Understanding the Market as a Buyer

This week a client came to me who is considering a move from the East Coast for retirement.  They live in a wonderful community in New York and want two bathrooms.  It is funny how two bathrooms is considered a luxury in some highly sought after neighborhoods!  They have a son who lives in the Northbrae neighborhood of Berkeley and they really like Solano Avenue area for the walkability.  Today I drove them around and had these charts created so they could better understand our market, as it is very important to understand the market as a buyer.  Remember, listing price often times has no correlation to sold price. Blog chart pg1

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buying smart in this market

I am currently trying to find several buyers homes. The challenge is that new listing inventory is down by 12%, so there is heavy competition. Buyers are frustrated: few homes are available, and determining the appropriate offer price is particularly challenging. When trying to determine the right offer price with few sales, looking at comparable data often won't cut it as our inventory is unique and sold data captures history, not the future, of value. This means that you have to analyze the market condition, the property condition, how much you love a home and the level of interest among other parties.

I strongly discourage buyers to write offers when they have a very low chance of being the winning bid. The first thing to understand as a buyer is listing price often has no correlation to real value. A seller can price a home at $1 to create an auction-like frenzy. In fact, the more offers a seller receives, the higher their price may go.

How does that affect you? When the next homeowner prices their property, the comps and competitive market dynamics will lead to a higher price.  You have just contributed to a market increase.

Last year I had several clients who did not want to adjust their search parameters to better meet their budget. They felt there was a chance (although slim) they could find that rare property that fit all of their requirements . That rare property didn’t show up, prices continued to increase, and they were priced out of the market.

The bottom line is the Oakland and Berkeley marketplace is very unique, no two homes are alike. Don’t  buy something that you do not want, but be sure to balance market realities with your expectations. See the chart below regarding the current inventory.

This chart illustrates what many buyers feel

Outdoor Space

California has such great weather, practically year-round.  An outdoor space can be a magical addition that many buyers will consider a big plus!  See the before and after photos below of a property I sold a couple years ago and the transformation of their outdoor space. BY_Before








Yummy Oakland Real Estate

Many who are familiar with the Oakmore Highlands area of Oakland have often admired this property.  Four parcels were combined to make this a prime lot with scrumptious views.  With level garden areas, a pool, an observation deck and mature trees, this 1936 Mediterranean home is spectacular!  Extensive remodeling was performed to provide modern amenities while keeping with the vintage aesthetic.  4 bedrooms, 5.5 bathrooms, 5,641 sq ft.  Currently listed at $3,290,000.  (Source: Carol Brown's listing from Grubb Co.).
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Preparing a property for sale and what is important...

It’s funny how people meet; Josh and Traci stumbled upon my blog years ago and hired me to be their buyer's agent. I am honored that we retained a friendly and working relationship as I am now their agent on the listing side. Six years ago I saw 12 Eastwood Court on Broker's Tour and I immediately called Traci and Josh.  This home was quite unusual as it had a very usable, sunny backyard.  The home felt very happy and I wanted to get their take on it.  That night we went for a visit, and after comparing and contrasting this property to other homes in Montclair and Lincoln Heights, they decided to make an offer and succeeded with multiple offers on the table.  For Traci, it was all about the true chef's kitchen.

Many improvements were made over the last six years of their ownership, and as they recently prepared for the sale their home the one thing that was a bit overwhelming and dated was the lava rock fireplace; see the before and after photos below…

Eastwood living room before

BEFORE (Source: East Bay Regional Data)

12 Eastwood 27


With the average age of today's homebuyers being 38, it was important to style the home with a breath of fresh air and I am thrilled how this property shows.  This is a home that one can simply move right into and be happy!

I was very happy to partner with professionals that helped us take this property to the next level; Visual Jill (www.VisualJill.com) acclaimed local designers, and Peter Lyons, professional photographer.

Open this Sunday, September 21, from 2pm-4pm.   Please visit www.12Eastwood.com for more details and photos.

Camping in Rockridge Anyone?

A few weeks ago I posted pictures of a retro kitchen that was featured this year's Rockridge Kitchen Tour.  That same family is doing something very cool in their backyard! Check out these pics... Diana and Craig are looking to make their oversized level and lush backyard into mod B&B.

This 1956 Airstream trailer is currently being restored and will become part of a Backyard B&B next year!
This 1956 Airstream trailer is currently being restored and will become part of a Backyard B&B next year!
They have also restored this beautiful 1951 Spartanette trailer.
They have also restored this beautiful 1951 Spartanette trailer.

