|
Previous Newsletters
Volume 23. Support Our Halloween Fundraising for UNICEF
Volume22. Home Affordability: Purchase Price Versus Interest Rates
Volume 21. On the Road to Recovery
Volume 20. Ten Gardening Tips That Can Improve the Value of Your Home
Volume 19. First Quarter Trends ~ Are We In Recovery?
Volume 18. Making Changes with Resale in Mind
Volume 17. Local Home Values Move Cautiously Upward
Volume 10. Structural Advice: Is Your Home On the Level?
|
Support Our Halloween Fundraising for UNICEF
|
|
Volume 23 |
|
 Every October, we fill our Marvin Gardens Real Estate offices with pumpkins for local children, in exchange for a donation to UNICEF. This year, UNICEF is celebrating the 60th anniversary of 'Trick or Treat for UNICEF', a tradition that has raised nearly $160 million dollars for child survival, protection, development and gender equality in over 150 countries.
On Halloween night in 1950, five concerned children in Philadelphia, Pennsylvania went door to door to collect money for their peers in post-World War II Europe. They raised a total of $17 and donated it all to UNICEF.
Inspired by their innovative and philanthropic spirit, the campaign that came to be known as 'Trick-or-Treat for UNICEF' was launched nationwide. In 1967, President Lyndon Johnson declared Halloween, October 31st, to be 'UNICEF Day' in perpetuity.
Beginning October 12, please come by our Berkeley Hopkins Street office, our Kensington office, our El Cerrito office, or our newly located Point Richmond office to pick up a pumpkin and donate $2 for a child in your life. Contact us for more information.
|
Green Corner
Ever thought of donating the unused fruit form your own trees? North Berkeley Harvest will pick the fruit for you from Berkeley, Kensington, El Cerrito & Richmond and distribute it to worthy causes. Check out the website for more details. www.northberkeleyharvest.org
|
back to top
|
Home Affordability: Purchase Price Versus Interest Rates
|
|
Volume 22 |
|
In mid-August, interest rates hit historic lows of 4.44% for conforming 30-year fixed rate loans. Interest rates are one of the key factors that influence buyers in terms of when they purchase and how much they spend. A common determinant for how much buyers spend on a home is based on the monthly payment they can afford. The two components making up the monthly payments are the loan amount and the interest rate.
 Using Berkeley as a good model for our local market (it has a broad range of home prices), the graph examines the past 10 years of both median home prices (in thousands of dollars) and sales volume (in hundreds) through June 30, 2010, with the average annual interest rate for 30-year fixed mortgages (Source: Freddie Mac) superimposed in red.
Conventional wisdom suggests low interest rates stimulate sales volume, which in turn reflects in stability or growth in home values. This same wisdom indicates that when the economy strengthens and sales volume rises, those interest rates do the same.
There are numerous other factors that affect home sales, such as the health of the economy, job security and affordability. Although it is too early to forecast with great confidence, we do see evidence that home prices have at least stabilized.
Currently, buyers fear that prices may drop again, thus they are waiting for the “great deal.” This knowledge stimulated us to do an analysis of the effect of rising interest rates versus dropping home prices using the monthly payment as the key factor for home buyers. We used the current median sales price in Berkeley for the example below.
The table illustrates that it takes but a 3% drop in purchase price to offset an increase of as little as ¼% in interest rates. Our conclusions in brief are:
 1. It is impossible to know when the market has bottomed out until it begins to rise again.
2. It takes a small shift in rates to increase the cost of home ownership.
3. With many fine homes sitting on the market longer than we are accustomed, making an offer below list price can be a wise, long-term decision.
With so many variables to consider and with a shifting market, please contact us for a current assessment and a personal consultation.
|
|
|
back to top
|
On the Road to Recovery
|
|
Volume 21 |
|
With sales on the books for the first half of 2010, we are beginning to see recovery in home values in most of our local communities. To gain a deeper understanding of where we have been and where we are going, we examined the 10-year median sales prices for a sampling of our local cities and neighborhoods, including the performance of 2010 through June 30th.
Using 2000 as a base year, the graph below clearly shows the rapid rise of home values peaking in the 2005 to 2007 period, followed by (in most cases), a steep decline, when the financial markets imploded in 2008. As we already knew, even a cursory look at the graph demonstrates that location is a major factor in determining a home’s value.
