Well, we may as well get it over with quickly. The latest batch of news about the housing slump is hot off the press, and it continues to have an impact on the Pleasanton and Tri-Valley real estate markets:

* Consumer Confidence dropped to its lowest level in a year

* Standard & Poors Housing Index dropped 3.2%, the steepest rate of decline for this index since 1989

* The unsold inventory of homes in California rose to 10.7 months, a 31% increase over last year at this time

* Home sales in California dropped 22.7% in July

* The median home price in California dropped 1.4% in July

* Nationally, sales of single family homes dropped .2% in July, the 5th straight month of lower sales, and the lowest level of sales since 2002

The good news? The Pleasanton and Tri-Valley real estate markets are doing very well considering the turbulence in the statewide and national markets. Yes sales are down, and yes home prices are down too, but the smart money is looking for opportunities in the market right now. And if you are still not convinced, talk to someone who has a home for sale in Antioch or Tracy. Now those are what we call slow markets!

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We are almost through the month of August, but it is already apparent that the recent turmoil in the mortgage market is having a big impact on activity in Pleasanton, Dublin, Livermore, San Ramon, Danville, and Alamo/Blackhawk. Month to date pending sales activity in the region is down sharply from July. And July activity was down from the levels in June (click on graph to enlarge)

As you can see, pending sales activity is down across the board in almost all of the markets of the Tri-Valley. San Ramon is the only market that has not seen a decline in sales activity in August, but this is largely because July pending sales in San Ramon were already down sharply. Now, we still have less 4 days left in the month, and we could see a spike in activity before the end of the month. And August is typically a sluggish month anyway, with vacations and families getting ready for school to start up again. But clearly activity in the Tri-Valley real estate market has slowed dramatically.

The good news? If you are a buyer (and if you are qualified by a reputable lender) this is one of the best markets in years to purchase in. Plenty to choose from, many motivated sellers, and virtually no competition for prime properties. Yes, your interest rate will be higher than what you could have obtained in the last couple of years, but you can always refinance when rates drop again. Savvy investors like to buy when most people aren’t buying… are you bold enough to profit from this market???

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As mortgage lenders struggle to adjust to the recent turmoil in the mortgage market, we are hearing rumors of upcoming actions that will hopefully help add stability to the secondary mortgage market (the institutionalized “bond” market where mortgage companies sell packages of loans to investors). One rumor I have heard recently is that the Fed will lower rates again by up to 1/2 % before their next meeting. This has the benefit of lowering the cost of short term financing to banks, thus easing the financial pressure on mortgage lenders until the secondary market reaches equilibrium. It has the additional benefit of sending a strong psychological signal to investors, as well as the general public, that the Federal Reserve will do what is necessary to stabilize the mortgage market. This is certainly a welcome step in combating the volatility we have seen in recent weeks.

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The second rumor, if it comes to fruition, will have a much greater impact. Word is that Fannie Mae loan limits may be raised substantially, perhaps into the $600,000’s for the most expensive metro areas (like the Bay Area). Currently set at $417,000, the “conforming” loan limit sets the maximum loan amount for Fannie Mae, which is a quasi-federal agency created to facilitate and standardize mortgage sales in the secondary market. And it works. The secondary market for loans that meet Fannie Mae guidelines is significantly more stable than the secondary market for jumbo loans (loans over the conforming loan limit of $417,000). While the Fannie Mae loan limits work for most of the country, in higher priced markets such as California, New York, and Hawaii, these loan limits are ridiculously low, and comprise a very small percentage of the loans originated in these pricier markets. There has been talk throughout the years of indexing the Fannie Mae loan limits to the median sales price, or creating some other mechanism to make these conforming loan limits more in line with values in higher priced areas. But no action has been taken, largely because the secondary market for jumbo loans was stable and fluid, and there was plenty of money available for jumbo loans at competitive rates, although the rates were slightly higher than conforming loan rates. But not any more. The market for jumbo loans is in turmoil, and we are seeing huge fluctuations in rates, as well as drastic changes in underwriting criteria and loan programs. Raising the Fannie Mae loan limits would have an immediate stabilizing effect on the mortgage market, and help solve the liquidity crisis that has created so many problems recently.

