Bloomberg has a nice piece today following up on Bernanke's comment last week that he applied to refinance his loan and was rejected recently. The story is pretty basic, but covers the "pendulum has swung too far back" issue, the "lenders' job is to find what's wrong with your package" issue, as well as the "our incomes are actually lower now than 10 years ago, on average, so of course lending is more difficult" issue. This latter point I've not heard paired with the tightening guidelines issue before (though of course folks lost so much equity and savings during the downturn, that downpayments are dramatically more difficult to pull together these days--for instance, 10 years ago, you could buy a $1 million home with $50,000 down, let's say. Today you might need $200,000 down (a 300% increase, and savings are incredibly hard to set aside quickly!), and your income might be 3% lower, on average (but rates are too, so......).
Wednesday, October 8, 2014
Tuesday, October 7, 2014
I don't know why it took me this long to mention this, but this spring, I had a
client who thought seriously about selling his home off market. Price was important, and privacy was not a big issue. I argued that to get the best price, there's no doubt the best approach is to stage, market a home very strategically, and open it up to the broadest range of potential buyers possible. You want multiple buyers, in part to keep the prevailing buyer "in line." Off market, too often, the sole buyer thinks s/he is doing a seller a big favor, and begins asking for lots of concessions in return.
Of course I know I'm the agent and you're the principal, so I do whatever you tell me to do. In this case, the seller was convinced to list the house off-market with another brokerage in town. They opened it up unstaged, to about a half-dozen buyers working with (only) their agents. None felt the look of love, and the seller felt that none was really properly pre-selected (we agents typically will bring all financially qualified buyers to an off-market listing, in part because our buyers would want to get in when others can't (why? They are hoping for a bargain.....)). The asking price was x. No bites. Not even an offer below asking.
I got the listing a few days later, staged, cleaned up the tax record to reflect about 1000 sf of permitted additional space, did a bang-up marketing job, and put the house on the market shortly thereafter for 93% of x, hoping for x or more. The prevailing buyer closed with zero complications at 27% over x (and 40% over asking).
There were a number of extraordinarily strong offers, and the three strongest were from agents who don't traditionally work in Piedmont--two from Berkeley and one from San Francisco. (You remember my story a few years ago that in a year with say 140 sales or 280 "sides," there were something like 200 different agents and dozens of firms which had participated in the Piedmont market?)
This has been a very big year for me, and for PacUnion. You've probably seen the
graphically striking full-page ads in the Chron pointing out that we have the most productive agents ($ sold/agent), the fastest growth rate, and the largest share of sold over-$1 million homes throughout the Bay Area. We've also been getting great press and awards for our pacunion.com website, and for our big presence in China. We have an office there, key staff have made several visits, all our listings are uploaded to the Zillow.com equivalent there (with text translated of course) and our concierge office here handles incoming inquiries ("I'd like to buy x house in Piedmont," as well as "I need a Chinese-speaking agent to help me buy my son a condo in Berkeley while he's at UC"), as well as advertising opportunities in a range of Asian pubs.
Meanwhile, back at the ranch, I've sold a bit under $25 million in real estate in the past year--85% of it in Piedmont. Prices have ranged from $665,000 to--oops I can't tell you because my clients' offer was confidential, and I never violate a confidentiality commitment. A bit less than half involved buyers, and I represented sellers (or renters!) for the balance.
Of greatest interest to me is how I stack up against the "typical" sale. On average, homes closed in Piedmont at 8% over the asking price over the same period. In contrast, looking at my buyers and sellers, my buyers closed at an average 7% below asking, and my sellers closed at 24.6% above asking.
You can achieve that kind of performance while being a jerk, yelling and screaming, and developing a reputation among agents and clients for lack of transparency and ethics. Actually, I'd argue that you can't, and have always approached my business hoping to deliver thoughtful, insightful advice in a collegial fashion while keeping my clients' interests paramount. Click here for more of what my clients say.
--On Sunset Magazine's site is a nice set of suggestions for great fall color. Think about shots of orange and purple, combined with waving grasses.
