A Realtor’s Bad Dream.

I don’t often have nightmares about real estate, but the other night I did and even though it’s true, it does sound like one of the cautionary tales.  So in my dream I was caring something heavy up a flight of stairs and and an older couple at the top of the stairs said aren’t you going to show us more homes?  Well in my dream, I didn’t remember them, but said well sure, I was just waiting for them to tell me what they wanted to see.  But at that point, I asked them what they wanted to do about their present home.  Was it their intention to sell it first?  They said yes, they should sell it first but they wanted to get out of it what they paid for it and the also the cost of improvements.  At that point I realized this was a Wake-Up dream, like the ones where you are na-kid in a crowd.  I don’t know if you have been to the web site http://www.zillow.com/, but you can put in your address and get a price on your home.  Now the price that Zillow puts out, regardless of the market has nothing to do with what your house is worth or what it will sell for on the open market.  Now you can go into the Zillow site and add on improvements that you have made, and it will recalculate what your home is worth.  However Zillow only adjusts some improvements to market value, while leaving others at whatever price you put in.  I did this exercise and after adding on all our improvements, and Zillow’s market value for our home was way over what was realistic in today’s market.  With the current meltdown in the financial markets, if you are thinking of selling your house, you need a Realtor, like us, who know the Tri-Valley market and all it’s sub-sections to be able to value your home.

Joan and I are continually upgrading our home, but for us to think that the home buyers are going to fully value our concept of what is important in upgrades, would be naive.  One psychologist, that I heard on the radio recently said, that only people, who have never upgraded their homes, would price their house correctly, all the others, who have made upgrades, would expect more than buyers would be willing to pay in today’s market.  So if you are thinking of selling, talk to a local Realtor in your neighborhood, who really understands what is going on there.  As an example are short sales, or foreclosures driving prices down in your area  or is a lack of distressed properties keeping prices up but sales down.  A good Realtor, including us can talk to you about what is going on at the ground level.

Let’s do the ARTWALK Again.

It’s that time a year again for the annual ArtWalk Livermore.  We visited the festival last year and had a great time.  This year the ArtWalk Livermore 2008 will be on Saturday, October 11th on Main Street in Livermore.  It features over 150 artists from contemporary and traditional to multiple media through out downtown locations in Livemore.  There will be two stages featuring live music, plus food and wine tasting.  There will also be improv performances by a group of local actors www.digicast.com , which unfortunately will not feature our daughter, who has a prior gig, but check it out for a lot of fun.  The festival benefits the Bothwell Arts Center.

Housing Insanity Definition!

Albert Einstein once said  “The definition of insanity is doing the same thing over and over again and expecting different results”.  Now I will allow you to pick the politicians, you think are likely to act insanely and those who wont, but for those people who want to sell their homes in today’s market and are expecting to sell at yesterday’s prices are insane.  In fact, except for a very few reasons, you should not be attempting to sell your home for some time.  Granted if you are dead, getting divorced or relocating for work these are good reasons to sell.  But in today’s market, especially in most of California, we have had a huge drop in prices over the past couple of years.  As an example using Livermore statistics from our local MLS BayEast, prices have dropped from $771,420 in August of 2007 to $534,688 this past August, a stunning 30.7%.  OMG!!!! But wait what if these numbers are just numbers?  Back in August of 2007, 76 unique single family homes were sold with 8 of them priced above $1,000,000, and 5 that were in foreclosure about 6.5% of all sold.  This August 72 single family homes were sold, but only 2 were priced over $1,000,000 and 19 were in foreclosure plus 11 were short sales, representing 41% of all those sold.  Now there was a 19% drop in single family homes year over year, which would make it a more balanced market in a normal housing climate, but as you might be aware, the number of distressed homes is a huge downward pressure on prices.  Sellers, who are not in trouble with their loans are still competing with these distressed homes.  We are also seeing a real struggle for people to move up, because they can’t get the prices they need on their current homes as evidenced by the drop in sales of million dollar properties.

So, unless you are a seller, who is downsizing with a good house, in a popular neighborhood, in a top school district and priced correctly,  take a step back and see if you can stay where you are for another year or two.  Or consider renting or leasing your home, if it makes financial sense, if you are moving out of the area with the thought that you might move back or just want your house to be sold in a more stable market.

Here’s  my best (worst) case scenario.  Currently we have a declining housing inventory, a growing population, a huge drop in new house construction, a group of buyers, who have sitting on the sidelines for the past few years and an unknown bailout/rescue financial plan that may unfreeze the credit market, which could turn a troubled market into a red hot housing market.  But we do we want to get back on the housing see-saw of the past 10 years.  Maybe slow and steady is the best answer which includes the implementation of rational and sane lending standards that protect everyone.

Check Out The New Mortgage Rates!

