San Francisco Peninsula Real Estate

A major community get together place in Menlo Park is the Plaza on El Camino between Ravenswood and Santa Cruz Avenues one block from the CalTrain Station where Kepler’s Bookstore, Cafe Borrones, and the British Bankers Club are located.

My office is two blocks down El Camino and I come to this Plaza on a regular basis especially when the weather is nice. Nothing better than sitting outside Cafe Borrone’s with some friends for lunch or after work.

Please share with me your opinion of Keplers, Cafe Borrone, and the BBC.

The Federal Reserve’s program to buy Mortgage Backed Securities (MBS) will end on March 31, 2010.

Many analysts believe this will cause mortgage interest rates to increase.

While there are many different opinions on where mortgage rates will increase to, the general consensus is 5.5% to 6%.

For more information, please review Paul Smalera’s post in the CBS MoneyWatch.COM.

Last summer, I was chosen by Habitat for Humanity to be their exclusive buyer agent for Habitat’s Neighborhood Revitalization Program. Coldwell Banker and I donate the majority of any commissions earned on these purchases back to Habitat.

This Habitat program has been funded in part by contributions from the City of Menlo Park.

The City has considered buying properties in Belle Haven and doing the rehab work. Instead the City has made a wise decision IMHO in helping Habitat with their program. The bottom line is Habitat can do a better job doing what they always have done than the City that has no experience in these types of programs.

Last night, the City authorized additional funding for this program.

This will allow Habitat to continue their mission of restoring abandoned dilapidated homes to provide low cost affordable housing to deserving families.

For those unfamiliar with Habitat’s program, let me provide a little information.

Habitat purchases foreclosure homes (REOs), locates a deserving family that will occupy the home provided the family provides a number of hours in “sweat equity” during the rehab of the home.

After purchase, Habitat funds the rehabilitation of the buildings. This funding is combined with volunteer labor (many local contractors provide their services for free) and the labor of the occupant family.

Upon completion of the home, the new family “purchases” the home from Habitat who provides a ZERO interest loan to the new family. This allows the home to be affordable to families who must earn less than 50% to 60% of the median County income.

This is a wonderful program helping deserving families obtain safe quality housing as well as helping the larger neighborhood by removing blighted homes from the neighborhood.

Due to this program, several families will be moving into their new home within the next few months.

There are two ways to buy foreclosures:
1. Go to trustee foreclosure sale on the “courthouse steps”  with cash for any offer you may make.
2. Wait until bank forecloses takes title, and lists property for sale on mls (REO).

#1 is are not for inexperienced investors (not saying you are )
#2 is a good way to go - depending on area, there may be a good stream of new REO properties coming on market.  you will work with a real estate agent to prepare offer just like you would on other non-REO houses on the market. competitive bidding on these. must be solid solid on financing or pay cash.

Please let me know if you have questions or would like more information on the above.

Here’s how the foreclosure process works in California and it will help you understand the dollar amounts quoted.

To start the foreclosure process, lender must file notice of default (NOD).

At the present time, I would say many lenders wait until 6 to 12 months of missing loan payments before filing NOD. By law, they can file after one missed payment, typically.

From that point, owner has 3 months to bring missing payments current.

During this period, the lender if they publish any amount, it will be just the amount of the missed payments.
So if you see amounts like $11K and $30K, they are probably the total amount due on missing monthly payments.

After the 3 month period, owner has to pay off loan IN FULL including principal.

During this period, the numbers “published” will look like $254K or $586K - principal amount of loan plus all missed payments.

If owner does not pay in full 21 days after the end of the three month period, lender will set for sale at foreclosure auction.

Typically opening bid will be the total amount due. Buyers will need to pay cash on the spot. Recently, I hear reports of some sales going off below the total amount due. Often trustee sales are cancelled or postponed.

Hope that helps explains the process. I am happy to answer any questions you may have about the process.

Of course, any home owner who is faced with foreclosure should IMHO, contact an attorney to obtain legal counsel on the process and one’s specific situation. 

Arn

I have written on several occasions about the ability to use retirement funds to purchase real estate.

There is a window of opportunity to convert IRA funds into Roth IRA funds and spread the tax impact out over two years.

As you probably know,  for “regular” IRAs, before-tax funds are placed in an IRA where it grows tax free until the funds are withdrawn and taxed at withdrawal.  In a Roth IRA, “after” tax funds are placed in a Roth IRA and they grow tax free and are TAX-FREE upon withdrawal.

The general theory on IRAs is to put money in and then withdraw after retirement when theorectically your tax bracket will be lower. Of course, with all our government borrowing and defecit spending, who knows tax rates may be higher 10 to 20 years from now than they are today.

