Market Trends Back Up--3Q09 Update

Following the national trends (see the cool NYT graphic we've been watching here.) Piedmont's average home sale price as reported by the MLS increased by 8 percent over prices last quarter. Recall that last quarter was the first time we saw a clear drop in prices--they were down about 16% compared to the second quarter of 2008. While the third quarter's prices are back up, they remain about 8-9 percent below the average we'd seen since November of 2005.

The average home price was $1.49 million, and $525/sf, and the typical home sold in 33 days at 95% of the original asking price. Prices ranged from $770,000 to $4 million, and $409/sf to $720/sf. No portion of the market seemed to have difficulty garnering an offer, once prices represented good value to serious buyers. Twenty one homes sold, moving us rather close to the typical volume of homes sold in the late summer.

Remember that these closed transactions reflect deals struck 30 to 60 days ago (as our escrow periods have lengthened due to changing financing and appraisal processes). If we look at pending transactions, the good news continues. Sixteen homes are pending (two were short sales, and several received all-cash offers), and while we don't know exactly how pricing will turn out yet, the typical stats based on asking prices are very consistent with this quarter's outcomes.

In contrast, Berkeley average prices are off 13 percent (to $671,000) compared to the third quarter of 2008. Oakland's situation is very complex. The average price across the city has declined 27 percent compared to 3Q08. There were 200 more sales, however, and 200 more all-cash transactions (now representing fully one-third of all sales in the city).

Note that of the 21 homes currently on the market in Piedmont, none is distressed (defined as either a potential short sale or a bank-owned property). But life is not necessarily rosy in all quarters. I imagine there are a number of Piedmonters who are underwater (that is, they owe more on the property than it is currently worth) but can keep up with payments as long as jobs or savings hold up. Today's news that personal expenditures increased 1.3% (1% excluding durable goods like cars-for-clunkers) offers a nice shot-in-the-arm for those concerned about the broader economy.

I have a vision of households going off to Costco to replenish their stores of paper towels and jarred spaghetti sauce, having subconsciously cleared out the shelves these last several months, a story line from one of Jhumpa Lahiri's short stories. The future looks bright if you're laying in the larder.

See details on transactions here and email me if you'd like a copy of Clarus MarketMetrics report on the Piedmont market.

Elements of the Principal-Agent Relationship

I’m on the advisory board of the Institute for Luxury Home Marketing, which in turn has a relationship with the Luxury Institute, which gives me access to the LI’s Wealth Report 9 times a year.

An article in this month’s issue was a great reminder. The managing director of the Bessemer Trust discussed five elements of a great principal-agent relationship:

1. Put the clients’ interests first.
2. Understand the clients’ total situation.
3. Be honest and transparent.
4. Deliver truly proactive client service.
5. Maintain absolute confidentiality.

A great list I aspire to!

Stop the Phantom Watts Dead--

Remember last year when I ran our home through an eco-efficiency review, and found that the most powerful change we could make was to unplug our [many] computers? The New York Times just got the point.

See yesterday's story, and check out the "smart" power strip they discuss at this Treehugger post.

Speaking of Piedmont School Privileges----

Don't forget that if your Junior has spent all three years at Piedmont High, you could move next summer, and still retain the right to attend Piedmont schools for that final year.

Check with the principal's office to confirm, but selling in the late spring might be a good strategy if your looking for cash to help convert your IRAs to Roth IRAs next year.....

Note to Self-----

Was reorganizing my Outlook Control Panel today and came across a note I'd made from a book called "Made to Stick." The note says, "why would you buy a house in a neighborhood you didn't know, in a market you didn't "get," and with someone you'd known for 5 minutes?" I don't know if that's my language or language I picked up from the book, but it's exactly right.

I think back to the time I was making an offer for a Victorian house with an ancient furnace and brick foundation in Piedmont. I'd checked the tax record and noticed it referenced a garage, though there was none currently on the property. I raised the question of the garage just informally as I made our offer, and the sellers said they'd taken it down just after moving in.

Long story short, the sellers paid for a new garage for my clients. We knew the City wouldn't issue a permit for any work, including the essential foundation work, unless off street parking was part of the renovation package. And who removed the garage without a permit?

If I hadn't known how the system works here in Piedmont, I might have missed it--and then my clients would have been incensed (or worse) when they found out what they'd gotten themselves into--a bill for an extra $83,000 for a garage they were happy to live without.

An acquaintance who lives right on the Piedmont border motioned to the house next door and said, "those folks bought their house thinking it was in Oakland, but once they moved in, they realized they could go to Piedmont schools." Well that's a coup! For the typical 3/2 home in Piedmont, that difference translates into about $325,000 in home value. And neither the seller's agent nor the buyer's agent thought to call the school district and see if the house had Piedmont school privileges. In fact, I bet they had no idea that there's a list with addresses very clearly identified, sitting on the desk of the Superintendent's secretary.

Buying a home in Piedmont is likely your largest financial commitment ever. You deserve to spend more than five minutes deciding which agent has the insight, contacts and energy to best represent you. Buy with someone you've known for 5 minutes? Indeed! See http://tinyurl.com/AboutMaureenKennedy for at least two minutes worth of an introduction-----