The “Google/Facebook/Apple Effect” Coming Soon to Mid-Peninsula Real Estate…

Back in 1996 when I moved to SF Bay Area from NYC after graduating with my MBA, South Bay (“Silicon Valley”) for technology companies, San Francisco for financial services and the Peninsula was a convenient place in between SF and South Bay that had Oracle and some other companies here or there. We chose to buy a house in mid-Peninsula and establish roots here nearly 20 years ago largely due to providing maximum career flexibility in being equidistant between SF, San Jose and Oakland with easy access to all 3 airports.

Circa 2018, San Mateo County is hot with major technology companies and venture funded startups taking on commercial leases of significant square footage with the many new commercial developments around towns. For example, Redwood City is headquarters for Box, Shutterfly, Equinix and many start-ups. Having more and more companies settle around here bodes well for employment growth, and desirability of living nearby to lessen commute times. How does the real estate future look further down the road in 2023? Two big names – the proverbial 800 lb. gorilla: Google and Facebook.

20 years ago, Mountain View (“MV”) was far less desirable city to live in than nearby Cupertino, Palo Alto or Menlo Park. I had a friend who relocated to Bay Area in 1997 and shared a rental house in Mountain View. The house wasn’t great, the neighborhood was questionable and there was nothing to do nearby. Since Google started expanding ferociously in MV with employees working very long hours, people wanted to live nearby work. Then, after Google went IPO in 2004, many employees suddenly was flush with cash and started purchasing real estate; Mountain View started really catching up in pricing metrics to its more expensive neighbors, then more and more nicer restaurants, bars, retail began opening up rendering MV even more desirable. Now Mountain View is an expensive city to live….and that aforementioned starter home in MV would probably sell for close to $2 million. The “Google Effect” on residential real estate.

Menlo Park has always been a highly sought after city with fantastic schools, proximity to Stanford and accessibility to South Bay. Once Facebook exploded on the scene, that had a ripple effect on East MP, Redwood City and even across the Dumbarton Bridge into Fremont and the likes (no pun intended). The current MP headquarters had previously been the HQ of Sun Microsystem, so the incremental impact didn’t have the same boom that Google had on MV. But when FB prior to its IPO, I know that they offered a housing stipend to anyone who lived within some miles from campus given the long hours employees were working to change how the world communicates through social media.

So in 2014, Google purchase approximately 1 million (pinky pointed to mouth emphasizing the M) square feet at Paciific Shores in East side of Redwood City. The offices were mostly leased up, so it would take some years for Google to vacate some tenants, do tenant improvements to Google standards, and then slowly move into the buildings. See link for details. https://www.bizjournals.com/sanjose/news/2014/10/03/google-to-buy-big-chunk-of-pacific-shores-iconic.html. Additionally, Googles rapidly growing Youtube business unit out of San Bruno has been aggressively purchasing office buildings in San Bruno just off the 380 freeway to expand growth at Youtube too. The price appreciation in San Bruno will also be interesting for those buyers who can afford more house in SB than in Burlingame, Millbrae, San Mateo or for those who work at Youtube or in South SF where many biotech firms exist.

The impetus for this article stemmed from recent news that Facebook was close to negotiating around 800k square foot of new commercial space in tony Burlingame. This would greatly affect the mid-Peninsula as FB fills this space with employees. https://news.theregistrysf.com/facebook-eyes-burlingame-with-800000-sqft-lease-at-kyllis-burlingame-point-development/ We won’t observe the direct impact on Peninsula real estate prices in the near term. However, as referenced in previous articles, land is in very short supply in the mid-Peninsula to build new residential housing units, while it appears that we will see greater demand in the medium term future.

Many analysts believe the housing boom is nearing an end in the next 2 years – but I heard the same scuttlebutt and “analysis” 2 years ago too. What do you all think? Do you think there will be a Google/FB effect in next few years? Or do you think the greater economy might eventually soften before that and lessen their impact? How about those of you who live outside the SF Bay Area, have you observed cities impacted by growth of a particular company or industry?

As always, feel free to email me at peter.tao@cbnorcal.com if you wish to discuss/brainstorm SF Bay real estate. Be sure to like my FB Page at https://www.facebook.com/PeterTaoProperties

 

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Neighborhoods Close to Downtown Areas and Transportation Options are HOT – San Mateo Village and Other Neighborhoods West of 101 and East of El Camino Real Prime Examples!

