Saturday, February 11, 2012

Enough about You; Now about Me--

I have a number of listings--including 145 Caperton Ave. and 33 Pacific Ave. in Piedmont--hitting the market this month and next. More on those very soon. Meanwhile, I advised clients as they bought or sold nearly $15 million in real estate last year (excluding our own purchase), and have advised clients on nearly $7 million in purchases in the past three months, including one that the managing broker at Highland Partners called ''by far, the most complex of my 25-year career.'' (And buyers, sellers, and brokers are all still talking to each other!)

Your confidence and referrals have been a huge part of that market expansion.

I'm still doing all my own award-winning marketing work and transaction negotiations. Mary Parise continues to make sure my clients and I stay on top of our paperwork, as she has for a few years. My trusted colleagues--staging professionals, painters, and handypersons--will continue to compete for my sellers' business as we prep for market. And I'm still bringing coffee to the high school parent club meetings, and supporting our community's strong schools, excellent arts venues, and safety net.

Energy Upgrade California

I think I've written about Energy Upgrade California before. Now that we've moved into our new house (312 Pacific Avenue in Piedmont--yes, Konrad now has a view....), I'm scheduled for a whole-house analysis next week. Will report on it shortly afterward.

My colleague from the Clinton Administration, Lori Bamberger, ran a roundtable at Berkeley recently on strategies to increase the uptake of energy efficiency around the home purchase and sale moment, and I rep'ed the realtor community. My big issue has been the cost of these ''whole house'' blower analyses. How do I convince a buyer to pay more for an energy analysis than for a conventional home inspection?

Solar City intuited my concern, and appropriately knocked the price for the evaluation down from the $800 everyone else charges to $295. At the end of the day, we'll make more thoughtful and strategic energy efficiency investments based on the insights, and will get some state rebates as well (you need the blower evaluation in order to get the rebates, which are not income-eligible).

Meanwhile, we've been installing occupancy- and vacancy-sensors around the house and a dusk-to-9pm switch on the front door lights.

Stop by anytime to check it out--

The Go-To Site on Piedmont

Check out and then bookmark the Piedmont Portal! Developed by the schools and school-support community (with specific thanks to my neighbors Holly Hanke and departing school board member and former president June Monach, together with new school board member Andrea Swenson and high school parent club prez Mary Ireland). June says:

The goal of the site is multifold:

*Raise awareness of important district funding issues, especially parcel tax information and how state funding works
*Educate parents and community members about our collective purpose -- how we all work together to support our schools and sense of community
*Highlight events and activities related to fundraising efforts in town via a shared calendar
*Share news items related to schools that are of interest to all
*Streamline fundraising across all groups by making online donations easy
*Feature photos of students and community members supporting our collective purpose
*Eventually host a secure, online version of the Student Directory

But the content is juicy--everything from discussions of capping AP classes to thoughts on the future of the transitional kindergarten class to tickets for the high school's production of Bye Bye Birdie, to links to the Center for the Arts. And that's just in the first week!

Saturday, February 4, 2012

Case-Shiller Index

While the press releases today on the Case-Shiller update (for November) were generally negative, San Francisco's data were more complex--those homes costing over $585,000 at acquisition (the top 1/3 of the regional market) dropped 1% between October and November, and only 1.9% year over year according to Socket Site's quick and deep analysis. The New York Times's wonderful interactive graph was just updated; see it here. Note that I was doing a bit of research on a Berkeley and a Piedmont home today, and Zillow reports that home prices in both areas have seen a tick upward.

Relatedly, Decluttering

If you're vaguely thinking about selling your home but haven't yet picked up the phone to call me, it's OK--you can take a few first steps by looking at my colleague Nina Johnson's newest blog posts on decluttering. This home organizing whiz can also work by your side to power through 20 years of accumulated belongings, as I know from personal experience. Get her regular postings by subscribing.

Market Ready

Have you seen the Market Ready series in the Times? (That missing adjectival hyphen drives me nuts.) I find the advice to be spot on, whether discussing installing appliances or repainting in advance of a sale.

