What’s Really Going On?

I think it’s time we had a chat.  A serious chat.  This market is messed up, yo.

So…. what are we seeing out there today?  Good homes that should have sold that didn’t?  Yes.  What?  But aren’t more people moving here?  Aren’t rates still good?  Aren’t buyers still out there?  Yes, to all of those questions but the market got strange.  It’s like we went to sleep on Christmas Eve and woke to a different real estate world here.  Explain that?  Oh, I will.

Let’s start with the article from the SF Gate from Friday, March 25 that stated the Bay Area has grown by 90,000 people from 2014 – 2015.  It’s not as great as the 106,000 that moved here in 2013 but that’s still a lot of people.  I’m sure you’ve noticed it on the road, in Whole Foods, trying to get a table at State Bird Provisions.  It’s crazy how we’re growing so much that when you see the mega structures popping up along 101, it makes sense.  We’re going to have housing for these people but our infrastructure isn’t making accommodations when you look at our roads which is pretty frustrating.  Our schools are also way impacted but that’s another tangent.  However, they’re only building luxury apartments assuming that the influx continues and they can afford it.  Can they?  That’s a scary proposition if you consider what would happen if there were mass layoffs – all these projects will stop or sit empty.  Yahoo has already started tightening their pants, will other companies follow in the next few years?  How will that affect these Chinese giants that will own these mega-structures?

So is it a bubble?

According to the CEO of KB Homes (a local builder), we ARE NOT in a bubble.  Oh, that magic word that’s so cute when you’re 4 and terrifying when you’re 40.  Jeff Mezger doesn’t want you to worry your pretty little head about it because, “$1.5 million is affordable in the Bay Area right now.”  It’s great for his business to tell us we’re not in a bubble, everything is fine.  I’m kind of curious why the SF Gate would go to a home builder to ask this question.  It seems like a publicity stunt.  Here’s what I see – $1.5 million as a median home price is unreasonable.  It’s superb to have dual tech or bio-med incomes but that’s the only sector that can afford that right now.  How will our nurses, firemen, teachers, paramedics afford to live here?  It’s unfair to degrade their quality of life with two hour (each way) commutes to the valley.  I think this will be our first mass exodus if you don’t count the natives moving to Portland in droves because they’re already priced out.  With minimum wage not set to reach $15 until 2022, I think businesses will struggle to find the employees who are needed for services here (so expect service quality to go down because only teenagers living with their parents can afford to work for $9 an hour); unless we build affordable apartments, it’s not sustainable.  We can’t have a society of only rich people because we like luxuries like grocery shopping and someone to bandage your kid up when he falls at school.

That brings me to another really interesting article I read on Thursday, also on SF Gate – Palo Alto considers subsidized housing for families making under $250k (per year).  Let that sink in for a bit.  A quarter million in earnings per year is now the middle-class poverty line in Palo Alto.  That’s considered very well off anywhere else in this country.  Palo Alto is doing this specifically to keep their teachers, firefighters, police officers, and government workers where they work.  If they see it and we’re seeing it…. why are other cities not following suit?  Affordable housing isn’t a negative word and it’s going to be necessary.

Here’s another reality check – it’s getting harder to get a loan.  What?  But Sterling Bank is now doing undocumented loans!  (If you sign up for one of these or you sell your home to a buyer with one of these loans…. well, I’m going to guess you weren’t paying attention a few years ago).  Lending has gotten harder to obtain in the last 4 months since TRID started and lenders will tell you it hasn’t changed anything but waiting times but I don’t believe them.  My clients have good jobs.  They’ve worked hard, achieved stellar credit, and now have a down payment saved up.  We send them to a bank that has always performed and…. we’re closing late.  Things are and aren’t happening.  Underwriters are tightening their belts and not making exceptions.  Relatively low risk loan applicants are being put through the ringer.  Not only did I have a client with solid employment (10 years at one company!), astounding credit, and large reserves – he also answered the lenders emails and got him what he needed within very short time frames and he still had problems.  I’m thinking this speaks way louder than the CEO of a building company saying everything is great!  This scares me.  This is why homes are sitting on the market and falling out of escrow.  This is why having an agent who vets the buyers is super important but it doesn’t always mean you won’t be effected.

