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Tax Credit Extended, Markets Further Stabilizing and Real Estate Ideal Hedge

Tax Credit and Conforming/FHA Loan Limit Extended

Made official on Friday, the tax credit for home purchases was extended through July 1, 2010 and the important details are exactly as they were in my post on Friday the 30th of October, which was summarized as follows:

· Effective on binding real estate contracts from December 1, 2009 through April 30, 2010, The tax credit would be $8,000 for first time home buyers and $6,500 for move-up buyers who have owned their current home for at least five years

· The tax credit expires on April 30, 2010; however, if a binding contract is reached by April 30, 2010, buyers have an additional 60 days to close the deal and still be eligible for the tax credit

· For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return

· The income limits for both first time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return.

· Cost of the home may not exceed $800,000 to be eligible.

Remember that a tax credit has about THREE TIMES the impact of a tax deduction, which allows someone earning $125,000 per year to be taxed on about $102,000*. And since other items like interest and property taxes are also deductible*, that same individual may be looking at less than half of their earnings being fully taxable..!*

Add the above news to the fact HUD also extended the conforming loan limit of $729,750 in the Bay Area to December 31, 2010, and you have a “perfect storm” for every qualified first-time buyer in the Bay Area.

S&P Case-Shiller Confirming Further Improvement of Housing Prices

Released last week, the S&P Case-Shiller index confirms that housing prices continue to improve, especially in areas like San Francisco where the index moved another 2.8% in August to 132.47. This marks the seventh straight month of improvement.

Zillow also reported that their index reflected further stabilization for the third quarter, with over 26% of the metropolitan statistical areas showing signs of improvement.

Real Estate as an Ideal Hedge to Both the “W” Concern and Inflation

You may recall from my last post that we are seeing far more application activity for purchases in the $1mm+ range, especially the $1.5mm to $4mm range. These applications have been coming from our more financially-minded clients, as they not only see tremendous opportunity to obtain a more valuable home, but they are very concerned about a “W”-shaped economic recovery and subsequent inflation. As such, obtaining an upgraded home for less, cheap financing and hedging against inflation make buying a larger home an ideal move. All things being relative, the reality is that the S&P 500 currently has a rather high price-to-earnings ratio at about 19.52 versus the historical average of 15.7. As such, if we were in average economic circumstances, it’s arguable that the stock market is overvalued by about 25%. Given the fact that our current economy is FAR from being in average condition, it’s anyone’s guess just how overvalued the stock market is. All I know is that my savviest, financially-minded clients think that the stock market is due a correction and that real estate is a great asset to have as a hedge against both a market correction and inevitable inflation.

Fannie’s New Program: Deed for Lease

Announced on November 5, Fannie Mae is helping those qualified applicants to essentially sell and lease back their current home. This program is also applicable to investment-property owners who are facing foreclosure and wish to deed the property over to the lender and allow the renters to continue renting at market levels.

Rates and Activity

• Rates continue to run as low as 3.75%, depending on a number of different factors, with the conforming 30-year at just under 5% and the jumbo 30-year at about 4.75%
• 71% of our transactions last month were purchases, and the average loan was in the $500k range.
• As mentioned above, we’re seeing a heavy trend in purchase applications for the move-up market, but inventory is turning off a majority of those buyers
• We closed a deal in TWO weeks, but we still recommend a 30-day closing period
• If you or someone you know prefers to pay cash for a purchase, then finance that purchase within 90 days to protect valuable tax advantages, we can help, as we have programs that DO NOT require 6 months seasoning and pricing is based on purchase money, NOT a cash-out refinance

* Does not constitute tax advice.  Please seek any qualified tax professional for proper guidance.

Tales From the Front – The World of Palo Alto Area Real Estate 10/16/09

Today was re-tour day in Palo Alto. When the price of a home is reduced, or the listing agent is trying to generate some interest in a stale listing, they “re-tour” it, or have it on broker’s tour again. Today we visited three great properties that are looking for new owners and are on tour following price reductions.