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Serenity, views, privacy have always been highly sought after characteristics in real estate and continue to command premiums. In the mid-Peninsula, I predicted a trend 5+ years that neighborhoods close to downtown areas of shopping, restaurants and public/private transportation will see above average appreciation as buyers are attracted to areas that require less driving. As the Bay Area economy booms, we see negative impacts to the 101 and 280 freeway traffic and bridge backups; rush house seems to start earlier and earlier. In particular, neighborhoods East of El Camino Real and West of 101 freeway are seeing a huge demand surge of buyers who want to be in close proximity to amenities. Examples of neighborhoods include Mateo/Glendale Village in San Mateo, and Clearfield Park around Laureola Park in San Carlos, are good examples of HOT, HOT neighborhoods in these sub-markets.

You may see on some listings that tout the Walk Score. The Walk Score is calculated by a company, which factors in the “walkability” to amenities such as businesses, parks, theaters, schools, restaurants, retail, transportation and other common destinations. The Walk Score output can be interpreted as:

Walk Score® Description
90–100 Walker’s Paradise
70–89 Very Walkable
50–69 Somewhat Walkable
25–49 Car-Dependent
0–24 Car-Dependent

Generally, 90+ Walk score are in high-density cities such as San Francisco. In suburban cities, neighborhoods scoring in the 50-80 ranges are generally considered in prime areas near amenities highly attractive to many of today’s homebuyers. For example, I had a great listing in San Mateo Village recently that was just blocks away from the Caltrain station, Hillsdale Mall (undergoing a major expansion upgrade), Whole Foods, Franklin Templeton headquarters, Bay Meadows, 101/92 freeways. Based on close to 200 groups attending the open houses, many buyers reviewing disclosures, and the significant number of offers on the house driving price 22% higher than list, the feedback from buyers (besides the beautiful house itself) was the extremely convenient location close to everything.

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San Mateo/Glendale Village Comparison to Areas W. of El Camino Real

    900 to 1500 SF   900 to 1500 SF  
1/1-5/31 # W. ECR San Mateo # San Mateo Village  
2013 18 694.41 12 641.6 108%
           
2018 16 1314.77 10 1290.75 102%
    89%   101%  

We know every SF Bay property has appreciated significantly in the past 5+ years. If you purchased a property, you did well. “The market is hot”. What constitutes whether a particular neighborhood is “hotter than another”? One gauge might be the percentage appreciation over time relative to the broader market and did it appreciate higher than average. For example, let’s take the aforementioned San Mateo/Glendale Village (“The Village”). In 2013, for a Single Family Residence (“SFR”) between 900-1500 square feet from January 1 to May 31, 2013, the average $/square feet was $641.60; in 2018 from January 1 to May 31, the average was $1,290.75. Compared this with the average $694.41 $/square feet for all SFR in San Mateo West of El Camino Real in 2012 and $1,314.77 $/square feet in 2018. The Village appreciated an incredible 101% in 6 years, while West San Mateo appreciated still a very high 89%. The Village seems to have appreciated at a higher percentage than the historically popular West San Mateo.

Key characteristics in the Bay Area affecting this trend towards living in locations close to things include:

  • Traffic seems to get worse and worse. A recent article suggests that sections of 101 freeway show traffic at 80% worse in 2017 than in 2010. Don’t know how they measured it, but it seems directionally correct from my daily experiences. People already spend quite a bit of time commuting to and from work. When they are home, people don’t want to spend more time in their cars.
  • Being close to public transportation such as Caltrain, BART, technology shuttle buses, and Samtrans provides attractive commuting alternatives.
  • Those that are able to purchase in this expensive area tend to work in demanding jobs. Many of those who chose to live in SF Bay want to be part of the action.

That doesn’t mean everyone wants to be close to a downtown area. Many still prefer being away from everything when they get home. In the current low supply, market, it seems every neighborhood sees strong demand. As I have written about in past blog posts, purchasing real estate isn’t just about financial considerations, but a lifestyle.

As always, anyone want to talk real estate on any topic, feel free to reach out to me at p_tao@yahoo.com or 650-504-7588. Please “like” my FB real estate page at www.facebook.com/PeterTaoProperties; it’ll be focused more on articles rather than just marketing my listings.

