My CSL Kitchen Tour Weekend for a Home Sale is Still Open!

As many of you know, I've gotten into the habit of putting a centrally located home on the market over the weekend of the Children Support League Heart of the Home tour (this year scheduled for April 28-29th; see http://wehelpkids.org).  We annually have 2,000 well-networked folks driving through central Piedmont, and they are all going to chat with friends afterwards.  Wouldn't you like one to stop into the all-day open houses and then later call a friend and say "you need to get young John over here to look at this Piedmont house I saw on the market this morning--it's got X, and Y, and Z, just as he wants!"  That self-selected but carefully targeted word-of-mouth marketing, backed up by thoughtful advertising (including in the tour booklet itself) is priceless.   

And the payoff has been dramatic.  Last year's offering garnered 11 offers and went 48% over the asking price, and previous years' outcomes have been similarly impressive.  When a fixer, or a cosmetic fixer is the subject of all-day Friday and Saturday open houses, plus the usual Sunday afternoon open, as was the case last year, I throw in my other specialty--the Renovator's Open House which earned front page coverage ten years ago by the 

San Francisco Chronicle.

So if you're anticipating a spring sale, get in touch and reserve my time!

Say Goodbye to 2016

With taxes kept low by Prop 13, mortgage rates locked-in at historic lows, and the prospect of capital gains taxes dropping in the next tax reform package, we potential sellers are experiencing what economists call "stickiness."  We're not overcoming inertia and moving when our circumstances change, but rather we're responding to incentives and staying put.  

As a result, a large proportion of my work is educating my clients so they are comfortable and confident whenever they decide to make their next move.  What's an electronic signature program?  Why should you care about the financial strength of a new co-housing development? What options are out there to defer or avoid capital gains taxes on the sale of a long-held home, and make a planned charitable donation or get some nice monthly income in the bargain?  I help people make great real estate decisions, and I get paid when they or their friends and colleagues rely on my advice when they buy or sell a home.

As I've said here before, the center of the Bay Area economic engine has been shifting gradually from Silicon Valley to San Francisco and Oakland.  Based on Pacific Union's transaction data, we're increasingly seeing tech households purchasing in the East Bay rather than households from the legal, management and finance/insurance/real estate (FIRE) fields.  And that means a number of tech households, looking for great schools and good housing stock, are focusing on Piedmont for the first time. 

The median home price in Piedmont increased 5% this year (based on MLS data, through 12/29).  Since 2014, prices jumped from a median $1.75 million ($652/sf) to $2.1 million ($791/sf), with a 15% increase in 2015.  Not only did the rate of price increases slow down in 2016, so did the volume--only 95 homes traded in 2016 in contrast to 147 in 2014, and 116 in 2015.  In fact the total volume of real estate sold in town declined by nearly $50 million/25% between 2014 and 2016, meaning transfer tax revenue is down rather dramatically.  

We saw this decline in the number of homes sold across all markets and submarkets in the East Bay, even though underwriting criteria have eased.  Downpayment requirements are the likely culprit--20% of a big(ger) number is a big(ger) number, and area incomes have not kept pace.  With interest rates increasing since early November, we're likely to see more Bay Area first-time buyers falling away as their window for homeownership closes.

Prices in Berkeley shot up even further, particularly for the sweet spot of $1 million-$1.5 million homes.  There, prices went up 16% in 2015, and then 8.6% over the course of this year.  At this point, buyers will pay roughly the same for a 3 BR/1 BA home in 1600 sf in Berkeley as in Piedmont!  

Prices in Oakland 94610 (Crocker), 94611 (Montclair/Piedmont Ave.) and 94618 (Rockridge/Upper Rockridge) also increased about 25% over the two-year window, but in a reverse of the trend in Piedmont and Berkeley, prices rose nearly 15% in 2016, but only 9% the previous year. Perhaps regional buyers have come to appreciate the great commutes, restaurants, movie houses, shopping districts and those fabulous La Farine savory morning buns only more recently. The entire Oakland market is up 31% over the two-year window, as neighborhoods recover from those deep dives of the housing crisis, and first-time homebuyers again find that Oakland neighborhoods offer affordability.