First up was a Crescent Park contemporary at 1012 Forest Avenue, listed by Alan Dunckel and Derk Brill of Alain Pinel Realtors in Palo Alto. Since there isn’t an actual Alain Pinel at that office, if you ask for him, you will be connected to Alan Dunckel, who is a nice guy and a good agent and his name is close enough. They have just reduced the price on this home from $2,395,000 to $2,195,000. Not bad for a 4 year old home in that neighborhood. It will have an open house on Saturday and Sunday from 1:30 to 4:30.

Next we moved a little South to 2145 Emerson Street in equally shi-shi Old Palo Alto. This newer traditional home is listed by Lisa Liu of Alain Pinel Realtors for $2,095,000, down from $2,295,000. At 2248sf on a 5000sf lot, it’s a cozy home, with great details, and great natural lighting. Open Sunday from 1:30 to 4:30.

Saving the best for last is my Intero colleague David Troyer’s listing at 75 Coronado Avenue in Los Altos. This new home is 6721 square feet on two levels on a 14233sf lot. Using modern Craftsman architecture and high ceilings, even the basement feels open and spacious, and it has great finishes and details throughout. Normally shown by appointment only, I’ll be there this Sunday from 1:30 to 4:30. Please stop by!

If you would like more information on any of these or other homes for sale in the area, send me an email, or call me at 650-450-0450.

Have a great weekend!

Tales From The Front – My world in real estate, October 9, 2009

I’m going back to some of our original content here on 3Oceans and providing some commentary on selected homes I saw today on Broker’s Tour that are worthy of mention to me. Thanks to JT for driving today, and Steve for navigational assistance.

I dragged my Los Altos compatriots to Palo Alto today to see a couple of fine homes from the 1930’s. Being an old house nut, 320 Kellogg Avenue, listed by Tim Trailer of Coldwell Banker in Palo Alto really captured my attention with its period details, classy kitchen remodel and the big soaking tub in the master suite. Set on nearly half an acre of Old Palo Alto, this fine property will only set you back $9,750,000.

Moving downmarket to 2050 Waverly Avenue, listed by Bonnie Bjorn of Coldwell Banker in Menlo Park is this beautifully restored Dutch Colonial, offered with the reduced price of $4,995,000. It’s less house and less land than Kellogg, but you don’t have the train noise, and I actually like the neighborhood better. Plus the almost $5million in change will get you a nice little place overlooking the fairway at Pebble Beach, or a small winery in Sonoma . . .

The highlight for me today was this newer Palo Alto Hills estate, listed by Grace Wu of Alain Pinel for $4,299,000. Almost two acres of land, sweeping views of the Hills, and a 3 car garage (must have!) make this a winner. No open houses, but I can set up a showing if you are interested.

Finally, a big shout out to David Chung of Alain Pinel for rocking his new Audi R8 on broker’s tour today! I think he is the new winner in the sexy Palo Alto Realtor Car competition. Eat your heart out Ken!

If you would like to see any of the homes I wrote about today, let me know.

Thanks for reading . . .

Palo Alto Real Estate Prices Continues To Defy Gravity…And Expectations…But Tight Inventory Is Part Of The Reason

Amid all the current bad real estate news, with mortgage companies going bankrupt, Foxton’s closing shop, foreclosure rates rising, a liquidity crunch in the credit market, people can certainly be forgiven for thinking the sky is falling — especially if their little corner of the real estate world really is suffering.

Meanwhile, back in our little insulated corner of the world here in Palo Alto, prices remain strong, with the median price point having risen ten twenty thirty thirty-five percent year on year. Yes, that’s thirty-five, as in the number found between thirty-four and thirty-six. Hard to believe, but no less true for it:

(Skeptics will of course pounce on the slight drop from the high of $2.4M a month ago to where we are now — $2.35M — as evidence that — finally — Palo Alto home prices will begin to obey the same rules of gravity that apply elsewhere. I believe it’s more likely to be a seasonal thing rather than an indication of impending doom for our market.)