--Are you yet addicted to Gardenista? The NYT's Michelle Slatalla's current roost, it's cooler than Sunset, and covers plants, hardscapes, floral, and has great graphics from correspondents in a few locations around the world. Because it's based here, much of the international coverage tends to be in other Mediterranean climates--South Africa, Australia, Spain and Italy, and so on.
--Been to the Bayview to Flora Grubb's shop? I hear succulents are heading toward passé, but otherwise, it's a great idea generator.
If you have an interest in property values elsewhere in the Bay Area--thinking about a move or looking at current values of an investment property--take a peek at Pacific Union's regional report for 2Q14 (this quarter's report will be coming out soon--keep an eye on this blog (tinyurl.com/PiedmontHome).
Lots of data, and it includes nice insights from the various regional VPs--remember we have offices throughout the Bay Area and in Tahoe, in contrast to the red guys.....
Also Courtesy of Pacific Union, and Christie's International--
You know Pacific Union is the longtime regional affiliate of Christie's InternationalReal Estate, right? Christie's puts out a great read every quarter--check the last issue out here. It's not just a compilation of big houses!
In the middle of a drought, don't forget that natives and Mediterranean plants are
great ways to reduce water consumption in your yard. Merritt College's non-profit plant sale happens this Saturday (9-3) and Sunday (12-3) at the College up Campus Drive. See MerrittLandHort.com for all the details.
Competing for your attention is the Ruth Bancroft Garden's plant sale also on Saturday 11-3 pm in Walnut Creek.
The following weekend is the native plant sale sponsored by the CA Native Plant Society, this year on October 18th at Hidden Villa Ranch in Santa Clara (do elementary school students still go to Hidden Villa for their eco-education overnight?). October 19th, go local to the Friends of Sausal Creek sale at Joaquin Miller Park 10-4 pm. Combine a plant sale and a Lawrence Hall of Science visit by stopping by the UC Botanic Garden's sale also Sunday 10-4 pm. See their blog for more info.
Longtime readers of this blog will remember Circle Lending, which took care of the paperwork for private loans, and Virgin Lending, which bought Circle Lending just before the crisis, and then folded shortly thereafter.
Looks like National Family Mortgage has gotten organized to fill the void, per Kathleen Pender's Chron story in July. They charge $725 to originate the loan (set up, record and handle 1099 forms at the end of the year), and then there's a separate $15/mo servicing charge (to cover sending out monthly mortgage payment bills, letting you know if a payment issue comes up), which can be paid by the lender or borrower, at your direction.
Note that if you were to "gift" funds to a relative, you are liable for gift taxes. The IRS has a "Applicable Federal Rate" which is a safe-harbor rate that avoids any liability. It's currently just over 3% for a long-term loan. So while market rates are closer to 4.375% for a 30-year loan, you could lend a relative at 3.06% and not worry about whether a portion of the arrangement would be considered a gift by the IRS. The program allows you to set the rate at whatever you agree on. See their site at nationalfamilymortgage.com, and/or check out a guide to borrowing at this site.
By the way, I've turned a few clients who are not yet ready to buy or sell onto the IRS's taxpayer guides to buying and selling. They have great FAQs and scenarios. (I send these links out, along with the settlement sheet from transactions, to each of my clients on 12/31--who wants to go hunting for that one piece of paper when organizing for taxes when I have it tucked into my "settlement sheets" file at the office?) See this site/doc for potential buyers and this site for potential sellers. Is that new roof a expense related to the sale or an addition to basis, or neither? What about an upgrade from vinyl to hardwood in the kitchen? Can you deduct transfer taxes? Loan points? The answers might surprise you........ As always, talk to your tax professional first and last!
Real estate blog Curbed highlighted the American Planning Association's selection of the Uptown neighborhood of Oakland as one of the top ten neighborhoods in the country. Read more about it and other coolest neighborhoods here.
Note to calendar: Add next month's Art Murmur. See the Art Murmur site for arts listings and First Friday events for next month--
3Q14 Piedmont Real Estate Update---
The third quarter of the year maintained the sales trends from earlier in the year, and represented a big jump up from the third quarter of 2013. The average list price this quarter for the 37 homes closed was $1.858 million, and average sale price was $1.989 million. Before shock sets in, compare that to the median price trends: The median asking price this quarter was $1.495 million, and median sales price was $1.775 million. I rarely include both sets of data, because they so rarely diverge to this extent.