For those who purchased at the peak and were forced to sell after it, the reality of the bubble can be painful. The rapid economic decline created short sales and foreclosures that fed the decline in home values. In most local communities, home values are at about 2004 levels, with most experts predicting modest growth that will take another five or more years to return to the values seen around 2007.
We appear to be well on the road to recovery. Interest rates remain at historic lows, inventory remains strong, and pent-up demand is demonstrating that buyers have stepped off the sidelines. Although cautious about over-paying, properly priced properties that show well are selling, in many cases, with multiple offers. Our professional experience and knowledge of the local markets enable us to help prospective sellers and buyers wade through the nuances of the impact of location from the macro as well as micro perspective. We invite you to contact us for a personal, confidential and complimentary market analysis of your current home or future purchase.
|
|
|
back to top
|
Ten Gardening Tips That Can Improve the Value of Your Home
|
|
Volume 20 |
|
When improving your home with a future sale in mind, the garden is often the last thing considered. However, the first impression from the street, such as the way your garden frames your house, can make the difference in whether a potential buyer wants to see inside. And how the garden looks when seen from inside the house can have a big impact on the desirability of your property, especially if like most people you do not have a bay view.
 
1. Notice the view of the garden from each room in your house and see if it can be improved through trimming or planting.
2. Create privacy from the street and neighbors with strategically placed hedges, trees, shrubs and vines. Plant or maintain attractive street trees.
3. Choose plants that thrive in our Bay Area climate. Consider using drought tolerant varieties.
 4. Create a seating area in your garden. Benches, tables and chairs invite lingering outdoors and are especially nice to look out upon from indoors.
5. Use curving pathways and separate areas, if practical, to create a sense of space and garden “rooms.”
|
6. Many folks want a patch of grass, even if small, for kids or pets to play or roam around in.
7. Plant attractive flowering plants by the front porch and entry. Condos and Townhomes can also benefit from pots of plants on the porch or balcony. Use different pot sizes for dramatic effect.
8. Keep weeds under control with mulch, but avoid the large redwood chips and “gorilla fur” mulch. Mulch should not draw attention to itself.
9. Plant a vegetable or herb garden. Home vegetable gardening is currently growing in popularity.
 10. If you have a sunny area, plant a dwarf Meyer lemon tree. They bear fruit for many months out of the year and are very popular in the Bay Area. And potential buyers from out of state love that we can grow lemons here.
Every property is different, especially in our local communities. To discuss your individual circumstances or if you have any questions, please contact us.
|
|
back to top
|
First Quarter Sales Trends ~ Are We In Recovery?
|
|
Volume 19 |
|
It seems no matter where we go, the number one question on people’s minds is, “What’s happening in the real estate market?” We ask ourselves that same question on a daily basis, so we want to share our thoughts and analysis.
Clearly San Francisco’s East Bay has many different micro markets and the question can’t be addressed with one answer. As local, experienced real estate professionals, we form pretty strong opinions as to strengths or weaknesses of the market within various cities and neighborhoods.
With the first quarter of 2010 just complete, we started digging into the data. A pattern has emerged in terms of market performance at different price points. Since we tend to cover a wide area from Oakland in the south to El Cerrito and northward, we decided to take an in-depth look at two representative communities: Berkeley and El Cerrito.
Our analysis looked at four major price points as shown in the table below. We compared the first quarter, Q1, of 2010 with the last quarter, Q4, of 2009, as well as comparing the Q1 of 2010 with the Q1 of 2009. Typically sales volume is highest in the 2nd and 3rd quarters followed by the 4th with the 1st quarter being the lowest. Thus, we don’t let the Q1 to Q4 sales volume comparison throw us.
Like any statistical analysis, there is potential for many interpretations. Here’s our view:
Berkeley: For the most part, the median price trend from the fourth quarter of 2009 through the first quarter shows positive gains at almost all price points. When examining the first quarter of 2009 with the same in 2010, we see that the medium prices, between $500k to $750k, and over $1 million are lagging. We believe two primary factors are at work. The lower priced properties are seeing significant sales activity while the three higher price brackets are way down in volume. Part of the volume decrease is because we have two quite different seasons which affect activity. The highest prices have almost insignificant volume to get a fair comparison as sellers have been holding onto their homes because of financing difficulties.
El Cerrito: With the exception of the over $1 million sales which are virtually non-existent, there is clearly price growth as represented in the bulk of the sales between $500k and up to $1 million. This is true in spite of large differences in sales volume. El Cerrito appears to be a good microcosm for other surrounding communities.