Wow, what a strong 2017 in terms of price appreciation and stock market gains – will it continue in 2018?

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I wrote a post this time last year discussing uncertainty in the real estate and stock market post Presidential election, along with potential for increase in interest rates. Similar sentiments of uncertainties existed even 2 years ago. The uncertainties turned out to be unfounded as the S&P 500 appreciated EVERY month in 2017 ending at 19%+ higher than start of year. https://seekingalpha.com/article/4134832-stock-market-1st-90-years. Going into 2018, many Wall Street analysts predict the stock market to continue rising, albeit not quite as rapidly as last year. https://www.cbsnews.com/news/can-stock-market-in-2018-possibly-match-perfect-2017/. So what does that mean for real estate?

Our current SF Bay Area real estate boom roughly started at the end of 2012, which has now spanned more than 5 years. The bubble burst occurred approximately 2008-2011. As my BS and MBA degrees were in finance with heavy dose of economics, I recall that the financial and real estate markets over the course of history generally run in full 7 to 10 year economic cycles. We are currently right in the middle of this time span, but yet there are not many indications of an impending slow down.

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Two years ago, I wrote about unicorns – how private company valuations do not necessarily represent liquidity events for a high majority of non-founding employees of these companies. https://taosiliconvalley.com/2015/12/15/the-epic-story-of-unicorns-and-dragons/. With that being said, many investment bankers and financial pundits do forecast some of these unicorns to go public in 2018. https://www.marketwatch.com/story/ipos-in-2018-here-are-six-tech-companies-that-could-go-public-2017-12-26. Many of these potential IPO companies are based in San Francisco, Peninsula or South Bay. Should even a few of these companies go public, we can expect some thousands of employees unlock previously illiquid paper wealth into cash that will motivate some of them to enter the real estate market, upgrade houses and/or buy investment property. This would have a material impact on real estate demand, and thus valuations.

My most popular blog post titled “Microeconomics for Real Estate 101” is the #1 ranked Google search result if you type Microeconomics Real Estate! Search Engine Optimization (SEO), baby…and I didn’t even try! 5 years later, same dynamic of a) strong demand and b) tight supply yield consistent price appreciation. For example, in Belmont and San Carlos, two appealing cities with top public schools, great location and strong community (as of January 23, 2018), there are only 13 single family residences (houses) Active in MLS at all prices. What if you are a 1st time buyer under $1.5 million? There are only 2 (yes, not a typo, two) houses listed under $1.5m across 2 major cities in the Peninsula.

For the last 2-3 years or so, EVERY buyer client of mine asked if they are buying at the peak of the market. No one has a crystal ball and can predict with certainty. We all have our personal predictions/opinions of course. It’s tough on 1st time buyers looking at historical price appreciation of properties in the SF Bay Area. I always like to fall back on my own personal situation. Back in 1999, we were looking to purchase our 1st house in mid-Peninsula. We outbid many other buyers and were paying record prices for a small house. I told my wife that we may be buying at the peak of the market, but that the Bay Area would be our long-term home; regardless of whether the market goes down in the near term, I was confident over the course of the medium to long term, Bay Area real estate would prove to be a great investment. We ended up buying a larger house in the area, and sold this original house in 2005 with an ROI of over 400% (due to leverage)! The market had in fact deflated approximately 2001 but then came roaring back shortly thereafter.

The key to psychologically overcoming the SF Bay Area market is to view any real estate investment in the medium to long term. If you plan to be a SF Bay Area resident in the long term, is it higher risk to be in the market or out of the market? And keep in mind, unlike buying stocks, bonds, mutual funds and ETFs, you actually also gain enjoyment and comfort with acquiring property as opposed to financial securities. As always, anyone who wishes to talk real estate with me, ping me anytime.