I am back - February 2013 Oakland and Berkeley Real Estate Update

Sorry for the lengthy lapse in posts!  I have been very busy helping clients! Over the past few months, East Bay real estate has been a whirlwind.  The combination of low interest rates, high rents, and a surge in desire for homeownership has once again created a sellers market.  Prices in communities of Oakland and Berkeley are still not at the peak prices of 2005 through 2007, but they are up from the steep decline of 2008, 2009, 2010 and 2011.

The biggest equity gains in Oakland have happened in the the walkable areas such as Rockridge and Crocker Highlands. (See the stats for these neighborhoods at the end of this post.)  As more buyers migrate to the sunny side of the Bay from San Francisco,  a higher demand is placed on a home with an easy walk to coffee, restaurants and public transportation.  Lifestyle can often trump home size in importance.

For buyers it is important to consider that interest rates will likely rise as the economy improves. This historic window of "cheap" money will not last forever.  As a buyer, if you plan to keep your new home for a long time, you can count on keeping that fixed rate, low interest loan and will maximize the savings.  I suggest that my buyers consider purchasing a home that will fit their needs for a minimum of 7 years.

Is now still a good time to buy even when buyers must compete, and prices can go substantially over the original asking price?  My answer is yes. Consider this. A listing price is a marketing tool. Many sellers decide to price their homes under its expected sale price to gain maximum exposure during the period the home is marketed to the public. Using this tactic often means that a seller with a home that might be worth $800,000 will price it at $720,000.  When a buyer offers $80K over the asking price, their offer is actually spot on in regard to value. But stopping there does not take the competition into consideration. With multiple buyers offering to buy the same property, it is often necessary to bid even higher than fair market value to win the home. What a buyer should factor into the equation while they ponder what price to offer is,  the record low interest rates. At a 3.75% interest rate on an offer of $811,000 and a buyer just might beat the competition by offering a few thousand dollars more. For example, the monthly payment with a 20% down payment, (not including property taxes and insurance) would be $3004.69.

What's the risk in waiting? Using the same example, if the interest rates rise to 5%, (still a great rate!), your monthly payment would be $3482.90. That equals a $480 per month increase for the same loan. It equates to an additional $5760 per year and $40,320 over a seven year time span. If you decided that you wanted to keep your payment down to the $3000 per month range and interest rates went up to 5%, your buying power would equate to a purchase price of $700,000 as opposed to $811,000- decreasing by over $100K. The risk here is that there is no guarantee that home prices will decrease accordingly by 7%.

A final factor to consider is whether you will  benefit from a tax deduction.  For example, if you make $100,000 annually and pay $30,000 in mortgage interest, you will be able to deduct that cost from your income for a substantial savings. (Please consult your tax adviser for the exact tax saving).

Ultimately home ownership is a personal choice, and a big investment. As you consider whether buying a home at this time  is right for you realize the numbers are now showing that the current market is in a sweet spot. The prediction moving forward is that prices and interest rates are on the rise...


It All Happens in Oakland!

Save the date!  On April 29 The Oakland Zoo will host a screening of the movie “Return to the Wild, a Modern Tale of Wolf and Man.”  The reception begins at 6:30 in the Marian Zimmer Auditorium at the Oakland Zoo with the screening beginning at 7pm.  The film is appropriate for children 12 and older and the cost is a sliding scale of $10-$20.  Get the details at www.oaklandzoo.org. Pack a lawn chair, dress warm and head on up to Redwood Heights Recreation Center this Friday, April 30 to see the Pixar movie “Up.”  Snacks are available from 6:30 to 8:30 for $4.00 with all proceeds going to the scholarship fund for summer day camp and after school Rockets.  The movie begins at dusk, approx. 8pm.  Call 510.482.7827 for a list of all the Friday night movies through July.

Oakland Museum of California is newly remodeled!  Saturday, May 1, celebrate the transformed museum with 31 hours of continuous free programs and events.  Festivities begin at 11am with a Native American Ohlone blessing, and of course the continued discovery of the story of California.  For more info visit museumca.org.

"The Promise" by Lorrie Fink

Stop by L’Amyx Tea Bar, 3437 Lakeshore Avenue, Oakland, on May 7 from 5-7 pm and enjoy a complimentary beverage and reception launching a solo exhibition of the recent paintings of Lorrie Fink, oils inspired by the organic forms found in nature and the cycles of life.  This Washington D.C. raised artist has been the Bay Area since 1974, with her first solo exhibit at EBMUD Gallery in 2008.

For images or further information about this exhibit, please contact: Lorrie Fink, (510) 326-1990; e-mail: lorrie@lorriefink.com, web site: http://www.lorriefink.com.