With mortgage rates continuing to hold at historic lows, the economy showing evidence of stabilizing and with buyers willing to step off the sidelines, it is not surprising for us to see these encouraging trends. Like everything associated with buying and selling real estate, timing and location play an important role. To discuss your individual circumstances or questions, please call.
|
back to top
|
Making Changes with Resale in Mind
|
|
Volume 18 |
|
In spring when the plum trees are in bloom, many of us get the urge to throw everything out and redo our spaces. Such spring urges seem very primal and universal, but before you make an appointment with a contractor, we have some advice. Whether you are planning to sell a property now, or in the distant future, it pays to consider resale before undertaking home improvement projects.
In the current economy, smaller, lower cost, maintenance-related projects have the best cost-to-value ratio (National Remodeling, 2010). Most likely, this is the result of steady increases in construction costs, along with a decrease in home values over the same period.
If you are planning to stay many years in your home, big projects such as kitchen and bath remodels and room additions can add unquantifiable enjoyment to living in your home. If you are moving within the next couple of years, however, you may want to consider simpler upgrades to enhance your current space without spending too much.
Here are some ideas for relatively smaller fixes that have immediate return at resale:
A fresh paint job in neutral or fashionable colors is the most cost-effective improvement you can make. If you have a lot of wood paneling, painting over it will lighten your rooms.
However, with beautiful original wood paneling, it’s usually better not to paint the wood. In general, original details in homes built in the 1930s and before are in demand, and those which have been lovingly restored by their owners have the greatest appeal.
|
Buyers also want hardwood floors, so if you already have them underneath carpeting, it pays to remove the carpet and have the hardwood floors refinished. Otherwise, replace worn carpet with an appropriate carpet.
Many tile bathrooms are attractive, but the tiles may need repair or re-caulking. Working with what’s in good condition or reparable, but replacing little things like knobs, mirrors and curtains can also refresh a tired bathroom.
A complete kitchen remodel before moving is usually inadvisable, but you can update the look of a kitchen without starting from scratch. Examine knobs, light fixtures, appliances, and flooring with a critical eye. Could the cabinets be painted? Could furniture be added or subtracted for a better use of space?
Landscaping can add a lot of value to a home for a modest investment, and if you have the luxury of time, your results will be more impressive. Well-placed flowering trees, planting for privacy, and creating outdoor spaces like patios can create curb appeal, vistas from within the home, and expand your living area.
A bit more expensive but still good value: window replacements can improve curb appeal and energy efficiency; roof replacements take the worry out of immediate cost outlays for a new buyer.
We would be happy to walk through your home with you to help you decide where your energies would best be spent from a resale standpoint. We can also recommend trades people to help you. It’s amazing the difference these small changes can make in the beauty of a home and thus your enjoyment on a daily basis, as well as the higher price it can fetch on the market.
|
|
back to top
|
Local Home Values Move Cautiously Upward
|
|
Volume 17 |
|
The real estate market in California varies widely from area to area. In the San Francisco Bay Area alone, we have numerous micro markets. The real estate market in Marin is a lot different from the market in San Jose. In Berkeley, the housing market is different from north to south and east to west. Then it changes again in Kensington, El Cerrito, Albany, Richmond and of course, Oakland and Piedmont, and so on. As local REALTORS®, we rely on far more than statistics to know what’s happening within our local markets. For instance, we gauge the attendance and interest at open houses, we can tell there are more listings coming up when our local home inspectors and stagers start getting busy, we notice changes in supply when our brokers’ tours are longer or shorter and what percentage of the homes are new or repeats. We notice the number of price reductions, the activity on our websites, and of course our own individual business and number of sales. Then, two months later when our hunches have become statistics, we see it all reflected in the sales numbers, days on market, ratio of list price to asking price and number of homes sold with multiple offers.
We would like to offer our insider knowledge to you, so that when you are ready to make a move you know what type of market you are in, and how to best position yourself or your property. The statistics below reflect an improvement from the very tough market almost a year ago. While these statistics are informative, because of the variation in our neighborhoods, we recommend consulting with us to get a true picture of property values in your neighborhood. We are noticing more sales, more optimism, and more traffic at our open houses recently, and also are seeing more multiple offers. In addition, our local stagers and inspectors are currently booking well into the future.
|
By these and other gauges, the market is improving. According to the California Association of REALTORS®, the state median home price increased year over year in November for the first time since August 2007; sales bottomed out more than 2 years ago; and the median home price reached its trough in February 2009. CAR predicts a 3.3% rise in the median price with a slight decrease in sales this year.