I think we’ll see an interesting Spring but by the end of the year and going into 2017, it’s going to level out.  Buyers are either waiting to see what happens or they’ll jump in and it will be like years before this where prices will climb until Summer hits.  It’s really hard to predict right now but I think the lower price ranges will be fine.  It’s that $1 million + that will be affected by buyers cold feet.  And let’s not forget it’s an election year.  Those always throw the market off!  Add to this the fact that we’re even mentioning the word “Bubble” and many buyers will cool their heels hoping to wait it out and get a deal in the future.  But that’s a big gamble because if we fall in 2017 or 2018, will it be to 2012 prices or Spring 2016 prices?  You just don’t know….

However, if your investment is for 10 years or more, real estate is still safer than stocks!

We’re those DIY people you’ve been warned about

Over this past year of home ownership, I (Sara) have discovered I have a special talent – I can find anything at Home Depot.  Anything.  That little dohickey that Dave can picture in his head but has trouble translating into words?  Found it.  Found it in an aisle three aisles away from where he was looking.  Who knew I’d be so handy?  It’s like I hold a PHD in shopping, luckily Dave is super talented at putting the parts together.  We make a good team.

On our latest project, we decided to tackle the tiny bathroom attached to our master bedroom.  We started talking about this bathroom years ago while staying in a suite at the Cosmopolitan in Las Vegas where I was enamored with the tub and the stunning aqua tiles.  I stayed up late using the little notepad drawing up ideas to layout the room and bathroom.  It morphed as we dreamed of a door leading out to a deck with a hot tub, possibly a wet bar so we could have coffee in bed, big picture windows looking out into the woods surrounding the tub, handmade blue lantern and penny tiles from Morocco – we dream big.

But here’s the reality.  I called it the creepy bathroom because there was almost always some creepy crawly thing hiding in there waiting to kill me.  I could tell you a comical story about the time there was a spider on my leg and I couldn’t get away from it because I was putting Vick’s vapor rub on my feet for a cough but we don’t have time for that.  I wouldn’t use the medicine cabinet because I didn’t know what was hiding in it and there was evidence something was hiding in it.  So one night, Dave cleaned the medicine cabinet – a really good deep clean and he decided he would caulk the separated seams to keep the crawlies out.  But he couldn’t live with the faucet because he likes a single handle, not two.  So we shopped for a faucet and stocked up on caulk.  But do you put a fancy faucet in a bathroom you don’t love?  Or buy cheap?  Do the cheap ones hold up?  None of these cheap faucets have the drain stopper we need.  Oy vey!

While standing in the bathroom discussing faucet heights, I noticed something on top of the window molding.  And there he was.  The offensive creepy crawly leaving gifts in the medicine cabinet.  A gigantic millipede.  Ewwwww!  Obviously I stepped out of the very small bathroom now inhabited by my husband and this giant bug he’s trying wrangle and scream again because there’s something living on the molding above the bathroom door!  Relax, it’s just the key.  We’re replacing the medicine cabinet now!

So we’re going to have an expensive faucet and a nice medicine cabinet over this vanity we don’t really love that has super limited counter space?  Let’s replace that, too!  And this is the story of how we went from “Let’s move this wall and expand under the house and put in french doors!”  To the reality of this:

I think only 24 hours had passed between “Maybe a new vanity….?” and Dave tearing the old one out.

It’s not my dream bathroom but it’s functional and less creepy and I love that.  That wall to the right?  It was supposed to go but we opted to make the bathroom usable now and not wait 10 years while we “figure it out.”

We found a cheaper version of the Kohler vanity we used upstairs, it’s all aluminum and since it’s recessed into an exterior wall, Dave caulked the outside to keep moisture and bugs out.  We found the cabinet at our place in the city where we also purchased all of our kitchen and upstairs bathroom cabinets.  We opted for white to give the room a light, clean, modern feel.  We went with a banjo counter so we’d have extra space to charge our toothbrushes and try to keep the area around the sink less cluttered.  I spent an extra $50 to have tile back splash instead of the short quartz pieces that come with the counter top.  I think this gave it a nice feel, will be easy to keep clean, and gives our tiny room a touch of character.  In reality it also meant we didn’t have to re-texture and paint where the old vanity which was 2 inches taller and its back splash were attached.  It was pure kismet that we found tile the exact height we needed between the mirror and counter.  We added those sockets to the left because the socket on the right is so close to the cabinet you have to choose between plugging something in and using the cabinet.  This is where having a brother in law who’s an electrician comes in handy!  The socket heights don’t match because we were working with an exterior wall with lots of studs and window framing but that’s ok because function is key.  We went with the same Hansgrohe faucet we have upstairs in a different finish because we really love it.

