My Favorite Real Estate Statistics

The media is full of information and reports and statistics and projections and forecasts about the real estate market. And, it can get a little confusing. Is it a crisis or a correction? A meltdown or a slowdown? Is it a good time to buy or a bad time to sell? And, when will we hit "the bottom"?

I just returned from another terrific 2-day real estate seminar with Brian Buffini, and thought I would simply share some of my favorite statistics from the event and let you decide where the real estate market is.

*About 1-2% of all homes are in foreclosure. Numbers are higher for certain areas (like nearby Stockton). And 30% of all homes are free and clear of any loans.

*The market is currently down about 13%, but it went up about 38% between 2002-04 and then another 17% from 1004-06. So, is this a correction or a freefall?

*It is projected that there will be 4.5-5 million real estate transactions this year, making it one of the top 10 busiest years in history.

*The average homeowner's net worth is $171,000, which is more than 40 times the net worth of the average renter.

*40% of consumers have never run a credit report on themselves. 40% have also never done a monthly budget, and 40% don't pay off their credit cards each month. Are these all the same people?

*In 2000, homeowners took out $26 billion in equity out of their homes. In 2004, that number hit $139 billion. 2005 was $450 billion. And, in 2006, that number made it to $620 billion. 16% of the money taken out of home equity was used to pay consumer debt and another 16% of it was used to buy more consumer goods.

So, what do you think the national numbers mean? And what is happening in your neighborhood? I know the market is still quite strong here in Rockridge and the surrounding areas. If you have questions about the market or want to know more, just let me know. I am always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.

Save Money by Going Green

I like to check in from time to time with ways to go green, and this month I will be mailing to my clients a list of helpful tips on ways to save money by going green. Yet another reason that going green is great is because it appeals to both our altruistic side (saving the earth) and the selfish side (saving money). Here is a preview of what I will be sending my clients this month:

• Ceiling fans use less energy than air conditioners and save you money in the long run.
• Hardwood floors require no vacuuming, meaning you will save electricity and money.
• CFL lightbulbs are afordable, long-lasting and use a fraction of the energy of traditional light bulbs. Save more money by getting them at CostCo or one of the many partners with PG&E.
• Set those CFLs on timers to conserve even more energy & energy costs while you are away.
• Wrap your water heater in an insulated blanket and turn it to the lowest setting when you are away.
• See if your city offers solar rebates and take advantage of them.
• Install solar-powered garden lights. They look stylish and are oh-so-easy! (for more stylish green tips, always visit Ecofabulous.com)
• Always buy appliances qualified and rated by Energy Star.
• Plant trees on the east and west sides of your home to keep it cool in the summer and warmer in the winter. The right placement can reduce the sun's heat by 20-50%.

If you ever have questions about greening your home and saving money, just let me know. I'm always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.

Home Design Deals in the East Bay

Well, I'm back from a little break. This time we hit the Rhine River from Amsterdam to Frankfurt with stops in Dusseldorf, Cologne and more. Now, back to the real estate market...and real estate blogging!

I love Ikea as much as the next person, but sometimes you need something a little different. One of the great ways to find unique and affordable home decor ideas is to hit the Alameda Point Antique and Collector's Faire. This where many of the East Bay's top interior designers and home stagers get their goods, so why shouldn't you have a chance at them, too?

I've been meaning to write about the Alameda Point Antique and Collector's Faire for quite some time, but now I don't have to because the SF Chronicle has just run a terrific article about the place. It is a great read full of tips and guidance on navigating about 750 vendors and bumping elbows with about 9000 other early-rising shoppers.

Here are some of the main tips shared in the article:

• Get there early. Very early! The gates open at 6pm and eager shoppers are already waiting in line.
• If you see something you like, buy it. It probably won't be there when you come back.
• Feel free to haggle. One designer recommends asking "How much are you asking?" as opposed to "How much is it?"
• Some shoppers like the new vendors on the far side because they may not be as savvy as the old-time vendors
• Grab a map and take notes so you don't get lost.
• Prices usually drop as the day goes on so that vendors don't have to cart stuff back.

The Faire occurs the first Sunday of each month, so mark your calendars for April 6th. The admission cost is $15 each, but it goes down in price as the day gets later.

This article is a fun read and really gives you everything you need to know about the Alameda Point Antique and Collector's Faire. And, if you ever have questions about interior design and home staging in the East Bay, just let me know. I'm always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.

Countrywide Foreclosures in Oakland & Berkeley

As I've written about before, a lot of people still ask me about buying foreclosures. Due to the media's coverage of real estate market and the sub-prime fallout, there is a belief that there are tons of foreclosure deals out there just waiting to be snapped up. But think again. The East Bay is just different.

Click here to visit a list of Countrywide's currently active foreclosures in California (and dig deeper to look at the whole country). There are over 4200 Countrywide foreclosures in the state as of February 12th. How many are in our neck of the woods?

Well, Oakland has 33 on the list, and your search pretty much begins and ends with that. There is one foreclosure in Berkeley, and none in Albany, Emeryville, El Cerrito and Piedmont.