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The Pleasanton CA real estate market showed a slight increase in inventory at the end of July, as well as a moderate decline in sales. However, these statistics did not reflect the impact of the turbulance in the mortgage markets, and the subsequent impact on the real estate market. Local real estate professionals, along with buyers and sellers, are holding their breath hoping that the troubles in the mortgage market will not have a dramatic impact on the Pleasanton market.

Overall, the available inventory of single family homes ended July at 206, up slightly from 195 the end of June. Pending sales decreased from 67 at the end of July to 54 at the end of August. Fortunately, we have not seen the upward creep of inventory this summer like we experienced in 2006, which has helped keep the market somewhat stable. Sales activity has been mostly stable in the recent future. (click on the graph to enlarge)

The low end of the Pleasanton market (single family homes under $1 million) showed a spike in inventory and a decline in sales. Available inventory at the end of July came in at 102, compared with 91 available homes at the end of June. Pending sales declined from 45 at the end of June to 39 at the end of July. (click on graph to enlarge)

The mid range real estate market in Pleasanton also showed an increase in inventory and a decline in sales activity. Inventory of available single family homes in Pleasanton between $1 million and $2 million ended July at 67 homes, up from 63 homes at the end of June. Pending sales in this price range stood at 12 at the end of July, down from 17 at the end of June. (click on graph to enlarge)

The luxury segment of the Pleasanton California real estate market showed a slight decline in available inventory, with 37 available homes at the end of July, down from 41 at the end of June. There were 3 pending sales in this price bracket at the end of July, down from 5 at the end of June. Overall, conditions in this segment remain sluggish. (click on graph to enlarge)

On the whole, the market right now in Pleasanton is slow, with mortgage troubles causing upward pressure on rates and uncertainty among buyers. Fortunately, inventory has not spiked as it often does in the summer months. On the positive side, this is one of the best move up markets in recent memory, as firm buyers with cash in hand can find some very good buys in the market right now. Ultimately, the mortgage troubles will be sorted out, and in the long run there is strong demand and strong job growth in the East Bay, all of which suggests that this real estate downturn will be a historic opportunity to purchase prime real estate at bargain prices without competition.

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In case you haven’t noticed, Dublin has embarked on an aggressive campaign of growth the past few years, including several retail and mixed use projects, as well as scores of high density condominium projects.

Now Charter Properties is approaching the city of Dublin looking to build 4 high rise towers, ranging from 19 to 21 stories each.

The project would have the tallest buildings in suburban East Bay and would dwarf everything for miles around. Other than Oakland’s 28-story Ordway Building and the 30-story Pacific Park Plaza in Emeryville, there are no taller East Bay buildings.

The towers, which would include a 100-room boutique hotel, a luxury gym and spa, 20 luxury single-story condominiums and 30 live-work units, would easily dwarf the next tallest building in town — Sybase’s six-story headquarters in east Dublin.

The towers would go up on Grafton Street next to a Lowe’s Home Improvement store that is under construction.

In Pleasanton, which faces Dublin on the opposite side of I-580, the tallest building is six stories high.

“We don’t build buildings that tall in Pleasanton,” Mayor Jennifer Hosterman said when she was told of the plans being considered. But, she said, “I can’t speak for Dublin.”

“I imagine the people of Dublin may embrace that type of project,” she said, noting that the city has embraced many other large-scale projects.

Yes, this is a bold proposition, and there would certainly be an impact on traffic in the surrounding area, as well as other considerations such as shadows and potentially altering the views for neighboring buildings. But this might be what the future looks like for the Tri-Valley region, as traffic and congestion make longer commutes to the central valley more and more difficult. Clearly, urban planners in the Bay Area are embracing higher density development close to transportation hubs as a way to reduce traffic and provide more housing.

The four towers will house 675 units. Empty nesters and those looking for a smaller home with a more urban feel without having to move to San Francisco or Oakland might enjoy the development, Inderbitzen said.

Many cities in the East Bay have height restrictions. Concord permits buildings as high as 200 feet in its downtown area, but cities such as Lafayette, Livermore and San Ramon have restrictions that do not allow buildings to be more than 45 feet tall, although developers can apply for a variance.

Walnut Creek residents voted to cap new buildings at a maximum of 89 feet, or six stories. Richmond has a height restriction of 75 feet in some corridors and 35 feet for residential projects.

