Real Estate and Real Life in the Wine Country

George Houghton a CPA in town who is specialized in Real Estate gave a seminar this Friday. His concepts on Real Estate and Real Estate investing in the Bay area are profound and supported by numbers. Please remember, these are concepts, give or take a few years.

Rules of inflation (excluding high tech stuff and salary) : every 30 years add a zero. Think about the value in gold, rent, ticket to the movies etc

For Real Estate: every 10 years values double , every 30 years ad a zero.

Your first house is free. You have to live somewhere and if you take the cost of renting a home, compare that to all the tax benefits of owning a home, it’s almost the same. Rent is paid to someone else, mortgage is paid ‘to yourself’. Of course this does not work for a million dollar home but for an entry level/median home.

Every rental cost about 10% of the value. Yes, this is true, think about it, I look forward to your reaction!

And last but not least: every $10K spend on a car is the same as $100,000 is Real Estate and 1 million in retirement… I know you have to enjoy life but it gives something to think about an spend more consciously.

By the way: George Houghton wrote a book: Unleash the power of Real Estate.

Have a great weekend!

  Mirjam (mirjam@c21alliance.com)

Did you see the new homes at Bridge Trail at the North Village ? It’s developed by Hugh Futrell, a great developer who does unusual projects. He also build The Burbank on seventh street in Santa Rosa. Both developments have something special. All the homes at Bridge Trail come with solar panels a great way to lower your PG&E bill, actually there are tax rebates that can be claimed too!

The homes in the newer subdivisions are built on small lots (post stamp lots), the beauty of the Bridge Trail projects that it comes with open space/trails, kids will be able to walk to the Jack London Elementary and Piner Olivet Charter Middle school. And don’t forget the North Village club community center with pool gym etc.

The homes are priced in the low $400K range, should you be looking for a new home: there is lots of value that come with these homes. Tell them Mirjam de Rijk sent you and say hi to Stan and Juan.

Yesterday’s Wine club party at Seghesio Winery in Healdsburg was great, 400 pounds of crawfish was flown in from New Orleans (Peter’s wife comes from New Orleans) and that was served cajun style with red potatoes, corn and sausage. It came with Gumbo, that was absolutely the best I had.Last time I mentioned the 2004 Venom, a Sangiovese from Rattle snake hill (sold to members only), this time I need to tell you about Defiant, a new wine that will come out next year. Peter shared some of it to sample: it is still very young but already delicious and my expectations are extremely high for when it come out next year. It’s a mix from some Italian vines, will have to ask again what’s in it since I did not write it down.

Oh, Seghesio is also a great place for a picnic: enjoy you picnic with a great glass of wine while enjoying a nice game of Bocce. It doesn’t come better than that: Sonoma County living at it’s best!

Have a great day!

Mirjam (707-486-2638)

With so much said in the news about foreclosures and short sales just some facts.

At this moment the bank owned properties are selling well, the lower price range of our market is selling, some bank owned properties were priced so low that they had more than 20 offers on them and I know of one property ( NW Santa Rosa) that went into escrow $100,000 over asking. It will be interesting to see the numbers when these transactions close.

Financial Title did sent me enclosed stat, an overview of the sub prime ARM’s that will mature the coming months/are maturing now. Sorry to say that quite a bit of these will end up as foreclosure. Banks are only interested to sell these properties as fast as they can.

While you have to be careful buying these (use a good Realtor), they are excellent opportunities for investors and buyers. Should you like to be on my ‘opportunities watch list’, just send me and email with your contact info so I can set you up. By the way, not only bank owned properties are great deals, sometimes a regular sale might be a better deal.

We are going to have a wonderful weekend, great for touring around Sonoma County an enjoy some wines. I did meet Pat Maier at the Chamber Expo this week, she was pouring an excellent 2005 Cabernet. Check out their website, you have to make an appointment to taste their wines, they are also available at some great restaurants in town (one was Willi’s Wine bar in Larkfield).

Have a wonderful weekend!

Mirjam (mirjam@C21alliance.com)

I know the market fluctuates all the time but I have been noticing that a lot of homes have been going into escrow, it has been rising over the last 5 weeks. It started slow but then it picked up. And yes, a lot of the homes that went into escrow also closed. Look at the statistics that I pulled from Broker Metrics a program that very conveniently pulls the data from our local MLS system.

The media is giving you info that the economy is going through the drain, the Fed will have to cut interest rates again. Perhaps they are right, but keep in mind John D. Rockefeller who said “The way to make money is to buy when blood is running in the streets.”

The info is also great for sellers, should you need or want to sell your home, the numbers clearly indicate the  ‘new reality’.

The above statistic is from all Sonoma County. The drop shows that a some people have take their home of the market at the end of the year, some home owners who were trying to do a ’shot sale’ did not succeed and the property went into foreclosure (these properties will come back a few months later as an REO) and it clearly show the increase of activity.

