It has been some time since I blogged and it was because I had too much to say and have been debating if I should or not !! Just trying to follow the trends on what is happening in the market and it irritates me to a great extent. I talk specifically about my market in Windemere, San Ramon and trust me, if I had the money to spare, I would buy now.It is not my goal to try and make a sale on these blogs but to express what I see on a day to day basis.

We are in a stalemate with buyers and builders. Buyers are waiting because the builders keep coming down on prices and keep increasing their incentives. This is like feeding blood to a man eating tiger !! When buyers see this trend, they want more and more and more- the extent of buyers' demands is to the point that if you give them a free house they want another one for free!!! This approach has to stop on both ends and I sincerely pray that it will, soon enough.

Buyers have not perceived the bottom... I see some builders holding steady with their bottomline and they are making sales. As opposed to some other builders in this area, who are still pandering over their prices. My first advice to builders in Windemere- get your prices down to a specified bottomline and get out of here by the middle of next year rather than waiting till 2010. And the logic behind this is that none of the builders are left with too much inventory and it is better to cut their losses now before interest rates go up again in the future.

Builders have made their buck in the hey day in Windemere and they need to take a hit on their profitability to accomodate the changing market or else just stop building. The buyers sitting on the fence will perceive the bottom only if the builders will hold fast on their reduced prices and stop giving any further discounts.Here is an example of marketing success with Centex - they dropped the prices low and got everyone to buy without a dime of upgrades offered and no incentives.They are done with La Sera and Sera Vista and Fioli always has people camping out to buy their next releases.

On the same note buyers also need to understand that it is possible to get a good deal but for heavens sake do not come in and make ridiculous offers of 30-50% below what sellers are asking for !! Just because the media is talking of the end of the housing market does not mean it is true ! There are micro markets in every market and you have to play the game in a different manner. And to vent some of my frustrations, buyers please- prices are down. You are still waiting for the bottom, trust me none of us can catch the bottom. Yes, not even us Realtors cannot catch it despite all the data and resources available to us. You are trying to catch a falling knife and you will not know when it hits.

It is a great market to buy in and I have an article from the county assessor that I thought might be interesting to read.San Ramon is a great place to live, schools are the top selling reason in Windemere and this will keep driving sales.San Ramon is very desirable for families with young children and if buyers continue to expect to get everything- low prices, great schools, family friendly neighborhood- they can expect also to miss the boat very soon. Once the builders are out of here, prices will go up and then you will have to play the rules of another changing market. I explain this to my clients all the time.. some get it and some don't.

Buyers need to understand that they are purchasing a home where they will raise their kids and grow old in, there are human bonds tied into it, a home is the place you put your roots down.A home is not a commodity that has no emotional ties to it, so please stop treating it that way. You have to love the home you buy and ofcourse it has to be at an affordable price tag. 

Creative juices have been dried up in the heat lately.I have had many ideas to write about but today I decided to write about bank owned properties in Windemere, San Ramon.

Many buyers have asked me about bank owned properties in this area and I have also written offers, which I am sorry to report, got kicked out. You may ask, why? Well, because despite my providing hard core data, the buyers felt they could grab these homes at 30% below list price. But unfortunately, the buyers lost the deals and my time went to a waste.

So, based on this experience, I decided to pull some data for you readers. Bank owned homes in Windemere are no longer great deals.There are too many buyers waiting on the sidelines to pounce on the ones that hit the market. They are far and few, and when these bank owned homes hit the market- they are selling to multiple offers.The hardest hit in the area are the townhouses in the Ambridge community, where the prices came down substantially but in the detached homes, prices have come down but too many players wanting to buy.

In the past, I have sold bank owned homes for an average of 3-10% below list price. But now the banks and listing agents have caught onto the game, and unfortunately buyers do not get it !! The BPO's are coming in lower than market value and the banks list these homes at ridiculously low prices and in the bargain get offers way over asking price. Why?? Because buyers think that these are amazing deals but eventually the buyer who gets the deal will probably pay close to list price of regular sales in the area. For example, 2382 Keats Lane came on the market for 950K when I knew the bank foreclosed that home at a loan amount of $1,175,000.The house got 16 offers and finally went pending in 8 days, for well over asking price( according to the listing agent), now I am waiting to see how much it closed for.Similarly, 3630 Montrose way came on the market for a ridiculous price of $544,900 and went pending in 5 days.Here is Data on Bank owned homes in Windemere since January 2007 to date.

