The Pleasanton CA real estate market saw a spike in activity in April, as pending sales for the month rose to their highest level since June 2007. Despite continuing dismal news on the national and regional real estate markets, and shaky economic indicators, many buyers in Pleasanton are deciding that values have reached a point where they are very attractive, and are deciding to act. This is yet another example of why there is no “real estate market”, but rather a series of micro markets that vary in terms of activity, outlook, and strength. Even within the city of Pleasanton there are neighborhoods and areas that are fairing much better than others. But as a whole, Pleasanton saw a strong month of activity in April. There were 67 pending sales for detached homes in April, up from 35 in March, and 43 in February. Inventory rose to 221 homes on the market at the end of April, up from 206 in March. This is perhaps a sign that this summer could see strong activity, certainly welcome news (click on graph to enlarge).

In the under $1 million price range, there were 42 pending sales in April, up significantly from 26 in March and 30 in February. Overall, 2/3 of the sales were in the under $1 million price range. Inventory rose to 118 available single family homes at the end of April, up from 106 at the end of March (click on graph to enlarge).

In the $1 million to $2 million price segment, activity was up significantly. There were 20 pending sales in April, making it the most active month in this price segment since May of 2006. March saw 8 pending sales in this price segment, so it was certainly a good month. Inventory rose slightly, with 70 homes on the market at the end of April as compared to 67 at the end of March (click on graph to enlarge).

In the over $2 million price range, activity was up as well with 5 pending sales in April as compared with 1 in March and 3 in February. Inventory remained unchanged, with 33 homes on the market at the end of April (click on graph to enlarge).

Overall, the spike of activity is certainly welcome news. With many sellers getting more aggressive on pricing, many buyers are getting off the fence and taking advantage of the values available in the marketplace. With interest rates remaining low for the foreseeable future, there is hope that this will be an active summer for the Pleasanton housing market. Only time will tell….

Good news. Pending sales in Pleasanton are up. There are 44 pending sales as of today (April 23) for the month. We have a week to go, so we might hit 50, which is a great month. Inventory is keeping steady with 223 homes on the market.

Pending sales are at or near record levels in Stockton, Tracy, & Antioch. Could we be getting close to a point of stability? Only time will tell.

And now, back to our regularly scheduled real estate slump…

One often overlooked casualty of the great real estate slowdown has been revenues from property taxes. Counties, cities, and school districts are the primary beneficiaries of property taxes. In fact, over 80% of the revenue raised by property taxes are used to fund these 3 entities, with schools getting over 50% of the total property tax revenue. So it is not just Realtors, mortgage brokers, and over-mortgaged homeowners who are the biggest casualties of our real estate slump. Schools are a big loser as well. In fact, our school districts are in financial crisis, and proposed budget cuts are deep and painful. The Pleasanton Unified School District expects a $4.5 million shortfall this year alone.

In order to understand the impact of the real estate slowdown on property tax revenue, you must understand the now famous Prop 13. The two major provisions of Prop 13, enacted in 1978, are that (a) property taxes are based on the market value of the property when it is purchased or transferred and (b) the assessed value is limited to a 2% annual increase, regardless of market value. Prior to Prop 13 in the wild days of the 70’s, homeowners were seeing huge increases in the assessed value of their properties, and therefore huge tax bills, as the real estate market appreciated rapidly. At that time, properties were assessed according to their market value, so if your home appreciated 30% for example, so did your property tax bill. This led to the famous taxpayer revolt that produced Prop 13.

What has kept the system relatively healthy is the steady appreciation rates of residential property in California. When properties sell, there is normally a net increase in property tax revenue, as appreciation translates into a higher assessed value for the new owner. This increase in revenue is especially strong in a booming real estate market, as not only are assessed values higher, but there are more sales to boot. But the reverse is true in a real estate slump. Property values have declined, as well as the number of sales. When sales of real property drop 50% for example, property tax revenue takes a hit as well. There is still usually a net increase in assessed value on many properties, depending on how long the previous owner owned it, but the number of reassessments drops with the level of sales. So there is a net decrease in revenue.

