Home Buying in San Ramon>Question Details

Prad, Home Buyer in San Ramon, CA

2200-2700sqft living area 4-5 bed and 2.5 -4 bath 5000sq ft lot give or take New or may be 5-7 years new Is this an profile of a home

Asked by Prad, San Ramon, CA Sat Sep 26, 2009

that can be made in a 650K /- budget normal sale...or am I day dreaming or have to grind through a foreclosure or short sale? Any comments from all the experts out there? I am looking in Windemere or Gale ranch area

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You state: "my posts are not opinions, they are based on facts and credible research."

With all due respect, all of our posts, regardless of the data we present, are simply conjecture if we take existing data and extrapolate it forward. We can take any data and make it portray any number of suppositions. I will never hesitate to call my analysis and subsequent extrapolations … my opinion.

I completely understand the direction you are headed based on the data you are using. I personally tend to take exception to nationally-based data due to the fact that we operate in a microcosm here in the bay area: we are in an area that is truly unique in all the world and our local markets react differently than those in other parts of the country. Or the state, for that matter.

For that reason, I use localized data provided by two separate third-party vendors that pull from all the local MLS databases and county tax records. I believe it provides a more accurate and comprehensive picture and can be dialed in, not by regions of the country, but by local neighborhoods.

But that’s MY opinion …
2 votes Thank Flag Link Thu Oct 15, 2009

I have read your other posts and think you are one of the better (industry related) contributors on these forums. If I were considering a traditional agent in your area, you would make my short list for consideration. I have not followed the low end market, as my profession involves analysis and economic forecasting for a rather specific demographic (i.e. folks who would typically buy homes in the $750K - $1.2M range).

Your observations, while interesting, are based on what economists cal IAO variables (Interests, Activities, and Opinions) a.k.a. Psychographics. As the dot com and housing bubbles have demonstrated, human behavior is rarely a reliable predictor of market dynamics (at best it is a lagging indicator). What you are seeing are folks reacting to a set of artificially created market conditions. As long as those conditions remain, the market will continue to respond; however, that does not mean that conditions are stable or sustainable.

The collection of rather weak enforcers that are currently propping up the market are small (but collectively influential) in comparision to the counter forces that are building, including shadow inventory and Option ARM recasts. We cannot kick the can down the road indefinitely and when the false market support relaxes, there will be significant downward pricing pressure on the mid to high market. It is coming and it will significantly impact the mid to high range, overbuilt markets in San Ramon, Dublin, and Livermore.


What you have described is called "transition gapping". As a market experiences significant shifts in price, gaps are created between the pricing extremes for a given demographic. At a certain point, the gap is sufficient to push the demographic to transition to a higher or lower market segment. During the boom, transition gapping pushed people into downgrading their segments, causing them to move further away from their workplace and/or pay more for less house. Now, transition gapping is going in the opposite direction, allowing folks to move closer to their work and/or transition into better homes for less money.

Transition gapping will actually further erode price support in the mid to high range ($750K - $1.2M) for San Ramon, Dublin, and Livermore. Why?

Folks in the $750K - $1M can now buy a decent place on the Peninsula, much closer to where they work, so they are much less interested in an oversized home in the far East Bay. The transition gap is allowing them to move back to places they previously preferred, but could not afford.

In the $1M - $1.2M range, folks are realizing that they can now buy up, as the highest end segments are seeing some of the largest price reductions. So instead of spending $1.1M now on an upgraded Hawthorne in a planned community like Windemere, they can make a transition to the $1.2M - $1.6M segment (as prices condtinue to come down) or move to more "tony" spots such as Blackhawk or Woodside (Peninsula).

So, for the mid-high range in San Ramon, Dublin, and Livermore, we have something called simultaneous "top" and "bottom" (range) divergent transition gapping. Meaning that within the traditional $750K - $1.2M, the majority of buyers in the lower and higher range will be transitioning out of the local market.
2 votes Thank Flag Link Sun Oct 11, 2009
Well, if you prefer to study the actual research, rather than accept anecdotal hype from realtors, Mark Hansen has done a reasonable job here:


Carl is actually making the opposite point than he intends, because he's pointed out that over the summer, a series of unsustainable factors were artificially stimulating the market and temporarily preventing it from a continued correction. Those forces could not continue indefinitely and are now waning, allowing the resumption of the downward correction for the market segments that I have been posting about.

Keep in mind that knowledge flows in a descending order of audience sophistication and self interest: the professional analysts are first to acknowledge evovling conditions, then ultimately the media, and lastly those who have the most to lose by facing reality (or this case Realty).

Sorry RE Analyst (and Carl), but even the Chief Economist of the California National Association of Realtors said the following (just last week):

"Prices are firming at the low end, but they're going to be softening at the high end," Leslie Appleton-Young, chief economist for the California Association of Realtors, said Tuesday, a day before she was scheduled to deliver an annual statewide housing market forecast in San Jose. That should apply across the state and locally, she said."

So even the #1 economist for California's Real Estate propaganda machine is admitting what I've been predicting for that past six months.
2 votes Thank Flag Link Sun Oct 11, 2009
Hi Prad, I believe your goals may be possible, just not right now.

There certainly is a large amount of supply that banks still have their hands on. This "Shadow Inventory", and when I believe we will generally return to normalcy, are topics I covered in this current-and-future-focused blog:
"Coming to a neighborhood near you: REO Shadow Inventory"

There are three primary variables that influence the Real Estate Market: Jobs (income), Interest Rates (investor demand for MBS), and Prices (level of supply). Let me touch on the current status of each:

Jobs (income):
We currently have a range of 11.2% to 12% unemployment rate in the four counties of Solano, Contra Costa, Alameda, and Santa Clara.
A weak local jobs market will reduce demand for local purchase housing.

Interest Rates (investor demand for Mortgage Backed Securities):
Most of the demand in MBS has been via the FED. Between now and Q1 2010 we should see an increase in mortgage rates as the FED gets out of the business of artificially holding rates down via their MBS purchasing program (to get the truth on how mortgage rates are determined see: http://docs.Steven-Anthony.com/SAR-HowMortgageRatesAreDeterm… )

As of 9/22, the FED has purchased $870B of its scheduled $1.25 trillion MBS commitment. Originally schedule to end in Q4 2009, the FED recently announced an extension of its MBS purchasing program into Q1 2010. While many thought this was good news, in fact, it means the escalation in mortgage rates will begin earlier than expected as the remaining $380B of FED purchasing will be spread over two quarters rather than one. When this program ends, many expect rates will be 1-1.5% higher than they are now if private investors do not pick up the purchasing slack.
Rising rates will reduce demand for purchase housing.

Prices (level of supply):
If the two prior "influences" reduce demand, it’s very plausible that the banks will continue to hold back on releasing their inventory in an attempt to counteract and stabilize the value of the property they hold. So far, this tactic seems to be working; however, keeping prices held at current levels when the other two variables (Jobs and Rates) are reducing demand has to eventually lead to price reductions to stimulate demand. Perhaps the Bank's "cost of ownership" (insurance, vandalism, theft, property taxes, etc.) will start to weigh on the current tactic of trickling out supply.