So, before you make a decision to buy an REO in this area, please make sure the agent you work with knows what they are doing.You may land up paying more than the house is actually worth and remember you will be buying this house As Is with no warranties.Your risk should be worth it, if the price you get it is right.

Windemere Sales activity
June-July REO market analysis

It's no secret that people like Warren Buffet and Donald Trump are actively involved in purchasing as much real estate as possible right now. Buyers need to understand that like Buffet and Trump, the smartest people in the real estate business are contrarians. They sell when prices increase and buy when prices are going down. This may be a little difficult for some buyers to grasp since it is exactly opposite to how most consumers behave. When prices increase, buyers stampede to buy property to capitalize on the increases. Of course, when markets fall, those who bought at or near the peak are generally the ones who are stuck with properties that are not worth what they paid. As one economist put it, "I know it's time to get out of the real estate market when my manicurist and the man who cuts my hair start advising me on how to make money by flipping real estate." If buyers are feeling reluctant, my advice is to be smart like Trump and Buffet--buy now when the interest rates are at historic lows and there are plenty of bargains as well. Think Location, Location, Location and Duration, Duration, Duration!  Add the high affordability factor right now and you have the perfect moment!

Seller strategies include having the seller pay part of the closing costs, pre-paying the buyers' homeowner association dues for one year, or providing home warranty policy. Since 35 percent of the properties in the U.S. are owned free and clear, having the seller carry part or all of the financing can be another viable option, depending upon the area and desirability of that area. Properties with financial incentives are excellent choices if you're hunting for a bargain. One caveat: avoid "wrapping" mortgages (i.e. expecting the existing lender to continue their loan after you sell to another buyer) unless you have negotiated a written approval from the senior lien holder(s) prior to closing.

Numerous lenders have buy down programs, including FHA. For example, on a $500,000 purchase price with a $450,000 loan at 6.5 percent, a permanent buy down would cost the seller $18,000. For $18,000, the buyer's loan is reduced $289 per month. To reduce payments by this amount would require a $45,800 reduction. (Please note that permanent buy-downs for 30 years are only available at a limited number of lenders. The typical buy-down is 2 or 3 years.) This approach may be too sophisticated for some buyers and sellers. The best way to explain it is for buyers to see what their payment would be with and without the buy down. Next, buyers need to know how much the monthly buy-down amount would amortize over a 30 year period. A permanent buy-down is a win for both the seller and the buyer.

Rent vs. Own Comparison:

House Price                           $400,000
Monthly Payment                   $2,995.00
Interest Rate                         6 %
Tax Rate:                             28 %
Down Payment of 5%:            $20000
Average Annual Interest         $22,528
Annual Tax Savings:              $6,307
Adjusted PMT                        $2,469   *You can apply to the IRS and take more $ home in your check!
Your Rent is                          $2,100

 *See your CPA on this approach and details appropriate to your circumstances!  Basically, you do not have to over-pay your taxes.  By increasing your dependents, you can many times take home $500 or more a month.  That would mean it would cost you less to own in this case.  Never under estimate the power of the write-off!

I have been out of action for a few days just because I have been busy looking for homes for buyers in Windemere and really not finding a whole lot available in the resale market !! As of 2 minutes ago, there are a total of 44 detached homes for sale, and I am not taking into consideration of the new homes available. Here is a snapshot of the current market scenario( I am in the process of creating more data and will upload it soon)

The buyers in this market are mostly in the 800-900K range, who are looking for larger homes at a reasonable price.I constantly get inundated with a statement( not a question) that the market will tank more in Windemere. For those who are really want to know how the prices have changed historically I have created this chart for their review. As you can see in this chart, 2008 YTD prices were higher at the beginning of this year, went down to below the price levels of 2006 and are now creeping up. With the number of pending sales up in the months of April and may, this curve will definitely climb up.Now this is some good news for sellers in this sub division. If you are a seller looking to move for a valid reason, then this is the time to aggressively price your home and get it sold asap.If you are a seller who just wants to test the market this is not the right time.For buyers who want to buy in Windemere I sincerely hope that these hard facts will drive home the point that every market is local and generalising will only lead to missing out on the opportunities available in the market now

I have been thinking about this for a long time, whether I should address this or not, but today I am angry. So I decided to write about this issue in public to express my feelings.