Obviously, it’s not done but after a week  of my husband disappearing at every opportunity (read: times when I did need him) to get this thing done, I’m pretty darn proud.  It wasn’t easy, he worked his butt off and there was that call while I was getting my haircut about how the counter top might need to go back because it wasn’t sitting right and losing two hours driving to SF to talk to the quartz guys… but there is no reward without a bit of stress, right?

Next, we’ll straighten the drawers, get some receptacle covers, add our sleek black handles (that I’ve been carrying around in my purse), paint the doors to the built in storage (white to match or pale gray), and try our hand at some linoleum tiles.

Dave showing it off to me now that we can really see the finish line!  And as Dave says, “You can finally wash your face in here now!”

Big Changes Coming for CA Schools

As things progress, we realize our systems need to progress with them.  We hope for wider roads as traffic increases, stable jobs as we buy homes dramatically increasing in value, housing to accommodate our growing population, and one of those infrastructures that is so essential – good schools.

Schools are such a scrutinized necessity.  We want to make sure our kids are getting a good education and it’s hard to understand how a teacher balances keeping the some kids challenged without letting others fall behind.  We place our critical basis on statistics.  Show me the test scores.  Show me a “grade.”  If that school isn’t a “10” it can’t possibly be good enough for my kids.  But what makes a school a 10 versus a 7?  Is it because that school didn’t hire the right teachers?  The parents aren’t involved enough?  The district is underfunded?  Or is it because their test scores suffered from being the only school in the district to have a special education program or an English as a second language program?  How many parents are aware that a school’s special education program’s scores are calculated with all the other scores?

How we measure these scores can make or break a school.  It hurts a school’s reputation or makes it so high in demand parents line up days in advance, camped out on sidewalks, to register their kids.  A good score can drive home prices up and demand through the roof – pushing well qualified buyers into condos just to get into an educational system over what?  10 points?  50 points?

Yes, we have Great Schools which is like the Yelp for schools but that’s flawed in it’s own way.  Some parents won’t even read the school’s reviews unless it has a score of 10.  Regardless of if those reviews say things like, “I love the smaller class sizes because my kid gets more one on one attention.” or “This is the only school in the district with a music program.”

As an agent, I need to promote the facts but I advise my parents to call a school and talk to the parents with kids there.  Do your own research before ruling out a school based on such limited information.

It seems like the state is finally taking a step back.  Test scores are such a small part of performance and it surely should not be the highest priority in your kids short childhood.  The School Quality Improvement Index, recently adopted by six districts statewide, is about taking those test scores further and looking at attendance, how quickly ESL students learn, suspension rates, culture, and more.

From their site:

CORE Districts was approved for a district-consortium request for a federal NCLB waiver on August 6th, 2013. The waiver plan, called the School Quality Improvement System, calls for a reorientation of districts’ work towards a collective effort to prepare all students for college and career, with districts assuming unprecedented accountability to eliminate disparity and disproportionality in all subjects and across the academic, social/emotional, and culture/climate domains.

I think this is going to be dynamic.  It’s going to alleviate stress on teachers regarding a single multiple question exam and reward them for making kids want to show up and learn.  How awesome is that?  It’s working in SF and Oakland, now I only wonder how long it will take to make it to spread to the rest of the Bay Area.

Let’s talk about… Protection

I’ve got my mind on my money and my money on my mind…

Protection is something that’s rarely discussed in our industry but it’s so important.  Many agents love to blog about the market, how many lovely homes they’ve sold, how to look past a dated kitchen or a lack of curb appeal.  Don’t get me wrong, I love all that fluffy stuff, too.  What’s not openly talked about is one of the key factors you should be hiring an agent for.  With the birth of the internet and sites like Redfin, Trulia, and Zillow, you as a buyer or seller have access to the listings and the ability to do market research yourself.  You can identify your perfect home on your own, so why even hire an agent?  You hire an agent because whether you realize it or not, this is going to be one of the biggest investments in your life and you want to make sure your hard earned money is protected.