 

2017 – the year of uncertainty with mortgage rates, stock market and the new President…

Average
1990 10.13%
1991 9.25%
1992 8.39%
1993 7.31%
1994 8.34%
1995 7.93%
1996 7.81%
1997 7.60%
1998 6.94%
1999 7.44%
2000 8.05%
2001 6.97%
2002 6.54%
2003 5.83%
2004 5.84%
2005 5.87%
2006 6.41%
2007 6.34%
2008 6.03%
2009 5.04%
2010 4.69%
2011 4.45%
2012 3.66%
2013 3.98%
2014 4.17%
2015 3.85%
2016 3.65%

The above chart is compiled by government entity Freddie Mac on 30 year fixed rate mortgages. See link for source. http://www.freddiemac.com/pmms/pmms30.htm. In November 2013, when mortgage rates went up to the low 4% range, I wrote a blog post on mortgage rates and highlighted key considerations for home buyers as well as offer historical and life perspectives on how to factor that into home buying decisions. I just re-read the post for 1st time in a few years, and I stand by all the key points mentioned. In fact, since it was published, rates for most of the last 3 years hovered below 4% and only recently increased to the low 4%. You can read my original blog post at https://taosiliconvalley.com/2013/11/08/mortgage-rates-have-risen-since-its-all-time-low-should-this-impact-your-timing-to-buy/.

As you can see, low 4% by historical standards is still incredibly low. I was cleaning out my garage last month and came across files from 1999 when I bought by first house. My first mortgage stood above 7% (yes, that is seven). No joke. Then when I refinanced later at 5-6%, I thought it was the lowest it would go, then refinanced again at 4-5%. Never during those times did I ever think it could ever get below 5%, let alone 4%. Two key considerations in today’s market would be 1) rates are still very historically low, 2) no one can completely predict where interest rates will go.

In my original blog post, I calculated payment differences on a sample mortgage based on an increase in interest rate. Will increase in mortgage rates affect average housing prices? Mathematically, yes. But there are other factors that also factor into housing prices such as local economy, supply and demand dynamics, stock market, and macroeconomic factors creating “noise” in housing prices.

This blogs most popular post was also from 2013 titled Microeconomics 101 for Real Estate. This post actually gets quite a bit of traffic, as if you Google “microeconomics real estate” my blog shows up in the #1 slot of Google results! SEO traffic baby! So basically, supply in SF and San Mateo counties is very low. That is somewhat to be expected as we are only in late January, but historically we do start seeing more listings come on the market starting about now.

There also seems to be a sentiment of uncertainty with respect to a new President. A highly controversial President is probably creating  uncertainty as well. 

I don’t have a crystal ball on what will happen. I continue to tell my friends, family and clients that no one can predict what will happen to the stock market or real estate prices. If they could, they’d be able to take advantage of it in the markets and retire from it. I’ve read many economists predict that there will be higher interest rates and inflation in 2017. I certainly believe this to be a strong possibility. However, some predicted that last year too. What I am bullish on is the overall strength of our local Silicon Valley economy. Who knows what will happen in 2017 as there could be short term movements in real estate values and stock prices up or down? But if the SF Bay Area is a medium to long term home for you, my belief is it’s a higher risk to try to time the market perfectly and be out of the market than it is to jump in. In my very 1st blog post, I wrote about buying my 1st house in 1999 in San mateo where I thought there was a high probability I was buying at the markets high point. Wow, 20/20 hindsight and the thought that I was worried I overpaid is quite amusing. 

Here’s to a fruitful, safe and healthy 2017 to all.

The Epic Story of Unicorns and Dragons

Unicorns are everywhere in SF Bay Area! It seems like we read about new “Unicorns” being created every week. The mythical Unicorn is described as a beast with a large, pointed, spiraling horn projecting from its forehead. Ancient Greeks and other European folklore reference the unicorn throughout history. I even have a first cousin who built a hugely popular Unicorn propelled vehicle where he rides around at Burning Man, the Maker Faire and parks around Davis, CA drawing hoards of attention. We all love unicorns. But alas, I don’t speak of the legendary beast. I reference those privately held technology companies with private valuations of over $1 billion dollars labeled as a “Unicorn”. As tracked by the Wall Street Journal and Dow Jones Venture Source study, there are now approximately 116 Unicorn companies, including Uber, Snapchat, Airbnb, and Dropbox with a large percentage of them based on the SF Bay Area. Are Unicorns real or mythology? Does working for a Unicorn equate to wealth and happiness in life? And how does the Unicorn SF Bay Area economy translate to the local real estate market?

