So now that everyone has spent the last decade in a frenzy to put in granite counter tops, the New York Times is reporting that there is apparently an elevated risk of radon contamination from some of the granite being used in homes. Great. So my half dozen trips to the granite dealer to pick out the “perfect” slab, the endless discussions about which bull nose edge to use, and the decisions about where to put the seams and whether to do an over-mount or under-mount sink have potentially added to my long (and growing) list of threats to my health?

Somehow, this takes all the joy out of it. For one thing, I think it would be awkward at Thanksgiving trying to carve the Turkey in one of those Haz-Mat suits with the oxygen tanks, and screaming at the top of your lungs “Aunt Phyllis, do you like dark meat or light?”. Or having friends over for a wine and cheese party in your new kitchen, and then promptly treating your departing guests to a Karen Silkwood shower in the foyer before they leave, complete with flashing red lights and sirens. It seems like a lot of work. Maybe I should have just put in tile after all.

Now before you go out and rip out all of your granite, it looks like the risk is relatively low in most cases:

Allegations that granite counter tops may emit dangerous levels of radon and radiation have been raised periodically over the past decade, mostly by makers and distributors of competing counter top materials. The Marble Institute of America has said such claims are “ludicrous” because although granite is known to contain uranium and other radioactive materials like thorium and potassium, the amounts in counter tops are not enough to pose a health threat.

Indeed, health physicists and radiation experts agree that most granite counter tops emit radiation and radon at extremely low levels. They say these emissions are insignificant compared with so-called background radiation that is constantly raining down from outer space or seeping up from the earth’s crust, not to mention emanating from manmade sources like X-rays, luminous watches and smoke detectors.

Still, if you are unsure, it might be smart to get a radon test if it will help you sleep better. Or line your kitchen walls in lead. But one thing is for sure… granite counters still look the best!

Popularity: 88% [?]

If you are in the market to buy a home, you have no doubt heard the term “Short Sale”. No, this does not refer to sellers who are under 5′ tall. A “short sale” is industry jargon for a seller who owes more on the property than what it is worth. The seller in this situation needs the lender to accept a “short” loan payoff, or in other words accept less than the full amount due on the loan. So how does that effect you the buyer?

First of all, short sales require the lender to agree to the reduced pay off. Therefore, when you negotiate on a short sale, you are negotiating with two parties: The seller who owns the property, and the lender who holds the loan. You need the approval of both parties to get your offer accepted. It is important to make sure the seller has received preliminary approval from the lender, because if the lender does not agree to the terms you will have no contract. Therefore, it is important to question the seller and/or the seller’s agent to make sure the process is in place, and that the bank will cooperate. This process requires the seller to submit documentation to the lender demonstrating hardship, along with evidence that the market value is less than the outstanding loan.

Secondly, be prepared for a long process. Dealing with banks in a situation like this can sometimes be comparable to getting allergy shots… it can be a long, drawn out, and ultimately aggravating experience. Often, you are dealing with layers of bureaucracy, and this can slow the process down. So short sales usually require patience on the part of buyers. It is also important to have interest rate protection during this process. In a normal transaction, buyers will typically lock in interest rates for 30 to 60 days. That may not be enough time for a short sale, and you want to avoid being 45 or 60 days into the sale only to find out that your rate lock expired, and your interest rate just went up 1/4%. Plan for the worst case. It is good practice to include in the purchase agreement a time frame for lender approval, with a clause that gives the buyer the right to cancel the transaction if the lender does not approve the sale after a certain period of time. This way, as a buyer you are free to pursue other properties if the lender is dragging their feet.

Thirdly, be prepared for potential issues at close of escrow if the owner is still living in the home. Often times, sellers in this situation are angry and frustrated, and on occasion can damage the property, remove appliances, fail to maintain the landscaping, leave the property dirty and full of debris, or take other actions that will cost you money. Be sure to do a walk through prior to close of escrow. Since the seller theoretically has no money, any issues at close typically have to be negotiated with the bank.

