Is the housing market shifting, an opportunity for some?

Is the housing market going to start shifting in the direction of price reductions at the higher end of the spectrum? According to Zillow Senior Economist Aaron Terrazas, it could happen. Approximately 14 percent of homes for sale underwent price reductions back in June, and most of them happened at the more expensive levels.

Over the last two years, the housing market has tilted sharply in favor of sellers. But this might be an early warning sign that the tide is turning a little bit. Although it’s too soon to officially call this a buyer’s market, this data does indicate that the trends in the housing industry may be normalizing. In speaking to my title rep, Jason Webb at Fidelity, I asked what he is seeing in the industry. His response was that there are currently more contingent offers, homes taking longer to close, and more demands to close escrow. I am personally experiencing all that in one escrow and it is not fun!

In my situation, the sellers have already moved and the buyer (who did not have a contingency on selling their condo) is delayed on it closing by three weeks. It was originally supposed to close by tomorrow. The agent representing the seller of the condo and the buyer on my listing is a rookie agent who has not been great at communicating the status. My sellers are frustrated and gave a demand to close escrow, but it was really to get them to push on the buyers of the condo, as I had no control and no authorization to speak to them.

We will now most likely close in another week on my my clients’ home because the buyer decided to go out and buy a new car. That caused his debt-to-income percentage to be too high, and now the car has to be paid off with proceeds from the sale of his condo. That causes further delays in our closing because the lender needs to see it get paid off. Another interesting component to this was that my clients Google’d the buyer and the results were…surprising. We knew it could be a challenging process, but we didn’t think it would be this much of a wild ride!

I believe we will see more of these types of issues as the market softens and reverts to a better balance. We can’t keep increasing, and it is time for the market to come down off this upward trajectory. There are some positive outcomes to a correction, but it is change and change is hard for most people; especially sellers when they still expect a higher price than their neighbor.

What is the most expensive zip code in CA?

If you had to guess which California city has the most expensive real estate, what would you say? San Francisco, maybe? Certain parts of Los Angeles – remember the show 90210?

Watkins-Cartan House, 98 Alejandra Ave., Atherton, CA

Nope, the honor goes to the 94027 zip code – Atherton, CA. For those not familiar, Atherton is right above Palo Alto and the average cost of a home there is…wait for it…$6.17 million. According to Zillow, home values in Atherton reached a low point in summer 2009, dipping below $3 million.

I asked my friend Jay Vorhees of JVM Lending what kind of average income would be necessary to afford a home in Atherton at 25 percent and 50 percent down.

Given that the average income in Atherton is about $250,000, I was wondering how exactly a median home price of $6.17 million was affordable there! Here’s his assessment:

Assuming no consumer debt, a 4.0% rate and a 42% debt ratio, with 25% down, PITI would be about $29,000 per month (rounded). This would require $69,000 of monthly income or $828,000 annually.

With 50% down, PITI would be about $22,000 per month (rounded). This would require about $52,500 of monthly income or $630,000 annually.

So how does the average income earner in that area afford Atherton? Most likely people have had these homes for years, thus the lower income. For new purchases, stock options from IPOs are not usually included in your annual income, thus allowing the the nouveau riche of Silicon Valley to buy with cash or put 50% or more down.

Opportunity Knocks?

At 55 Crest Ave. in Alamo, you might see a “best of both worlds” type home. It’s a 0.84 acre lot, the land is appealing, and because of that, they’re listing at $795,000.

But if you’re waiting to move into the 21st century, this may not be the place for you. Believe it or not, this run-down old place had almost 50 disclosure packages requested because of its location and potential.

I personally know a few people who are interested in the renovation project, with the knowledge that a remodeled home in that area may sell for much more later on.

Of course not all buyers who request a disclosure package will write, but I suspect they got at least 15 offers, the opportunity is too great even if the property sells for one million, it is surrounded by $1,500,000-$2,000,000+ homes.

There was a combination of speculators looking to flip it and disgruntled buyers who have lost out on homes and think it might be worth building their dream home. It just goes to show that the Bay Area real estate market is crazy red hot right now – it is a seller’s market.

If you are thinking of buying in or around Walnut Creek, give me a call! I’d love to help you.