There is normally a steady amount of discussion about the relative fairness and effectiveness of the current property tax system. When we have periods of fiscal crisis, these issues tend to move to the forefront. So is the Prop 13 property tax system fair? It depends on who you ask.

For example, consider 2 houses that are the same size next to each other. One house has been owned by the same owner for the last 20 years. Let’s say the property tax generated by this house is $3000 per year (not unusual in our area). And let’s say the house next door sold last year for $900,000, so the annual property taxes on this house are $10,000 per year, or three times the amount. It is quite possible that the owner paying $3000 per year has a couple of kids in school. And the owner paying $10,000 per year may not have kids yet. So from a use standpoint, one could argue that the owner paying $3000 per year is getting his kids public school education subsidized by his neighbor. It is hard to argue that this is fair.

Or how about a long time home owner with a very low tax base who decides to retire to the desert or the foothills, and rents their home out to a young family with school age kids. Again, this would be a net loss to the school district, as the revenue generated from the low tax assessment will most certainly not cover the cost of educating the tenant’s kids.

Or how about new homes. Local governments and school districts have collected (some say extorted) millions of thousands of dollars from new home builders in permit fees, school mitigation fees, and other fees levied on builders for the privilege of building homes in the community. This raises the cost new homes, sometimes by as much as $50,000 to $100,000. So one could make the argument that buyers of new homes bear an disproportionate share of the tax burden to fund schools and local governments. And to make it even less fair, when new homes cost more, resale homes generally benefit from an increase in value, while enjoying a cap on what they pay into the system.

On the other side of the equation, property taxes are not cheap. And homeowners need the certainty and protection of limits on the increase of assessed values. Even long term property owners need protection against huge increases in property taxes, especially those on fixed incomes. Is it fair to force an elderly home owner to sell their home because they can’t afford the taxes on their property under the old system?

There is a strong argument that while there are inequities in the current system, there is stability. When you buy a property, you know what the taxes are going to be, and you are protected against huge increases in property taxes. As is often the case, how much someone is paying in property taxes has a lot to do with their feelings on the fairness of the system.

It is always amusing when Realtors meet with potential sellers, and the conversation around pricing is often filled with comments from the seller such as “I want X amount for my house” and “my house is worth X because the house around the corner sold for Y, and mine is nicer”. And Realtors, sometimes under pressure to tell the seller what they want to hear, chime in with “yeah, I think you can get X for your home! It is magnificent!” or “yeah, the market is slow, but looking at your home, I’m thinking it is worth Y”. Often, Realtors and sellers get into a kind of “groupthink” situation where each one reinforces the other, and before you know it, they have worked each other up into a frenzy. The only problem is that there is one party who is a huge part of the equation regarding the value of the home, and their point of view is usually not represented in these meetings of the mutual admiration society… I am speaking of course about buyers. And guess what? Surprise… they usually have a totally different opinion about the value of your home.

The fact of the matter is that it is the opinion of the buyer that counts the most. They are the one(s) writing the check, so you must see the market through their eyes if you want to sell your home in this market.

Price Vs. Value. You see, all the seller and the realtor can do is set the asking price for the property. They can not set the value. The value is determined by buyers and the strength of the market in that price segment. So the seller and Realtor might agree to set the asking price of a given home at $900,000, for example. But if they receive no offers and very little interest after 30 -60 - 90 days, then the value of the house is not $900,000.

So if buyers ultimately hold the power in determining the value of a home, it makes sense to try and understand how buyers view the market. What is the mood of buyers today? What is important to them? What are their concerns? So here are some things that buyers think about when evaluating a house in this market.

