A rollercoaster closing on 2600 Jones Rd.

I recently represented buyers and helped navigate them through a difficult process to land a great home at 2600 Jones Rd. in Walnut Creek. What started as an ordinary home-buying process for John, ended up being a bit of a nightmare as the loan kicked out of underwriting without telling us and loan contingency removal was due on Monday. We got a conference call with them on Saturday and Monday, had a “solutions consultant” calling my client. Nobody mentioned this would happen. We got the details worked out, but when I asked how long before we know if it is approved, he said 6 days and I had no confidence that Quicken would still be able to make it work as their communication and getting all the documentation they needed upfront was not optimal.

We got a notice to perform, I recommended John get approved with JVM, the listing agent had spoke to this lender and they confirmed what I was telling her, so they gave us until Friday. JVM was able to fully approve him, so we removed the last remaining contingency “the loan” and asked for an extension to close. The sellers agreed. John is a newspaper guy from Minnesota and retired from the Chronicle, who was looking for a home where his 11-year-old son and mom, would be in a better school district. The one he would have been going into was ranked a 1. John Jr. will now be going into 6th grade at WCI albeit virtually for now.

John’s son is the joy of his life, a smart kid who now gets to attend a great school in Walnut Creek! We had our own troubles getting a loan and getting everything finalized (especially with the pandemic throwing things off), but eventually, we closed thanks to the help of JVM Lending.

Now, John has got his son into a get a 2-bedroom home in Walnut Creek with a pool. I also gave a bike that I wasn’t using, so now John’s son can walk to school, ride his bike, and swim in his new home. JVM was able to underwrite them quickly during this process, and that allowed us to get everything closed on the deadline day. So many crazy things went on during this process, but I’m happy to say that John landed his son and mother a great home!

Watching Neowise in style!

I went up to Castle Rock Park in the Open Space the other day to try and catch an evening sighting of the Neowise comet! I decided I had to do it in style, rather than just hike up there to stand around!

So, I brought my dog, Bodie, a picnic, some wine (shh!), and a friend! The views were spectacular as usual with the twilight colors and a dim orange sun reflecting off Mt. Diablo. It was absolutely beautiful. We eventually found Neowise, but needed binoculars to see it, as the light pollution from Martinez refineries didn’t lend the naked eye a view. Though I was hoping for some spectacular images like those posted on Jackson Hole’s Twitter account, it was not meant to be in highly populated Contra Costa County.

Days earlier, I also took a hike in a different direction at Castle Hill Park to Pine Canyon where there is a rock formation where the Peregrine Falcon makes it nest (once an endangered species) and a bench that you can sit on and just take in the scenery and maybe see a falcon flying high above. It is a short walk in, but nice to take it all in and just be outside.

The changing face of downtown Walnut Creek

COVID-19 has proved a tough hurdle for all of us, but businesses have been hit especially hard. With California’s phases changing, going backwards, we’ve seen businesses shutter and the economy as a whole begin to dip.

Fuego

It’s no different for us in the real estate industry – home sales and the buying/selling process are looking different than they were even back in January due to the pandemic. Anyway, I was wandering around downtown Walnut Creek the other day after work (yes, with my mask on!) and noticed the innovative ways it is changing.

With indoor seating banned, the city streamlined permitting for outdoor dining by getting parking spaces blocked off to allow for more seating. It’s sad to see how this is all affecting the downtown that thrives on human traffic. There is a bunch of outdoor seating on Locust from Brodericks to Limon. A few spots already have outdoor seating (Sauced, Torsop but got more out front

Among the other casualties of the pandemic economy, PRIMA Ristorante has decided to close its doors – a Walnut Creek staple that had been around nearly half a century. I’m sad to see it go. Salons were open for a month and as the state recently pushed back opening, caused the salons to re-close. Some such as Ashley Flowers Hair found they have some outdoor space where they can still legally operate. Hopefully as a country, we can get a grasp on the spread of this virus as other countries have done before winter. I really need a mani/pedi. Continue to be careful, wear a mask in public and follow the local health guidelines so we can get back to some semblance of our previous lives!

Ace is the place!

We didn’t have a hardware store for a long time in Walnut Creek. I think the closest thing to that that we had was a Simon’s, which was a sort of all-encompassing space that did sell hardware. But, now, we have a local branch of Ace, and I love it!

Ace has a little something for everyone, but also hits on all your hardware needs. They have really cute ideas for gifts. They do an especially wonderful job with cute gift ideas, from candles to dish towels, but they also offer everything from bird seeders to barbecues. Like any good hardware store, they are tools, cleaning supplies, key-making, patio/garden, paint, grills and accessories, and plants/soil.

My favorite aspect, though, is probably at winter time. They do an awesome job of providing holiday lights, decorations and of course Christmas trees, and will even have a tree delivered to your house for you!

It is just really nice to have a local hardware store that has so much more and isn’t part of Lowe’s or Home Depot. I recently had to run over and replace a bird feeder that my favorite yard squirrel knocked down and broke as he was swinging on the wire trying to get to the bird food (he might not be my favorite anymore) I used my Ace rewards and got $5.00 off! They are pet friendly and when I take Bodie with me he is always facinated by the train with a golden gate replica, blowing it’s whistle as goes along the tracks on the tracks above the store! How cool is that! Remember, especially in these times, SHOP LOCAL, if possible.