We just updated our Realty Times market conditions and we do see a slowing in the downward spiral in prices.  Whether this is a pause or a floor is any one’s guess, but as I have mentioned before we won’t know where the bottom of the market is until we are a couple of months past it.  In Livermore the bottom is starting to take shape, due to the fact that over half of the pending and sold properties in August are either Bank owned or short sales.  The bottom feeders (and we need them) are setting the prices at the bottom.  This will inform the rest of the market where prices should be.  However because only 30% of properties in Livermore are currently in this situation, there could be an upward pressure on prices.  We’ll see.  But with the Fed’s takeover action of Freddie Mac and Fannie Mae, mortgage rates have dropped in the last couple of days.  Who knows if the rates will hold steady, but if you are ready to buy, this might be the window of opportunity that you have been waiting for.  CALL YOUR LOAN BROKER OR LENDER NOW!

Art Under the Oaks!

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Yet another Art Under The Oaks celebration has taken place at Alden Lane Nursery this past weekend.  Once again art lovers and gardeners from all over came to take a look at local and area artists.  It was a beautiful weekend to walk through the gardens and view the various art forms.  One of the most interesting items were the designs made from the fallen 400 year old Oak that use to greet visitors as they entered the grounds.

  By the time we got there, most of the items had sold signs on them. Anyway good times.

Too Many Choices

While talking to some of our buyers, it occurred to us that they currently have too many Choices .  Now this is not news to anybody who serfs the web, but if you plan to buy anything you have to set limits and need to have perimeters. We are currently into our third month of choosing living room furniture that no one will use.  I not going to make this a long post, but simply point out that in any buying decision, the buyer has to decide what they need, what their standards are, and what they are willing to spend. 

In the go-go days of the housing boom, you basically bid on your minimal requirements and hoped for the best.  Today with four times the inventory of the boom, many potential buyers are asking, isn’t; there something better at a lower price coming on?  We’ll, ya ,maybe.  But  what is it that you need and are you qualified to get it if it comes on the market.  Right now the biggest issue is getting a loan and the second will the property appraise. 

Think.  No home is perfect.  Everything can be changed for a price.  What neighborhoods do you like, what do  really need for for the next 5 to 7 years, then talk to your loan broker or lender and find out what you you can afford to pay on a monthly basis.

Who’s kidding Who about Short Sales?

I’ve been writing lately about Short Sales, where banks agree to take less than the value of the loans and Foreclosures, where the lender owns the property and these links will give you a good background on what they are and how they work.  And as a disclaimer for what I am about to write, Joan and I currently have three short sale listings all with offers on them and one looks like it will close…maybe.

What got me to digging a little deeper into why short sales are such a headache was an article in the Washington Post with the headline; “Be ready for short sale to stumble”.  It was a brief but depressing look into some of the problems that come up during a short sale.  Though short sales technically always have existed, they were rarely seen in the last ten years.  The above article quoted a Virginia Realtor who said after checking his multiple listing service data that of every 20 short-sale listings that draw a contract only one makes it to closing.  That’s depressing!  What the article explains is that short sales are currently structured so that a home owner and a Realtor have to take a gamble that the lender(s) will agree to a short sale, but only after they have found a buyer, who is willing to take a shot (a 1 in 20 chance in Northern Virginia) at getting this home and willing to hang out for 2 to 6 months or more to find out if they did.  Lenders don’t want to do anything with a potential short sale until they have a live one on the hook.  Then the waiting begins.  The best case scenario for a successful short sale is there is only one loan and there is no Private Mortgage insurance.  Lenders will most likely let a property go to foreclosure, because they can only collect PMI in a foreclosure situation.  The second best scenario is if both a first and second loan are with the same lender.  They’ll negotiate among themselves.  With two lenders, it can get ugly, especially if the second lender, who will receive almost nothing wants to be difficult.  In California, in a non-judicial foreclosure, the first lender can not come after the owner for the difference between what the home sold for and the loan.  The second lender is in the same situation except if the second lender gets nothing, so that’s why it’s important to give the seconder lender somthing.  The other thing that can go wrong is that the potential buyer goes and buys something else, why the negotiations are going on.  There are many other reasons things can go wrong on a short sale.  Rather than deleving deeper into these reasons, let’s look at some imperfect results.  Since last September only 25 short sales of all types of homes have closed according to the MLS, in Livermore.  That’s out of 550 homes closed during the same 10 months.  Short Sales were just 4.5% of all closings overall, which is suprisingly close to the number the Realtor in Northern Virginia came up with, although the percentage has climb to about 8% in the last couple of months here in Livermore.  Short Sales are making up about 16% to 18% of the overall inventory.  I am not going to go any further down the slippery slope of statistics here, but while we see some improvement in short sales, there needs to be a lot more done to speed up the process and avoid a costly foreclosure.  This isn’t charity, this is business and it needs to be run as such to avoid bigger losses to everyone.  To be continued…

The Real Drama Camp, A Smash Hit!