How Long has it been on the market? This is the first question buyers ask about a home without fail. Why? Buyers want to gauge how much “room” there might be in the asking price, and how desirable the house is to the market in general. If the answer is “90 days”, then the buyer will generally assume it is overpriced, and mentally discount the value of the house. Or worse yet, buyers will ask themselves “what is wrong with this house that no one else is interested in it?”. Either way, it is not good. Of course, if the price has recently been reduced, it helps reduce the impact of this question. If the answer to the question is “3 days”, then the buyer knows that there is likely not as much room in the asking price, and will need to be fairly aggressive in terms of the offering price if they want to make an offer. The fact is the seller’s position weakens the longer the house stays on the market.

I don’t want to be a fool. Buyers, whether they verbalize it or not, are afraid of making a mistake. No one wants to buy a house for $900,000, only to find out it is worth $800,000 six months or a year later. In a soft market like this, buyers need to feel somewhat insulated against future price erosion. Translation: buyers want to buy your home at a good enough price that the market can slide some more, and they will still feel okay about it.

It needs to be as close to move-in condition as possible.. To have success in this market, buyers have to be able to move in without having to do a lot of updating or work. Buyers just don’t seem to be in the mood to buy homes that need a lot of work, unless it is at a substantial discount. So carpeting should be new or newer, paint should be fresh, and there should not be any repairs or touch up items needed. Sellers in this market need to eliminate as many possible buyer objections as possible before the home goes on the market.

The value has to be justified. Buyers have to be convinced that the price is justified by hard data. Comps or comparable sales are great. The only problem is that sellers tend to gravitate towards the sales at the higher end of the spectrum, and guess which sales the buyers tend to give most importance to? The lowest ones, of course. It takes a seasoned professional to explain both the high comps and the low comps to the buyer so that they can be reasonably certain that the value is there for that home.

If it’s not near perfect, I am better off waiting You can’t blame buyers. There has been an onslaught of negative media attention on the real estate market, and the economy. This leads to insecurity and uncertainty on the part of buyers today. So if the house is not exceptional in terms of value, or close to perfect in terms of condition, buyers often revert to waiting.

It takes strong value in today’s market to get buyers to act. Your home has to stand out in your price segment in order to attract the attention of serious buyers. Smart sellers know that they have to leave some money on the table if they want to sell today.

Now that we talked about what buyers care about, here are some examples of what buyers don’t care about:

* How much the seller “needs” in terms of the sales price. Adding the phrase “because the seller really needs the money” to an ad will have zero impact with buyers. They don’t care.

* How much potential there is. Buyers buy what they can see, and they buy what the property has now. Buyers don’t generally assign much value to the fact that you could add a guest house, pool, sports court, or family room addition for example.

* The seller is offering a credit of $50,000 to remodel the kitchen, or baths, or flooring, etc. Bad news: Buyers are not willing to undertake remodeling or updating unless there is substantial incentive to do so. Sellers see a dollar amount associated with upgrades. Buyers see spiraling costs, flaky contractors, living with chaos, stress, and a huge hassle. Buyers are more likely to pass on your house and buy one that they can move right into.

* That you spent major money remodeling your kitchen and master bath 10 years ago. That was then, this is now. In fact, improvements you made 10 years ago might be out of date today.

The mortgage market continues to adjust to the turmoil in the credit markets. The trouble lies in the secondary mortgage market, where institutional investors purchase mortgage loans typically bundled into Mortgage Backed Securities. The yield that these investors demand is a function of perceived risk (how safe is the investment) and the typical concerns of long term bond investors, namely the threat of inflation over the long run. When the sub-prime crisis hit in July of last year, it dramatically changed the perceived risk of mortgage instruments in the secondary market. In other words, investors in the secondary market perceived a higher level of risk for mortgage loans in general, and either demanded more yield to compensate for this additional risk, or elected not to invest in mortgage instruments all together. This put immediate upward pressure on rates, especially jumbo mortgage loans (loans over $417,000).