Morucci’s: A History

During shelter-in-place, I did some giveaways supporting local businesses. One of them was a gift card to Morucci’s on Boulevard. I had an opportunity to speak with the owner, Robert Fambrini (a very Italian name for the owner of an Italian deli!), and ask a few questions.

He told me he spent 25 years in the Petrini’s market chain, a family-owned business until 1989. It was founded as a butcher shop in San Francisco in 1935 by Italian immigrant Frank Petrini and later expanded to specialize in gourmet foods. At the start of the 20th century, grocery stores were a lot like department stores, with different partners owning and operating their departments.

Robert was in six of the Petrini locations from San Francisco, Novato, and Moraga, to Walnut Creek. When asked what words of wisdom he would give his 18-year-old self, Robert replied, “Go slow. When you are young, you want to conquer the world, however financial issues will arise and you don’t want to extend yourself too far!”

He found trying to manage six locations at once was too much, and in 1989 Petrini’s ultimately sold to a Canadian company. Now he has been happy to focus on just one deli for the last 20 years – Morucci’s, in Walnut Creek. He says it is more profitable and much easier to manage. “It’s been a wild ride,” says Robert.

He said having one bigger deli is always better and that he’s happy it is in Walnut Creek. In hindsight, I wished I’d asked him how the name “Morucci’s” came about, but it was crowded and busy (no surprise to those who have been there!), so I’m grateful for his time.

A quick visit to John Muir

A couple of weeks ago, I went to take a run in my neighborhood. I got about 10 yards from my house running with my sunglasses on, before I stepped into a small hole I hadn’t seen, caught the edge with my toe, and fell flat on my face. Not my proudest moment!

Anyway, after a zoom video with my doctor, she recommended an X-Ray, so off to John Muir I went. It wasn’t really a pleasant reason for meandering around the John Muir Hospital campus, but I ended up catching some pretty cool art.

I love this blue, meandering line of glass depicting a river that starts at the waterfall rock. When I first started writing this blog, I did a quick picture to ask if people could guess where it is, but decided it was better to go more in-depth. It really is a peaceful place to sit and take a lunch or a reprieve from a sick or dying family member’s situation.

The hospital’s namesake, John Muir, also has a statue in the roundabout of the campus. I took a few shots of that as well! Visits to the hospital aren’t really something people look forward to, but props to John Muir for decking out the area with some serene artwork to make it a better experience!

Think this is a housing crisis? Think again!

Economists are predicting an interesting forecast for the second half of this year. I have spoken to some people who have tenants who aren’t paying, and they believe in the next couple of months we will have a setback. July will bring corporate reporting for the second quarter and they now say we are officially in a recession that actually began in February before COVID. All of this is creating an interesting and volatile market. As the states continue to open up, there will be fewer people on unemployment. It will probably take a year or more to get it back to normal levels, but in the East Bay, the market is on an upturn.

File:Sign of the Times-Foreclosure.jpg - Wikimedia Commons

As my manager, Elias, wrote us in an email recently: “Educating our consumers on the local market, listing inventory, buyer activity, year-over-year statistics, and truly being [customers’] trusted advocates” are important in this time.

Here are some other reasons why we most likely will NOT have a housing meltdown:

  • According to the latest Wall Street Journal Economic Forecasting Survey (which polls more than 60 economists monthly), 85.3% believe a recovery will begin in the second half of 2020
  • Five of the major financial institutions are also forecasting positive GDP in the second half of the year
  • Four of the five expect a recovery to begin in the third quarter of 2020
  • All five agree a recovery should start by the fourth quarter
  • Overall, the vast majority of economists, analysts, and financial institutions are in unison, indicating an economic recovery should begin in the second half of 2020
  • According to Kristin we had a housing shortage before Covid and we still have a housing shortage and that isn’t changing anytime soon.

A side effect is all the new restrictions on showing a property and how it affects the consumer. We now have to send a form stating everyone is aware of the COVID environment, make an appointment for a specific time, not touch anything, wear masks, and only have two people (plus an agent) in the house at one time.

A recent experience with a client on a new construction purchase really highlights the inconveniences. They are not allowed to meet in person, and to view the new construction, you also need an appointment. They send the document via electronic signature, however, my client was moving from out of state where they are not wearing masks and have a more open policy. He was having a hard time reading it on his phone, he was in the middle of moving to the Bay Area, and thought, “when I get there, I will just sign at the office.”

That was his expectation, but the office staff was not expecting him to sign in person because they sent it electronically. They had to give him a mask, and it became a reality of unmet expectations on both sides. The take away for me is that nothing goes a planned. We have to be more fluid. And communication is key. Expectations have to be voiced, as nothing is done how it used to be.

On the state of things…

The murder of George Floyd has struck a chord with the world. It has created a spark, which has ignited the tinder ignored for decades. Unfortunately, unconscious bias, racism, and racial stereotyping exist. My hope is this movement will create the needed changes and initiate conversations for understanding and acceptance.