Not only is the overall market doing well, but every quartile is actually pulling its weight, with the top quartile doing particularly well of late:

Median prices, of course, are not the whole picture. Inventory, for example, is well below what you would expect for this time of year: a year ago at this time, there were 80 homes on the market, while now we’re just short of 50:

Our neighbors to the north in Redwood City, meanwhile, are showing a different story. Median prices are down, way down…

…and inventory levels are up, way up:

But again, that’s not the complete story. Observe…first, the lower two quartiles are indeed hurting…

…but the top two quartiles are holding their own quite well, thank you very much:

What’s the explanation for all this? Why is Palo Alto and the upper half of the Redwood City market doing so well, while the lower half of Redwood City is hurting? Friend, top broker, and colleague ex-colleague Steve TenBroeck (the “Steve” in the “Jeff and Steve” team) explains it thus:

Home owners in Palo Alto learn from the Merc and the Chron that the market is bad and decide maybe now ain’t a good time to sell. But, no worries — they don’t have to sell. Their mortgage, while high, ain’t killing them. They didn’t get an adjustable rate mortgage, so their payments aren’t skyrocketing. Owning a home isn’t causing them any cash flow problems.

Similar reasoning holds for the upper half of the Redwood City market. In the lower half, however, homeowners are hearing that the market is bad, and they’re personally experiencing it: their adjustable rate sub-prime mortgages are resetting soon, and their cash flow problems are about to become worse. Many don’t have the luxury of waiting for next year to sell. They have to sell now.

The lesson? Real estate is local, very, very, very local.

Just Bought A $26M Atherton Mansion? Here’s How to Keep Zillow From Finding Out

An interesting question came in yesterday through my Meebo chat box…is there any way to keep the public (and Zillow, for that matter) from finding out price for which a home sold? What about keeping the name of the new owner confidential?

I chatted with some of my friends in the escrow business and here’s what they told me…

Keeping the price confidential: Fill out a certain form with the escrow company specifying that you want the price to remain confidential. When they record the document at the county, they’ll arrange for the transfer duty stamp to be stamped on the back instead of the front of the relevant page. When that document subsequently gets scanned for the public record, only the front — not the back — is processed. Voila! The price doesn’t appear on the county’s web site records, and thus (presumably, at least) the prying eyes of Zillow and the general public won’t see it.

Apparently it may still be possible for a determined individual to find out, however, by going to the county and insisting on seeing the original document.

Keeping the new owner confidential: Arrange to consummate the purchase in the name of an LLC, Trust, or other entity, and put the address of said entity as a post office box.

So there you have it! The future owner of this little Atherton delight (listed by perennial Atherton mega-lister Mary Gullixson) can rest easy at night…snooping neighbors won’t know exactly what deal he got!

Disclaimer: I am neither an escrow expert, nor an attorney. The methods described above may or may not in fact be correct, and if they are correct in any one particular county, they are not necessarily correct in your county. Before embarking on your anonymous home-buying adventure, please consult with an escrow expert and an attorney.

‘Nuff said.

Photo from mlslistings.com

An NWMLS-Compliant Broker Tour Report

This post is in honor of the citizen journalists at Redfin, whose months of efforts at writing witty, insightful property reviews were brought down by an over-zealous MLS association bent on maintaining the rightful balance of power in the real estate business — ie, that the listing agent is at the top of the pyramid, the buyer’s representative is significantly lower, and the consumers…well, they’re not really that important, let’s face it.
I’m a good 800 miles out of the jurisdiction of the NWMLS, but I’m sure our local MLS’s are paying close attention.  So, here’s what my semi-regular property reviews would look like if they were to be NWMLS-compliant…

Ken DeLeon, Wilson Sonsini attorney turned Keller Williams mega-agent, has a new listing at 994 Loma Verde.  Like half of today’s tour, it’s priced just a whisker under $1.3M, but good common market sense would suggest it’ll go somewhat above that.  At ~1800 sq ft, it’s spacious and bright, and — as we would expect — it’s impeccably staged.  Another met expectation was Ken’s food line up — he always does a full-court press to bring in the agents, and we were there in force.  Ken’s open house schedule for this weekend is standard for him:  1pm to 5pm on both Saturday and Sunday.  That is, while other agents are still enjoying lunch, Ken is already out there at the property; while other agents have long gone home, Ken is still there, trying to get the best deal for his client.
(Full disclosure:  Just so there’s no mistake, I am not Ken DeLeon.  My name is Kevin Boer.  Ken is a friend, and, technically, a competitor.  I’m with Alain Pinel Realtors, not Keller Williams.  994 Loma Verde is not my listing.  I am not advertising the listing.  I am not pretending as if I am the listing agent in an effort to get people to call me about this property.  I am talking about the property because I saw it on tour today and it was pretty neat.)