Lastly, lenders like to sell properties “as is” in these situations, as they do not want to get into negotiations over property repairs. This is okay, but make sure you as a buyer have the right to inspect the property to your satisfaction, and the ability to cancel the contract if the inspections uncover issues with the property. And if there are issues that come up, you can certainly request that the bank resolve them. They are under no obligation to do so, but if the request is reasonable and it makes business sense for the bank to agree, they usually will.

Short sales can be fairly straightforward, or very complicated. This depends on the stance of the lender. Some banks are much easier to deal with than others when it comes to short sales. As always, you should seek out an experienced, professional real estate agent to help you navigate these waters.

Popularity: 20% [?]

We’re all guilty of it. We read all the doom and gloom headlines about the national and California real estate markets, and automatically project it into our own market. The truth is that while overall the market is sluggish, some markets are much weaker than others. The Central Valley and the distant reaches of Contra Costa County are much worse than the Tri-Valley, Silicon Valley, and the Peninsula (when is the Peninsula market ever bad?). What are the factors that determine whether a given market is performing well, or is mired in a severe real estate recession? In my opinion, there are 5 main factors that determine the stability of a suburban real estate market.

1. Schools. Many buyers select communities based on the quality of the public schools. The better the schools, the more likely buyers will choose that community, even if they don’t have school age kids. Certainly, it is easy to see that the communities with the best schools are faring the best in the current market. Pleasanton, San Ramon, Danville, Palo Alto, Los Altos, Lafayette, Moraga, and Orinda, for example, all have top quality schools, and all are outperforming the rest of the state in terms of the health of the real estate market. Similarly, Tracy, Stockton, Antioch, and other cities with less attractive public schools are struggling right now.

2. Commute Accessibility. The closer the community is to major job centers, the better the demand is. Given a choice, buyers will generally opt for a shorter commute when all things are equal. In fact, they are typically willing to pay more for a shorter commute. Conversely, a community with a long commute will have to be less expensive to compete. It is a trade off: Time and commute expense vs. a bigger, newer house. The problem is that gas is approaching $4 per gallon, and some commuters are finding out that there are other costs to commuting that they downplayed, including time away from family or loved ones, stress, frustration, wear and tear, and fatigue. It makes sense that communities closer to job centers typically fare better than outlying communities with longer commutes. Palo Alto, Los Gatos, Orinda, Lafayette, Cupertino, Los Altos, Burlingame, and San Rafael all offer excellent commute accessibility, and are relatively stable markets. Tracy, Antioch, Stockton, Manteca… well, you get the idea.

3. Jobs. Suburban cities that have a strong corporate presence and an abundance of higher paying jobs also perform better. When a community has an abundance high paying jobs, then the average income in the city tends to be higher, the demand for housing stronger, and the schools tend to be better. San Ramon, Pleasanton, Cupertino, Palo Alto, and others have many major employers in the city limits, and this helps create demand. Oakley, Byron, Brentwood, Manetca, etc are not considered major corporate job centers, and the market in these communities is bordering on abysmal.

4. Supply Limits. When cities have limited land availability, they tend to have a stronger real estate market. There can be natural barriers to supply (the Bay, mountains, city limits, geography), and there can be man made impediments to supply (slow growth politics, lack of water or sewer resources, exorbitant fees). But the fact remains, when there is an abundance of buildable land, the market tends to be more volatile, as any uptick in prices will invite home builders to build more homes. And any reversal in the market typically gets amplified as well, as ample land means aggressive builders will often be saddled with unsold inventory, which puts pressure on the builder to cut prices and/or offer incentives to get their homes sold. This is a major part of the reason the Central Valley real estate market is having such a difficult time right now… there is a huge number of unsold new homes available, and in a motivation contest, a builder will win every time. Builders will do whatever it takes to sell their inventory, and this further depresses the prices of resale homes.