I received a call from a gentleman today who said he saw me online and wanted to talk to me about buying a home in San Ramon.He gave me the details of what he wanted and I was about to tell him of some of the homes in his price range when he interjected and said" Let me finish"... " I will do 50% of the work in trying to find the home but I want 50% of your commission.I will do business with you only if you give me that money".And my answer was "NO, I don't do that and I am not the person you want to work with" and he hung up on me !!

I felt humiliated and violated by this behaviour and I deal with it in more subtle ways everyday.I honestly did not want to argue with this man because he was disrespectful. Honestly, speaking from the heart- I feel like buyers are treating agents like a pimp would treat his whore !! Strong words?? Yes, that is how strongly I feel about it.There is no respect for the knowledge we have to impart, the negotiation skills /experience/knowledge we bring to the table.Ok, go ahead and buy a piece of crap for a higher price and I will give you my commission back- if you don't care about living in a termite infested home that has a lien on it!!

Why do some buyers treat us Realtors like garbage????? I think the main problem was caused by part time real estate agents, who do not know what they do and are hungry for an income. These are not the agents who will work hard and diligently for the buyer.Our industry has been overflooded with people who got into it for the quick buck- yes there was a time even a tear down would sell in a day but not anymore.I am actually glad that this downturn has come because I am waiting for these unprofessional agents fall off the bandwagon, leaving room for true professionals who treat Real Estate as their career path.

Can you go to a doctor, engineer or any other professional and ask them for half of their fees?? They will surely kick you out of the office. What the heck, I want to ask this buyer's employer- make him work for 40 hours and take back 50% of his pay check- then I would ask him how much sincerity he would have for his employer.

If there are any buyers reading my blog, I have one question- would you rather get 5-10K back from an agent and pay 50K more on the house or save the 50K on your mortgage amount?? Would you like to do all the inspections yourself and not know what to read on them or get back the agent's commission? Would you rather write the contracts yourself, liason with your lender, title company,read your prelims, etc etc yourself and get back the agents commission??That is the difference between a discounter agent and a full service agent. Trust me, when the market changes to a sellers market, these same buyers will be wanting to hire agents who will get them the deal.

I give respect and total dedication to my clients and I am not wrong in expecting the same. Try heckling your dentist before he takes out your tooth- what  a joy ride that would be !!!!!!!!!!

I was positively ecstatic to hear the news yesterday when finally the propaganda about the deterioration of the housing market was not the news !! The media finally came out and said that the activity increased by 29% in the bay area.So, I decided to do some of my own investigation for San Ramon.

Here is what I found:( these do not include new home sales, as these figures are not available to us)

January 2007- Total 52 sales                        January 2008- total 36 sales
February 2007- Total 74 sales                      February 2008- total 42 sales
March 2007- Total 122 sales                          March 2008-total 52 sales
April 2007 -Total 94 sales                              April 2008- total 66 sales
May 2007- YTD 55 sales                                 May 2008- YTD 38 sales

Although everyone said that 2007 was a terrible year for sales, 2008 has been rougher on sales in San Ramon .But, our board does not have the functionality to allow us to pull data of number of pendings in the last few months or years to compare the live data we have now. As of today,127 properties are pending with only 330 resale properties listed for sale in San Ramon area. That is about 3-4 months of housing supply.Like I said in my earlier post, we are experiencing flattened market in San Ramon and if the inventory goes down in the summer months, things will start looking better for sellers.

In Windemere, there are a total of 400 homes left to build with the new home builders.Centex is almost done and during the course of informal chats with sales reps, it seems the pace of sales have increased and the estimated time for builders to leave the area maybe preponed to end 2009 rather than 2010.There is definitely an end in sight for sellers in the resale market who have been hurting !!