The Young Actors Theatre Camp is over for the summer, but it was a great time to break out in song and dance for 110 or so aspiring thespians.  Our daughter has been going to the winter camp for the last two years and this was her first and longest summer camp.  Shawn Ryan and John Ainsworth have been putting on their; in front of and behind the scenes acting camp, for the last nine years and it just keeps getting bigger and better every year.  The winter camp has out grown its Camp Arroyo location in Livermore and will be held at Camp Jones Gulch in Santa Cruz.  But with the help of this piece on ABC 7 news, the winter camp had a waiting list last Tuesday of 40 and who knows how many today.  Check out their website to see what all the excitement is about and how two hard working performers are giving young performers the tools it takes to succeed not only in show biz, but just about any field where you are expected to perform.  Actually, I think the skills taught at YATC can be used by anybody in any field of endeavor, except for hermits, but even there it would be helpful if you could entertain yourself.

Your Biggest Canvas, Your House. Need Help?

                  I wanted to update a post from a while back about house colors.  This time of year, many people start thinking about painting the outside of their home.  The big question is what colors to pick.  A few years ago, I wanted to paint our house because the original paint was fading.  Not wanting to go to our local home owners design committee for a change approval, we opted for the original color.  OMG, how boring, what was I thinking.  Anyway mistakes can be great teachers.  Now upon review, if you need to see some good uses of color, check out the Sandhurst neighborhood off of Murdell and Cancannon.  Many use a base, a trim and an accent color to set off the home.  So you can do a drive by and check them out OR you can go on line and play with colors. 

Here’s a site that really has a lot of resources about how to paint your home.  This link goes to a variety of paint programs that let you pick a style of house and then pick colors for it.  The second one on the list, Resene EzePaint from New Zealand was the toughest to use of the ones I tried, but had the most house styles to choose from and a seemingly endless pallette of colors.  Bob Villa’s and Better Homes’ programs were easier to use, but much more limited.  All these were the free versions, if you find one you like, you can buy your favorite that let’s you upload a  photo of your house.  Then you can see what it might really look like.  But the site has many more articles about how to choose colors, it is an information rich site.  Here’s another site with color suggestions and tools. 

So my suggestions is review the advice about colors in general, like looking at the color of your roof and using that as a starting place to pick your pallette, then play with the free programs to see which one you like.  Next buy or use a program that allows you to load photos of your home into it and play with colors.  Finally, if you have followed me this far on what could be a $3,000 to $6,000 investment, find a color consultant for $50 to $150 to review your choices so they can make recomendations, suggestions and corrections.  Exterior house colors are one of those First Impression things, you only get to make one. 

One final thought is to check Consumer Reports on their rankings of brands of paints.  A couple of years ago they ranked Behr paints available at Home Depot, as their number one paint and a best buy.  Many paint contractors like Kelly Moore partly because of discount they get from the store.  Try to get costs from both Home Depot and Kelly Moore, or your favorite choice of paint when you are getting bids from painters.  AND please get at least three bids and find out if they pass along their discount from the paint store. 

Get Your Free Housing Market Predictions Here!

Towards the end of May, I tried to guess what the total homes sold or in contract would be for the entire month in Livermore.  My prediction was between 100 and 105, but  the actual total was 109, so I missed it by that much.  Then I noticed this post on the Huffington post that gave five reasons, why the housing market should turn around by the end of the 2008.  One reason he gave was that this is a Presidential election year and with a national yearning for change, who ever gets elected will give a boost to the mood of the country and the economy.  And a second specific reason was that housing prices in some areas have fallen enough to attract investors, who can get a positive cash flow by turning them into rental properties.  Livermore is getting close to that price point, Brentwood and other nearby towns are already there.  So a week away from the end of June, here are my predictions for Livermore and Pleasanton, cities sharing a common border but separated by a $200,000 to $300,000 pricing differential.  Livermore should see a total of 83 pendings and sales of everything.  That’s down from May, but an increase over June of 2007, when we had 72 sales.  Bank owned properties and short sales make up about 42% of all sales, which is hasn’t changed much in the last few months.  Also overall inventory continues to drop and is actually below what it was last year at this time.  Again these are free predictions not necessarily accurate ones, but buyers are starting to see a change in the Livermore housing market and there are not as many perfect homes to choose from as there use to be.  While short sales and REO properties make up 28.6% of the active inventory in Livermore, Pleasanton has only 17 such properties on the market or just 6.6%.  This is keeping the Pleasanton housing market from having a bigger pricing correction then Livermore.  The current housing inventory has remained stable in June, but sales have been sliding the last couple of months and my prediction is that total contracts and sales will drop from May’s 66 to about 60.  And that trend, we see in Pleasanton of rising inventory and falling sales, will just by the very nature of the market place cause downward pressure on prices. 

So if you are a buyer and want Livermore, our recommendation is buy now, especially if you have specific needs like a particular school or a specific yard need or number of bedrooms, because we are seeing fewer choices in Livermore.  However if you want Pleasanton, I think you still have time to shop around, prices will still be softening over the summer.