Satisfied?

A Fair Oaks Castle

Fair Oaks is one of my favorite Menlo Park neighborhoods, partly because of the unpredictable mix of properties. There is a sprinkling — but only a sprinkling, mind you — of McMansions, but the rest are a melange of cottages, Victorians, Craftsmen, bungalows, and small Ranches.

Today’s tour offered a surprise in the form of 655 14th Ave, brought to the market by friend and colleague Shelly Roberson, wife of 3Oceans contributor David Roberson. I’ve driven by the home many times and found the exterior square-castle look intriguing, but the inside is even more so.

Though 1900 sq ft in size — larger that most Fair Oaks homes — the inside has a warm, cozy feel, brought about by the owners’ artistic flair and Shelly’s own staging handiwork. (She’s one of a handful of agents who stage their own properties. Trust me, you don’t want me doing that for you!)

My favorite touch was the Tintin poster on the wall in the upstair’s kid’s bedroom, which brought back nostalgic childhood memories — which I suppose was the intent! (If you did not grow up in the UK, France, or a former colony of either, you may not be familiar with the Tintin series. Do yourself a favor and buy a couple comic books. While you’re at it, get some from the Asterix series as well.)

This listing looked like a good excuse to try out the Popup Image Gallery Wordpress plugin from Yellow Swordfish (not to be confused with Redfin).

To The New Owners of 730 Seale, Palo Alto: I Want to be Your Au Pair

Every now and then you come across a home that’s just enchanting and has a story that’s simply begging to be told.  Suzie Provo — friend, colleague, and a top local agent — had one such property on tour this morning:  730 Seale in Palo Alto.

Come with me as we take a walking photo tour…

Read more

Fire Engine Red, A Proud Fixer Upper, and More Eichlers: All in a Day’s Palo Alto Real Estate Tour

Chomping at the bit to go, I headed straight out of this morning’s broker marketing meeting to see what the new Palo Alto inventory looks like. The outcome? Inventory is definitely on the rise, with both statistical proof (the Altos Research chart on the left) and the general buzz and business of everybody touring around today.

With six homes on my list — scattered throughout town — and only two hours on my calendar, it was all about efficiency.

First up was 1045 Newell, an “original Barrett & Hilp home,” a Leannah Hunt (Coldwell Banker) listing in the Green Gables neighborhood. $1.25M gets you 3 bedrooms, 2 bathrooms, 1500 sq ft, and a quick 5-10 minute drive on Embarcadero over to the 101. A trust sale home and not particularly updated — but well-staged, per Leannah’s custom — this home awaits the next generation of Palo Altan home owners.

Then it was across Embarcadero and Oregon over to South Palo Alto to see another Coldwell Banker listing — this one from Robert Lane — at 2898 Louis Road. “This one has charm,” says the listing, and it would be hard to argue with that. It has 2 bedrooms and 2 baths squeezed into just under 1000 sq ft, so the next owner will most likely want to expand — but since it’s a corner lot, the only way to do so and still keep in line with Palo Alto’s setback laws may be to go into the side yard.

Just south of this Louis Road listing was 770 Allen Ct, a fixer upper and proud of it. The listing agent, Steve Greenbaum from Keller Williams (another technophile like myself!) explained that a contractor actually lived in the property in its current condition — something I’m not sure I could have done even in my Peace Corps days — but simply didn’t finish the project. The bones of the home look good, and the yard is large, though in need of some TLC. An old fashioned pot-bellied stove in one of the rooms awaits the new owner.