5. Income. Cities with higher median income typically fare better than markets with lower median income. Simply put, people of higher means usually have more financial resources to weather any storm, and often have more equity in their homes. First time buyers and moderate income buyers tend to gravitate towards the less expensive markets where they can get a decent home for less money. Again, this is a big factor in the disastrous markets in the Central Valley, where many buyers got in for little or no money down, and do not have the resources to wait out the market. The foreclosure rates in cities like Stockton, Antioch, Tracy, and Mountain House are significantly higher than the high income areas of Pleasanton, Danville, Alamo, Lafayette, Palo Alto, etc. Cities with high foreclosure rates experience a much more severe decline in prices, as distressed sales drive down prices.

In summary, how a community scores on these 5 factors will go a long way towards determining how stable the real estate market is. Of course, everyone would love to live in Palo Alto or Pleasanton. But the reality is the most stable real estate markets usually tend to be the most expensive, so at the end of the day buyers have to balance this equation with what they can afford.

Popularity: 15% [?]

Okay, we all know the Pleasanton/Dublin/San Ramon real estate market is struggling overall, but sometimes it is helpful to gain some perspective by looking at how good we have it, relative to some other markets. I have a realtor friend who has a listing in Antioch right now, and her story certainly helps us understand that our market is hot compared to some of the outlying markets in the central valley.

First, some background. Pleasanton currently has 186 detached homes on the market, Antioch has 1069. Antioch had 59 pending sales in October, and Pleasanton had 45.

This particular house in Antioch is just over 2000 sq ft, with 4 bedrooms, 2 baths, and a 3 car garage. It is a relatively new home (6 years old) in a desirable area by a good builder.

In May, the house across the street from this home sold for $745,000. It was a larger home, with over 2500 sq ft. The subject home was listed in May for $649,000, which seemed like a good price. However, after 2 1/2 months on the market with no offers, the owners lowered the price to $599,000. Still no offers, and very slow activity. The owners have a mortgage balance of about $530,000 on the home, so they did not have much equity. After a couple of months at $599,000, the wife lost her job, and they became extremely motivated to sell. They lowered the price to $449,000, which is far below their loan balance. So it is now a short sale situation, where the bank will hopefully agree to take less of a loan payoff as an alternative to taking the house back in foreclosure. The agent has basically given up, and does not even list a price on the home flyer… instead, she put “call for price”.

The Antioch market is a disaster. By some counts, as much as 40% of the homes for sale are distressed sales, either foreclosures or short sales. On top of this, you have builders with unsold inventory who are willing to give away whatever is necessary to sell their glut of unsold homes. Now this is a tough market.

Compared to this situation, the Pleasanton and Tri-Valley market is doing very well. Our inventory is relatively stable, and although sales levels are down from the summer, there is activity, and some homes are even selling in less than a week, often close to asking price. The intent here is not to rejoice in other people’s problems, but rather to help appreciate how good we really have it here.

Popularity: 16% [?]

The old saying in real estate is location, location, location. Certainly this is true on macro level. An average home in Manhattan is certainly worth more than an average home in Jackson, Mississippi. But as the Pleasanton/Dublin/San Ramon market slows, the location of a property takes on more significance in terms of how quickly the home will sell, and at what price. The reason is simple. As the market slows, there are more houses for sale, and less pressure on the buyer to compromise over homes.

In today’s market, buyers have become very deliberate, and are far more sensitive to “intrinsic value” factors such as location, condition, age, view, lot size, amenities, and floor plan. So what is a desirable location, and an undesirable location? I am not talking about comparing neighborhoods within a city, but rather homes within a neighborhood. Here are some characteristics of homes that have challenging locations:

Busy Streets. If a home is located on a busy street, it is not as desirable in the marketplace. A busy street, by the way, is considered by most buyers as a street where young children can’t play in the street because there is too much traffic. Because many of the buyers today have young children, or are planning on having young children, they will typically shy away from homes on busy streets. In effect, you are losing a fairly large percentage of potential home buyers. Whether rational or not, the fear that a busy street instills on parents is very real. Typically, buyers who buy homes on busy streets have older kids, where this is not as much of a concern, or no kids at home. And savvy buyers know that even if they do not have kids, it will likely be more difficult to sell the home when the time comes, so they are more conservative in what they are willing to pay. If it is a corner lot, and the busy street is on the side of the property, it also becomes problematic.