You may also want to protect your heart.  Sound silly? Maybe it’s not.  You’ve walked into this home and you’re already picturing your son’s first steps in the living room, your daughter walking down that staircase in her prom dress, or late nights snuggled on the porch with a glass of wine.  This home is going to become an extended member of your family, you’re emotionally invested.  Then you’ve spent the time trying to decipher the reports which are written in another language (“serviceable” means what?)  and you’ve decided that you can live with or fix the flaws because every home has flaws but not every home has what makes this one feel right.  You’ve also sacrificed, choosing to forgo fancy meals or vacations to build up that down payment.  But now comes the stressful part.  Will the sellers like my offer?  Will they like me?  Did I choose the right amount to offer?  Should I have gone a thousand dollars higher?  What if the others offers are all cash?  What if the other buyers have more money in the bank?  What if we don’t get it?  Will I ever find another home I love this much?

Let’s face it, you sign on the dotted line and you’re all in.  It’s a legally binding document.

Now let’s take a step back… You just signed a legally binding document with someone licensed by the state to write legally binding documents.  In California, agents are the only other entity beyond lawyers who can write such binding contracts and your savings (and heart) are on the line.  Did your agent explain this contract to you?  Are you aware of all the terms you’ve just agreed to?

How did you choose your agent?  Was it because they were nice and made you feel comfortable?  Are they a family member who maybe took a few online classes and thought, “Hey, I can sell houses now?”  Or did you pick the professional who successfully does this for a living, who studies the market and the paperwork as though it were a craft that can be honed but due to consistent changes in the law can never be mastered?

A few days ago, we were invited to be part of a small, exclusive forum made up of the top agents from our brokerage to discuss the two contracts commonly used in our area.  We challenged each other and used our real world experiences to pick apart each contract to point out the positives and negatives of each one because neither one is perfect for all situations.  Most buyers have no idea that there are two standard contracts in our area and even worse, most agents are only comfortable working with one.  However, it’s important to know that each purchase contract protects the buyer and seller in different ways.  While the contracts can be modified a bit through the buyer’s choice of terms and terms can be negotiated later, the main fact is the contracts are very very different and the contract your agent chooses for your offer may be the difference between opening the door to negotiations and a hard no.  For example, one contract obligates the seller to make repairs while the other one doesn’t… which contract do you think the seller is more likely to accept if he/she’s got one of each sitting in front of him/her?

This all comes back to working with a real professional.  You can find the house but we are the ones who help you leap off that cliff and (hopefully) dive into homeownership.  The quality of the contract your agent writes, the importance of knowing which contract the seller or their agent would prefer, the knowledge base your agent brings to the table in knowing how to give the seller what they want while still protecting your rights as a buyer – these are all the factors that can stand between you and the realization of a dream.  Your agent can make or break it; they truly can be the difference between you writing an offer and buying a home.  As a seller, an agent who understands all the purchase contracts coming in will protect your rights, too.

(Sara’s Notes:  This advice may not apply to you as many states in the US require a lawyer to write up the contracts.  If you do live in a state where the contract is not written by the agent, I’d still advise you to pick an agent who fully understands the process and can ensure the entity writing the contract executes it with your terms and conditions in tact.  Contract writing is often the first step in the negotiation process so it is key to make sure that you have a strong negotiator with your best interests at heart.  Once it’s in writing, it’s very hard to redefine your needs.)

RE/MAX National Housing Report – July 2014

Curious how this recovery is effecting our country as a whole?  Overall Days on Market are down (excellent!), prices in metropolitan areas of the Mid-West are up, and an increase in inventory is having a positive impact on the nation’s real estate outlook.  Our market here in the SF Bay Area recovered faster than any other market and has settled into something that resembles a stable market (as depressing as that may seem to some who thought the Spring frenzy would last); now it’s the rest of the country’s turn to start seeing some positive numbers so those who wish to make a move can.

If you’re thinking about a change in the SF Bay Area, we’d love to help you!  If you are thinking about a change anywhere else in the world, don’t hesitate to contact us.  Through our vast network, we can help you find the right professional in your area to get you the best results!