Currently, most individuals due to a new law are able to convert IRA funds to ROTH IRA funds and pay the tax due on said conversion over a 2 year period.

Of course, everyone needs to check with their own tax advisor before making any decisions. Tax law is complicated and beyond my expertise but I know enough to suggest that this is an option you may want to consider.

Jeff Brown provides additonal information on this concept.

I have helped several clients purchase investment property with retirement funds, let me help you too!

so says Warren Buffet…………

The Real Estate Bloggers report that Warren says:

“within a year or so, residential housing problems should largely be behind us”

“prices will remain below “bubble levels”"

“many families that couldn’t afford to buy an appropriate home a few years ago now find it well with their means”

Click here for full article.

I would say Don’t bet against Buffet.

Let’s take a look at inventory levels for single family homes in Palo Alto, Menlo Park, and San Carlos over the past 12 months.

As we can see, the number of homes for sale in Palo Alto, Menlo Park, and San Carlos dropped during 2009 reaching a low right around the holiday season where many homeowners just take their homes off the market.

Since the first of the year inventory levels have increased:

Currently, there are about 90 homes for sale in Palo Alto and Menlo Park and about 50 homes for sale in San Carlos.

What is striking is that the number of homes for sale March 1, 2009 compared to March 1, 2010 is that in all three cities, current inventory is much less than 12 months ago.

Inventory in Palo Alto has dropped from 135 to 90.

Inventory in Menlo Park has dropped from 130 to 90.

Inventory in San Carlos has dropped from 85 to 50.

This bodes well for our real estate market. When inventory drops, buyers are competing for fewer properties.

We are starting to see multiple offers in Palo Alto, Menlo Park, and San Carlos especially in the “entry level price range” - $1.2M and below for Palo Alto and Menlo Park and $1M and below in San Carlos.

Let’s take a look at the Market Action Index for Palo Alto, Menlo Park, and Palo Alto.

A value above 30 indicates a sellers’ market. A value below 30 indicates a buyers’ market.

As you can see the market action index has increased steadily over the past 12 months. What was a very “cold” market - ie poor for sellers - 12 months ago has “warmed” significantly over the past 12 months. It still is a buyers’ market but much less so than 12 months ago. If the Market Action Index continues to improve at the same rate, we will see a balanced market in about another 18 to 24 months. Of course, no one can predict the future and many things can either accelerate or reverse the trend of the past 12 months.

The market action index in Palo Alto has increased from 18.5 to 21.5.

The market action index in Menlo Park has increased from 17.5 to 21.0.

The market action index in San Carlos has increased from 16.5 to 20.5.

Let’s look at price per square foot in Palo Alto, Menlo Park, and San Carlos.

The median price per square foot has decreased minimally in all three cities.

So what’s my overall take?

Prices certainly has not yet started to jump up but the market is getting stronger - inventory has dropped and the market action index has increased. We are setting the stage for a solid market moving forward.

As a buyer, I would not be in any great hurry to buy but we are near the bottom. So keep looking and when you find a house you like that you can purchase at a good value, go for it.

After 32 years in the local real estate market, I can tell you when the market turns upward, it turns upward QUICKLY. Interest rates certainly are headed up. So don’t make a “panic” purchase as many did in 2004 and 2006 but be realistic.

Another excellent REO opportunity has come on the market in the Belle Haven area of Menlo Park.

1150 Hollyburne Menlo Park is a 2 bedroom 1 bath home listed by New Light Realty at $287,500.

Unlike many REOs, this home is actually in pretty good shape with an update kitchen and bath. Yards and fencing are in good shape. New laminate floors have been installed. Some fresh paint and maybe some new carpet in bedrooms and this home will be in move in condition.

Click here for more info

Here are a few videos of the property.

Call me if you would like to see this property and learn more about these opportunities.

I had the pleasure of touring a fantastic new listing in White Oaks about 2 blocks away from my home since 1986.

335 Pearl Avenue is listed by an old family friend, Jean Rigg of Menlo Realty.

This 3 bedroom 2 bath home is listed at $997,000 and contains 1690 sf of living space.

Hardwood floors, open beamed vauled ceilings, very ample room sizes - you should see the bathrooms!

Offers will be presented Friday Feb. 26 at Noon.

I would expect this property will recieve multiple offers like many other San Carlos homes priced under $1,000,000 have recently.

Here are a few pics:

The property is on a corner lot so it does not have a large rear yard.

Other than that, it is n excellent house with good bones and in good condition.

Let me know if you would like to take a look at this home.

To search for other San Carlos homes, click here.

I previewed the following East Palo Alto for a client of mine today.

2384 Oakwood Drive 3 bedrooms 2 baths $209,000.

This is a REO property.