Lenders are becoming more willing to lend money as long as the buyers meet their strict guidelines.FHA has come out with new programs which are making money available in the market.It is a buyers market and now is the time to buy.Some might say that I am trying to influence them but I can already see the change shifting slowly.By the time the media's machinery starts to move on the positive angle, the market would have started heating up.No, I do not see ridiculous price gains atleast for 2 years but if the available inventory starts to deplete, then the market could take a turn earlier here in San Ramon.

I am finally feeling vindicated- I have proof now of what the builders are doing !! Saville in Windemere had posted 2 properties on the MLS that I had been following for sometime.One was on Fenwick Way priced on the MLS for $835,800, a plan 2 and another one on Enfield Street, a plan 4 at $859,000.Well here is what they sold for: $726,065 and $748,487 respectively !! The bigger home sold for $350.08/sq ft and the smaller home sold at $371.96/ sq ft.I said in my last post that the plan 4 should go around 740K and now I am so glad that my prediction was right.Looking at percentages, these homes sold for 87% of the listing price and in my opinion there should have been more room for negotiation.

Looking into the county recorders sales figures over the last 5 months at Saville, their prices have been coming down steadily. The average drop seems to be 13K with every months sales.Herein lies the question- how would I purchase this home? At $371.96/sq ft too, this home is expensive.With no backyard done, no upgrades included by the time you are finished you will be spending another 20K on top of your price.The bigger homes at other communities are selling for cheaper per sq ft value.Do your due diligence by researching prices of sold homes before you get carried away and make an offer that the builder will love.

I also looked into county records for Campton and found this information:

November 2007-2 houses on Paddington court for $751,500 and $809,500
December 2007- 2 houses on Paddington for $816,000 and $976,000
January 2008- 1 house on Paddington for $801,500
February 2008- 1 house on Wimbledon court for $935,500
March 2008- 1 house on Wimbledon court for $824,500
May 2008- 3 houses on Wimbledon court for $726,000,$765,000 and $820,000

Now, I cannot tell by county records which were the plans but it does give you a general idea on how the price curve has come down.So, please think carefully before you make your offer.If you want further details of price variants in other communities in Windemere, please email me or call me.I have also updated statistics on my site on price graphs and trends in San Ramon, so please do take a look at them.

When a reader brought it to attention, I looked back at my blogs to see if that is what I was doing.My words may seem like that but the thought behind all my blogs is the same strong sentiment- deals have to be REAL DEALS !!!! Let me clarify myself for those who read my blog and if thereafter I seem to go off on a tangent, please excuse me as I am not a professional writer !

Centex:
La Sera and Sera Vista- When they started their price correction, the plan 1 at $838,000 on dirt lots was a great pricing but builder did not give any upgrades.They were giving standard features and buyers who did not care for upgrades but just wanted an affordable home got a great deal.Builder soon realised that the concept of selling dirt lots was getting an amazing response, they created a marketing hype around their homes and started bumping up prices immediately- now these same homes were not good deals anymore but consumers did not realise because they caught up in the whirlwind.

Fioli- When they had not even opened doors officially, they were trying to sell October release homes, again dirt lots.Their pricing started at $482,000 and were amazing prices.I later got to know from my buyers at this community that the builder was charging them for every small item, touting it as an upgrade. Despite this fact, these homes were amazing deals.In 7 days the word spread around and people starting flocking to the sales center and builder realised they had another golden goose on their hands.When they had the community innaugral, they sold July lots and people camped the night out( including my buyers) and prices were given out when buyers sat down with the sales rep.Now they had bumped up prices 20K !! Even then, they were in the correct price range. Then with every release, prices were being increased by 15-20K and people are still camping out. Now they are no longer good deals and buyers are not understanding !!

Lennar:
Escalante and Stafford Place- Sales were very slow for them when they started these communities early last year.They were at the 800K-900K+ mark and yet no buyers.They increased incentives and made some sales. At that time Centex was in the high 900's and over the million dollar mark at their communities. They even offered brokers upto 6% referral fee but it was slow sales. Towards the last quarter they gave deep discounts, but they were reaching their fiscal year end and the builder wanted to make numbers.At that time, prices & incentives were really good. Starting January 08, prices went up substantially and now they were no longer good deals.Buyers heard from their friends of the great prices they got last year and want the same prices this year but the builder will not consider it.