I am all for civil disobedience, freedom of speech, and the right to protest. There were thousands who came to Walnut Creek and peacefully protested. The key words are “civil” and “peaceful.” I deplore the few opportunists who choose to loot our cities. They dilute the message of the peaceful protestors and reinforce the opinion of those who are already biased or racist, and cause the police to be more vigilant. To be clear, I believe looting here and nationwide has mostly been done by outside agitators and opportunists who are not associated with the peaceful movement itself.

I live very close to downtown, and the night the looting occurred, I worried rioters would come into my neighborhood and I considered what I would do. The next day, there were some emails asking what we could do to keep our neighborhood safe if that happened. This photo was sent out. I suspect the police were preventing anybody from looting Kaiser, which is directly behind them, but also the main access to my neighborhood. The next night, when I heard helicopters, I felt safer and appreciated the police who are there to protect, though some heavy-handed police actions across the nation has made people skeptical about their intentions. The police, as a general entity, obviously have issues to fix. Their main duty is to serve and protect, and most do that admirably.

As a result of the looting on Monday, our beautiful town of Walnut Creek is boarded up. My heart also goes out to all the businesses who had to shut down or restrict their business activities due to the mandated shelter-in-place. They now have had to protect their businesses by boarding up the windows or repairing damage caused by the looting. The downtown area was closed off for a few days and there are very few who are wandering down there. Please continue to support them in whatever way you can. The day after the looting, many residents came downtown to help clean it up. Kudos to all who did. I only heard about it afterward – otherwise, I would have been there too.

I debated about posting this because there is fear in sharing it. Fear that I will say something wrong, offend somebody, or not say enough. I believe we all have a voice and we should express it when something is a concern and stand up for what is right. This is what protesting is all about and we should stand up for what we believe in. Our voices should be heard. Vote. Strive to make a change for good. Be heard.

I will end this with a quote by James Baldwin: “Not everything that is faced can be changed, but nothing can be changed until it is faced.”

How low can rates go?

Jay Vorhees at JVM Lending recently shared a great blog, which I have posted in its entirety below. As usual, I’ve added my two cents to the topic at the end. Hope you enjoy!

One of the most interesting aspects of the COVID-19 crisis is its effect on interest rates. In “normal” times, mortgage rates correlate closely with the 10 Year Treasury Bond. In other words, when the 10 Year moves higher, so do mortgage rates and vice versa.

Also, “the spread,” or the difference between the 10 Year Yield and mortgage rates in normal times averages about 1.5%, meaning the average mortgage rate is usually about 1.5% higher than the 10 Year Yield. Since the COVID-19 crisis started, however, the “normal” correlation and spread have disappeared.

10 Year Treasury Yields have plummeted much farther and faster than mortgage rates. In addition, mortgage rates don’t always move in conjunction with the 10 Year, and the “spread” between the 10 Year and the average 30-year mortgage rate has jumped to over 2.6%!

Mortgage rates remain higher than expected for a few reasons that I have illuminated many times. One reason is that lenders could not handle the onslaught of refi volume if they lowered rates any more. But the important reason has to do with risk. Mortgages are much riskier now because of unemployment, forbearance, and liquidity concerns; higher mortgage rates simply reflect that risk.

HOW LOW WILL RATES GO?

If the market returns to “normal;” if the 10 Year remains as low as it is now (around 0.6%+); and if the “spread” between the 10 Year and mortgage rates drops back to the 1.5% range, we could see 30-year mortgage rates drop another 1%!

Yes, that means 30-year mortgage rates as low as 2%!

SHOULD BORROWERS WAIT TO REFINANCE?

Absolutely not, and this is why.

First and foremost, the above scenario requires a lot of major “ifs.” And in this extremely volatile economy, anything could happen to derail the downward rate spiral, including inflation, new regulations or government actions, less competition in the market, renewed liquidity crises, and/or a faster than expected economic rebound.

Additional reasons to refinance now rather than waiting include: (1) most refinances are “no cost” so borrowers can simply refinance again if rates fall further; (2) borrowers can save hundreds of dollars per month by refinancing now at no cost, so why defer the savings? And (3) refinancing is relatively painless now with all of the new technology in place, so refinancing again should not be a concern.

This has been our mantra for years and it bears repeating – borrowers who wait for pristine market conditions (with respect to both housing prices and interest rates) often get burned. And that is because in this world of extreme volatility, nobody really has a clue what will happen.

Kristin’s take: I have had many conversations with buyers who are wanting to “wait and see,” and many keep asking if prices have come down. Prices have not come down (with the exception of the luxury market) and we are currently seeing multiple offers or properties pending in 5 days, especially in the entry-level market. Of course, it depends on the home: is it updated? Is it priced at fair market value or lower? And so on. I believe the window to negotiate or get a great deal was within the first 6 weeks of our shelter-in-place because there was so much unknown. For those who had a higher level of risk tolerance or just needed to buy a home, I believe hindsight will show they got a deal (comparatively).