These three “variables” are constantly in play. As such, if you are serious about a purchase team up with a Real Estate professional and get set-up with an automated MLS Search Agent. However, you should be aware that a MLS Search Agent is not your first step. The first step should be a formal Pre-Approval - not a Pre-Qualification! To tell the differences see: http://www.Steven-Anthony.com/default.aspx?pp=39377

OK, now back to my "your goals may be possible, just not right now" comment. Let's stop for a reality check: not every property on the market is distressed. For example, for the Month of September San Ramon's Active distressed listings (short sale & REOs) were ONLY 33% for detached homes and 46% for attached. So, ultimately, it may be non-distressed sellers that force the Bank's hand a bit in certain markets. Meaning, will the Banks continue to hold backlogged property (with its inherent "cost of ownership") if they see non-distressed sellers adjusting the local "price variable" downward to increase demand? Will Realtors who list distressed properties, and appraisers who provide values, not be influenced by non-distressed sold prices when suggesting list prices and performing appraisals?

Best, Steve
2 votes Thank Flag Link Wed Sep 30, 2009
The square footage is the "problem" with the criteria if that is the proper word. I believe that it is possible if the square footage close to or below 2000 sq ft. This of course may but work for your needs but if you can't compromise on square footage what else is there to compromise on?

City? Puchasing in Dublin may be an option with the other criteria.

Townhouse? No lot.

Newer should not be a compromise. There is something in this age bracket for you.

I don;t know that I would go as far as Carl's statements though. The $8000 credit is going away if the government doesn't renew it. There are many many more foreclosures coming and many others on the way. Yes, activity is up and realtors can make a living selling homes now but much of what is occurring here is manufactured. If superconfoming loans go away, the market will be adversely affected and prices will adjust again.

This doesn't mean wait, it means make a good decision on your own personal factors. The exuberance in the market is a reflection of the realities of Bay Area real estate. We have a housing shortage. Many buyers in this market are investors are buying in a depressed market but even Carl says that pricing is designed to attract multiple buyers. Much of
Web Reference: http://bob2sell.com
2 votes Thank Flag Link Sun Sep 27, 2009
Hello Prad,

A great, direct question deserves a bit of research using MLS data.

58 Number of single family homes in Gale Ranch & Windemere sold since 1/1/2009 priced to $700k
26 Number of single family homes in Gale Ranch & Windemere sold since 1/1/2009 priced to $700k that had at least 2200 square feet of living space.
$679,000 is the median selling price of these 26 homes, but prices ranged from $621,000 to $700,000

Now, for the next slice of data, drum roll please...

13 Number of single family homes in Gale Ranch & Windemere sold since 1/1/2009 priced to $700k THAT WERE NOT SHORT OR REO! Median price of these homes was $685,000, although selling prices ranged from $630,000 to $699,000!

Only 9 of these were less than 7 years old (2002 or newer). 3 were in Gale Ranch near the high-voltage power lines. 6 were in Windermere. 2 of those 6 were new construction in Campton at Brookfield sold way below original listed price.

Bottom line, there's a lot of current demand for homes in Gale Ranch and Windemere (schools, location driven). Expect to compete with multiple offers. 5 months of inventory is considered a " balanced" market. Less is considered a seller's market. More is considered a buyer's market. At the end of August we were showing less than 2 months of inventory for the city of San Ramon. Although I don't have the hard data at hand, I'm sure it's less for that specific target area.

Kindest Regards,
Vickie Nagy
Realtor® - ABR, CRS, e-PRO, GRI, SRES
(925) 407-7987 cell
Keller Williams, 760 Camino Ramon Suite 200, Danville, CA 94526
CA DRE License #01363932
2 votes Thank Flag Link Sun Sep 27, 2009

As always, a great dialogue, much appreciate your responses. Your clients are fortunate to have such qualifed representation.

Definitely agree on the superconforming risk profile, as that's one of the markets I'm tracking ($750K - $950K). Sellers in that market seem to favor a price range that will allow folks to barely squeak into the highest FHA ranges (which I believe for most of the Bay Area top out at just under $730K).

San Ramon at 130 CSI sounds about right for resale, but note that the Shiller bottoms typically overshoot baseline by 5 - 8 points (except for the dot com era, which was flat). I also agre that in the mid range ($500 - $650K), prices have largely stabilized; it's mostly the mid high and low luxury ranges that have the most downward pricing pressure ($750K - $1.2M, collectively).

The other factor to consider for the Tri Valley area is the large number of unbuilt units that have been approved for construction (Fallon Village, Schaefer Ranch, etc.). With more 4000 units in the pipeline, I'd be concerned about re-sale value in the shorter term, especially if the current new homes are selling at inflated prices.

Wow, now we are agreeing on almost everything. Guess we'll have hit a round of golf and go out for martinis? Then we can debate the whole "Japan vs. US recession, similar or not" thing.

: - )
1 vote Thank Flag Link Sat Oct 24, 2009

I completely agree that your principle residence should be purchased for its long term utility value (i.e. using it to live in). The benefits of things like mortgage interest tax deduction, inflation hedging, etc. are simply "extras" that enhance the utility value, even if the net value proposition from an investment perspective is unfavorable. After all, in a standard market, you buy a house to raise a family, build dreams, etc. The utility value of those factors alone can justify the purchase.

What troubles me is the magnitude of this bubble. When you look at the housing bubbles that occurred during the booms in the 1970's and 1980's, the Case Shiller Index rose 10 - 12% over the 4 - 5 year bubble periods before correcting back to the pre-bubble baseline. In both cases, the correction took about the same amount of time as the run up to the bubble's peak.

The current bubble saw a stunning 83% increase in the CSI, occurring over nearly a 10 year period. Since the end of World War II, the CSI has consistently corrected back to its baseline, providing over 60 years of reliable trends. Even with the modest corrections that have occurred since the peak in 2006, this market has a long way to go before re-equilibrating to the CSI baseline (~110). People just don't seem to understand how inflated the market is or that the government is enacting polices to artificially support it in a way that is not sustainable.

It's helps to actually see the data on a graph, which is truly stunning. Take a look at the two mini booms in the 1970's and 1980's and note the run up and relatively short correction back to baseline. Now look at the current bubble.


Wow. That pretty much speaks for itself.

Like economic heroin, the government is injecting the market to make it "feel better", using things like foreclosure moratoriums, tax credits, and low interest rates. But those policies are not sustainable and if the market gets "addicted" to them, the withdrawal will be more painful than if we'd just let the market correct naturally. Even now, the government is realizing that they can't let the tax credit lapse on November 30th or the market will go back into a (healthy) correction. I'll be they renew it and possibly even expand it (hmm, no wonder we are running one of the largest deficits in US history). Stimulus anyone?