I look forward to your feedback!

   Mirjam (707-486-2638)

In today’s housing market, the media’s continued focus on negative real estate news is keeping many people solidly on the sidelines. But remember, you are not getting the whole story.

FACT #1: THERE IS STILL OVER $23 TRILLION OF VALUE IN U.S. HOUSING STOCK. Home ownership continues to be the basis of our wealth in this country.

FACT #2: THE HOUSING MARKET CANNOT HELP BUT GROW. Our country’s tremendous wealth, liquidity, and entrepreneurship will continue to drive our economy. 70-100 million people will be added to our market in the next 40 years.

FACT #3: REAL ESTATE IS CYCLICAL. The biggest fear in good times is that the fair weather won’t last forever—because it doesn’t. But the reality of a cyclical real estate market also provides its brightest hope in bad times—foul weather won’t last forever either. What’s happening today is a market correction, severe in some places, but it’s not the end of the world. The markets will stabilize.

FACT #4: 2008 IS THE BEST YEAR TO BUY A HOME IN 35 YEARS. 1973 was the last time mortgage rates were this low in a buyer’s market. We had rates this low in 2001 and 2002, but those were strong seller’s markets with little inventory. The last two big buyer’s markets, in the early ‘80s and early ‘90s had much higher rates. Low rates and good inventory make 2008 the best year to buy in decades!

FACT #5: FIRST-TIME BUYERS HAVE A REAL ADVANTAGE IN TODAY’S MARKET. First-time buyers can buy at a reduced price without having to sell at one too. Higher limits on lower cost conforming loans also help first-time buyers purchase more home for their money. Today’s ‘starter’ homes can be pretty impressive.

FACT #6: FIRST-TIME BUYERS LOSE MONEY WHILE THEY WAIT ON THE SIDELINES. First, renters typically pay more state and federal income taxes than homeowners with a mortgage deduction. Renters are also losing the wealth they could be accumulating as they pay down their mortgage and as their home increases in value over time (as it surely will). Lastly, renters who wait to buy will lose money if interest rates increase by the time they finally act. Higher payments from higher interest rates represent money buyers could have kept if they had bought earlier. Conversely, if they were willing to spend that amount of money earlier, they could have bought more home.

FACT #7: HOMES SELL WHEN THEY’RE PRICED RIGHT AND SHOW WELL. When sellers make their home’s value obvious, they make a sale—it’s as simple as that. The facts are showing this. In Sonoma County we see investors coming back into the market.
… Have a great day!

Mirjam (707) 486-2638

Good news for all you folks  who own investment property for appreciation purposes in a ‘vacation’ area (Lake Tahoe, Hawaii). Exchanging this property will be a whole lot easier.

Per March 10, 2008 the IRS officially allows limited personal use of an investment property and will not prevent the  qualification of a property held for trade or business or investment use for purposes of the tax-free-exchange rules. Here is a link to an article from Tom Kelly.

Using your investment property 1 or 2 weeks a year and keep it vacant for the rest of the year and still qualifying  for 1031 exchange rules is ok by the IRS.

Sonoma County is a great area, historically track records of property values doubling every 10 years, the wine county is a great vacation destination and on top of that: great opportunities right now!

Have a great day.

Mirjam (mirjam@c21alliance.com)

While the woes about Real Estate rage along in the news and everything you hear about Real Estate is bad, we had a great Realtor meeting yesterday. Rivendale Homes had a great open house party planned and announced that sales had picked up in their offices, apparently Christopherson homes had the same happening at their new home subdivisions. And one of the Realtors mentioned that he had multiple offers on his bank owned property -> it’s in escrow now. One of the properties I am currently selling in the JC area at 1228 Morgan Street gets a lot of showings and we had over 30 people come through the open house last Sunday.

It seems like we have hit bottom in Sonoma County. Nobody knows that until home prices are going up again but it looks interesting right now. Doing a count while writing this blog this morning we have 2498 active residential listings in the MLS and 366 listings in escrow/under contract. While we all know that some of these contracts will fall apart due to several reasons, it does give us a nice snapshot. This gives us a 6.8 month inventory - comparing the properties that are still on the market to the ones that have an accepted offer. Yes I know, usually this count is done for homes that have sold, however doing this math with homes that are in escrow gives us a closer look at what’s currently happening.

There were 366 parties that found a property that matched their need and thought is was worth putting in an offer. That’s encouraging! By the way, don’t forget, interest rates are still at historical lows!

This morning I did run into a new website : ‘Trash your Realtor” . I do understand that home owners who bought when the market was at it’s top are trying to blame somebody (”any body”) and Realtors are an easy target. I did see an article of people suing their Realtor for buying an ‘overpriced home’.