Brookfield:
Saville and Campton- They were making sales in the 800K price point when La Sera was above the Million dollar mark and these were the only affordable community.BUT, the builder did not adjust prices with market conditions.While Centex slashed prices to make sales, Brookfield was like a gargantuan moving at a slow pace, well behind market conditions.In my blog, I wrote that my hunch was that the builder will try to blow out this community in the summer, because Centex had changed course on their selling strategy.But after making this prediction and going to the sales center, it was a big surprise to me that they were still totally out of synch with the marketplace !! Hence my raving and ranting last night.

Hawthorne- Gorgeous homes but still over priced.Ideally they should be within the 1.1 Million dollar mark. High Lot premium is a load of B.S.

Santorini- The creme de la creme of the Windemere community, amazingly beautiful homes. Slightly bigger than Hawthorne and they should be within the 1.2 million dollar mark at the highest.At 1.4 million they are way too high because you can pay the same price at Old Ranch summit and get huge homes on almost 1/4 acre flat lots with views of the valley !!

I am still predicting that some communities( that are seeing reasonable sales) will tighten incentives because the big player, Centex, is almost finished. This will not be the best for buyers: builders slowing down inventory and incentives would mean push in resale market.This would be a great situation for sellers( and I guess this is where my contradiction came into play because I am a home owner in Windemere !!) but it would not be a good one for buyers.That is why I said that there are some good deals to be found in resales right now and ignoring them would not be a wise decision because their prices will start to creep up if there is low inventory in the market.

I hope I was able to clarify myself to some readers who may get confused with what I am ranting about !! When I spot a good deal, I will shout myself hoarse.

Was away for 2 weeks as my Mom passed away. I felt like I had been away for a long long time. But now am back and trying to get myself entrenched in work again.

The market in San Ramon seems to have reached near the bottom as far as pricing is concerned. I am no statistical expert but I follow the activity closely. YTD statistics show there were 385 homes sold from January to April and this year it is 245. This is not counting new home sales, as those figures are not accessible unless I go pour over county recorders documents.

Sales activity surely seems to be slower but then again,a lot of people moving into San Ramon are coming into new homes and the resale market is slower than last year.I was running some statistics on the townhouses in the Ambridge community of Windemere and the odd finding was that year to date, exactly 8 homes sold in 2007 and 2008 but the average reduction in price was 8% in price.This mainly caused by 2 reasons- the last 7 months saw a rise in the bank owned properties in this neighborhood and Centex coming in with the Fioli project and ruining the comps. Now consumers want resales to cost less than the Fioli townhouses !!

Buyers do not want to understand how the builder is working the low prices of the townhouses.They will nickel and dime the buyers on every little thing that will cost them maybe 3 times the price through the builder than it would otherwise.Besides the new townhouses are a year from completion, so you wait for a long time to get into a home.In my opinion, it is better to negotiate the price with a resale- where you get everything ready to go and upgrades included.Buyers, understand that although sellers cannot compete with builders, yet they are realistic about prices in this market.

In my community of Windemere, I find an exciting turn of events.Here is my take on what is going to happen soon. The largest dealmaker Centex is selling out inventory fast till the end of April, which is their fiscal year end.Come May, they are taking away broker referral fee because they think they can sell remaining homes at a higher price, on their own.Oliveta has about 40 homes left, La Sera has about 10 homes left. I wish all the best to the buyers who walk in there on their own to find good deals !! So, once they are sold out the other builders come into a stronger position and there will be lesser incentives from other builders as inventory will reduce.Resale home inventory is already slowing and in my prediction soon after the summer months are over the market is going to level off with lesser inventory to choose from.People still want to move to Windemere and there will be a slow creep up in prices.

There is not a whole lot left in the 3000sq ft plus homes. Once Centex is out of the way, it leaves Lennar to demand their price on Escalante and Stafford Place or else you go over the million dollar plus mark to buy at Hawthorne or Santorini.Watch out for deals coming soon from Brookfield homes, is my hunch. They are trying to blow out Saville and they will give good incentives this summer. Once they are done with that community,they will try to pick up sales in Campton- which BTW is probably the slowest moving community. Ridiculous prices on their homes deters a lot of people.So, in my next blog I will keep you updated on what strategies are being employed and what way the curve is moving.