Today, the climate is still difficult. The government has enacted legislation to raise the Fannie Mae conforming loan limits to $729,000 in our area. The hope was that this would help stabilize the mortgage rate environment and make homes more affordable in high price areas. Fannie Mae & Freddie Mac are considered to be backed by government, therefore they are perceived to be less risky than jumbo loans. Most mortgage experts thought that loans up to $729,000 would be at the lower conforming loan rates, which would be a boost to the real estate market. But unfortunately, the secondary market saw things a little differently. There are fewer buyers for the new conforming loans, and there is uncertainty on how to assess the risk, so as a result the yields are higher. (click on graph to enlarge)

Right now, loans over $417,000 up to $729,000 have around a 1/2% higher rate. Jumbo loans (over $729,000) have an additional premium of around 1/2% to 3/4% over those loans. So for fixed rate loans, current rates look like this: (note: this assumes a 0 point loan. No apr’s have been computed. Rates courtesy of Private Mortgage Advisors)

Conforming 30 year fixed up to $417,000 5.75%
Conforming 30 year fixed from $417,000 to $729,000 6.25%
Jumbo 30 year fixed loans over $729,000 7.0%

Now recently the Fed has been reducing their key short term interest rates in a bid to infuse capital into the economy. This has had some positive effect on rates in general, but it has also led to concerns about an increase in inflation, which can put upward pressure on long term rates. But it certainly helped short term mortgage instruments, especially adjustables and home equity lines of credit, which dropped as well. However, lenders and investors recently have become very leery of these types of loans given the high level of defaults. So predictably, the rates on these loans have to be higher to justify the perceived risk, which means that they are not as attractive today. In fact, these short term interest only fixed loans are not much lower than fixed rate loans. (click on the graph to enlarge)

Here is a breakdown of current rates for short term loans:

5 year interest only fixed up to $417,000 5.625%
5 year interest only fixed from $417,000 to $729,000 6.0 %
5 year interest only fixed jumbo over $729,000 6.75%

7 year interest only fixed up to $417,000 5.625%
7 year interest only fixed from $417,000 to $729,000 7.25%
7 year interest only fixed jumbo over $729,000 6.875%

Lastly, lenders in general have tightened up considerably on the underwriting guidelines. Now lenders are looking closely at the buyer’s credit scores to judge their qualifications, and across the board lenders are demanding higher downpayments. If you are trying to obtain a loan over $729,000, lenders are now requiring 20% down. There is low downpayment money available under $729,000, including FHA loans, so downpayments are not as critical under this amount. The simple fact is that lenders are not willing to take chances with buyer’s qualifications, and will look at the buyer very carefully to make sure they are qualified. The days of easy money are over for the real estate market, and while it makes things harder for now, it is much healthier for the market in the long run. Once the secondary market stabilizes, we should see capital flow back into mortgage instruments, and rates will come down as a result.

So there is an old crotchety man who dies, and at the funeral the minister asks if anyone would like to say a good word about the decedent. Awkward Silence. Again the minister asks if anyone would like to speak on behalf of the departed. More awkward silence. Finally, a man in the back row stands up and says “his brother was worse”. Like this story, most discussions about the Pleasanton real estate market have resorted to “Antioch is worse, or Brentwood is worse”.

The truth is that the Pleasanton market is doing pretty well thank you, all things considered. Yes, it is sluggish in terms of sales. And yes, there remains downward pressure on prices in many price brackets and neighborhoods. But traffic is up, people are out looking, and the feeling is that better days are ahead. Now better days are not the frenzied, multiple offer, buyers will do anything to get your house type of market, but rather a market with stability in prices, and reasonable loan rates and terms where you can qualify for a loan (even if your last name is not Gates or Hilton).