Buildings of these sizes are generally located in urban areas where space is tight, but Linda Dalton, an expert on city planning issues at Cal State East Bay, said building up instead of out is becoming a trend.

“Land gets expensive and people want to reduce their commuting. That ends up meaning more density,” Dalton said.

Dalton, who has not seen the project plans, said that, ultimately, the City Council has to decide whether the project fits into city plans.

Building towers may seem strange now, but Dalton said the thought of building multiple-story condominiums and apartments in suburbs 30 years ago would have had people scratching their heads.

Dublin planning commissioners and City Council members have said they have no problem entertaining the high-rise notion, but they do have questions about how the project would affect the city — how large would shadows cast by the towers be, how it would affect the city’s job-housing balance and how it would work with other retail, office and residential buildings being constructed nearby.

Inderbitzen said some studies on how the project would affect the city — and sunlight — are being conducted, although more would be scheduled if the city is interested in the project

“The fact that it is different doesn’t bother me at all,” said Mayor Janet Lockhart. “It’s just about making sure it fits in our community.”

Courtesy of the Contra Costa Times

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Someone put up a sign on the old Koln Hardware building on Main Street in Pleasanton announcing that Hooters would be opening soon, along with a phone number for job applicants. This immediately caused a stir on the normally quiet streets of downtown Pleasanton. The only problem was it was not true. It was a prank. The sign was removed shortly after it appeared on Saturday morning.

Sorry guys, you’ll have to go to Dublin if you want some Hooters wings…

All of the well publicized mortgage troubles are not just affecting the low end of the housing market. Even the luxury market segment is experiencing disruptions and problems in the financing arena, and it is causing some major stress, hardship, and in some cases, losses.

The credit crunch now is hitting home buyers from all walks of life, not just subprime borrowers with poor credit. That in turn could mean fewer buyers - and lower prices.

For instance, a multimillion-dollar deal in Larkspur went belly-up last week when the lender yanked the financing at the last minute.

“Everything was perking along smoothly. All contingencies were removed,” said Bill Hogan, a Realtor with Coldwell Banker in Greenbrae, who sold the four-bedroom home for $2.45 million and expected to close the deal later this month. “The loan was approved and locked in. People were ordering moving trucks, everyone was feeling euphoric.”

On Thursday, the couple buying the house learned that their lender was rescinding their loan because they were making only a 10 percent down payment.

“All of a sudden the lender, because it is backed by a series of investors that are feeling very shaky and panicky, decided it could no longer honor the loan commitment,” Hogan said. “This was not a subprime loan; this was fully documented, people with outstanding credit who own a $5 million home now and didn’t need to sell it to buy this one.”

The buyers could have gotten a mortgage at a substantially higher rate - just under 8 percent - Hogan said, but “they crunched the numbers and said, ‘Hell, no, maybe this is a sign for us to get out.’ ”

The buyers walked away from the deal, forfeiting their $73,000 deposit. The home is back on the market for $2.2 million, its original asking price.

The incident underscores how the mortgage crisis could undermine real estate prices.

Lenders nationwide have drastically tightened their purse strings because Wall Street investors, spooked by rising foreclosures and defaults, no longer want to buy mortgages. Earlier this year, both lenders and investors soured on subprime loans to people with poor credit.

But starting last week, Wall Street started to spurn jumbo mortgages - those above $417,000 - even for borrowers with sterling financial profiles. Those loans have become scarcer, harder to qualify for and more expensive.

In the Bay Area, high home prices dictate that most mortgages are jumbos.

“A month from now, when we’re reporting closings for the month of August, we think that will be a pretty lousy number because of the mortgage market crunch,” said Andrew LePage, an analyst with research firm DataQuick Information Systems of La Jolla (San Diego County).

The one bright spot for Bay Area real estate in the past year has been upper-end sales. The median price of homes has risen in many counties. That’s not because prices rose but because a larger percentage of sales was for more expensive homes. At the same time, sales of homes in what passes for inexpensive here - less than $600,000 - eroded significantly because many entry-level home buyers were knocked out of the market by tighter lending standards several months ago.

“If people are having trouble getting jumbo loans, it will put downward pressure on the high end of the market,” said Michael Carney, a finance and real estate professor at California Polytechnic State University Pomona. “People know it will be tougher to get loans. A lot of potential buyers will wait.”