The people who lost the most money during the dot com correction were those who bought into the false bottoms (there were several false bottoms before the market truly bottomed). The investors punched out during the first drop, because they knew the market was not sustainable. I fear for these folks who are buying brand new homes for $1M thinking they will hold their value, when all the research and trends indicate otherwise. Whether its a false bottom or an artificially maintained market, people are putting their life savings on the line without knowing just how much risk there is in this market.
1 vote Thank Flag Link Sat Oct 24, 2009

I have not been following this thread as nearly as closely as I should. You make some stong points with merit about Steve and Carls analysis. I would caution you about placing so much merit on the actual numbers being some sort of indicator that buyers should be banking on. There are variables at play here that have an impact on the market fundamentals that we professionals don't see and consumers may never see.

The one aspect I would point to is we have no idea what the banks are really up to. The people who control the "phantom inventory" are not talking and the people who should be researching this for are are shills to a system bent on salvaging a status quo that has terminally let down consumers. The clues are there though giving us some indication as to where some percentage of that inventory is going.

1) The banks are selling "tranches" (that seems to be the buzzword) of foreclosures to private equity firms. Millions of dollars of real estate sold in block to hedge funds and REIT's for pennies on the dollar (far less than small timers can do at auction). Knowing that real estate is an inflation hedge and assuming that these hedge funds are cash sufficient it is possible that that inventory may never see the market in a decade. I might even argue that those homes would be converted to rentals (or aggregated with together as redevelopment projects) that the greater economy would have to recover and we would have to ride out an inflation cycle before they appear on the market. That could be a very long time.

2) We have a housing shortage. I keep pointing people to ABAG stats from the market peak. The bay area is hundreds of thousands of units short to balance supply and demand. If the banks dumped their inventory all at once here. It would only temporarily relieve the market. In a short period of time the flood would subside and we would be right back where we are right now. Multiple offers and little inventory.

3) I can say definitively where the bottom is. Its based on what the home would rent for. Say the home described above in San Ramon home would rent for $3000 per month. Do the algebra backward using $3000 as the total cost of ownership based on today's interest rate. I just did a simple calculation based on 5% interest and the number comes out ot be $500k financed. Add 10% or 20% down payment and that number grows to something close to $500 to $600k. So if Prad could find that home for $650k right now his exposure is 50k to 100k. If he could find a home for $600k he should by it blind. At $500k he would ahve to compete with investors for the property. It's a dynamic equation because as interest rates go up so does the demand for rentals.

Hope that helps.
Web Reference: http://bob2sell.com
1 vote Thank Flag Link Wed Oct 21, 2009
I agree that housing market in Tri valley is seeing some false signs of recovery even so the fundamentals of economy remains weeks. Builders are taking full advantage of this Hype by raising prices and dumping them to impatient buyers who don't want to miss the boat.

At the same time Bay area companies are cutting heavily on Stock options and Bonuses so the income level to support such high prices is reducing and govt' is running out of options to support subsidies when they are running on huge budget deficit.

HawkEye is making excellent points based on Solid analysis but I agree at this time trivalley market is showing irrational behavior as someone said "market can remain irrational longer than you can remain solvent"
1 vote Thank Flag Link Mon Oct 19, 2009

With all due respect, based on your past posts, you have indicated that you make the commute from San Ramon to the South Bay during non-commute hours. Yes, if you drive from Windemere to San Jose at off peak hours, then maybe you can make the trip in 45 minutes. What, do you work the night shift?

The reality is that most of the people in the demographic I am tracking do not have that luxury. They are working standard corporate jobs on the Peninsula and even with "flexible hours", they must be at work during normal business hours. Most of the folks who can afford to buy in the demographic I am tracking are Silicon Valley professionals who must be at work during normal business hours and whom work in places like Santa Clara, Mountain View, Sunnyvale, Foster City, and South San Francisco.

Even Google maps indicates that the standard commute time from San Ramon to Mountain View is an hour and 20 minutes in traffic and that assumes no accidents (which occur 1 in 3 days per week). They show the same timeframe for the traffic time commute from San Ramon to South San Francisco: 1 hour and 20 minutes (no accidents).

As anyone who has gotten stuck on the San Mateo Bridge during commute time knows, if there is a mere fender bender anywhere on the San Mateo bridge, highway 880, highway 238, or highway 580, your commute goes from an hour and 20 minutes to two hours plus. On a good day the 880 to 238 exchange (to 580) is a stressfull navigation, on a bad day it's a nightmare.

And public transit is not an option. The M line bus, while nice to ride, has to endure the exact same traffic patterns. And BART is not an option, as you have to make multiple train changes and ultimately take a shuttle or bus to get to your final destination. Never mind that riding BART through SF has a whole different set of risks that most professionals would rather avoid (don't wear red or blue...).


And yes, when you parse down to the individual level, variance is highly based on preference. However, I've never characterized individual behavior, as that is impossible to predict. Trends are reliable though. For example, as the deserts encroached and destroyed arable land in the middle east, the research predicted that most folks would move to better areas (which is exactly what happened). Yet, there is always a minority that hold out and buck the trend (following the Bedouin's, for my example). Those that count on the strategy of the minority (i.e. outliers) are the ones that lose their credibility (and their money). My analysis applies to the majority in the demographic I am tracking and it is accurate, even if you wish it were not.

By the way, in my view your credibility on these forums is pretty much gone, but I gave you the benefit of my response only so that others won't be mislead by your biased rhetoric.
1 vote Thank Flag Link Sun Oct 18, 2009

You have very decent knowledge about real estate market in general. However, your postings are somehow bias. I do not know you wrote in that way intentionally or not. Please, be honest to yourself and to everybody reading your post.

For example, the way you describe commute time is absolutely absurd. I do not think you have ever actually drive it by yourself. All the number you gave is purely fantasy. Although this is a free speech forum, you still need to be careful about what you wrote here. That is your responsibility and duty to share you honest opining. So far by reading what you wrote, I am highly disappointed. I believe many people agree with me.
1 vote Thank Flag Link Sun Oct 18, 2009
As Peninsula prices soften, that will create an incentive for folks in the mid high range to leave the Tri Valley housing market and move closer to their South Bay and Peninsula based employers.