REMAX_National_Housing_Report_July_2014

Tuesday Musings

Today Movoto posted their Top Ten Snobbiest Cities in America and *surprise* (which doesn’t seem like a surprise at all) Palo Alto was labeled number 1. How did they come to this conclusion? Well obviously factors like number of Apple stores, home prices, and income came into play along with completed higher education, performing arts centers, and access to private schools (not that you even need those in Palo Alto, those schools are attended by the Atherton kids). Movoto suggests that if you know the difference between a Cabernet [Sauvignon] and Merlot, these cities might be at the top of your list when looking for a home. However, “snobby” or rather “snobbery” is defined as the behavior or attitude of people who think they are better than other people. Not sure those are the neighbors I would be seeking out myself but to each his own.

Heading out on Realtor tour today was a bit underwhelming as we still have record low inventory, yet it’s not the frenzied market of Spring as there are noted price reductions, too. So, while the buyers are out there, they’re being a bit more discerning about which homes they bid on. The positive is this: there are good homes at good prices and there are deals to be had if you know where to look and when to strike. The other take away: your listing agent still matters! Can you hear me sellers? You may think a monkey can sell your home in a market like this but you still only get one chance to make a first impression. Hiring a professional is the only way to guarantee you’re not leaving money on the table.

Our favorite home today was 1906 Bayview in Belmont. Priced at $945k (and very likely to over that asking price), is a move-in ready home with an open floor plan in the Belmont hills – close to good schools, great food, a year round farmer’s market, transportation, and so much more. This 3 bedroom/ 2 bathroom home won’t last long!

5 Things Friday

Thinking that we’re all the same?  Think again!  Here are 5 reasons why we blow away our competition:

1. We offer Equity Lock!  Don’t know about it?  Google it, because 80% of the agents in our area don’t even know what it is.  So…. are you now curious?  It’s buyer protection and a wonderful safety net in a market like ours.  What if you knew you could buy protection for your investment if you’re forced to sell during a down market?  Wouldn’t that help you make more confident bids as a buyer?  Equity Lock is a form of insurance the buyer pays for at the close of escrow that will cover the difference if they’re forced to sell and lose money due to market fluctuations.  This is also wonderful for sellers to know that the buyers bidding are less likely to have remorse and get cold feet.  Not only do we offer this, but our rate is the cheapest, too!

2. Analytics – There is a science behind all the seemingly random stuff we do.  Don’t get me wrong, most agents don’t study the patterns and work off their gut or copying others.  However, a core group of our agents have studied that pricing correctly, the day and time you hit the MLS, whether or not your photos are entered correctly to hit the MLS when they’re supposed to, good quality photography and staging, and proper marketing can make as much as a 30% difference in what a home sells for.  Are you leaving money on the table?

3. Seller Protection – up to $100k in Seller’s coverage actually.  Most brokers carry insurance to cover their agents but if a seller is sued for fraud, they’re on their own.  Our brokerage is one of the very few that offers seller indemnity protection because we know that we’re in the most litigious state and mistakes are made. We want our clients to be able to move on with their lives confidently, not worrying if they forgot to mention a 10 year old leak or even worse, a problem they weren’t even aware of.

4. Remax.cn – If you watch Million Dollar Listing in NY, then you probably know how brilliant it was when Ryan called brokers in China to sell a condo in Times Square for a seller who wanted top dollar.  Chinese investors are a large part of the buying market and as a seller, exposure to good buyers is going to determine your proceeds.  We are the only RE/MAX office in the area who’s listings are shared on the Remax.cn website in China due to a great relationship our broker has with theirs.

5. The power of teamwork!  Believe it or not, buying and selling homes can be super stressful.  Knowing there’s someone you can reach at all hours, someone who’s got all the answers can allow you to focus on what you need to.  We’ve got a powerful team, the two of us plus our entire RE/MAX network, reliable lenders, contractors and handymen, escrow coordinators, and more.  We’ve also got the connections in the industry to help bring buyers their perfect home and sellers their ideal buyer.

Thinking about buying or selling?  We’d be happy to help you!

Bring your toothbrush! This gorgeous home is ready for it’s new owner!

Why does nobody sell more homes than RE/MAX? Because we love what we do! And we make snazzy videos like this one.