As always, I'm happy to help you think through your real estate options, whether buying, selling, renting or renovating.  If you have colleagues, clients, friends or family who plan to buy or sell in the East Bay Hills, I promise to work hard to earn their trust, protect their privacy, and exceed their expectations.

Happy New Year!

Personally, I'm anxious to move on from last fall.  So let's all recommit to act local again!  Well, at least after vacations--

We've continued our commitment to take long hiking vacations; this past year to the Inner Hebrides and to the High Sierra.  Those long hikes, interrupted only by a lovely shooting star or a tasty mushroom, provide time to think and plan, and sharpen my commitment to service, both professionally and personally.  Even during the workyear, I find my best strategic thinking about marketing a home or building a winning offer for buyers happens up at Sibley while walking the dogs in the early morning.

Hiking may not be at the top of the list toward the end of this year though--I'm celebrating my next BIG birthday, and we're heading to Paris for art, food, and friends.  

Here's to a great 2017 for us all!

2Q16 Piedmont Update

The Piedmont Market

The second quarter of 2016 consolidated gains made over the last couple of years in Piedmont. Low inventory and low interest rates kept prices up. About a quarter fewer homes sold this quarter (36 vs. 46 in 2Q15), with prices stable at right about $2.2 million, in the main.

The mix of homes is slightly smaller or more upscale this year compared to last--both factors lead to higher prices per square foot, even though the overall sales prices were relatively constant. While the average last spring was $755/sf, this year the $/sf increased a bit to $790. My sense is that offering prices stayed relatively consistent this year to last, in part to encourage auction-like behavior where that was possible. While sold prices were about the same, they were about 15% over asking this 2Q16 while only 9 or 10% over asking last year. 

 Homes sold in a brisk 12 days on average, and there were very strong sales all along the price spectrum--from the lower end up to the four over-$3 million sales reported to the MLS. Nearly all of our sales were in multiple offers.

Solid news for homeowners does not mean great news for the City, however. Because so many fewer homes were sold this quarter compared to 2Q15, transfer tax revenues are down by nearly 30%, again based on properties reported on the MLS.

Similar consolidating trends describe the surrounding neighborhoods of Oakland-94610, 94611, and 94618. The average single family home sold for roughly $1.2 million both this spring and last, in 14 days, at 18% over the asking price. In close-in Oakland as well as Berkeley, however, the total number of homes sold was very stable year over year, in contrast to the decline in available homes in Piedmont.  That's good news for those thinking about a move to Oakland.  Today's staff meeting included a report that the absorption rate (ratio of homes hitting the market compared to those going into contract) remains super-low in Berkeley, but is appreciably higher (though still a seller's market) in Oakland. And total inventory in the Oakland-Berkeley-Piedmont area is up to the highest level this year as we swing through the July 4th pause.

Berkeley is seeing sizeable price increases this quarter compared to 2Q15--average prices rose from about $1.1 million to about $1.25 million, a 13% jump.  Several of my clients have been in that mixing bowl this spring, and it is not fun. Homes are selling for 25% over asking, on average, in 14 days, at about $720/sf. In fact I've mentioned to several clients that in the $1-1.5 million range, prices are essentially the same in Piedmont and Berkeley right now, given the upward trends there. Across Alameda County, prices were up 9% this May compared to last, per the CA Assoc of Realtors.

We have been hearing about a cooling housing market in San Francisco for a couple of months (see this analysis from my colleague Deborah Lopez at Paragon in the City), and many of us in the business are wondering if some of "our" San Francisco buyers are now able to stay there rather than cross the bridge. And yesterday I even wondered if, in the depths of the Great Recession, families postponed childbearing a bit, just in case, which would lead to a few fewer 5-year olds looking for great kindergartens about now! And a quick Google search confirmed the theory.