This is only part of the story. Why not it also happens on this way, as Tri Valley prices drop more than Penisula, people in low-mid range in Penisular move to low-high range in Tri Valley. Life is full of trade-off. There is nothing perfect especially when your budget is limited. Somebody prefer close to work, some people prefer newer house and some definitely need a good school district. Don't forget the fact, majority parents moving to Tri Valley is for their school. They can not afford a decent house in good school district in South Bay or Penisula. If some one think Tri Valley house will appreciate better than Penisula because of its lower price, that is dead wrong. A older house with large yard in good school district in S. Bay And Peni definitely has better potential. However, not everyone purchasing a house put appreciation as first priority. And most important, you have to be able to afford it first then wait for appreciation in furure. If a house in cheap Tri Valley area still required double income to support, image how much income it requires in pricy area. In case of mass job loss, no one and no area will be immune.
1 vote Thank Flag Link Sun Oct 18, 2009

By that definition, yes everything anyone ever says about the future is just an opinion. So when your doctor examines you, runs some tests, and then tells you to have surgery or you will die, that's just an opinion. When your accountant analyzes your financials and tells you to prepay your taxes now or be in big trouble at the end of the year, that's just an opinion. Same for dentists, lawyers, etc. Yes, professionals can be wrong, but in general they have a much higher degree of credibility when offering an opinion. I suspect that you'd agree that these opinions are quite different from saying "I think the color blue is better than any other color".

Also, I'm not just a home buyer, I'm also an analyst working in an industry that is critically dependent on accurate predictions of future economic trends, including the housing market. While my analysis draws on macro market trends, it is highly targeted to two specific micro markets (Tri Valley and Mid Peninsula). To develop an informed forecast for the areas I am following, I researched the following (specific to those area):

1. How many NODs were filed in the last 12, 6, and 3 months? What is the trend?

2. How many foreclosures occurred during the last 12, 6, and 3 months? What is the trend?

3. What percentage of NODS and foreclosures in #'s 1 and 2 above were in the prime market?

4. During 2004 and 2005, what percentage of the purchases in the prime market were funded using exotic loan products? What percentage of those exotic loans have refinanced since origination?

5. In the past 12, 6, and 3 months, what percentage of the NODS and foreclosures identified from #'s 1 and 2 above were for mortgages identified in #4 above?

6. For #4 above, what percentage of loans required a co-signer to qualify (i.e. dual income)?

7. Since 2007, what is the net job gain (or loss) within a typical commute radius for the area in question?

8. For #7 above, what percentage of the jobs gained (or lost) paid salaries for the prime demographic?

9. Are there atypical market forces (i.e. the government) artificially restricting or supporting the market?

So, in the Tri Valley micro climate, ask yourself the following:

Is there a concentration of dual income purchasers who bought in 2004, 2005, and 2006 using exotic loan products with 5 year recast periods, have not refinanced since origination, and who have jobs more than 20 miles from their home?

Are these folks currently unqualified for loan modification and/or relief programs?

Compared to historical averages, is the ratio of NOD to Foreclosures high (indicating a local backlog of shadow inventory)?

Is there a net job loss in the local and broader region?

Is the Federal and State government enacting unsustainable price support measures that must ultimately wane (e.g. foreclosure moratoriums, low interest rates, tax credits)?

If the answer to all those questions is "Yes" for a given area, then you have a micro-climate that would justify a downward pricing forecast. Actually, it would be more like a perfect storm.
1 vote Thank Flag Link Thu Oct 15, 2009
I'm a first time buyer, so no I don't own a home on the Peninsula or anywhere else. The reason I'm tracking price trends is because I don't want to buy now, only to have my home's value drop significantly in the next 12 - 18 months. And my posts are not opinions, they are based on facts and credible research. You can deny the facts, if that makes you feel better, but so far none of you have actually offered any evidence that contradicts what I have said.

The Tri Valley are (including Windemere) grew substantially in the run up of the housing bubble and many of those folks overpaid for their homes, using exotic loan products such as Option ARMS. These are not the "subprime" loan market, which has largerly corrected. These are the "prime" loans, made to folks with dual incomes and good credit. This market has not yet corrected and when it does, prices will go down significantly. Since the new builds in the Tri Valley area (such as Windemere) have a high concentration of these types of borrowers, the effect will be much stronger in those areas.

If you don't believe me, then do your own fact checking. Here's an article published today on Bloomberg (link below):

U.S. Foreclosure Filings Jump 23% to a Record High in the Third Quarter

...“The problem is prime loans going into foreclosure and people being underwater and losing their jobs,” Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles, said in an interview. “It’s a really bad number.”

Mounting foreclosures mean U.S. home prices probably will resume falling, analysts from Amherst Securities Group LP in New York said Sept. 23. A “shadow inventory” of 7 million properties are in the foreclosure process or likely to be seized, up from 1.27 million in 2005, they said.

The pace of prime and so-called alt-A loan defaults is accelerating as subprime defaults slow, Standard & Poor’s analysts led by Diane Westerback said yesterday in a report. Prime loans are those made to borrowers with the best credit records while alt-A loans are considered riskier because they were often granted without documenting the borrower’s income."
1 vote Thank Flag Link Thu Oct 15, 2009
Antu wrote:

This is totally personnal choice. I am working in peninsula and thinking opposite to you. There is more risk in bay area as price is so inflated than san ramon. San Ramon is value for money. Wise investor should lock profit in bay area and move to east bay for opportunity.


Antu, that post above just revealed your total lack of credibility.

There's no "personal choice" involved, I presented a valid analysis of market conditions, there's nothing personal involved. And the data refute your wishful thinking that the wave is moving West to East. It's unfortunate that you made some bad investment choices based on the bubble and are now regretting them; however, the reality is that investors are bailing out the failing mid-high East Bay market and investing their money in the South Bay. South San Jose is much closer to the Silcon Valley, so investors are snapping up homes down there knowing that when the economy rebounds, folks would rather live 25 minutes from work than commute from the far East Bay and battle 1.5 hours or more of traffic.

Don't believe me? Then explain why on 10/3 the Mercury News announced that San Jose is suspending it's affordability requirements for developers, because the South Bay market has seen so much decline in prices.

1 vote Thank Flag Link Sun Oct 11, 2009
did you ever see the quality of those houses in penisula...They are all near death..40 years old..need lot of maintanance..one of my friends boought million $$ home at cupertiino - 50+ yrs old..now looking for exit for this reason..As a buyer, I am also considering the same. Unless, you own really crap houses in peninsula by pauing 1M+, you will never understand the problem. I see big number of my friends are moving to San Ramon area for this reason from peninsula..lot of bay area companies are running shuttle from San Ramon now-a-days..So, your analysis is kind of one sided and with less informative..
1 vote Thank Flag Link Sun Oct 11, 2009

The problem is financing the larger homes.


If you've read any of my posts, you will be able to quickly confirm that I’ve been predicting a firming at the bottom end of the market and a continued softening and eroding of the top of the market. And I was saying it LONG before our chief economist started agreeing. So far, the market at the bottom in almost all bay area communities has reversed direction and has been heading back up. It’s a fact.

Here is just one recent example, posted BEFORE the Chief Economist of the California National Association of Realtors made her comments. Read to the bottom, especially item #4.


