| Cover Story - Friday, 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."
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