Then there’s the fire-engine red Eichler at 3924 Louis. Nancy Goldcamp (Coldwell Banker again — what’s with this? Did Alain Pinel go out of business?) brings us this $1.175M 3/2 1900 sq ft, adorned with a great kitchen, and with all the light you would expect from an Eichler. Great staging, though tragically not done by my friend Ann O’Connell. Oh well, we’ll give her a few more years to completely corner the market.

Rounding out my tour today was another small property begging for a facelift or perhaps even a complete organ transplant. 3176 Emerson is, as the listing agent Richard Cottrell himself describes it in the MLS, a real fixer upper on a terrific lot in a great neighborhood. Folks living outside of this fantasy land we call the Bay Area may be shocked that a fixer-upper — and an 840 sq ft one at that — is not only on the market at $935,000, but will in fact probably sell with multiple offers, well above that price.

Today’s Menlo Park Real Estate Tour: The Travails of a Gluten-Intolerant Realtor

Alas, the Americans with Disabilities Act does not consider gluten-intolerance a protected condition, and thus I went hungry during today’s Menlo Park real estate tour, in which many homes offered tempting delicacies to lure us in.
Though the dearth of housing inventory remains an issue (see the 90-day rolling average chart to the left), the numbers have been increasing lately (per the 7-day rolling average chart on the right), and this was reflected in today’s tour which featured a surprising number of properties in the Willows.

But before stopping by the Willows I went to the Flood Park neighborhood sandwiched between Bay Rd and Highway 101 to see Corey Sijbrant’s listing at 1033 Ringwood, Menlo Park. Weighing in at $1,049,000, with 3 bedrooms, 2 bathrooms, and 1600 square feet, it’s been nicely done up and the master bedroom boasts a loft area, a touch I’ve always liked.

Moving on to the Willows, I started at 927 Arnold, a Tasha Standridge (Keller Williams) listing. This home is a classic “Timing is everything story.” On the market during last year’s doldrums, it just didn’t sell. Tasha wisely took it off the market, made some improvements, and now it shows even better than before and will doubtless sell within the week. With two stories, 4 bedrooms, 2 bathrooms, and about 1750 sq ft, this home is listed for only $990,000. A home that large in the Willows for under a million dollars? What gives? Simple — it’s unfortunately only a stone’s throw from Willow Rd and from highway 101. The sound barrier wall deflects a lot of the noise, but there’s still enough noise to make the property’s yard a poor choice for a yoga meditation session. Check it out this weekend during the Saturday and Sunday open house.
Next was this week’s winner of the “great spread” award: 212 Chester St from mother-and-daughter team Gloria and Caitlin Darke (Alain Pinel). I had to content myself with the healthy stuff there — celery sticks and carrots — and pass on the undoubtedly delicious, but tragically gluten-ridden, breaded chicken. Oh yes, the home itself…Priced at a whisker under $1.3M, the home has been significantly redone, boasts a large lot over 7300 sq ft, and has nearly 2000 sq ft of living space. See it for yourself during this weekend’s open house on both Saturday and Sunday.

Next up was Karen Izzo’s (Coldwell Banker) listing at 3 Cleland Place. Also open this Saturday and Sunday, this $1,200,000 “Charming Willows Bungalow” has a surprisingly large back yard — complete with a nostalgia-inducing tree swing — and 1410 square feet of living space, including 3 bedrooms and 1.5 bathrooms. Her Realtor treats included some much-needed coffee and some undoubtedly also delicious, but sadly be-glutenized muffins. I had to pass.

From there the next on my list was local Keller Williams superstar Miles McCormick’s listing at 336 Concord Drive. Miles was in the business and web-savvy early enough that he snagged the domain name “HomesOfThePeninsula.com”. At $786/sq ft, this 1520 square foot property will set you back just under $1.2M, and you’ll get not only a spectacular Willows location — with proximity to downtown Palo Alto — but also a very nicely done up 3 bedroom, 2 bath home. Again, delicious treats. Again, not for the gluten-intolerant Realtor. Oh yes, this home is also open on both Saturday and Sunday.

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