Making Sense of the Euro Crisis

I'm at a get-together of former banking regulators this weekend, and saw a great PP deck providing insight on the euro crisis, and potential impacts in the US. Email me if you'd like a copy. One thing that crossed my mind while here was potentially adverse effects of low low mortgage rates over the long term.

The S&L crisis was caused, in part, by the squeeze faced by S&Ls when they had 30-year mortgages at 5%, but interest rates spiked to the 20s in the early '80s. I remember hearing about the resulting ''disintermediation'' in my housing finance class at Harvard in the mid-'80s.

Since then, the market has gotten by through a combination of adjustable rate mortgages (ARMs radically reduce interest rate risk) and the hedging effects of securitization. I haven't seen an ARM loan in a couple of years, and the mortgage securitization business is still seized up. But we're blazing forward with 3.75% 30-year loans. What happens when broad interest rates go up to a moderate 7-8%?

Our securitization system will probably be back in shape by then, but I imagine a number of owners will say, ''should I take that job in LA if doing so means leaving my 3.75% mortgage behind and shifting to a new 8% loan on a replacement home down south? That's $20,000 more in post-tax income going to housing costs! Maybe not.''

I hear about this labor market ''stickiness'' already, either because of low Prop 13-protected taxes, or because potential sellers are underwater. Moving to LA means finally taking the hit on a home that's currently underwater.

So let's re-fi into those low low rates while we can, but hope that the economy firms up so we don't get too dependent on them--

Pesky Trusts and Estates

Just bought a house and realizing that the estate taxes won't stay at zero forever? Thinking about wills, a trust, guardianship and such? Forgot to put the new house in an existing trust? Let me know and I'll pass on a few names for you.

Meanwhile, take a peek at a story from Schwab's most recent On Investing issue. (You'll have to leaf through the issue--it's called ''Estate Planning is a Family Affair.'')

Your title company is likely willing to write up the documents needed to put a house into an existing trust, as long as you go down to the recorder's office to record the document. Your estates and trusts attorney can take care of it as well.

And just today, the Wall Street Journal had this story about clearing out a parent's home.

Turning to Sewers

You've probably seen references in the local papers to the new sewer lateral ordinance in town. Beginning in August in Piedmont, and now this month in Oakland, sellers (generally) are responsible for ensuring that the connecting sewer line (or ''lateral'') from the house to the City main is intact, with no offsets or root intrusions. The city main may be in the street in front of your home, or perhaps in a right of way at the rear of your yard.

Berkeley has had such an ordinance since 2005, so agents and sewer specialists are quite familiar with the process and timelines. By the time most Piedmont transactions have closed in the last few years, buyers have been inspecting, and then insisting that sellers either address a sewer lateral problem, or give a credit so the buyer can do so. The typical culprit is clay pipe which in our moving landscape tends to crack and ''offset'' over time, allowing fluids to leak in and out. Some older homes might even have storm drain or sump pump water going into the sewer line, which as you can imagine can overwhelm the treatment plant further ''downstream.''

Replacement is typically taking a couple of weeks these days, and costs can range from $1200 to maybe an absolute high of $16,000, depending on how far your house is from the City main, and how complicated the journey might be. Typical charges total about $5,500, I would say, and include a video inspection in the $100 range and about $350 for EBMUD's testing. If you know your line is clay pipe, many would argue that you should save the video inspection fee and just jump to replacement as 99% of the laterals from the clay-pipe era have failed.

Buyers clarify in their standard purchase offer who will pay for replacement (if necessary), so it's good to get testing and replacement out of the way early as you plan to go to market. Once replaced, the EBMUD inspection certificate is ''good'' for 10 years, so you could even do it this fall and use the certificate when you sell in three years.

Of course just because a buyer wants a seller to replace the sewer doesn't mean it must be that way. Everything is negotiable. But EBMUD has a very detailed process, including a $4500 performance bond and an 180-day completion deadline, should the buyer take on that responsibility. I even heard this morning of a case where the lender wouldn't allow the transaction to close, even though the buyer had agreed to jump through the hoops and take care of the sewer after the closing. At this stage, the ''default'' is definitely for the seller to do the work.