Don’t forget that Realtors do not set a price, a buyer does. It’s our job to help you find and get you new a home and yes, of course, to run a market analysis to give you an idea about property values in a certain neighborhood. But when the market was so hot, everybody wanted to get in, bidding wars were the norm. Who are you going to blame for this?  I have to say that some of my clients did loose out on bidding wars simply because the price went up so far that they felt they could no longer afford that home. I felt bad at that time however, later when we spoke about this she was glad they lost out, it would have gotten them into trouble. When she told me that, she did make my day, just because I had wondered whether I had done right by not pushing them beyond the amount they had told me they could afford. Sometimes it’s hard to figure out what the right thing is. If anyone has feedback/an opinion on this please do so, I am curious about your feedback.

In general, people move in droves. Right now it’s a great market to but, however, most buyers will wait until the market turns around and home prices go up. That’s just how the market goes…

Well this was my rant for the day, it’s going to be a beautiful day in beautiful Sonoma County.

Have a great day!

Mirjam (mirjam@c21alliance.com)

This weekend’s open house at 2390 Baggett Drive was a great success. Most people that came to see the house were seriously looking for a new home. Together with the feedback from other agents that investors have started ‘bottom fishing’ and that some of the ‘great deals’ have attracted multiple offers I have come to realize that we sort of know were the market is at and that’s a good thing. Also the interest rates are historically low and might even go lower.

As promised some stats for Sonoma County, yes, our area has been hit hard in certain price ranges.We had a fairly high percentage of people that bought homes with the dreaded negative arm that adjusted recently. Our area is not as bad as other areas (Fresno for instance) but certain parts of Santa Rosa do have a lot of short sale listings and REO listings.

The first I am going to share is the 2 years overview of inventory:

As per December 31, we had 3385 properties for sale (Dec 2005: 2304) and in that same month 217 properties sold (Dec 2005 : 343). In 2007 March was the top month with 428 properties sold in that month. Interestingly enough, the year before the top month was in June with 522 properties sold. So no matter what you might think, homes DO sell, the numbers are proof of it.

Regarding the market: as Realtors, we do preview and show quite a bit of homes. It’s usually very clear why homes don’t sell: besides the pricing issue there is also the showing issue: a lot of homes show dirty, cluttered and not kept. It’s beyond my comprehension why people don’t at least clean their house before putting it on the market and keep it clean while being on the market. If you don’t do it for your prospective buyers, please do it for the poor Realtor that you hired to sell your house or the ones that preview or show your home: it’s depressing to show or preview a dirty house!

Thanks and have a great day!

Mirjam de Rijk (Mirjam@c21alliance.com)

The article in yesterday’s Press Democrat titled “Slide to Continue” was ‘of-course’ about the ‘horrific’ Real Estate market was actually very interesting. Ashley Young -the example used in the article-  did take advantage of the current market and bought her home in Windsor for $470,000. About 2 years ago that house might have sold for $630,000. I am proud of Ashley, she is taking advantage of the cycle in Real Estate. About 15 years ago we had the same type of market and at a seminar I recently attended some people mentioned that they bought in that down market 15 years ago and were glad they did.

Real Estate is worth the investment however…. in the long run. If you bought your home about 6 years ago your chances are about 100% that you will sell it for more than you bought.

So what will you do? Sell you house and move up to a house that is also less in value (less property taxes too)? Take advantage and make the difficult move to own instead of rent? Or start building your investment portfolio and purchase a rental property? The rental market is great and the rents will go up the coming years.

And despite of what you might think: interest rates are at an historical low and there are a lot of great programs available.

Have a great day!

   Mirjam

What I find interesting is that a lot of people are worried about the decline of property values (see PD article -or not) for the wrong reason. I have heard some people mention that they are thinking about selling because property values have come down. As a matter of fact, sometimes I do give people advise not to sell their home because other options might be better. I do like to sell properties but only when sold for the right reasons -> which are many.

If you live in the home you like and you can afford your mortgage, why worry about what the market does? If you are not planning on selling, what’s the problem? The value of your property is ‘paper money’ unless you sell. Over the long run, property values go up so don’t worry about what is happening. Yes, you might not be able to refinance and take equity out of your home, but that is only smart depending on what you use it for. If you are taking equity out of your home to pay of credit cards, you might have a different problem that needs to be addressed.

My husband and I owned properties in declining markets and quite frankly we never ‘lost’ on any of our homes. Of all the decisions my husband I made over time, Real Estate has always been good.

If you have questions or would like to get some feedback on your situation, please don’t hesitate to contact me.

Oh, don’t forget: if you bought when the market was still hot and you have reason to think that the market value of your property is less than what you paid, don’t forget to take advantage of Prop 8 -> have your assessed value adjusted so you pay less property tax. 

Mirjam de Rijk

  mirjam@c21alliance.com