Speaking of colleagues, Dawn Thomas down in Silicon Valley reports a similar softening in her market. Across the state, home prices were up 5.1% in April 2016 compared to 4/15, though prices statewide are still well below the peak of May, 2007. The international buyer, who represented up to 10% of total statewide home sales in the past several years, has declined to less than 4% of the market. And as I say regularly, remember that these folks are not just the stereotypical Chinese and Russian buyers, but the UC professor from Latin America, or the high tech worker with UK citizenship.

The California Association of Realtors points to 6 factors contributing to the shortage of inventory in the state:

--Low interest rates on current mortgage (leading owners to "stick" in place)

--Low tax bill in current home (ditto)

--Fear of the capital gains hit in communities like Piedmont (with extra-long "tenure," high initial prices and high appreciation, we are more likely to bust through the $500,000 capital gains exclusion for homeowners)

--Tougher mortgage requirements today

--Slow new-home construction, and

--Perception of few move-to options.

In fact, California homeowners are moving after 10 years now, compared to 5-8 years before the crisis. Think for a moment about the multiplier effect of just one homeowner staying in place for one extra year.

Layering over all of these housing elements is the overall job market. Between 2012 and 2015, the Bay Area saw 235,000 new jobs, but only 30,000 additional housing units built (and many of those are not near where the jobs were created). No wonder our commutes are getting longer! We'll see how long it takes for the market to get to stability--something we really haven't known for 15 years. But meanwhile, give me a call and we can talk about your situation!

Speaking of Giving Me a Call....

I've recently talked to heirs of a client about market dynamics and the sell vs. rent choice, a downtown Piedmont homeowner about various "move down" scenarios and implications, a longtime homeowner about thoughtful renovation choices for now that will make sense whenever she sells, and a local real estate investor about potential returns on several local possibilities. I help people make great real estate decisions, and I get paid when you or friends and family use me to buy or sell a home.

Still haven't gotten around to a Re-Fi?

I have two buyers in contract right now, and both will be getting financing in the 3.6% range. Rates are extraordinarily low, and there is so much re-fi activity that the appraisers are overwhelmed (my big issue this morning). If you haven't refinanced recently, email me for a list of my five most reliable lenders. And if you're only 10 years away from paying off the mortgage, know that lenders can organize a new 10- (or 15-) year loan at today's low rates. No reason to pay 5% or more, just to avoid another 30-year mortgage--put those savings into your pocket, not the bank's!

The Christie's Magazine

For all you shelter magazine readers looking for a free fix--The Outdoor Issuemade me feel like I was at the Post Ranch Inn, in my living room!

Garden Ideas!

A client works for the East Bay Park District's Botanical Garden up near Tilden. If you haven't taken a morning walk up there (no dogs, unfortunately for us), you are missing out. The website says that penstemons and red mimulus (sticky monkey flower) are out in force this month. I'm always blown away by what I see up there.

I've been hard at work these last few weeks on the garden in Inverness--propagating and transplanting from Piedmont to West Marin, and setting aside bearded and Douglas iris bulbs for the Inverness Fair in August.  Let me know if you'd like a few yellow Douglas (PCH) bulbs, or frilly white or simple light purple bearded iris bulbs later in the summer.

And of course, following a 15-year old tradition instigated by Judy Rosenberg, I'm making NYT Plum Tortes for the fair and freezer, with the gargantuan crop of wild plums this year. In fact last weekend we hosted the Spouse's annual old-time string band extravaganza, and dessert was fruit crisp, with rhubarb, plums, blueberries, apples, huckleberries and blackberries from the yard. Luscious with the youngest Son's homemade ice cream!

The Race of Things

See two recent NYT stories here and here that really reinforce the notion that a key driver of longstanding inappropriate police killings of African Americans (only now caught on tape) is the broader role of race in American society. Today's story, based on the Home Mortgage Disclosure Act data I spent much of my previous professional life working on, outlines the continuing role race plays in where we live, even as we approach the 50th anniversary of the Fair Housing Act. 

Did you know that during the depths of the Great Recession, lenders sent out word that they would not lend in certain zip codes (including our neighboring Oakland 94610, 94611, and 94618) without disproportionate downpayments? What impact do you think that had on family wealth, rates of foreclosure, and neighborhood strength?  "You can buy in Piedmont with 20% down, but you need 40% down to move to Montclair or the Glenview."