In March, the Pleasanton market saw a bump in inventory and a slight dip in pending sales. Overall, the month of March ended with 206 available single family homes on the market, up from 185 at the end of February. About half of these were over $1 million. Pending sales dropped slightly from 43 in February to 35 in March. Inventory is going to rise, which is normal for this time of the year. Hopefully pending sales will rise now that everyone is done with Easter and Spring Break. (click on graph to enlarge)

In the under $1 million price bracket, inventory was up, with 106 single family homes on the market at the end of March, compared with 99 at the end of February. There were 26 pending sales in the month of March. 17 of the 26 were on the market for less than 30 days, and of the 9 that were on the market for more than 30 days, all but one had a price reduction. (click on graph to enlarge)

In the $1 million to $2 million bracket it was much the same story. Inventory was up, and pending sales slipped. There were 67 single family homes on the market at the end of March, as compared with 55 at the end of February. In March, there were 8 pending sales, down from 10 in February. (click on graph to enlarge).

In the luxury home segment (over $2 million), the market remained sluggish. Inventory was up slightly, with 33 homes on the market at the end of March, as opposed to 31 at the end of February. There was 1 pending sale in March in this price bracket, down from in February. (click on graph to enlarge).

Look for inventory to increase as we enter the prime Spring months. Short term rates are down, which is great for home equity lines of credit and existing adjustables. 30 year conforming fixed loan rates are decent, but the jumbo market is still in turmoil, and jumbo fixed loans are priced with a large premium right now, mostly because investors are not sure how to evaluate the risk associated with these loans. In all cases, underwriting guidelines have become more restrictive, and lenders are being very conservative and deliberate right now. With the recent moves from the Fed, it is clear that stabilizing the mortgage and financial markets is their number one priority, so expect to see plenty of liquidity and money available for banks to lend, which will have a positive impact on the real estate market.

There are signs that we are moving towards stabilization. Distant suburban areas like Antioch and Brentwood have seen strong increases in pending sales, an important first sign that buyers are entering the market. Brentwood currently has 187 pending sales, with an inventory of 514, or less than 3 months supply. This is a very positive indicator that buyers are starting to jump in. New home builders are seeing increases in traffic and sales, especially in the hardest hit areas. In Pleasanton, open house traffic is up in most neighborhoods, so there are definitely buyers out surveying the landscape. And homes that are well priced and attractive continue to attract attention, and many are in fact selling. As the old saying goes, “hope springs eternal”… or maybe Spring is the season of eternal hope.

The Pleasanton CA real estate market is relatively stable at the mid point in March. Certainly, amidst the drum beat of bad economic news and further turmoil on the financial markets (I guess putting all my money into that Bear Stearns Emerging Markets Fund was a bad move), we are really doing quite well. Inventory is creeping up as we head into Spring, but this is normal. There are 194 total single family homes available in Pleasanton right now, up from 185 at the beginning of the month. Most of the increase is in the $1 million plus market. Pending sales look to be about on par with February, which was a good showing. There are 21 pending sales for March so far, compared with 43 for the month of February. So in a nutshell, we are chugging along at a decent clip.

There are some encouraging signs in the marketplace. Some of the outlying areas like Brentwood and Tracy are reporting an increase in sales, and more market activity. New home builders are reporting more traffic across the board, and sales are up fairly significantly at most subdivisions. And the Fed just lowered their short term rates again by 1/4% and then 3/4% two days later. All in all, with prices at a bargain level for many homes in our market, real estate is getting more attractive. And good news for those borrowers who are stuck with adjustable rate loans…. your rates are going down! In fact, with the continued downward pressure on short term rates, adjustable rate mortgages have become very attractive again, especially since fixed rates remain stubbornly high in the face of all of this rate cutting by the Federal Reserve. This is because long term rates are more sensitive to inflation, and often when short term rates are cut, long term bonds and mortgage rates actually increase as investors worry about inflationary pressure. So all in all, we are doing pretty well thank you. Here’s hoping we see more improvement as we get into Spring.

