http://pleasantonweekly.com/print/story/print/2008/06/27/troubled-market


Pleasanton Weekly

Cover Story - June 27, 2008

Troubled market

Housing sales, prices down, but Pleasanton better than most

by Jeb Bing

Jim Lavey has seen it all. A Realtor for the last 35 years in Pleasanton where he has lived since 1959, he has represented hundreds of buyers and sellers in good times and bad. Lavey, who is affiliated with Allied Brokers Real Estate, said that while these are not the worst of times--such as we saw during the dot-com bust or in the early 1980s when mortgage interest rates hit 20 percent and higher--these are not good times in real estate either, especially for sellers.

For buyers, who have good credit under tighter lending rules, these may be the best of times with some homes in Pleasanton that sold two years ago for $999,000 now being advertised for $100,000 less. Plus mortgage interest rates, while higher than a year ago, are still at historic lows.

Even with more than 324 homes on the Pleasanton market today, only 11 are bank-owned because of short sales when banks took over the mortgages, or foreclosures, where the owners simply walked away. This compared to 24 bank-owned homes on the market in Dublin this week, 50 in Livermore, 121 in Brentwood, 514 in Antioch and 521 in Oakland.

In Washington, D.C., lawmakers are moving with a sense of urgency to approve a rescue-refinancing plan aimed at stemming the tide of more than 8,000 new foreclosures a day that lenders are filing across the country. Partly as a result, housing prices on average for the country have plummeted 15 percent from a year ago.

Prices are down in Pleasanton, too, but not by as much. According to Dave Stark of the Bay East Association of Realtors, there's been a 2 percent drop in the median sales price since the first of the year, with a home priced earlier at $825,000 now being marketed at $810,000. By comparison, prices are down 20 percent and more in Newark, Hayward and Union City, according to Bay East data.

Lavey pointed out that except for homeowners who bought in the frenzied peak sales and pricing markets of 2005-06, most here have equity gains that will still give them sizeable capital gains if they sell today at less than they might have received a year ago.

Carol Rodoni, president of Bamboo Consulting and a real estate industry expert and consultant who also writes several real estate columns for Bay Area newspapers, agreed.

"When you look at Pleasanton as a whole, and I come to the East Bay often, you find real estate in this city very protected," she said at recent town hall meeting at the Veterans Memorial Building. "First of all, you are almost fully developed out here. Basically you have a wonderful infrastructure. You have a diverse selection of apartments, condominiums, homes and various neighborhoods. You have a great school district. Even if you are commuting, you are still close enough to San Francisco and the Silicon Valley to make living here do-able."

"When I looked at some of the prices that you have here and what's really happened, I found that as recently as 1996, you could have bought a home here for $290,000," she added. "By 2004, you were already up to $722,500. You peaked at $831,750. Now you have gone down a little, but if you look at the current market, it's basically at about $780,000."

Rodoni said the real estate market in Pleasanton closely parallels the markets in Danville, Lafayette, Orinda and much of the mid-Peninsula in that they have been only nominally impacted by the real estate downturn that is troubling much of the country.

"When you think that there are places that have decreased in value 30, 40 and 50 percent and that you've had a decline about 13 percent, which is normal in a correcting market such as the one we're in, this is incredible."

At the same meeting, Major Jennifer Hosterman cited some of the strengths of Pleasanton that continue to attract homebuyers, even in a weak housing market.

"We have great schools, a vibrant downtown, good transportation and a diverse population," she said. "I will also tell you that the city's finances are in very good shape. I'm one of very few mayors in the state of California that can say that. For instance, if we had to buy a fire truck tomorrow, we could do it with cash on hand."

Rodoni predicted that the real estate market will remain troubled through the second quarter of 2009, when home sales and prices should start to rebound.

"If you own a home in Pleasanton and you can keep it, then keep it," she advised. "Because this is how real estate works: every 30 years, you add a zero. It's the magic of compounding. When you go back and you look at 1906, if a house cost $200, you move it forward and it was worth $2000. Move it forward another 30 years and it was worth $20,000. Then move it forward 30 years to 1996 and that same house was worth $200,000. If we keep going, someday it will sell for $2 million."

"Real estate is an asset that's available to everybody," she said. "You must have it in your portfolio to build wealth."

Lavey said that in today's challenging real estate market, sellers need to use the services of an experienced Realtor, listen to professional advice and scout the market themselves to see what similar homes are priced at.

He said homes fall into price point categories that have $100,000 increments. Right now, there are about 30 homes in the $700,000-$800,000 price point category and another 30 in the next category priced between $800,000 and $900,000. Prospective buyers work with a Realtor first to identify their housing interests and to obtain pre-approved financing through a lender in a specific price point category. The Realtor then shows the buyer five or six of the best homes in that category, but not all 30.

"Today is far different from 2005 when buyers were standing in line with multiple bids for many Pleasanton homes, no matter what the condition," Lavey said. "Many Realtors use stagers who come into a house and prepare it for sale, even if it means recarpeting, painting over wallpaper, sending much of the furniture to a storage service."

"My job, and it's not always an easy one, is to tell the owner that even though they've lived with their wallpaper and green carpeting and turquoise bedroom for years, they have to make changes of they want to sell their home in this market," Lavey explained.

"You want your house to be as sharp as you can make it because we're in a very price sensitive and fast-changing market," he continued. "You want to be where you need to be with the price right from the start. If you're not, Realtors won't show it and no one will make an offer. The risk is that the longer it's on the market, the greater the chance it will lose another $10,000-$25,000 in market value and you don't want that to happen."

Sales are also time-sensitive as well as dependent on price.

"We're almost to July," Lavey said. "Our market will start to shut down come mid-September to October, and then we will start to see people who have to sell drop their price."