There is no question that this has had an adverse impact on interest rates, especially in the jumbo loan segment (which is virtually the whole Bay Area). Still, the market will find its level at some point, and skittish investors will ultimately return to the market, although they are going to be a lot less likely to swallow many of the risky mortgage loans that the market has relied on for the past 3 or 4 years. In fact, several lenders have instituted new, more stringent underwriting guidelines to help make loans more appealing to investors in the secondary market. The flip side of this? It is harder to qualify for a loan, and if you have marginal credit or a small downpayment, you might be out of luck.

Courtesy sfgate.com

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A writer from BankRate.com has compiled a list of 10 features that can add value to your home. Keep in mind that the writer is based in Atlanta, which could make some of her projects impractical and/or not applicable. For the sake of discussion, here is her list of 10 projects that add value:

1. An updated kitchen. “Kitchens are critical,” says Robert Irwin, author of “Home Buyer’s Checklist.” “Today, people like a big kitchen with a lot of workspace.”

They look for solid surface counters and high-quality flooring, such as wood, laminate, tile or stone. And they want newer appliances in working order.

Even if it’s not huge, it should have “countertops that are serviceable, that aren’t going to have to be replaced soon and cabinetry in good condition,” says Alan Hummel, past president of the Appraisal Institute. “It has to be well-appointed and large enough to fit your needs.”

It also doesn’t hurt if it opens onto another room. “A lot of families are looking for that openness,” says Hummel.

Kitchens are probably the main focal point of the home, and a make or break room in terms of buyer appeal. In Pleasanton and the Tri-Valley area, granite is what most buyers look for, and it can transform an ordinary kitchen for a surprisingly low investment. Othe keys are stainless appliances, wood cabinets, and tile or hardwood flooring.

2. Modern bathrooms. Buyers are looking for “master baths that give a little room to roam,” says Hummel.

A big asset is a spa or a whirlpool tub. “I’m always entertained by the people who have them in the master bath and don’t use them,” says Ron Phipps, principal broker with Phipps Realty & Relocation Services in Warwick, R.I. “But it’s a big feature.”

Some other features buyers are seeking are separate showers with steam and/or multiple jets, a double sink, and a separate room for the toilet.

Another key are of the home, bathrooms are often a function of age. The newer the home, the more lavish the bathrooms tend to be. The master bath in particular goes a long way towards appealing to buyers and adding that luxurious feel to a home.

3. A well-appointed master suite. “People are really excited about master suites,” says Hummel. The wish list: A luxurious bathroom, lounging areas and walk-in closets.

No disagreement here, especially regarding closet space. You can almost never have too much closet space in the master bedroom, and a walk-in closet is ideal

4. Natural materials. “People like natural materials,” says Phipps. “Ceramic tile, hardwood floors, granite. We’ve gone back to a real appreciation for historically true materials. And simulated works as well. The look is very popular.”

If you have carpet, it should be a good product and well-maintained so that “a person doesn’t have to walk in and think, ‘I’m going to have to spend five grand right off the bat,” says Strong.

Right on the mark. Natural finishes and deep earth tone colors are currently in style. The old adage of making your home neutral does not really apply anymore, as buyers these days are looking for richer, deeper colors and natural finishes.

5. Curb appeal. First impressions are everything. A house that appears tidy and well-cared-for will sell more quickly and for more money. A good first appearance can add as much as 10 percent to the value of the home.

This one should probably be in the top 3. Curb appeal is a huge factor in the value of a home, as it helps create that all important first impression.

6. A light, airy, spacious feel. “People buy space and light,” says Myra Zollinger, owner/broker with Coldwell Banker Realty Center in Chapel Hill, N.C. “I have yet to have anybody walk into a really dark house and say, ‘I love this.’”

Richard “Dick” Gaylord, president-elect of the National Association of Realtors, agrees. “That’s a very big feature,” he says. “I haven’t sold many homes that aren’t bright and airy.”

This is another crucial factor. Homes that are dark create an uninviting feel with the buyers. Trim or even remove some trees near the home, eliminate heavy drapes and other window coverings that detract from the natural light entering your home. Skylights are always a good addition as well.

7. Good windows. “People are looking at exposures and windows,” says Phipps. “It’s been a cold winter for most of the country and energy efficiency is very important.”