I hear a lot of Pleasanton, Dublin, and San Ramon buyers say they want to wait for “the bottom”. They just are not comfortable buying in the current market with all of the negativity and the fear of more price erosion. Perhaps it’s time to take a walk down memory lane and revisit the market of 2005. Because once we are past “the bottom”, and all signals are pointing up, we could be right back into that kind of market. You do remember the market in 2005, don’t you? (cue up background music with heavy strings)

Ah yes, the good old days. No worries about how much prices are going to drop. Everyone is buying real estate (even, as it turns out, some people who shouldn’t be). The news media is full of stories about how much homes are appreciating. You are my client, and you would like to buy a 4 bedroom, 2000 sq ft house in Pleasanton. You would like to spend between $800,000 and $900,000. Great! Let’s get started.

Thursday, 2:00 PM. There are 4 listings on the market that you can choose from. One of them backs up to the freeway, and it is overpriced by at least $50,000. Another one is completely original, and has dark brown chocolate carpeting, harvest gold appliances, and foil wallpaper everywhere. It kind of looks like Janis Joplin’s house would look in 1967. In fact, by the looks of the seller, they have been smoking a lot of what Janis smoked in the day (allegedly). The third house is moderately updated, but on a semi-busy street. You could live with it, but it is not perfect. It would be a good “backup” house. And the fourth house is remodeled throughout, great lot, and a definite showcase. After seeing the 4 houses, you decide to focus in on the 3rd and 4th choices. Smart move.

Thursday 4:30 PM. I call the agent on the “showcase” house. They are asking $869,000. However, they are not looking at offers until next Weds, which means we have to wait through the weekend. There will be competition. No matter, you want to go for it. It is a great house, and you can move right in. The 3rd house might be a good back up house if we are not able to get one we really want. I talk to the agent on the “backup” house, no offers yet, but several interested prospects. Good… no offers yet.

Friday, noon. No new listings on the market. Bummer

Saturday, 2:00 PM. Get a phone call from you. You drove by the “showcase” house, and there is an open house. You go in, and there is a constant stream of people filtering through the house. Everyone loves it, lots of questions directed at the agent, including “when are you looking at offers?” We will have company. No new listings on the market.

Sunday, 2:00 PM. Get another phone call from you. You drove by the “showcase” house, and it is of course open again. Almost a traffic jam on the street. People are going into the house in droves… like they are holding auditions for American Idol inside. Agent says “several people”" are interested. Nothing new on the market. You are anxious. I am thinking about taking up yoga.

Monday, 11:00 AM. I call the listing agent on the “showcase” house. Expects 6 to 10 offers based on what other agents have told him. Called the agent on the “backup house”. Two offers have been written, and the seller is reviewing them Monday night at 8:00.

Monday 4:00 PM. Decision point. Do you want to make an offer on the “backup ” house, or wait for the “showcase” house that will likely be a bidding war? You have to decide.

Monday 4:30 PM. 2 new listings hit the market. One is on a busy street. Forget it. The other one has some remodeling, looks promising. You drop everything and meet me at the house. Yes, there is some remodeling, but it backs up to apartments, and the pool is a disaster (looks like something the Creature of the Black Lagoon crawled out of in the 60’s). Oh yeah, it is $839,000. You decide to wait for the “showcase” house. You are going to pass on the “backup” house too. After all, there will be other listings, right?

Tuesday 10:30 AM. Find out the “backup” house had 2 offers on it, and sold for $20,000 over asking price. That’s okay, it is not the one you wanted. I take a couple of Rolaids. No new listings.

Wednesday 3:00 PM. Decision time. You and your wife are going by Macy’s home store to look at all the cool furniture you can put in your new home. Call the agent on the “showcase” house. She expects between 8 and 10 offers. More Rolaids. Undeterred, we make plans to meet a 5:00 to write an offer.

Wednesday 4:15 PM. New listing hits the market. It looks pretty good from the MLS information, not as good as the “showcase” house, but a possibility. No showings until Friday, so no chance of getting into it. Oh well.