dragon

But have you heard of the growing “Dragons” within the mid-Peninsula? It used to be that there was only one Dragon in the mid-Peninsula, but now the Dragon community has grown to several more just the past year or two. Confused? Yes, the creatures with the serpentine and reptilian traits that may even spit fire and fly! Dragons are in Greek Mythology and prevalent in Chinese culture – sometimes in fierce settings and other times symbolizing wealth and power. Well, Dragons in this untold story are mid-Peninsula cities with houses that now command a minimum of $1 million for a small 1,000 sq. ft. or larger house (as defined as single family residence). Although these 1,000 sq. ft. houses are not large, they are highly appealing due to a great convenient location to SF and Silicon Valley in the mid-Peninsula, and have strong school districts. There is a small, but growing list of cities that I now call a “Dragon” city. Just 2 years ago, the only city that may be labeled a Dragon was Hillsborough. You can now add Belmont, Foster City, Burlingame and Redwood Shores to the list. Do note this categorization includes on SFR and not condo/townhouses that may be had for less than $1 million. By the way, I believe I just invented this new terminology, “Dragon”, which is probably why you have not heard of it before.

In Belmont and Redwood Shores, often linked together given the same highly ranked Belmont-Redwood Shores school district, a year ago had one last neighborhood of Sterling Downs/Homeview where fixer-upper small houses could be had for $850-900k. However, in 2015, the same small 2/1 or 3/1 1000 sq. ft. with 5,000 sq. ft. lot houses in the neighborhood were selling for between $1.0-1.2 million. The top ranked school district certainly has propelled Belmont prices in past few years. See my earlier post on Belmont at this link. https://taosiliconvalley.com/2014/06/17/why-belmont-housing-is-hot/

Up until a year ago, there were some pockets of homes in mid-Peninsula where there may have been a few under $1 million fixer upper houses, particularly in Lyon-Hoag, Burlingame Gardens and the neighborhoods between 101 and Caltrain tracks. However, Burlingame is firmly a Dragon now. In the past 180 days, there were 112 SFR properties sold in Burlingame and only 2 of them sold under $1.2 million ($1.06 and 1.198mm). Yes, the Burlingame Dragon is fire-spitting fierce.

Those who are familiar with mid-Peninsula might be asking why isn’t San Carlos or Menlo Park included as a Dragon? In San Carlos, there is one last bastion of houses that can still be had for between $900k to $1 million in the Clearfield Park neighborhood walking distance to Laureola Park. That is the neighborhood located between El Camino Real and 101 on either side of Holly street. Make no mistake, houses that are upgraded goes above $1 million, including a recent sale on very busy Holly street that went above that threshold. However, there have been some recent sales below $1 million for fixer upper 2 bedroom 1 bath around 1000 sq. ft. houses. So if you want to get into the San Carlos school district living in a house, you may consider this neighborhood. And in Menlo Park, right next to the Facebook headquarter campus, there is a neighborhood called Bellehaven that may have houses just below $1 million. Both of these cities may very well be a Dragon within the next year if the real estate market continues to appreciate.

There have been recent articles in the Economist discussing the Unicorn valuations and the difference between private company valuations vs. realities that many/most of these private companies never see true liquidity events for the non-executive employees to truly cash out, as well as the inflated private valuations that provide preferential structures to VC and PE firms as well as founders that ultimately dilute the common shareholder should there be a acquisition or future funding round or IPO.

http://www.economist.com/news/leaders/21679194-correction-startup-valuations-would-be-good-news-technology-sector-gored

http://www.economist.com/news/business/21677192-fable-unicorn-theranos-much-hyped-medical-startup-plagued-doubts

I have been lucky to be part of two great start-up companies back in my former start-up corporate life. I had been a VP-level executive at a high profile Internet company that went public in 1999 during the first dot com bubble and reached over a $1 billion market cap – this is 16 years ago when $1 billion was a really, really big number and impressive. Then, I held a senior position in 2007 for another high profile Internet company that sold to a private equity firm for $1.2 billion valuation which was one of the 1st companies to achieve a huge return for VC investors post bubble.

Although there was a nice financial gain in aggregate, in both instances the upside was severely capped due to stock being illiquid. One had a 6-month post IPO lockout, and the second had been bought by a PE firm who bought majority stake, with the minority stake and unvested portion remaining privately held. Eventually I found out the second Unicorn went through difficulties and company recapitalized with the value of my share holding down to zero; thus, I will now have a $3k capital loss write off for the remainder of my life recouping the AMT tax I paid to Uncle Sam over 7 years ago. Thus, as you read about all these Unicorns being created, just note that majority of non-executive/founder employees at these companies have not yet profited from their stock options.