And all hype aside, between the two of us, one of us is out in the market every day, evaluating the trends and actually visiting hundreds of homes and writing countless offers. I’ve spent untold hours talking to sellers and buyers alike, have personally talked to C.A.R.’s chief economist and have a bit of an understanding of the psychology of the market. You are not going to get any classic Realtor rhetoric here, only information gleaned from the trenches by a full-time practitioner along with my opinions about where all this is taking us.
1 vote Thank Flag Link Sun Oct 11, 2009

Windemere is in melt down. Check a redfin.com search of the properties in your housing profile and you'll find a host of short sales, plus there is a large amount of "shadow inventory" in San Ramon that has yet to hit the market. Check my other posts on this issue, as I've documented current listings that are short sales (and soon to be foreclosures).

The Realtors are referencing statistics from the summer blip, trying to imply that the market has bottomed, but the forward looking data indicates otherwise. Keep in mind that most of these realtors made a killing during the boom and are desperate to preserve an artificially inflated lifestyle. Don't fall for the hype, conduct due dilligence on current and forward looking trends. These days, waiting is paying off.
1 vote Thank Flag Link Tue Oct 6, 2009
I am amazed that so few of the RE experts were so reluctant to call a top at the height of the bubble - their mantra always was 'buy now or be priced out forever' - but the same experts have been so eager to call a bottom, just a year and half after the bubble burst in the SF Bay area.

I recall Rama Mehra had been calling a bottom since 2007, but all her posts on trulia have disappeared.

Trulia allows all to delete their posts - I wonder if the post from Carl calling a May 2009 bottom will be there for posterity. I like Carl's post and opinions, but I think, he is more likely to be wrong on this one - time will tell.

California and bay area real estate market will have some very strong headwinds in the next couple of months, and the headwinds will last a couple of years - Alt A and option Arm resets. Chances of further declines are far more likely than any sustained appreciation.

Here is an interesting video , from Robert Shiller. Watch and draw your own conclusions.

1 vote Thank Flag Link Sun Sep 27, 2009
A bit of market history:

There have been a number of self proclaimed experts out there in the Windermere/Gale Ranch area who’ve been predicting that the bottom would fall out of the San Ramon Market and we’d be able to snatch up 2200 sq. ft. homes for rock bottom prices. The bottom of the market was in May, 2009. Prices have been moving back up ever since.

The “experts” failed to take a few things into account:

1. The tax credit has fueled a steady stream of buyers into the market.
2. Interest rates continue to be at low levels.
3. Current low prices have galvanized countless buyers into action.
4. Very low inventory has fueled multiple offers on almost every property out there.
5. Banks have been listing REOs at artificially low prices to attract multiple offers.
6. The northern California economy still remains stronger than the rest of the state and/or country and will continue to do so for the foreseeable future.

Even when the tax credit goes away, the other five factors will still be in place. As you’ve no doubt seen, homes that are hitting the market that are priced correctly are gone in mere days.

There is also a wildcard factor here that no one predicted:

Banks have learned how to regulate the flow of REOs to the market in order to control prices. Although there are many foreclosures out there, banks have decided to no longer flood the market as they once did. They’ve figured it’s in their best interest to mete properties out slowly and control market values. They’ve succeeded.

The majority of recent sales have actually been normal sales. There has been a reality check in place for many owners who’ve listed FAR too high and then had to adjust down to market values. This is in NO WAY an indication of a declining market – it is simply an example of properties priced too high to begin with that are only selling when prices reflect current market values. As in any market, properties priced too high simply sit there. The market price per square foot is, in fact, moving back up.

Second are short sales. Because of the lack of inventory, short sales are now attracting multiple offers as soon as they hit the market. These are indeed a grind, however, if you are willing to endure the process, these can actually be some of the best values. Unfortunately, because of lack of inventory, these are now getting multiple offers like everything else, and prices are also rising.

Lastly are REOs. There is currently one Windermere REO on the market below $650,000 – it is listed artificially low, will garner multiple offers and most likely sell closer to $700,000. Unlike short sales, REOs close quickly just like a normal sale.

Currently, if you want to get a home in the square footage you want at $650,000 or below – then you ARE dreaming. The average price in this square footage range is $749,000. Whether this will change as we head into the New Year no one knows for sure. Personal opinion, I don’t believe it will. There are too many factors to discuss here, but I believe the market will dip a TINY bit at the end of the year, then continue to inch up very slowly.

I can send you the actual data if you wish: unfortunately, it can’t be posted in this format.

Here are some posts that mat be helpful:

Mad Dash To The Finish Line: $8,000 Tax Credit Soon To Be Gone

Bank Tactics Causing Repeat Of Crash Conditions in San Francisco Bay Area

Artificially Low List Prices Are Wreaking Market Havoc: 6 MAJOR Emerging Problems

MARKET ALERT: Starter Home Prices Rising Out Of Reach?

1 vote Thank Flag Link Sun Sep 27, 2009
Hi Prad,
I found a couple of homes in your budget with your criteria. They are either short or REO properties. Most of the properties in that area that are not Short or REO are in the 800s and up. Just to clarify things; REO properties are bank owned and have clear title. They do not take as long to close as short sales and are not as complicated or risky. Short sales are tricky because you are dealing with different entities (home owner, bank, etc.) and it can take 60 days to close or the property could be foreclosed right from under you. It can be a frustrating process. With a good agent and a lot of patience you will make it through this process.

I hope this helps. My name is Heather Gass. I am a realtor for Prudential in the Orinda office, but I live in Alamo. I have lived in San Ramon before and am very familiar with the area. Please feel free to contact me at (510) 220-0603 or email me at heather.gass@prurealty.com. I would love to help you find your dream home.
Happy hunting!
1 vote Thank Flag Link Sun Sep 27, 2009
LOL Carl. "Man hugs" for everyone!

So I just finished a "non bubble" market analysis of San Ramon and was suprised to see that the data implies that there is still a $300K - $400K price inflation in the mid high market. I did a double take and re-ran the numbers, as that seemed a bit high to me, even with all things considered.

Since 1960 there have been two other real estate booms. One occurred from 1976 to 1980 and the other occurred from 1984 to 1989. The market corrected back to baseline in 1993 and thereafter, home appreciation roughly matched inflation until the start of the most recent boom in 1997. So there was a relatively "flat" period from 1993 to 1997 (where homes appreciated at the rate of inflation).

Here's the graph again for reference:


So I wanted to compare the new builds in Windemere to their equals during that non-boom period. What I found was that from 1988 through 1998 (the period between bubbles), 3000 + square foot homes comparable to Windemere were selling in the mid to high $300K range:

5 bed 4.5 bath, 3200 sq. ft. sold for $350K in Nov 1988

4 Bed, 3 Bath, 3300 sq. ft. sold for $370K in March 1996

3 Bed, 3 Bath, 3200 sq. ft. sold for $375K in March 1989

4 Bed, 4 Bath, 3300 sq. ft. sold for $342K in May 1994

4 Bed, 3.5 Bath, 3200 sq. ft. sold for $375K in Oct 1998

4 Bed, 3 Bath, 3400 sq. ft. sold for $334K in Dec 1993

With inflation, these homes should now be selling around $600K, but instead are listing from $900K to $1M (as are the new homes in Santorini). If wage growth outpaced inflation that might justify the price run up, but I don't believe that is a factor (still finalizing that data, as its a bit complicated because of the large number of commuter to SV).