Wednesday 4:50 PM. Call the agent again. 4 offers in hand, several more on the way. I ask her if she can give me a hint as to how high they are, and of course my question is met with laughter on the other end of the line. Oh well, worth a try. A couple more Rolaids.

Wednesday 5:00 PM. We meet to draft the offer. You are a strong buyer. 30% down, pre-approved, cash in the bank, etc. But there is competition. You talk about how the house would be perfect for you. I try my best to temper your enthusiasm, and remind you that there is a good chance you might not get the house. You are not phased by that thought.

Okay, run the comps. The last couple of closed sales say it should be priced at around $850,000. There are 2 pending sales that are kind of similar, and they were asking $855,000 and $870,000. It seems to be priced pretty well given the market conditions.

What do you want to offer? You respond with $860,000. Reality check time. There are already 4 offers, and probably 8 to 10 offers by the time they are presented. I calmly explain that you have a better chance of finding D B Cooper than getting the house for $860,000. Okay, but we are getting up there in terms of what you are able to afford. No argument from me. After much discussion, we decide to go in at $890,000. We will give it our best shot. Of course, this offering price has no relationship to comparable sales, or market data. At this point is is purely us against the other buyers, and who wants it the most. We have to strengthen the offer too. 7 day contingency period for the loan, appraisal (oh yeah, remember the appraisal?), and the inspection contingency. Stress level goes up. I try to remember what I did with my box of Zantac.

I have you write a cute letter to the seller telling them how much you love the house, how it will be perfect for you and your family, how you can see your kids playing in their yard, and how much you hope they choose your offer. You include a picture of your family and your dog. You include a copy of your Eagle Scout certificate.

We finish signing the offer, write the substantial deposit check, and I tell you to keep your fingers crossed as you leave the office. I also tell you not to get too attached to the house, because you might not get it. I call the agent, now 7 offers in hand, and 2 or 3 more expected. I have to get the agent the offer by 7:00 PM.

Wednesday 6:50 PM. I deliver the offer. Now I get to wait. And wait.

Wednesday 7:00 PM. Nothing

Wednesday 7:30 PM. Nothing

Wednesday 8:00 PM. Nothing. I start getting nervous.

Wednesday 8:30 PM. Call from the listing agent. They ended up with 12 offers. They are going to counter 6 of them, including ours. Multiple counter offer. Great. Expires at 10:00 AM the next morning. We have to jump through hoops, and we still may not get the house. I call you, and you sound drained but still hopeful. I am thinking about how cool it would be to have a normal job.

Wednesday 8:55 PM. I get the multiple counter offer faxed to me. $925,000. Yikes! I call you, and you are not enthused. You really wanted to stay under $900,000. But you can stretch and make it work. Let’s sleep on it.

Thursday 9:15 AM. We decide to up the ante. We counter back at $930,000. I’m feeling good about this. I deliver the counter to the agent.

Thursday 10:00 AM. No word from the agent

Thursday 10:30 AM. No word from the agent

Thursday 11:00 AM. Voicemail from the listing agent. “Thank you so much for the response (I already know we are screwed by that opening sentence) but the seller has chosen one of the other offers. It was a little higher than yours, with no loan or appraisal contingency. We’ll let you know if anything happens to the escrow”.

Thursday 11:01 AM. Bolt to Starbucks. Need a Carmel Frap. Now! 2 more Rolaids en route. I wonder what it would be like to sell for a software company. Surely it would be easier.

Thursday 11:08 AM. I call you. You are bummed. I can hear the combination of disappointment and exasperation in your voice. We did everything we could, but it was not enough. That’s okay, I reassure you. There will be other houses. It wasn’t meant to be. (funny how Realtors become such great philosophers at times like this). I’m anxious. I know we have to go through this circus again.