"Because now, with school starting at the end of August, most of the homes in Pleasanton, including many in the Vintage Hills area where I have several listings, really appeal to families. They want to be in their new home with the kids ready for school."

"As bad as the market is across the country, and even weak here in Pleasanton for seller, it's a good time for buyers," he added. "This city continues to attract families, interest rates are still low and financing is readily available with good credit."

Comments

Posted by House Hunter, a resident of another community
on Jun 29, 2008 at 10:34 am

Well it's a "nice" article, but pretty short on facts and figures... expecially any year over year data. But then again, asking realtors for their opinion of whether it's time to buy is like asking a barber if you need a haircut. I noticed the total absence of mention of San Ramon... which is what my wife and I hear when we talk to sellers about where they are moving too. We find the pricing in Pleasanton not really reflecting what will sell and the same homes we saw in October are still on the market today in June. This is why we're looking in San Ramon as well - pricing in Pleasanton is still defying logic (and sales).


Posted by Born and Raised, a resident of Jensen Tract
on Jun 29, 2008 at 7:06 pm

House Hunter (or should I say bargain hunter):

Please don't let the door hit you on the bum on the way out. There is a reason that San Ramon has a wind festival every year. Because it's WINDY - all the time. Enjoy your wind.


Posted by Agreed, a resident of Another Pleasanton neighborhood
on Jun 30, 2008 at 6:44 am

Born and Raised;

Good point. Nor does San Ramon have the schools Pleasanton does. Or the parks or a "real" downtown.

If price is the driving factor, San Ramon can have the "House Hunter."


Posted by Doo Doo Brown, a resident of Valley Trails
on Jul 1, 2008 at 1:47 pm

San Ramon..... was that person just trying to compare San Ramon vs. Pleasanton? Why not compare the difference between Palo Alto and East Palo Alto?? If price is your main concern, then why not try the city of Tracy right over the altamont? Houses are half the price and are a bit newer...the only drawback is living in a town very similar to Hayward....
But if your looking to find a beautiful neighborhood, and great people...then please visit Pleasanton. Remember to drive slow and enjoy the view. Tree lined streets and a family atmosphere is what you'll find here. A child-friendly park is always in walking distance, and the general population doesn't seem as angry as the rest of the bay area. Before I moved here, I thought the smiles were because everyone in pleasanton had money (which I found to be false)... Now I know that its because there is a sense of community, common courtesy, and an overwhelming sense of 'right vs. wrong' in Pleasanton. People simply live life the way your supposed to live it...


Posted by Objective view, a resident of Vintage Hills Elementary School
on Jul 30, 2008 at 6:05 pm

As a resident of Pleasanton, I do want to believe that housing values are stable. However, when surrounding communities decline in value, it also weighs on pricing in quality communities. There are over 50 notice of defaults in Pleasanton. Many of these are as a result of purchases from the 2004-2006 timeframe. If you search Lavey in the archives, you will find an article about the real estate market in 2004. Examples of $100,000 price increases occurring literally overnight. Those are the jumps in value that are not sustainable in a market. In today's market, when you see a similar home, selling for $100,000 less 2 doors away, a seller can't expect a bank to appraise and lend to a new buyer without that buyer covering the $100,000 with his own cash. In fact, reputable lenders are requiring 20-25% down on homes in the current market, and show cash available after close of 6 months of payment. That is a lot of cash. Homes do fall out of escrow do to appraisal contingencies, even in Pleasanton. The facts are that in the past, 2004-2006, you could buy a home that jumped in value by $100K overnight, by obtaining a loan from a lender for 100% of the value, showing no income documentation. That type of purchasing, buy unqualified buyers, edging out qualified buyers on overpriced property, is what gives us the false sense of value. It is very difficult to let go of a high value on a home in your mind. The bottom line, if you need to sell your home in this market, lower the price. If you are interviewing realtors to sell your home, ask when the last time they sold a home was? If they haven't sold a home this year, 2008, what make you think they can sell yours? For the majority of real estate agents, the last home they sold was in a market where you put up a sign, and sorted thru offer letters, each higher than the last. Those days are long gone, those lenders are broke, and those homeowners are struggling to pay their mortgages in every community. Look at realtytrac.com if you need further evidence. If you go to zillow.com, enter in a home address, look at the 10 year value chart. The appreciation you see as a mountain after a slow steady climb, from 2004-2006 does not exist any longer. Take a look at the 2003 to 2004 estimate, that most closely reflects the value of your home today. If you have to sell, don't make the mistake of hiring a real estate agent with limited experience, or one from out of the area. You will end up riding the market down, like those who have been on the market for the last 90-120 days. Houses don't sell for too cheap, if you price too low, you will get multiple offers, even in this market. If you get multiple offers on your home, and they are all 10-15 percent below your current asking price, guess what, that is closer to the real value of your home than your asking price. Don't rely on a friend with "some real estate background" for real estate advice. If you don't believe your agent, ask to speak with his/her broker. The broker has years of experience. Hire a real estate agent with 10-20 years of experience as a full time real estate agent. That will guarantee they know how to sell a home in any market.


Posted by Lily, a resident of Kottinger Ranch
on Jul 31, 2008 at 12:53 pm

San Ramon? Really? You want to move to San Ramon? Agreed, there are lots of more reasonable newer styled homes in SR. And i will agree that the schools are recently built. But seriously... ask a homeowner in the Shapell/ Lennar developments how they feel. All the upgrades that they paid for two years ago are being given away for free today. Ask an appraiser how the value homes out there.. there's not many "adds" they can list anymore.
After you research all that then tell me you want to move out of pleasanton.



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