Assuming wages did not quintiple (i.e. 5X) from 1998 to now, it really does seem that the government's injection of "stimulus" into the market is artificially propping up prices (low interest rates, foreclosure moratoriums, tax credits, loan modifications, etc.). I'd hate to think that housing has taken on the economic dynamics of "beenie babies" or "cabbage patch dolls", but there seems to be a fundamental disconnect between 300 years of economic and financial theories and principles in this current market. This kind of deficit spending to prop up an entire market is not sustainable and I have to believe that at some point, they must remove all this artificial market mojo and let the correction happen.

I wonder what that $1200 beenie baby is selling for today...
0 votes Thank Flag Link Sun Oct 25, 2009
Maybe a group hug would be in order next?
0 votes Thank Flag Link Sat Oct 24, 2009

Again I generally agree with you and in the price points at but more importantly over superconforming there is price risk. At and under conforming there is little risk as multiple offers show.

I like that case shiller index. It's a good indicator and doesn't change the discussion much. I saw that pic on the other San Ramon post and pit a piece of paper from the low to high to find out where "normal" should be right now. That point corresponds to about 130 on the indes. Once that graph is completed to current it should show price declines below to below the 130 mark.

If I am correct that means that the market is in depression and prices are far below supply demand equlibrium and buyers today, even if prices fall another 10%-20% might expect to see all that recovered very quickly.

Lets say that is 2015 as CAR expects. 60 months of rental (5 years) at $2000 per mo is 120k. Do I think prices are going to fall 120k on homes below 600k? NO! (all things being equal).
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Sat Oct 24, 2009

Generally I agree with what youare saying. I'd nit pick on this or that but substantially, yours is very good information. I still fundamentally disagree with your characterization of this market, see my conclusioin at the end of this. I would generally say, the best information for industry folks isn't necessarily the best information for consumers. I point specifically to your statement about housing not being an investment but a net liability. While your statement is technically true (I agree) The statement is more factually correct for a business owner. I believe the statement to be patently false from the consumer side.

Home ownership is number one wealth generating asset and consumers number one inflation hedge for almost every one who owns a home. Renting (in most areas of the country) is not the most economically sensible thing to do. For the average Joe, as someone who isn't that financially sophisticated and follows this economic stuff like professionals do, they wouldn't know how to properly evaluate the rent/buy decision anyhow. On a realted point, yes my answers are simplistic but the average Joe is my audience not the realtors and industry pro's. When I use the word investment, it is because a home is a unique hybrid non-liquid financial asset and should be treated as such. Please do not infer my meaning to equate the home investment to be in any way equivalent to a stock or retirement asset. Their different and that is a different discussion.

Anyone who is in the market right now, if they are represented by a responsible agent is being told to buy for the long term. The market isn't going to race upward and we are going to be in this doldrum until 2015 according to CAR. There are still a lot of people speculating in this market in spite of government attempts to prevent it. A lot of people still think like the boom days that real estate is a commoditized liquid asset that can be bought and sold on demand, this thinking must stop for this market to fully recover. The fact remains that people are going into multiple offers and are getting shut out for one reason. In spite of collapsed prices (that you and I disagree on cause) there are a more people who can afford to buy homes (at these price levels) than there are available homes (in this area).

If this were a free market, prices would be up 15-20% percent year to date. But as I started out saying. It's not, it's manufactured stability.

Under superconforming loan limits, if you are going to buy, be patient. Find the right house and be picky. Remember also you are buying for the long term, in the long term everything will be fine.

Over superconforming, you are experiencing what the lower market has already gone through. Hold on to your hats and enjoy the ride.
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Fri Oct 23, 2009
Hi Folks,
If San Ramon is not good due to commute wise what about pleasanton as a compromise with better homes compare to Peninsula but older compared to San Ramon and commute wise also it is better compared to San Ramon . I think pleasanton schools are almost as good as San Ramon. Any thoughts ?
0 votes Thank Flag Link Thu Oct 22, 2009
Correct. A bottom is always a false one until double tested. You comment is a BIG thumb up ^$^
0 votes Thank Flag Link Thu Oct 22, 2009
The ABAG report focuses on long term trends (out to 2035) and is meant for long term planning. Although updated biannually, the ABAG forecasts are in five year increments that are not particularly useful for the shorter term forecasting required to respond to evolving market conditions. Try pulling the ABAG report from August 2005; it’s actually amusing to see their projections for the current increment (at that time, we were ignoring ABAG and already predicting the crash, which is why I didn’t buy).

Regarding disciplines, analysts also combine finance, economics, and demographics when evaluating markets. The best analysts also integrate decision science, in order to bridge the gap from quantitative to qualitative forecasting, which allows consideration for psychographics (i.e. social trends).
Your point on credit is actually a bit more complicated than presented. In a balanced market, there is only a limited correlation between credit availability and price (check the stats pre 1996, before the bubble started). The primary factor is employment, because commercial credit allows businesses to prosper and consumer credit allows the fully employed to engage in commerce (in turn fueling business). The presumption (i.e. pre 1996) is that only credit worthy businesses and individuals are granted credit, so there is no artificial (and unsustainable) availability of capital.

For the housing boom, it was actually the government that relaxed rules and standards, initiating an increasing amount of credit availability to consumers who were not otherwise qualified to secure it. Ultimately others took advantage of those relaxed standards to run up the market, but the origin of the problem was government housing and monetary policy.

In the same way that venture capital artificially propped up the values of companies during the dot com boom, the lax lending standards artificially propped up the values of homes. The housing correction is not about credit, it’s about deflating overinflated home values. Even with the volatility of the stock market, deflating overvalued stocks during the dot com crash took almost two years and there were at least three false bottoms. The false bottoms are where most people lost their money, because the investors punched out during the first drop. Housing is significantly less volatile than stocks, so the housing correction will take comparatively much longer and with the potential for similarly patterned false bottoms.

I disagree that credit availability has completely reversed. In fact, the government is continuing to prop up the market by making credit easy to obtain (relative to a standard market), imposing foreclosure moratoriums, providing unsustainable tax credits, and providing mortgage relief programs that only delay inevitable foreclosure. Without a job base to sustain the demand for current housing prices, these gimmicks are just a proverbial finger in the dam. Any assumptions made against these artificially supported conditions are at best risky and at worst financially disastrous for someone who buys into a false bottom, only to lose 40% of their home’s value in the next coming years.