There's a clear reason, however: 3Q13 saw a highest price of $2.93 million--and that was about the max for the previous several years. The very high end of the market had seized up during the crisis. In contrast, in the past year, a large number of high-end homes have come to market and closed (though fully 1/3 of homes currently on the market in Piedmont are priced at over $3.5 million, suggesting buyer demand is not bottomless.)
This quarter we saw not only a highest sale price of $5.45 million in Piedmont (as reported by the MLS...), but there were four sales over 3Q13's max. That is, with actual sales to review and fold into the averages in the over-$3 million range, our average sales prices spike up.
Circling back, these figures represent a 17% increase in prices this quarter compared to 3Q13 on a median basis (which I would focus on), and 34% on an average sales-price basis. Across all sales this quarter, the average sales price was 7% over the asking (the median was 19% over asking). Homes sold in a typical 15 days on the market, and for $670/sf (average $669/sf and median $671/sf). As I pointed out to buyer clients just today, don't consider $670/sf to be what you'd expect to pay for most homes in Piedmont, however. Those homes that punch many buyer buttons--those that are recently renovated in an of-the-moment style (see below for more on that!), include a master bath, have all bedrooms on the same level, include a family room, preferably that kitchen/family room opening onto a large andflat backyard, and a location walkable to both schools and Piedmont Avenue, the prices have consistently been closer to $850/sf or more.
Putting these stats in the context of last quarter's data--the prime sales window in Piedmont--the market has consolidated its gains--buyers are thankful we are at a bit of a plateau rather than still on that steep upward slope: Last quarter, 65 homes sold for a median price of $1.758 million--nearly identical to the median this quarter. The average sale price then was $1.884 million (compared to this quarter's $1.989m).
Pulling back to the regional and statewide data, the Ca. Association of Realtors reports that prices across Alameda County are up 9.2% July over July (on a median sales price basis). Check out a new app that the CAR has introduced if you're interested in looking at pricing trends (and other sales stats) in other counties in CA. Across the state, median prices are up 8.9%, and the total number of sales was down by 9.3% on a year over year (through August) basis. This supply shortage of available homes certainly contributed to price spikes earlier in the year, but it appears that more sellers are motivated to put homes on the market (or are able to sell and not bring money to the table) because we see total inventory is increasing these last few months.
In addition, those Facebook and other IPO beneficiaries who had money burning a hole in their pockets have blown their wad, so the crazy money is not nearly as significant a factor today as it was earlier in the sellling season. (On the other hand, with the exception of one bizarre situation in which I was involved, homes are invariably appraising for the contract sales price--the all-cash and way-over-asking prices from the early- to mid-summer are still considered legitimate comparables today. If you've been postponing a re-fi for some reason, there's no reason to wait, as appraisals will be successful, and interest rates are finally creeping up.)
And finally, at the national level, my contacts at the Institute for Luxury Home Marketing (I won a national marketing award several years ago at this Dallas-based organization's annual conference--the only conference typically on my calendar suggest that high-end properties across the country are seeing some price pressure. Click here for more national stats focused on the high end, generated by the same vendor who provides detailed info on the Piedmont market when I organize open houses for my listings.
Anytime you need more insight into local or regional housing trends, just let meknow. I appreciate the opportunity to review stats and market trends through the quarter--it helps inform my thinking, gives me something to talk to clients about, and certainly ensures that I operate in a data-driven manner, rather than relying on my gut only!
Thursday, October 2, 2014
Today I polled my colleagues for caterer ideas for a holiday event at our house for my spouse's office. Here are the responses, in no order:
-Blue Heron Catering (510) 533-0781
-Barbara Llewellyn Info@BarbaraLlewellyn.com Telephone: 510.832.1967 Facsimile: 510.832.0419 (looks like she does teambuilding events built around one-day cooking classes too)
And for most creative (and thrifty) idea:
-Get food from Ann's Catering (of Rick and Ann's) and use Hostess Helpers (http://www.hostesshelpers.com) to can do the actual staffing.