Insulated windows are always a plus, says Strong. “Typically, they pay for themselves in five years,” he says. The cost for an average 2,600-square-foot home is estimated at about $10,000 for new windows, he says.

Definitely a good idea, especially on older homes. And new windows give the home a fresh, light look as well. And it is one last major expense the buyer will be able to avoid.

8. Landscaping. Mature trees “are worth $1,000,” says Strong.

And having outdoor spaces with touches such as pergolas and Victorian garden swings “can be very helpful,” says Phipps.

Conversely, you don’t have to spend a fortune on plants, either. Just keep it “typical with the neighborhood,” he says.

Landscaping is critical, especially in the Pleasanton and Tri-Valley area, since your yard often becomes an extension of your living space for 6 or 7 months of the year. One caveot, however. Mature trees are great, except when they are right next to the home and cut down or eliminate natural light from the interior of the home. Remember, light is your friend.

9. Lots of storage. Nothing beats an oversized garage, some attic space and plenty of closets. “If you have a two-car garage, do you have extra space for those things we all have — bicycles, lawn mower, snow blower?” says Hummel. “Space is important.”

A nice plus in the master suite? “His and hers walk-in closets,” says Irwin.

Amen to this one as well. If there is no space in the garage area, you can always invest in a high quality storage shed to increase the storage capacity of your home.

10. Basement. “If it’s dry, it’s a plus,” says Kenneth Austin, co-author of “The Home Buyer’s Inspection Guide.” “But it’s a negative if it has water problems.”

A finished basement adds even more value. “Ten years ago, nobody cared,” says Mittenbuler. “Now everybody wants them.”

That’s nice, but we don’t have basements in Pleasanton and the Tri-Valley. In many cases, the 3rd bay of a 3 car garage functions as the basement in the Bay Area.

In summary, appeal is the key factor for how much your home sells for, and how quickly. But appeal is an elusive subject that does not necessarily conform to checklists or easy formulas. As always, it is best to consult with a design consultant or an experienced real estate professional for how to best increase the appeal of your home.

Courtesy of Yahoo News

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This past week saw some turmoil in the mortgage market, with stories and rumors of local and national mortgage lenders going out of business, or unable to fund (provide the funds) existing loan commitments. In other words, buyers and sellers could be days or even hours away from closing, and find out that the lender will not be able to provide the mortgage funds to close escrow. Needless to say, this has created much uneasiness in the local real estate market. So what is going on here?

First, a brief explanation of the mortgage business. Mortgage companies, including large lenders like Countrywide and GMAC, make their money by originating loans and subsequently selling them to investors in the secondary market. Once a loan is closed, it essentially becomes like a bond, and some investors are attracted to the return and the historical safety of mortgage loans on residential real estate. Mortgage companies will use lines of credit to fund the loan (provide the loan funds to escrow), and subsequently sell these loans in the secondary market. Mortgage companies are normally not lending their own money, but rely instead on two things… availability of credit to provide the funds for the loan until the loan can be sold, and an active secondary market with investors willing to purchase the loans. If one or both of these conditions become problematic, then the mortgage company’s ability to provide loans becomes in serious jeopardy.

What has happened is that with all of the well-publicized problems in the sub-prime (higher credit risk/low down payment) market, and the subsequent concern about mortgage loans in general with the national real estate downturn, the secondary market has been thrown into turmoil. Investors have been less inclined to invest in mortgage loans, and have been demanding higher returns, which will lead to upward pressure on interest rates to make the loans more appealing. There is also problems with pricing in the secondary market, as there is uncertainty in the secondary market in terms of pricing (determining what the loans are worth) and assessing risk. And when the mortgage lender is unable to sell their loans, or unsure what the market pricing will be, they will not be able to lend for very long, because again they are funding these loans on borrowed money (lines of credit). In short, it is the secondary market that provides liquidity to mortgage lenders, and when the secondary market is in turmoil, then it effects all mortgage lenders in their ability to provide funds and/or keep rates at attractive levels.

At the end of the day, this situation should work itself out, as all markets eventually do. In the meantime, be aware of who the lender is if you are in escrow, and perhaps make sure you are dealing with a large national lender, or better yet, a bank or savings & loan, who usually are in a better position to access funds to fund their loan commitments. And it is certainly a good time to deal with seasoned professionals, both in the mortgage side and the realtor side, as they are better able to deal with volatility and potential problems.