I also disagree that housing is an investment. In most cases, principle housing is a liability and in a standard market, with the net costs of ownership factored in, the inflation adjusted appreciation is relatively poor in comparison to other “true” investment options. Investors are buying into the low end market because it has largely bottomed and the purchases are in lower income areas where they can rent the homes for more than the mortgage payments (e.g. slum Lords counting on housing subsidies to ensure steady cash flows). There are also a collection of higher risk investors who buying into the mid low range with the expectation that the government will extend (or even increase) the artificial market forces that are sustaining prices in that segment. They are gambling that a mini boom will allow them to turn a quick profit before the market hits the middle hump of the W and drops back into the correction.
0 votes Thank Flag Link Thu Oct 22, 2009
If you have 2 or more kids. Private school no longer make sense. Many of my friends who previously lived in Santa Clara or South San Jose and sending kids to private school. They all recently traded up to Cupertino and Palo Alto and now sending kids to public school. Private schools are getting more expensive now and house price in poor school area appreciates less than in good school district. Many schools in San Jose are not adequate. They are below average, I mean they are very very bad. I am not racist, however, the more Latino in the an area, the worse school district it will be.
0 votes Thank Flag Link Thu Oct 22, 2009

I'm just going to let the ABAG reports speak for themselves. If you can dismiss a government report that Bay Area cities use for the basis of thie housing policies as folly but the facts speak for themselves.

As far as declining values go with regards to the housing shortage I say this. The first thing every real estate agent is taught is there are many factors that affect the demand side of the housing equastion. We are taught that in times of tight credit prices fall and in easy credit values increase. Other factors that affect value are use or zoning, the degree of functional obsolescence, the conformity of neighborhoods. This is what the state deems important information that agents should have in order to get a license.

One other factor that affect value that they don't teach are how we as a society react to trends. When prices were going up everyone wanted to get into the real estate game and now that prices are low everyone wants no part of real estate.

As a practical matter the high values of the recent past were artificial. No Income No Asset loans created so much demand that price inflaition was not in line with income appreication. Government agencies put the information out there and no one listened. The bank played as the Titanic sank. In other words values should not have gotten so high.

Since then credit went 180 degrees the other way. Last October, there was no credit to be had. Prices fell to their their lowest level, a level below where incomes and affordability fell back in line.

To summarize, when there is no credit values fall, the emotion of the day is to stay away from real estate, and generally people are not making big changes. Cooler heads are buying, people who need homes are buying and to bring this conversation full circle as the credit situation "normalizes" and as renters become buyers, ABAG reports say there are not enough homes for the people that are already here.

Two things I left out of my earlier post. One is that 1 million people are expected to come into the Bay Area in the next decade. Those ABAG assumptions were based on some rosy economics but I assure you that even if that number is 50% off builders won't be building whatever number of homes we are currently short and whatever homes are needed for newcomers. THAT is why investors are snapping up homes right now. Two, inflation will come back and if you hold on to a real estate long enough you will make money. Look at the price of any home in 1975 and compare it to the price in '85 and 95' and now. You will see that the trend including today will be one direction. UP.

Much of this dicsussion has been for people who have been following this thread. If you are in the busines you know this already. This of course assumes that we are dragging along a bottom in a Japanese style extended recession and wont fall into a second great depression before a recovery. Dismiss ABAG reports at your own financial risk.
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Thu Oct 22, 2009

By "decent" schools, I mean "adequate" (per the Webster's definition). Plenty of folks go to "adequate" schools and turn out just fine. You are also neglecting to account for the relatively large number of folks who purposely buy far less home than they can afford, so that they can use the difference to send their kids to private school (or have one spouse stay home and home school).

The difference in monthly payments between a $425K mortgage in a "decent" school district / area and $900K mortgage in a "top" school district / area can be as high $3800 a month. That's more than enough to send several kids to a top private school and/or have one non-working spouse stay home with the kids (and home school).
0 votes Thank Flag Link Thu Oct 22, 2009
If we are in declining market, Hawk is absolutely right. Except his claim in greater San Jose area. Most areas do not have decent school. That is why parents paying over million dollar to get a garage in Cupertino and Palo Alto. You can drive by the areas where those sub-450k properties concentrate, you will understand why they are selling so low.

If market has already bottomed up, Bob's opinion is more close to reality. For predict long term trend, all you need to do is to track population inflow and outflow. inflow < outflow, house price going down, inflow > outflow, house price head up. That is simple. Do you see any negative population growth in any area?
0 votes Thank Flag Link Thu Oct 22, 2009
Hi Bob,

Thanks for your response.

On your first point, I am in a Financial Services related industry (but not banking) and have a host of friends in the banking industry. They all laugh at these conspiracy theories, admitting that the slow rate of foreclosures and release of related industry is really due to a combination of fear and incompetence. Fear meaning that if they release too much inventory, the Feds will push harsher regulation. Incompetence meaning that up until recently, foreclosure processing was a tiny part of the banking industry's business model and they are struggling to adapt. For over 100 years, banks have not been in the business of processing failed loans (or being landlords to foreclosed rentals). This is all very new and quite counter intuitive to nearly a century of business model entrenchment. It's the the metaphorical equivalent of the Ford motor company trying to build boats.

On your second point, I disagree with the assertion that the Bay Area is "hundreds of thousands of units short", as that contradicts the supply and demand dynamic that is currently driving prices significantly downward. Pricing has dropped so much in the South Bay, that San Jose has suspended their affordable housing programs. San Jose is a reasonable commute to the Peninsula, has decent schools, and great amenties. There are currently over two hundred and seventy, 3 bedroom, 2 bath homes for sale under $450K in the greater San Jose area.


On your third point, I agree, but with qualification. Keep in mind that the rent to buy ratio will also descend as the market descends, so the numbers you quoted are a polaroid; in descending market, the snapshot is a bit misleading. In a downward trend, rents and home prices will both continue to fall, yet the ratio will remain roughly the same. It's not enough to run the numbers and "buy blind" based on the ratio. You have to plot the trend of the ratio, not just the ratio itself.

A $1M purchase to $6000 monthly rental ratio is exactly the same as a $500K purchase to $3000 monthly ratio. In that example, the value proposition of the ratio hasn't changed, even though the relative prices have been cut in half! If a $1M purchase to $6000 monthly rental ratio drops to a $500K purchase to $1800 monthly rental, that's a different story, as the trend indicates that rental costs are descending faster than housing prices.

0 votes Thank Flag Link Wed Oct 21, 2009
SK, stop reading the headlines if you want to buy house.
0 votes Thank Flag Link Tue Oct 20, 2009
Intresting read for those who thinks housing market and economy has recovered based on past few months of Housing and Stock market trends.

"1929 And Today - Sobering Parallels Abound"
0 votes Thank Flag Link Mon Oct 19, 2009
"Bay area companies are cutting heavily on Stock options and Bonuses". Totally agree. I will also wait Cupertino crashing like a stone.

