1521 Oregon, Berkeley

I helped my clients buy this home three years ago. Now they have a little boy, and they are feeling the need to stretch out, so their starter home in Berkeley is on the market.

This home is a charming 1922 Bungalow with two Bedrooms and one and a half baths. It is affordable and just right for someone who wants their first home in Berkeley. 1521 Oregon has a grand backyard, perfect for parties and BBQ's. Any gardener will relish all the space for planting flowers and landscaping. There is also a detached studio for extra space. It is currently being used as a recording studio.

View the virtual tour at here.

This charming home is on the market for $499,000. Just right for someone looking to start out in Berkeley.

Education

Sorry I haven't posted in a few days. I have a new home coming on to the market this weekend, and 2 new clients. As I have stated before, one of my goals is to have the smartest buyers and sellers on the market.
It is important to have a good understanding of what is happening in the local Real Estate market both when you are looking to buy a home, and when you are selling. This is a first for both my new clients. Both are moving towards a good understanding of the inventory of the homes on the market, what the expected sales price of any given home should be, and the importance of the days on market for any given property and how that affects value.
My buyer is learning about valuating those features she wants in a home, and trying to figure out what she must have, and what she is okey with letting go. Since we live in a market of existing properties, it is hard to find that one with all the features she wants that is also within her price range. Some things she may have to wait for, or install herself.
My seller is learning the importance of pricing a home, and how all the marketing is built on this cornerstone. He is learning about staging a home, and how spending a dollar here may mean gaining $5 at the close of escrow.
Both of them are learning about market value, and how everything is a balancing act.
Education can be a long and tedious process, but you have to be smart about your personal goals, and about the prevailing trends to make the best decisions when it comes to buying or selling a property,

A Link to an Excellent Article in the NYTimes

Sometimes someone else writes something that should just be required reading. In the New YorkTimes this week, Roger Lowenstein has written an excellent article on the preceived bubble bursting in the Real Estate market, and why leveraging your wealth by owning a home is better than renting. It is definitely worth your time.
Just click here to read it.

More Than A Realtor

Being a Realtor has put me in the unique position of being involved with my clients at both an emotional and financial crossroads.
This year it has become even more apparent to me that my career as a Realtor involves so much more than helping people buy and sell their homes.
As I stated in an earlier post the skill set that it takes to be a Realtor today also involves helping people manage their wealth, and leverage themselves towards the next step of their financial plan. This involves counseling them on what is and what is not a good investment, making sure they do indeed have a plan, and, almost more importantly, making sure they have an exit plan.
But, even beyond this, the role of the Realtor can become one of an even more intimate consultant. Buying or selling a home involves not only that next step in a financial plan. It can also be the next step in an emotional plan, and sometimes there is no plan at all.
Unexpected things happen in life; a child is born, a new job becomes available, a partnership ends, an old plan fails, and a new one takes hold.
I have been asked to be the resource for information way beyond Real Estate. I am honored that my clients have come to me to help them find the right person to advise them. Sometimes they just want someone to tell their new story too, and I am always available to listen and offer emotional support when it is needed, and be a resource for specialists when that is needed.
I treasure my relationship with my clients, and I feel like they are a part of my new family.

Spring is Here! Well...Almost

Something strange is happening in the local Real Estate market. On Mondays and Thursdays when I tour, all the other agents I have talked to have been involved in multiple offer situations. I know of 2 homes in the Berkeley Hills that took offers last week, and both of them had more than a dozen buyers competing to buy them.
In a year when we were preparing for, at best, a level market, and more likely, a market retreating in values in the 3% to 5% range, this sudden activity is a bit of a surprise.
Now this could be a few things. Firstly it is Spring, and we almost always experience an up surge in activity in Spring. Though I don't remember this happening last year.
Secondly there is a very low inventory of homes on the market right now, so if you want to buy now, there are fewer choices, so there is more competition for what is on the market.
Thirdly, after a year of being pounded on by the press and the market, sellers are realizing that they are in a different market, so they are taking much more care in pricing their properties. It takes much more careful consideration to price a property to attract the most qualified buyers than it ever has.
So, is this just a Spring anomoly, or is the market shifting again? It's just too early to tell. We should all know in a month or so.

What's in the Future? Part 3

One of the factors that lead to the over heated Real Estate Market of 2000 – 2005 was the easy availability of cheap money. While the Fed was driving down interest rates, the banks, with the permission of the government were putting together loan packages that made it extremely easy for the average American to buy a house.

With interest rates down to 4% on some loans, you could arrange to get a loan with no down payment and no documentation. You could get 5 or 7 year adjustable rate mortgages. You could even get a negatively amortized loan if you wanted to. Home ownership in the United States grew from 50% of the population to 70%.

This easy access to money only further fueled an already hot real estate market. Now all of these exotic loans have begun to backfire on the home buyers who used them. With home values at a stand still or even dropping, those who used zero down payment loans have very little room to maneuver. A zero down payment only works in a Market where values are growing. You can depend on the growing value of your home to make a zero investment into something of value, with the growth of the equity in your property.. In a downward trending market, you are going deeper and deeper into a whole, and rising interest rates are making it cost more each month..

By the 3^rd quarter of 2005 fully half the home loans made were either sub-prime or adjustable rate mortgages. Now that the market has changed 21% of sub-prime lenders have gone out of business and that number will likely increase as more and more people default on their loans. Even the big institutions cannot absorb all the defaults.

By September of this year Freddie Mac is going to tighten up its requirements for loans, and they have already signaled that 50% of those sub-prime loans out there will not meet the tougher requirements. In this arena of lending, there is still quite a distance to fall.

The silver lining in this will be a more controlled lending market leading to a more stable Real Estate market. At least, that is the hope.

How Did We Get Where We Are, And Whats in the Future? Part 2

During the local Real Estate boom of 2000 to the third quarter of 2005, the role of the Realtor changed from that of a facilitator for finding a home, and closing a sale, to a consultant who helped t property buyers leverage their wealth. It is a role change that reflected the change in the perception of Real Estate for the average buyer, and it is a role that is even more important today.
Starting in 2000 the ability to get a loan became easy and money was cheap. Real Estate values were growing by 20% every year, and more and more people began to amass second and third properties, not as homes, but as investments for the future.
Unfortunately these same factors that lead to the explosive growth of property values, were the same factors that have cooled the current market. Speculation drove prices for homes higher and higher furthering the vision of wealth through the purchase of Real Estate. The existence of no documentation loans, low interest rates, no down payments and negative amortization added fuel to the fire. It all had to end sometime.
When the Fed tightened the money supply in 2005 , I think it gave buyers time to really consider what was happening. After being beaten up for 7 years buyers simply were not going to take it anymore. It really took a couple of months for the Real Estate market to change course, but for we Realtors in the 3^rd quarter of 2005, it felt like it all changed overnight.
All Real Estate is local. National trends are interesting to look at, but in the end, the most valuable information you can get is about the local market where you are interested in buying. While Real Estate prices fell in many areas in the United States, in the Bay Area prices actually rose. It was a mere 2%, as opposed to the double digits we were used to, but it was still a rise. For 2006 buyers, for the most part, sat back to see what the market was going to do. The volume of sales dropped by 20% in 2006, and buyers did not really come back to the market until the last quarter of 2006.

My next blog will bring us to the present day with the crises in sub-prime lending, and what the market has in store for the future.