Call me for sewer replacement recommendations--

Fuzzy Logic Hits Thermostats

You'd have to have been in Tahiti for the past three months to have missed all the press on's high-tech thermostat.

Programable thermostats are great if you have someone else install them just after painting your walls. Otherwise, they can be complicated to program, and nothing is more frustrating than taking the '60s thermostat off and putting a new on in, and then realizing you have a halo of newly exposed paint gracing your living room wall….

Nest's shape is eerily like the '60s thermostat--no halo!--and best of all, it takes the ''programmable'' out of ''programmable thermostat'' and does the programming for you. Fuzzy logic runs our rice cooker, and it apparently runs the brain of this thermostat too.

It can tell if you're in the house, adjusts for your early-to-bed-on-Thursdays-before-Friday's-dawn-bike ride routine, and can be adjusted remotely over the web. Stuck in Chicago for another 3 days? No problem. Just tell your machine to drop down to 55.

They'll be doing over-the-net system improvements through time. I gather Best Buy sells and installs them. Will try it out and report on that next quarter., $249.

Piedmont Market Firms Up in 2011

While the number of homes sold in 2011 surged a strong 22% over 2010's 99 sales, prices inched up three percent to an average $1.446 million from last year's $1.401 million. The homes sold in an average 29 days, a sales window that remains the shortest in the East Bay market.

Prices ranged from $550,000 to $4.5 million, and while the average price per square foot remained right around $500, the top price was $727 per square foot. Through the year, the typical home sold for one percent below the asking price, though that ratio ranged from a low of 74% of the asking price (typical of “problem” or distressed properties) to a bidding-war high of 33% over the asking price (an occasional outcome with fixers).

Buyers brought all cash to the closing table for 11 sales, while eight homes sales were “distressed.”

Turning to the 4th quarter of 2011, prices softened, as is typical after the spring and summer flurry. We saw 22 sales close (compared to 25 last year) averaging $1.383 million (compared to $1.413 million in 4Q10). The average days on market was flat at 30, and only one home sold was distressed.

Thusfar in 2012, however, the market seems to be heating up again: In the first ten days of the year, two homes I know of are pending off-market, and one end-of-the-year special slipped into contract and closed in ten days.

The Fed's low interest rates mean that, to buyers, homes feel like they are on sale: A million dollar mortgage (translating into a $1.3 million home with 25% down) can be had for well under $5,000/month. When interest rates were in the 6s, that same home would have required $6,300 a month, and the jobs to generate it.

I anticipate another firm market in the coming year, and perhaps even a bump up in prices. Typical slowdowns in the housing market (in the early '80s and early '90s) last about six years. If that pattern is reliable--a big question of course--we should see slow increases this year as the top of the market in Piedmont was November, 2005.

Across Oakland, the number of homes sold last year bumped up 8% over 2010, though the average price dropped 9%, reflecting distressed sales. Similarly, the number of Berkeley sales increased 8% while average prices dropped 6%. Looking at all six East Bay cities, prices were flat at all price ranges, while the number of homes sold under $1 million slumped about 5%, but was flat above $1 million.

Be sure to let me know if you'd like more detailed information on a neighborhood, and/or price band. With today's tools, it's easy to give you a clear snapshot of our submarkets. And take a look at Pacific Union's hot-off-the-press regional update here.

Moving to the state level, California expects about a 3% decline in average prices across 2011 among all home sales. Just over 520,000 homes traded hands last year. The California Association of Realtors anticipates a 1% increase in the number of homes sold, and 2% increase in the price of homes sold through 2012. The amount of unsold inventory (that is, the number of homes on the market) declined 16% during the course of 2011, meaning that the supply of homes has dropped while demand (based on the number of closed transactions) has remained rather steady compared to last year.

Alameda County remains the most affordable county in the ''inner'' Bay Area--a household income of $58,000 is required to purchase the typical entry level home here.

Click here for home-by-home information on this quarter's Piedmont sales, and for a Clarus Market Metrics analysis of 2011.