Broderick doesn’t live up to the legend of Hubcaps

My son Jackson and I tried Broderick recently. And as much as I loved Hubcaps, which formerly occupied the space there, I have to say Broderick was slightly disappointing.

I used to go to Hubcaps for burgers before movies, and it was a Walnut Creek classic. But it definitely needed a remodel, so when the owners shut it down with the intent of rebranding as Broderick, I was pretty excited.

There’s a definite decor and lighting change, and a better bar-sitting situation if you want to watch a game while eating. The casual atmosphere is nice, and updated compared to its predecessor. Unfortunately, that’s about as far as the positives went.

Jackson ordered a burger and I ordered a fried chicken sandwich. I had visions of the fried chicken you get at Tender Greens, however, I got a thickly, breaded, heavily-seasoned coating that separated from my chicken. Jackson’s burger was ordered medium but only had a tiny bit of pink in the middle – and was dry.

This may sound like a funny complaint, but we also had so many fries on our plates that there was no room to put ketchup. Speaking of the fries, they had weird seasoning on them. The sriracha-mayo doused my chicken sandwich and made the whole situation sloppy and hard to eat.

The huge pickles on the sandwiches were good, and the artisan buns were great. They do have brunch there and the wait staff was attentive, but did not ask us about our meal. The food just wasn’t special and it cost $38 for two burgers, fries and a beer.

Overall, I give it 2 Mt. Diablo’s out of 5.

Hotel Boom in Walnut Creek?

As prices for housing, hotels and, well, pretty much everything continue to skyrocket in San Francisco, travelers are starting to realize they can stay in the East Bay and BART to and from the city in order to save a lot of money. This will have a direct effect on Walnut Creek, which is right on the BART line and becoming a hotspot anyway.

New hotels are being reviewed for Walnut Creek, including a 160-room business traveler-targeted Marriott Residence Inn near BART (where the Jaguar/Range Rover dealership and Bank of the West are currently situated) that would open this time next year. The city has also reportedly discussed a boutique hotel being built in the downtown corridor.

On one hand, this means more visitors discovering our beautiful little city and, therefore, more of a boost to the local economy. On the other hand, it means even more crowds and traffic. Higher prices for food, movie tickets and shopping. More loud, rowdy party-goers hopping from Crogan’s to Tiki Tom’s to Stadium Pub. You take the good with the bad.

Either way, if this hotel boom in the East Bay continues, it will accelerate Walnut Creek’s transition from small suburb to a must-visit Bay Area destination. I have already heard a few opinions of how people feel about Walnut Creek’s growth…please share your comments too! It’s always a hot topic.

Why It’s Important to Hire a Landscape Architect

Last year, my sewer kept backing up and I found that I needed a new sewer lateral. My front lawn had a bunch of crabgrass, and the lawn never seemed to get green enough. Then, with the drought, I just let it go.

My whole front yard was torn up, so I decided to do some landscaping – new grass, plants and an automatic sprinkler and drip system.

The project turned out to cost much more than I expected. The sewer lateral was $6,000, and then I ended up paying an additional $8,000 for the landscaping and sprinklers.

I thought I was getting a deal, as the person I hired was a personal friend – though he admittedly knew nothing about plants – who could plant the yard and put the new system in.

Turns out, it was much more difficult than either of us expected. This is on me for thinking it would be an acceptable, cheap way to get the yard done. I still wonder if I hired a landscape architect, would I have saved money and would I be happier with the end result?

Of course, no home improvement project is as simple as it seems. My sprinkler heads had faulty gaskets and some of the plants were not getting water and I lost plants. Luckily, Admirals Choice, who installed the sprinklers, is replacing them at no cost to me.

A year and a half later, we are still working on the grass, there’s still a line in the grass where the sewer lateral was dug out, and I need to get rid of the weeds.

We put weed killer on it, but I had to wait until the weather cooled, then it didn’t kill my stubborn crabgrass, and the rain began. So…I waited some more.

The gaskets should be replaced next week, then hopefully it will be time to seed before it gets too hot, and then I can fill in the plants that died.

So, with the hope that you don’t end up like me, with a two-year-old front yard project that cost me a fortune, I am sharing a great Houzz article on Landscaping Trends:

[houzz=http://www.houzz.com/ideabooks/64002187/list/inside-houzz-new-data-offer-insights-on-landscaping-trends w=300]