Our local market is showing similar statistical improvement. Six months ago, we ran these same numbers, and there has been a marked improvement in almost every area. The market is not back to its peak of 2006, but the last two quarters have seen a definite uptick in sales price and volume.
The variation in neighborhood markets has to do with several factors. Schools, price range, “walkability”, safety, commute and intangibles like aesthetics and desirability all affect value. The impact of the recent increase in bank owned sales (REOs) and short sales has been profound.
The best way to have an accurate assessment of the market value of your property is to have us provide you with a free market analysis.
This involves our visiting your property, researching the age, square footage and other pertinent information from the county records, and then comparing your house with others that have sold in your neighborhood or similar neighborhoods close by.
We fine tune the information we get from the comparable sales and statistics with our personal experience, including touring literally dozens of properties a month, following trends, and our experience marketing hundreds of homes every year.
We invite you to call us for a personal, confidential, complimentary and comprehensive market analysis.
|
|
back to top
|
Structural Advice: Is Your Home On the Level?
|
|
Volume 10 |
|
It seems no matter where we go, the number one question on people’s minds is, “What’s happening in the real estate market?” We ask ourselves that same question on a daily basis, so we want to share our thoughts and analysis. Some of the most common questions we hear are about the structural safety of our homes. In our geographic area, where soils are “expansive,” earthquake faults active, and many homes are on hills, structural integrity is an important concern. With this in mind, we interviewed B.K. Paul, Structural Engineer with Earthquake and Structures, Inc., a local structural and civil engineering firm.
Q. Marvin Gardens: What signs of a home’s performance would suggest that an engineer should be contacted?
A. BK Paul: We look for issues that suggest that the structure is “out of normal,” such as sloping floors, differential settlement where a portion of a structure is out of plumb, portions of the foundation have rotated, cracks at the corners of doors and windows, as well as diagonal cracks in the walls and around fireplaces where the loads are especially heavy.
Q. MG: If a basement or crawl space is wet or even damp, how does this condition affect the foundation? What are the solutions to this condition?
A. BK: Our soils are not homogeneous, as they are composed of differing amounts of clay which expands when wet, then contracts when dry. Thus wetness under the foundation can cause upward pressure, causing non-uniform movement, which translates into shifting of the structure and cracking of the foundation. This is especially true with older shallow foundations, which are also susceptible to deterioration of the concrete and rusting of the steel reinforcing over time. Deeper foundations typically avoid this as the soil below 18” tends to have more constant moisture content. Mitigating the source(s) of water through improved drainage (the deeper the better), controlling runoff and catching roof water and directing it away from the structure are the best measures.
Q. MG: In order of importance, what are the most important projects to retrofit a home against earthquakes?
A. BK: Bolting the sill plate to the concrete foundation is the first, typically done by epoxy 5/8” bolts with square washers into the foundation at 4’ – 6’ on center, depending on the number of stories of the house. Second is the addition of shear (horizontal forces such as from wind or ground movement) panels that are installed between the foundation and the first floor joists (sometimes called cripple walls). These panels are typically made of plywood, and are generally nailed 6” on center to the studs, and have metal clips connected to each floor joist. For a 1-story house, 40% to 50% of the walls need strengthening, while a 2-story home will require 50% to 70%, and so on. Posts under the house also require metal connections.
Q. MG: What constitutes a sign that a crack in a foundation is “serious?”
A. BK: Depending on whether the lot is level or on a hillside, even a hairline crack can forecast a problem.
If it is 1/8” wide or more, then an evaluation is in order.
Q. MG: Are there new products available for residential construction worth considering?
A. BK: Yes, prefab engineered metal panels are new technology and are 4-5 times stronger than conventional plywood shear bracing. For example, a 12” wide metal panel that can fit between wall studs, which allows for more window and door openings and less disruption to the original architecture, is even stronger than 4 feet of ½” plywood.
Our special thanks to BK Paul, ESI Incorporated. 6355 Telegraph Ave, Suite 101, Oakland, CA 94609 (510) 601.1065 www.esiengineers.com
|
back to top
|