That Oakland list does offer some deals for people who are willing to put a lot of work into the homes and a lot of patience. Most of the deals are in the $200k and $300k range, but there is one as low as $118,000 and one as high as $744,000. Buying foreclosures takes a lot of time because everything needs to pass through the bank's bureaucracies, and the purchases are "as-is."

I found it to be quite interesting and wanted to share it with you. So, peruse the list and let me know what you think. And, if you have any questions about foreclosures, please let me know. I am always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.

The Inspection Contingency Period

So, you've made an offer on a home and it has been accepted. Congratulations! Within the escrow period, there is the inspection contingency period for you to look into all of the nooks and crannies of the house to make sure it is the perfect home for you. And, if you do find any significant faults, the inspection contingency provides the ability to pull out of the contract.

Now, you probably aren't an expert in foundations or furnaces or termites, so you have to get the experts in to inspect your home. But, what should you expect to inspect? Of course, every home is different in size, history, style and more, but this is a general list to set you on the right path to a successful completion of your inspection contingency period.

General Home—A look at all of the basic systems in the house, from heating and electrical to roofs and windows. The general home inspection can sometimes lead to additional specialized inspections.

Roof—An examination of the age, style and condition of the roof.

Sewer Lateral Inspection—This inspection looks at the plumbing connection from the private home to the city’s sewer system to find any possible leaks or seepage.

Pest and Structural—A investigation of any termite infestation or basic structural defects.

Foundation—A detailed investigation of the home’s basic foundation.

Heater—An examination of the age, type and condition of the home’s heating system.

Electrical—An examination of the age, type and condition of the home’s electrical system.

Plumbing—An examination of the age, type and condition of the home’s plumbing system.

The cost of these inspections can vary from free to several hundred dollars, so make sure to budget that into your plans. If you need a referral to a qualified inspection, check out The Smartt List or give me a call. I'm always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.

The ABCs of PMI

With all of the seismic changes happening in the mortgage markets, one aspect to keep in mind is PMI, aka Private Mortgage Insurance. PMI is when you buy insurance to cover your lender (not you) because you are taking out a loan deemed to be riskier than most.

PMI is usually needed on loans for more than 80% of a home's assessed value, which account for many mortgages in the Bay Area. So, if you are putting less than 20% down on your home purchase, you will most likely need PMI.

How much is PMI? Generally, it costs one-half of one percent of the total loan. So, if your loan is for $500,000, your annual PMI will probably be around $2500 annually, or about $210 per month. That is a lot of money to add to your monthly budget, and it is not always tax deductible.

Because of the major shifts in the mortgage industry, PMI guidelines will also be getting tighter. The private mortgage insurance companies are indicating that they will no longer provide the insurance for 100% financing or even for loans with just 5% down. It appears that a minimum of a 10% downpayment will become necessary. And, if you can't get PMI, then you probably can't get your loan.

There are some ways around PMI. Some lenders will waive it if you get your loan at a higher interest rate, and that interest would be tax deductible. Or, you can get a second mortgage (at a higher interest rate) to help get to a 20% downpayment.

One final note: always make sure to cancel the PMI when you pay down the premium to 80% of the home's value. Don't wait for the lender to do it, even though they are legally required to.

PMI and the changing mortgage market can be challenging to understand, but please let me know if you have any questions. I am always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.

The Rockridge Market is Just Different

Today, Ron Kriss, our broker here at Lawton Associates, announced a comprehensive and historical comparative analysis of the Rockridge real estate market. And, he has concluded that "Rockridge is Just Different." I have worked with Ron Since the mid-90s and we have seen the market in all of its many ups and downs.

Rockridge has long been one of the most desirable neighborhoods in the entire Bay Area, and the real estate market here is atypical. Lawton Associates, an expert in the Rockridge district, has been the top-selling real estate brokerage in the neighborhood for over 10 years.

This chart, compiled by Ron, demonstrates the fact that there were more homes sold in Rockridge in 2007 than in the two previous years. The average list price and the average sold price have gone up every year including 2007. The chart includes a split of 2007 into the first half and second half of the year, to further counter the mainstream media’s point that the market is getting worse. “Maybe things are getting worse in the Greater Bay Area, the State of California, and the United States,” adds Kriss, “but not in Rockridge. Both six-month periods of 2007 were very strong and there was even continued over bidding on many premium homes.”

Ron adds, “Compared to the peak of 2004, there were fewer homes sold in Rockridge in the 2005-2007 time period. This is mostly because there were just fewer homes on the market during this 3-year time period, not because homes were not selling. The number of cancelled, withdrawn, and expired listings over the above chart’s four year period has not changed very much.”

Ron's 2008 Forecast—“ The market could actually get very hot in 2008”

Based on early trends from January 2008 and the proposed increase of the conforming loan limit, Ron also provides a forecast for the next eleven months.

“I can tell you that the spring real estate market has already started off with a bang and there is not enough inventory. This coupled with historically low interest rates has shown us a very robust marketplace so far. If buyers are waiting for prices to drop and sellers to give their homes away, I don’t think 2008 is the year. In fact with the conforming loan limits set to increase under the just signed “Economic Stimulus Package” the market could actually get very hot in 2008.”

If you have questions about the Rockridge market, or other markets in Oakland and Berkeley, just let me know. I am always happy to help. I can be reached at 510-547-5970 x57 or MSmartt@jps.net.