week was a very busy one with writing offers and closing sales before the month’s end.  The offices reported that they closed 10 sales on Friday alone.  Phew!  Why is this market moving so smoothly?  I chalk it up to a consideration that they may not be quite as impacted by the effects of the national economy as some of our inland communities.  Monterey by nature is a more affluent and upscale community and lending issues and credit concerns become less relevant.

-          San Francisco – I think we can chalk this slower than usual week up to an early 4^th of July holiday.  Many City residents are heading out on vacation and thus, the market traditionally takes a bit of a pause until San Franciscans return.  Having said that, well priced and presented properties are still yielding multiple offers—though, for the most part, homes don’t seem to go wildly over listing.  The Market Street office is reporting that they are getting a lot of multiple offers with buyers much less hesitant to act. Some Buyers are even setting up “Plans B and C” in case they lose out on their first choice.

-          Silicon Valley – Silicon Valley is one of the broadest areas for micro climates.  Take San Jose for instance.  This market is currently enjoying the foreclosure flurry as well with many listings going into multiples.  Our Cupertino Stevens Creek office reported that Cupertino and Sunnyvale listings are moving quite well—as long, of course, as they are priced well and show well.  One listing this week received three offers.  Neighboring South County (Gilroy, Morgan Hill and Hollister) are also seeing the short sale and foreclosure frenzy.  Our Gilroy office reported eight multiple offers this week alone and that a large percentage of available listings are short sales.  The affluent communities of Los Altos, Los Altos Hills, Los Gatos and Saratoga are seeing movement but only if the old adage of “price it right from the start” holds true.  Homes that test the waters often sit while those that price their homes competitively from the beginning—and show well to potential buyers—seem to move almost as soon as they hit the market. 

What I can tell you is that all of this activity surround foreclosures is music to the ears because it means there is a revival of the first-time-home-buyer.  And with that ever important consumer, comes a domino effect that will likely begin to shape our entire housing market.  It may not be today.  And it probably won’t be tomorrow.  But soon it will come, so be ready when it does.

Homeowners often take advantage of the summer to do various maintenance projects on their homes.   As we are now firmly ensconced in that time of year, I thought the article below might be of interest.   It includes items that should be addressed throughout the year, but now is as good a time as any to get started:

This maintenance checklist was compiled with the help of Lou Manfredini, Ace Hardware’s home improvement spokesperson and star of the “Mr. Fix-It” show on Chicago’s WGN-AM radio, and Frank Lesh, president of the American Society of Home Inspectors and head of his own home inspection company, Home Sweet Home Inspection Co., in Indian Head Park, Ill.

• Change your furnace filters monthly. “It’s so easy to do but so critical,” says Lesh. Clogged filters decrease furnace efficiency and can cause breakdowns.
• Drain your water heater at least once a year. Sediment will drain out along with the water from the water tank. Removing sediment can prolong the heater’s useful life.
• Clean the coils. If you have baseboard heating units that use hot water, clear dust from the coils inside the units to maximize heating efficiency. Clean dust whenever you see it accumulating. If you have a hot water boiler/furnace, you should also oil the pump inside the furnace twice a year, says Lesh. Look for the three spots on the pump designated for oiling.
• Check your circuits. Test the performance of the circuit breakers in your electrical circuit box twice a year by flipping them off and back on. If you have a circuit that keeps shutting off with normal daily electrical use, call an electrician. A faulty circuit breaker could indicate a short in the wiring inside your walls.
• Watch out for drips. Check under sinks periodically to look for leaks or water stains that might indicate leaks. Catching a small problem early can prevent water damage. Use a plunger to clean out sinks and tubs whenever water doesn’t drain normally.
• Be aware of life spans. Water heaters, furnaces, roofs, and other key components of your home should be replaced before they fail, based on their average useful lives. Here’s a general ballpark of the life span for key components:
  • Exterior house paint: 5-10 years
  • Furnace: 15-50 years
  • Roof: 13-15 years
  • Water heater: 7-15 years
  • Wood deck staining: 4-7 years
• Keep the wet out. Water is a major enemy of your house. Check each season for signs of water damage to your home. Flashing, the metal pieces used to seal the areas between roofs and chimneys and around doors and windows, are especially vulnerable to damage by wind or age. Loose flashing can let water seep under a roof or inside walls, which in turn can cause mold.
• Get to the bottom of things. Check your home’s foundation for cracks or gaps that could let in water or varmints. Also look at the ground around your house. As homes age, they often sink slightly below the surrounding ground. This settling lets water puddle against the foundation and possibly damage it, notes Manfredini. Doing major landscaping work also can cause changes to the ground’s pitch that let water flow toward the house.
• Look up. Chimneys take a great deal of weather abuse. Visually inspect them each year for signs of loose mortar or loose or missing bricks. Have the insides of chimneys cleaned every two to three years. Also check your roof for loose shingles or dangling gutters.

Last Thursday Bank of America said it expects to eliminate about 7500 jobs over the next two years after it completes its acquistion of Countrywide (about 3% of the combined workforces).  BofA said it ended March with about 209,100 employees, while Countrywide said it employed about 50,400 at that time.   The cuts will occur nationwide and mostly in areas where the companies have significant overlap, such as staff support.  Affect employees will be notified in the third quarter and will be offered severance packages.