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Why do I say I was “lucky” even though my private stock options never yielded the financial homerun that I held on paper? Three reasons. First, to this day, I am really good friends and business confidants with many of my former colleagues that I value more that money. Second, those were really fun formative years where I grew professionally and personally and felt I was part of something revolutionary. And third, those experiences in the high tech start-up world has allowed me a very unique perspective to the SF Bay Area real estate in a in strongly technology driven marketplace where I’ve “did it and done it” that allow me to adeptly navigate the competitive landscape of real estate.

On the real estate side, I have owned real estate located in the mid-Peninsula since 1999, and have seen huge returns. My clients who purchased properties in the past 5 years are obviously all extremely happy they are “in the market” now. I get asked nearly every week what I think the real estate markets will do in the near term. I have inclinations and my thoughts. However, no one can truly predict and time the market perfectly. Two considerations I like to provide is a) that if SF Bay Area real estate is a medium-to-long term hold (similar to the US stock market), over the course of time, the SF Bay real estate market has proven it’s ability to appreciate over the course of a 7-10 year economic cycle and b) particularly for 1st time buyers that unlike other financial investments, even in a downturn, at least the investment in a property can be enjoyed through day-to-day living and that provides some immeasurable intrinsic value.

So to my 1st question of whether Unicorns provide wealth and happiness – it can possibly create wealth, but it is not guaranteed and it can possibly provide some happiness but that is also not guaranteed. And I think most would agree that monetary wealth doesn’t automatically guarantee happiness.

Certainly, the technology industry creating Unicorns does have a direct impact to the creation of Dragons. Regardless, as they say, home is where the heart is; purchasing real estate in expensive SF Bay area is both a decision on financial investment considerations and creating a home to settle in. I suppose housing prices in this area is still lower than the cities in NYC, London, Hong Kong and Toyko; we may need to create a different terminology for those cities, but alas, I’ve used up all my creative writing juices.

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Where’s the Beef? Er, I mean listings on the market more than 2 weeks….What does this mean for potential sellers?

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The year was 1984, and a new Wendy’s television commercial caught fire.  An elderly lady with this raspy voice would yell into her telephone asking “where’s the beef?” to some competitor burger joint of Wendy’s complaining about the small hamburger size of their product.  I remember as a kid, everyone in school would use that line for almost any situation. “Where’s the beef?” catchphrase kept going for years after launch.

Current year 2015….over 30 years later…I was just looking at one of my MLS saved searches (on 4/17/15) – single family residence (house) listings Active on MLS in cities from Millbrae down to Palo Alto under $2 million list price that has been Active on MLS for 20 days or more. There are 12 cities in the search.  Guess how many houses there were?  75-150 might be a reasonable guess given the low inventory, high demand real estate market in the mid-Peninsula market.  There were only 25 houses that have been on the market for more than 2 weeks and not pending sale.  That equates to approximately only 2 houses per city.

Although I am not precisely tracking data by recording in a spreadsheet, I have had this internal MLS sort for approximately 4 years now. I do not remember another year, regardless of month of year, where SFR 20+ days in this mid-Peninsula area of 12 cities was able to fit on the 1st page of my web search. Properties sell within 1-2 weeks on the market given low supply and high demand. So, what does that mean for sellers and buyers?

For sellers, you may think this might be all great news.  Both yes, and no.  If you are seller moving out of the SF Bay Area, this should be great news.  Sell your house and be able to buy a bigger house for less money in nearly anywhere else in the US (NYC excluded). Even though other parts of the US also is showing strong appreciation with low inventory situation, it is unlikely to be at the same level as the SF Bay Area.

However, if you were a seller looking to purchase a bigger house in the same area, then there might be challenges. They are not insurmountable, but definitely trickier: 1) buy bigger house 1st if you qualify for 2nd mortgage or can purchase all-cash, then sell current home after purchase, 2) sell current house 1st, negotatiate rent back, and aggressively seek to find AND secure new house before having to move out with back-up plan having to move to temporary residence, and 3) buy bigger house 1st using alternative/hard money lenders, then sell current home after purchase and finally refinancing into traditional mortgage paying off alternative loan. Some other options exist, but those are most common possibilities.

