Happy New Year! — The Official Blog Launch

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Happy New Year everyone!  I’d intended to illustrate this post with suitable icons for every winter tradition from Christmas to Kwanzaa but decided against it when I  couldn’t think of a suitable graphic for non-believers.  And why should they (we) feel left out?

The image is of a sculpture by Rodin.  I saw it in the Rodin Museum in Paris during the summer of 2008 and, like so many of his sculptures, it seemed to glow from the inside.  For me, these hands express the tenderness and grace that we humans are capable of.  My wish for the New Year is that there be more of both in this  world. ...  Additional Details

The Credit Crunch from the Other Side of the Desk

I’ve written a piece as a guest-writer for The Front Steps, one of the better blogs on SF Real Estate.

After talking to loan officers and loan brokers for several weeks about the lending environment, here are the takeaways:

  • Have “perfect everything”:  high credit score, secure job, money in the bank and documentation to prove it all.
  • Figure you’ll be putting down a minimum of 20% as downpayment.
  • For the best long-term rates, to to a retail bank that you have a relationship with.
  •  ...  Additional Details

    Maybe it’s time to buy that first house….

    That’s what New York Times journalist Ron Lieber discusses in Saturday’s Business Section.  You can find a copy of the article here.  Of course, nobody really knows where the real estate market is headed but Lieber suggests that now could be a good time to buy.  Here are a few of the takeaways:

    • First-time home-buyers presumably have the down-payment sitting in the bank, so they can benefit from the drop in home values without having to worry about selling their own home in a depressed market to raise the downpayment.
    • Mortgage interest rates are currently pretty low by historical standards and could go lower if the federal government decides to try to drive them lower.  If you can lock in a low rate for 30 years, that seems pretty smart.
    • The best deals may be in “new” housing, where developers are desperate to get out from under bloated inventories.  Those inventories, however, are falling as construction of new projects has come to a halt.  With winter being a traditionally slow time to move houses, now may be a particularly good time to buy.

    Along these lines, a loan officer recently told me that he’d heard of a downtown high-rise condo that was listed for $1.1 million and was sold by the developer for $770,000 — just enough to pay off the loan amount attributable to the unit. ...  Additional Details

    The View from Space — Part 2

    More pearls from Ken Rosen and the other big brains who addressed UC Berkeley’s  Annual Real Estate and Economics Symposium on Monday:

    •    What to Invest In Now: Rosen and several other commentators say that REITS (publicly traded companies that invest in investment-grade real estate) are cheap relative to their underlying assets.  Some are trading at around 50% of the replacement value of the assets they hold and are paying a dividend of around 10%.  The best sector of the real estate market right now is the apartment rental market.  (Makes sense, since a lot less people can afford to buy homes.) So look for REITS that own big apartment complexes in decent market areas (see below).   Do your homework:  be sure that they have good management teams and don’t have too much short-term debt because refinancing anything is going to be tough for a while. Hedge your bets.  (Easier said than done for us mortals down here on planet earth.)  Rosen has parked his cash in short term Treasuries.  Obviously he’s worried.  We should probably be too. ...  Additional Details

    The view from space — Part 1

    Ken Rosen is a smart guy.  He’s the co-chair of the Fisher Center of Real Estate and Urban Economics at the Haas School of Business at UC Berkeley and the investment advisor of choice to some of the biggest players in real estate, from banks to insurance companies to REITS.

    Once or twice a year I spend the day in a windowless hotel conference room listening to Ken and some of the biggest heads in the real estate biz  expounding on the state of real estate. These guys (and they are mostly guys) look at real estate through the lens of global macro-economics and international finance.  Want to know where interest rates are going?  They study yield curves on T-Bills and monetary policy in the capitals of Europe.  This is “the view from space.” ...  Additional Details

    Dataquick vs MLS: why the discrepancies?

    In my October 27 blog discussing the Case-Shiller Index, I referred to Bay Area County stats from Dataquick that showed San Francisco’s median prices to be down 12.7% from a year previous (YOY) vs.  the 11.36% that I’d quoted in my October 23 blog.

    The reason for the discrepancy?  Dataquick compiles its figures from the San Francisco County Recorder’s Office; my numbers come from the MLS.  Transactions like foreclosures or transfers between family members or between legal entities generally don’t involve agents or brokers so they don’t show up in the MLS.  They also tend to be at lower values because they are often at below market rates, so Dataquick’s numbers will always be somewhat lower than the numbers pulled from the MLS.  Thanks to Rick Campbell at the REReport for his quick response. ...  Additional Details

    Update to Halloween Horror: Did it just get scarier….??

    The day after I posted my take on the Case-Shiller Index, they came out with July’s report (they’re always trailing three month averages) showing a continuing decline in the San Francisco MSA.  Wait for it:  down 27.3% from July 2007.  Are we worried?  Not that much.  Why not?  Read my October 27 blog:  “San Francisco” means most of the Bay Area when it comes to the Case-Shiller Index.

    You want scary?  Median prices are down 45% year over year in Contra Costa County. ...  Additional Details