I can only hope that as we pull apart these issues this summer and really start to talk about race discrimination and its effects on all of us, we'll get to a more real place in this country and will be stronger and more unified for it.  Ann Coulter's comments today, to the CA delegation no less, are not a step in the right direction ("Ann Coulter warns California Republicans the nation could turn into California"-- LA Times).

Pension or No Pension? On-Market Sale or Off-Market Sale?

Pension or No Pension?

I had a nice cup of iced tea with a local lender this morning--he's one of my "Five Great Lenders to Meet your Needs"--let me know if you need the contact list. We were talking about how "stuck" the market is today: Higher-end sellers aren't moving as frequently as in the past, so mid-range buyers don't have anything to buy, and so on down the line to entry-level buyers. Moreover the lack of upper-end sales is leading to the supply shortage that is driving up prices, adding to affordability problems. (Full disclosure--agents and others associated with the business are suffering as well, as we tour available homes, read all those detailed disclosure packages, attend pre-inspections, and make offers--yet our clients don't get the house--until they finally do. Remember, we only get paid when the transaction closes!)

Anyway, he saw a split in financial picture between older Baby Boomers who more frequently have pensions (and who can typically afford to stay in the Big House) and those without pensions (who too frequently really can't afford to stay in the Big House, but often want to). Sometimes there's ego associated with staying in the Big House. We wondered whether "moving down" is a pivotal move that makes the aging process real--once one "moves down," do we acknowledge in some ways--or not--that we're on the back side of a career?

 Maybe two-income households--or two-IRA households--can better afford to stay in the Big House than their earlier cohort could, so of course the pipeline would naturally slow. 

Moving can be intimidating, time-consuming and emotion-laden of course. "Change sucks" I used to say when heading a federal agency through some radical change back in the Reinventing Government '90s. I get it. 

 And for many, it's so much easier to just stay in place, paying the same mortgage you've had for years, even if it might be more logical to switch to a cheaper mortgage and invest the difference. Inertia is so hard to resist, say the physicists.

Some might think the funds are best "invested" in the house, but remember that the average $/sf in Piedmont over the past 10 years has gone from $600/sf, to $750/sf during the end of last year/beginning of this year and to $685/sf looking only at YTD 2016. That's only about 15-25% appreciation

over ten years-about what finance folks say to expect from real estate over time.

If moving on is what you want to do, but moving seems like more than you can handle, remember that your agent can handle lots of the details. Especially if you buy the move-to house before selling (typically getting a home equity line on the current house to help fund your purchase), it's easy to prep an empty house for sale.

We do it all the time.  While there was no renovation involved in my recent sale of 217 Bonita, Teresa Baum and I arranged to move 60 years of household goods, paint, replace some fixtures, and prep the yard; we were on the market in 27 days. 

If you haven't yet bought the move-to home, so sorting, donating, and gifting items and renovating a bath or two is part of your process, we can arrange for a professional organizer and contractor to help you do it efficiently, and on your schedule. And your lender can walk you through how to get from here to there in a way that reduces risk and perhaps decreases your overall interest payments [still paying on your student's college loans?]. Let me know how I can help!

A "Bonita" Sale

 

Speaking of 217 Bonita Avenue, it sold way over asking with eleven offers in 12 days, and will close in about three weeks from first hitting the market. Admittedly, this 1907 house is perfectly located for today's drop-off-the-kids/walk-to-latte/catch-casual-carpool buyers. It's perfectly sited on a big deep lot with nice Bay views, and offers fabulous architectural details. But then there's the thoughtful and creative advice that my client is paying just the going-rate for:   We carefully timed the offering to coincide with the annual CSL Heart of the Home tour (about 100 of our 350 visitors came during those tour hours), and offered the insights of an architect and contractor during the Saturday afternoon Renovator's Open House. We also strategically advised the seller regarding which prep items would lead to more offers and a higher net price, and which prep items would just chew up valuable time and not add to the bottom line. 