As a seller, it may seem that you may need to do less work to prepare your house for sale. Yes, and No. That may be true to simply “just” sell the house. However, the best agents will still advise you on possibilities to be put your property in the best light to maximize your sale price. Because of my construction project experience, I almost always will talk to my seller clients about possible projects to do to the property prior to selling with some estimated rough range on cost and what the estimated ROI percentages will be on potential upside.  This provides a framework for my clients to decide if the wish to invest time and money into the house to potentially increase sale price. My seller clients really appreciate my outlining in detail their choices so they can make decisions even if they ultimately do the minimum required. Some agents will default to not doing any work or even convince homeowners not to do work, since they can get it on the market sooner and they still know it will sell and it requires less effort to them. Although timing is always a factor in the decision matrix, I believe it is still important for the homeowners to know their options and understand the risk/reward and possible financial outcome of each option.

As always, feel free to contact me if you wish to brainstorm anything related to your home.

 

Why I lectured some relatives about their smoke detectors over Thanksgiving…..

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I just returned from LA where I visited some relatives over Thanksgiving weekend. Good trip, great food and awesome weather. Some retired relatives have lived in their house for over 30 years. They’ve updated some items inside the house but other parts of the house have original details. One part of the house, they have unwittingly ignored is their smoke alarms. They do not work, and the smoke alarms are probably 10-20 years old – none of them have working batteries and it’s not certain the detectors even work at all. When asked why they don’t replace the batteries or detectors, they indicated that the ceilings are too high or that they simply forgot to do so. I spent the next 10 minutes lecturing them on the importance of smoke detectors/alarms and how dangerous it is to live without them.

In selling real estate, one of the California state laws require that “every single-family dwelling and factory built housing unit sold on or after 1/186 must have an operable smoke detector, approved and listed by the State Fire Marshal, installed in accordance w/the State Fire Marshal’s regulations….”  In fact, some local cities impose even more stringent smoke detector requirements. When I recently completed a bathroom remodel to my own house, the city inspector checked my house for working fire alarms and even instructed me to add a smoke detector to a part of the house before he issued the final approval. I was happy to comply.

As part of closing a real estate transaction, one of the disclosure documents that must be signed is a Certification of Compliance with Water Heater, Smoke Detector and Carbon Monoxide Device Requirement. Simplistically, the Seller/Owner signs the certification that they/the house is compliance prior to close of escrow. On the deals that I close as either the listing or buying agent, one of the real estate agents on the transaction ends up providing a working smoke detector on behalf of their client literally the day before close of escrow. Obviously, this is not the ideal scenario because it means the owner had been living on the property without proper working detectors previously.

Nowadays, it’s not just smoke detectors but also carbon monoxide devices. There are many brands that sell single units that detect both smoke and carbon monoxide.

The “chirping” of low battery life is annoying. Over the years, I’ve had to wake up in the middle of the night to dismantle the battery to stop and then procrastinate for weeks before replacing the batteries. I can only imagine the extra hassle it would be for an elderly person to carry a stepladder up the stairs and then have to replace batteries. Low and behold, they now make detectors that come with a 10-year battery life – hooray!

Smoke/carbon monoxide detectors are relatively inexpensive these days. You can see the link below from Homedepot.com that a combination smoke/CO2 detector with a 10-year battery life only costs $40. This investment now lasts for an expected 10 years and replacing the units is very easy. Below is a link for an example of one such unit.

http://www.homedepot.com/p/Kidde-Battery-Operated-Combination-Smoke-Carbon-Monoxide-Alarm-with-10-Year-Sealed-Lithium-Ion-Battery-21010262/204249510?N=5yc1vZbmgjZua

My relatives who I had to lecture were probably annoyed at me for the tone I took, but I am completely comfortable with having done so. It’s a safety issue, and I lecture only because I care and am concerned about their welfare. The only redeeming outcome of the exchange is that I now know what present to get them for the holidays. I will probably purchase nine new units and install if for them throughout the house. No, it’s not a fun gift, but one of necessity to all households alike. I don’t believe they read this blog so hopefully it’ll still be a surprise gift!

Have a fun, safe holiday season!