We end up writing offers on 4 more houses. We finally get one. Evey new listing seems to be priced $10,000 or $20,000 higher. With every house we loose, we get more aggressive on the next one. We waive loan contingencies. We shorten inspection contingencies. We throw in 30 days free rent, and dinner at Ruth’s Criss. The house is not perfect, not even close. But after the ups and downs of 5 offer presentations, you are relieved to finally have one in contract. Of course, there were several issues that came out in the inspections, and of course the seller is unwilling to fix any of them. But hey, at least we got the house. For $45,00 over the asking price, and probably $55,000 over the comps. I worry about how long this crazy market can keep up. At some point, this market is going to run out of steam I think to myself. I’ve seen it before.

So, the question is, do you really want to wait for the market to be “better”? Really?

The Pleasanton CA real estate market showed some definite signs of life in February. Activity was up, especially in the lower price ranges. And inventory rose as well, which is not unexpected given that we are in early Spring. Overall, while there are still troubling signs in the economy, and the national and statewide real estate markets, the Pleasanton market (along with San Ramon, Danville, LaMorinda, the Peninsula, and other highly desirable markets) seems to be improving. Value is still the rule of the day, however, as cautious buyers are very deliberate in their pace, and generally conservative in what they are willing to pay. But activity is activity, and we’ll take it. Adding to the cautious optimism are reports of an increase in traffic and sales at the local new home developments, a welcome sign from a market segment that has been struggling at best. And reports from the Brentwood & Antioch markets, two of the hardest hit markets in Eastern Contra Costa County, show that there is an increase in inquires and activity as well, which is certainly welcome news. All in all we are seeing improvement in the market, although we still have a ways to go, and likely so more hurdles to overcome.

Pending sales activity in all of Pleasanton increased from 24 during January to 43 in February, or almost double. It it the highest number of pending sales since October 2007. Inventory also edged up, with 185 detached homes on the market at the end of February, as compared to 159 on the market at the end of January. (click on graph to enlarge)

The under $1 million market segment showed the largest increase in activity, with pending sales jumping from 14 in January to 30 in February, the largest number of pending sales in this bracket since August 2007. The inventory also increased, with 99 homes on the market at the end of February, up from 81 at the end of January. (click on graph to enlarge)

In the $1 million to $2 million bracket, pending sales remained flat at 10 in both January and February. Inventory in this price segment rose from 50 available homes at the end of January to 55 at the end of February. (click on graph to enlarge)

In the luxury home segment (over $2 million), there was a pickup in activity as well, with 3 pending sales in the month of February, as compared to none in January. Inventory was up slightly, from 28 available homes at the end of January to 31 homes at the end of February. Overall, market conditions are still sluggish in this price bracket, but buyers are finding some real values in the market, which should help stimulate activity. (click on the graph to enlarge)

Overall, I would expect to see inventory rise as we hit the Spring. The key question is whether there is enough demand to absorb most of the increase. If there is, then we could be reaching a point of stabilization. But if inventory rises dramatically, there could be more downward pressure on pricing in some of these price brackets. One thing is for sure… there are some great values out there right now for buyers who are willing to act.

It would be a reach to say that the Pleasanton Ridge Open Space is a well-kept secret. In fact, if you live in or near Pleasanton, you no doubt are well aware of this special sanctuary in the heart of suburbia. Miles of pristine trails, breathtaking views, and abundant wildlife make it a special place to get away for an hour or two (or three, or four). I was just hiking the ridge about a week ago, and a full grown coyote ran across the trail 200 feet ahead of me. I have also seen fox, deer, wild turkeys, and all sorts of raptors. The only downside is dodging all the mountain bikers zipping past you.

The Chronical has an article on the ridge that does a decent job of describing it. Since we’re at it, here is more information on the Pleasanton Ridge parklands from the East Bay Regional Park District.

The only downside is that it might make it too popular, and instead of hearing “mom, look at that cool coyote!” you might be inclined to hear “mom, look at those two mountain bikers that just crashed!”. But be that as it may, we are lucky to have such a great escape so close to home.