"Bonita" Avenue speaks to the new owners--they are from Chile!  

(And they have no idea I'm a member of the National Association of Hispanic Real Estate Professionals [NAHREP] and have NAR At-Home-with-Diversity training.  Based on open house chats and names alone, eight of our 11 fabulous potential buyers do not look like my own white-dad-mom-and-three-boys family (actually, my mother was born and raised in Argentina, but how could you tell, and, anyway, why?))

So Who's Selling Piedmont, Anyway?

As you know, I've been in DC a good amount of the past year or so, but I'm back full-time now.  Pacific Union colleague Teresa Baum and I have been working together to cover my clients. Looking at the sales so far this year (as reported by the MLS), and understanding that the 23 sales have 46 "sides," we find that:

--32 different agents or brokers (yes, there is a difference....) were involved in the 23 sales.

--13 different brokerages were involved in the 23 sales.

--In just two cases, one agent represented both the buyer and seller; one of these in an off-market situation (later reported in the MLS).

--Firms were evenly spread across the price spectrum--no firm "owns" the upper or lower end.

--In about half of the transactions, buyer and seller agents were from different firms (meaning that it's not particularly common that buyer and seller are both represented by the same firm).

--Only once in 23 sales was the brokerage fee 6%.

Bottom line: Buyers and sellers entrust their assets to lots of brokerages and lots of agents in Piedmont. As always, you should interview three agents and decide whose style and approach best matches your needs.

The Christie's Magazine--

Is available here.  Be prepared to wait a bit while it uploads.

On- or Off-Market?

As noted, these sales are only those that hit the MLS. Others have sold off-market and were never reported to the MLS. What's up with that? 

 With so much competition, too many buyers are missing out on a purchase over and over again. They are anxious to hear about off-market listings, because they hope to avoid competition and higher prices. (Now, really, how is that good for a seller?)

Some sellers think that selling off-market is the new new thing, which it might be, but it's typically not the way to get the highest and best price for a home. (Let's say right now that some sellers aren't interested in highest and best price--they'd rather protect their privacy, or sell super-quickly, and they are prepared to leave money on the table to do so. I respect that, and always ask about my clients' goal first.  They are the principal; I am just the agent.)

For those who want highest and best price (say, those of us who don't have a pension), why is an off-market sale not a great idea? I'd say there are four basic arguments:

--In a rising market, as we have now, an off-market price is based not on what today's buyers are willing to pay, but what a few buyers a couple of months ago were willing to pay.

--In today's market, we often see those way-over-asking-prices when a half dozen or so buyers are bidding, and one party digs deep and offers substantially more than the competition (who are all focused on what some buyers a couple of months ago were willing to pay). If you want a chance of a way-over-asking price, you need to go on the MLS, priced for multiple offers.

--Off-market buyers think they are doing the seller a favor, and off-market sellers think they are doing the buyer a favor. Once in escrow, they both get cranky and feel used, and try to adjust their side of the bargain downward or upward. And,

--Off-market buyers have no "Buyer B" nipping at their heels, ready to step in if "Buyer A" wants to reduce the price, or get all the furniture for free, or have you replace the roof. On the MLS, buyers who are in contract are generally well-behaved, and follow the terms of the contract, because they fear that the seller might ditch them and go to Buyer B.

And there's basically one benefit to an off-market sale:

The agent who orchestrates an off-market sale typically spends a lot less time on the effort. They might even broker both ends of the deal (and what happens when one party wants to cancel--I do not want to even go there on fiduciary duty....). Two clients in one transaction is much better financially than a one-purchase-in-three-or-four-attempts, and just might be attractive enough to lead an agent to throw your interests overboard.

Which gets us back to the beginning--if you're thinking through the next 15 years and trying to optimize your retirement prospects, now might be a fabulous time to get the highest and best price for your current home, and then a new home here or elsewhere (I can track down a great agent there) for all-cash, or at super-low interest rates. Give me a call to discuss your situation--

After all, I help buyers and sellers make great real estate decisions.