Today my company has just announced random pay cut from 2% to 8%. They use lottery to decide who get the most cut.
0 votes Thank Flag Link Mon Oct 19, 2009
Yes, we shall wait until market crash again. I will wait. Let those don't-want-to-miss-the-boat party swim naked.
0 votes Thank Flag Link Mon Oct 19, 2009
Is a very old house with a big lot plus the fancy remodel better than a brand new house with a small lot? Hard to say. My previous house was build in 1992, not very old, right? But my dryer can not be used in my new home. I have to replace the dryer wire because the new home has to follow CA new power plug-in standard. Yes, you can remodel your house. But it is hard to improve your house fundamental structure.

A tip to folks who want to buy the old house is that you should try to avoid to buy a expanded house because the house foundation may be damaged and not easy to detect. That is a advice from one of my friend who is a bridge engineer

By the way Hawthorne homes does increase the price about 5%-10%.
0 votes Thank Flag Link Mon Oct 19, 2009

The poster who asked the original question is looking in the same demographic as the research that I conduct, which is not "less than 1% of mankind". In fact, the majority of folks in that demographic are dual income families making between $140K and $200K per year. Who do you think is buying all these $900K homes? If the incomes weren't so high across such a large demographic, prices would never have gone so high, nor would they continue to be sustained. Whether it's overly compensated state employees or run of the mill silicon valley professionals, the incomes in this area are disproportionally higher than most places in the nation.

Our "normal" is not the "rest of the world / mankind". And a wise person plans and lives in his current reality, not that of others (elsewhere) or one that he/she thinks should be.
0 votes Thank Flag Link Sun Oct 18, 2009
why don't you think that most of the people are thinking like you. You make less than 1% of mankind. World is different.
0 votes Thank Flag Link Sun Oct 18, 2009
Antu wrote:

If I start to agree with you, then I see that peninsula will be the first place to crash in next few years. Still I see $500/sq. ft. in santa clara with bad schools and 55 yrs old 1230 sq ft house. Do you think that this house will be a great choice over 3-5 yrs old 2200sq ft nice house?I think that peninsula house market should expect 15-20% hair cut.
Antu, I wish you were correct, as I'd prefer to buy on the Peninsula rather than in San Ramon. I'm not really a fan of the cookie cutter, McMansion style tract houses on tiny lots, as they lack character and in the long run, I believe their resale value will be low, especially when the builders start going full steam again and build huge new housing tracts in that area (that's just an opinion / preference, as my wife likes them).

Also note that the national trend is away from McMansions and back to smaller homes. The green movement has people reconsidering whether a family of four REALLY needs 4200 square feet and nine rooms, when most of that living space will just collect dust and/or be used for storage. And you have all of that space, but your kids can't actually play in the back yard because it's smaller than most dog runs...

Personally, I prefer the older custom homes on the Peninsula (and West Dublin), as they have large lots and the designs are quite varied. In the down economy, materials and labor are actually quite cheap, so a major remodel of an older home, using high quality materials, costs roughly 30% less than it would have during the boom. And the city goverments are being much more accomodating on permits, because they know that a major remodel on an older home means a reassessment that will lead to a much higher property tax basis.

Anyway, opinions and preferences aside, unfortunately my research indicates that your prediction of the Peninsula crashing first won't happen. It'll actually happen in the opposite direction (i.e. East Bay first).

Unless the Tri Valley area expands its professional job base (currently very small in comparison to the number of buyers/owners), the are's principle lure will be Peninsula based workers opting for a long commute in exchange for cheaper housing. As Peninsula prices soften, that will create an incentive for folks in the mid high range to leave the Tri Valley housing market and move closer to their South Bay and Peninsula based employers.

As the economy improves and professional wages increase (or the "survivor" employees that didn't get laid off regain their courage to buy), folks will rediscover buying power closer to their workplace (i.e. the Peninsula). This will further fuel the move of the mid high range market in San Ramon, Dublin, and (to a lesser degree) Castro Valley, back to the South Bay and Peninsula.
0 votes Thank Flag Link Sun Oct 18, 2009
Agree, hair cuts everywhere!
0 votes Thank Flag Link Thu Oct 15, 2009

If I start to agree with you, then I see that peninsula will be the first place to crash in next few years. Still I see $500/sq. ft. in santa clara with bad schools and 55 yrs old 1230 sq ft house. Do you think that this house will be a great choice over 3-5 yrs old 2200sq ft nice house?I think that peninsula house market should expect 15-20% hair cut.
0 votes Thank Flag Link Thu Oct 15, 2009
Thumbs up to you! The point you make about concentrating on a neighborhood is so simple and at the same time so important. I even take it a step further by breaking the research down to the specific search criteria of my Clients.

You make solid points in your posts, and I agree with much of what you have shared. I trust you would agree that the "macro" research you have been doing must be considered along with specific "micro" neighborhood research to arrive at a true market picture.

In my opinion, knowing when it’s the “right time to buy” is different for every homebuyer. Some take a quantitative view, perhaps weighing whether a profit can be made over a certain targeted timeline, or attempting to mitigate their equity losses by diligently monitoring news and reports on the direction of the market. Others are more qualitative. They seek to find a fantastic location/home that will pay dividends in the long run. The quantitative and qualitative viewpoints are equally legitimate based on the needs and wants of the Buyer.
0 votes Thank Flag Link Thu Oct 15, 2009
I was able to close something like this 4 months ago (approx 2200 sq.ft , 4 b/2.5 b, 4000 sq.ft lot) . It was a new home with $13k in upgrades in windemere area.
0 votes Thank Flag Link Mon Oct 12, 2009
Hawkeye, don't forget the schools in S. San Jose really sack. Many neighborhood in that area are not desirable. That is true investors are snapping up distressed property in S. San Jose. However, few of them will intend to live there. They rent them out. Most people go to San Ramon are for her great schools and nice neighborhood. None of them can be provided by cheap S. San Jose. Schools vs. Commute, that is the trade off of personal choice. BTW, commute is not that bad, I drive on average 35min each way between San Ramon and Santa Clara, off-peak of course. I used to live in Fremont, right now my commute hour is about 10min more and property price is about 25% cheaper. You do the math. The most important fact is that I can not afford a decent house in Fremont, none-the-less in Cupertino or Sunnyvale.
0 votes Thank Flag Link Mon Oct 12, 2009
Totally agree with Antu.

Hawkeye, you dumped tooooooo much " view and point" about San Ramon. Not sure if you tried to bring more buyers to buy your peninsula home.
0 votes Thank Flag Link Mon Oct 12, 2009
Looks like you are screwed in some bay area real estate. So, you are attacking San Ramon. Don't think that everybody in this universe are like you. There are enough people who has brain so they can think reasonably. If people are buying and happy at san ramon, what is your problem. If possible, sell your peninsula broken home, move to something newer so that you can save yourself...
0 votes Thank Flag Link Sun Oct 11, 2009
This is totally personnal choice. I am working in peninsula and thinking opposite to you. There is more risk in bay area as price is so inflated than san ramon. San Ramon is value for money. Wise investor should lock profit in bay area and move to east bay for opportunity.
0 votes Thank Flag Link Sun Oct 11, 2009
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