Close to major roads or freeways that generate noise. If there is a major road or freeway close to the subject property, this will also likely impact your home in the market today. Buyers typically want peace and quiet, not the constant sound of traffic. And if your home backs up to a major road or freeway, it will definitely impact your home. It is not very often that home buyers come to my office and ask “do you have any homes that back up to a freeway?” or “Can you find me something with a major road behind it? I love the sound of traffic!”.

Homes that abut commercial or other non-residential properties. Homes that abut shopping centers, commercial buildings, water treatment facilities, storage yards, industrial buildings, and other types of non-residential properties will often have a tougher time selling. They are usually not very appealing to look at, and can generate noise, odors, loitering, and other factors most buyers consider negative. This can also go for schools, although this is more of a hit and miss proposition. Some do not like the noise associated with a school, while others consider it “happy noise” and are not bothered by it. It depends on the buyer.

Homes that abut higher density condos or apartments. Single family homes that back up to apartments or high density condos will typically have a tougher time selling because there is a perceived lack of privacy and more potential for noise from neighbors.

So does this mean that homes with location issues won’t sell? Of course not. Any home will sell if it is priced correctly. It does mean, however, that it will sell for less than a similar home in a better location, all things being equal. All things being equal, buyers will overwhelmingly opt for better locations if there are 2 similar homes to choose from. Because of this, there is always a discount for homes in less than desirable locations. The amount of the discount will vary, however, depending on market conditions. When the market is hot or overheated, and there are multiple offers and intense competition from buyers, the discount for inferior locations is much less, as buyers are forced to compromise and be more accepting of homes that are not perfect. Even if they don’t start out that way, after losing 2 or 3 homes in multiple offer situations, buyers tend to get discouraged, and tend to settle for homes that are not perfect. Conversely, when the market is stable or slow, and buyers have the luxury of choice, location becomes a much bigger issue. In effect, homes with inferior locations need to be discounted more heavily to attract interest from buyers, and they will typically take longer to sell, as you must go through more buyers to find one willing to overlook the location.

There are also offsets that can help to mitigate location issues. For example, many homes that back to busy streets or freeways have over-sized lots. This can help to offset the location issue, but the home will likely still be discounted by the market.

Location is unfortunately one of the intrinsic value items that you can not change. You can only adjust the price to make it more attractive to potential buyers.

Popularity: 16% [?]

Okay, first let’s get the bad news out of the way. It seems like every week we are hit with bad news about the housing market, and this week is no exception.

* The California Association of Realtors predicts home prices and sales will be lower next year. It forecasts sales of existing homes will be 9% lower. The good news: It is less than the almost 23% drop in sales this year.

* They also predict a drop in the median home price statewide of 4%, down to $553,000. The good news: The prime markets in the Bay Area are expected to fare much better than the inland areas of the central valley and Southern California. Statewide statistics will continue to be misleading with respect to the Pleasanton, Dublin, San Ramon, and Tri-Valley real estate markets.

* There is no question that there is some price erosion right now. The good news: If you are a buyer, there has rarely been a better time to buy a home.

* The mortgage industry, along with the federal government, is taking steps to stem the tide of foreclosures nationwide. There are plans for a new mortgage industry coalition, comprised of 11 of the largest mortgage bankers nationally, aimed at assisting financially strapped homeowners in desperate need of assistance. The good news: some help is on the way for some borrowers in dire straits.

I’ll say it again…. Pleasanton, Dublin, San Ramon, and the Tri-Valley region are going to be fine. Sure, prices have slipped, but they went up 40 to 50% between 2001 and 2005. We are still way ahead. And the good news is that I just got an email from the Oil Minister in Nigeria, and I can make some serious money just by helping him transfer some funds into my bank account. So things are indeed looking up!

Popularity: 15% [?]