More on Sunnyvale Public Safety...not going to the dogs

When Sunnyvale’s Director of Public Safety Don Johnson, Officer Devin Kline and his partner, E. Jay, were guests at the Sunnyvale/Cupertino Tour Meeting last week. Johnson spoke to Realtors and affiliates about the department’s work in the community, while Kline talked about search and rescue work performed by C. Jay, who is a member of the department’s canine unit. We were impressed to here that these dogs save the lives of Public Safety Officers. SILVAR Past President Mark Burns said at this week’s meeting that the District plans to raise funds to buy bullet proof vests for some of the four dogs in the department. The bullet proof vests will protect the animals from being shot or stabbed, as was the case involving a police dog in San Diego. One bullet proof vest costs $1,800.

New Home Developers Reach Out to Realtors

Unusual markets make strange bedfellows. For many years, our question when we saw new homes being built was "Will they cooperate?" (In other words, will they pay a commission if one of us brought them the buyer?) In the past, the answer was usually "no". New home buyers were lined up at every model home, and it wasn't uncommon for developers to have a waiting list of purchasers before the first houses were built.
Now new home sales are at their lowest in 13 years, and the median price of a new house or townhouse has dropped to its lowest in more than three years. One of the agents in our office reported a call from a new Toll Brothers development, asking if he wanted to register his client who was at their model home. This sort of outreach is unprecedented in the industry, and shows how things have changed. Some developers are offering "laddered" commission schedules to Realtors who bring in buyers...an incentive for originating multiple sales.

New from Zillow

The Bay Area is known for its micro climates. That's as true for the real estate market as for weather patterns. Remember...I call our section of the Bay Area "The Oasis."
While home values have tumbled across the country, the San Francisco region has pockets of strength where prices continue to rise, albeit modestly compared with the double-digit appreciation of recent years. Not surprisingly, those strongholds are in affluent areas.
http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2008/02/12/MN19V0GLO.DTL&o=2
An analysis of home-price changes in Bay Area ZIP codes released by www.zillow.com shows a map of the region as a virtual checkerboard of good news and bad news.
Homes in many parts of Silicon Valley, San Francisco and Marin County appreciated in value as of the fourth quarter, compared with a year ago, Zillow said. But foreclosure-heavy, low-income areas such as east Contra Costa and southern Alameda counties had more dismal changes - many ZIPs there show home values down 5 to 10 percent, even more than 20 percent, in the space of a year.
The price volatility "is a sobering reminder of what's going on," said Stan Humphries, vice president of data and analytics for Seattle's Zillow. "It's pretty dramatic." However, he said, the Bay Area map actually is a pretty picture compared with many other places.
A 2-year-old Web site that provides an automated home-valuation service offering "Zestimates" - estimated market values - for 67 million homes nationwide. Zillow has data on 80 million homes in 48 states, or 88 percent of all homes in the country. Zillow collects data from a wide variety of sources, such as county recorder and assessor offices and real estate listings, then uses proprietary algorithms to arrive at automated models for estimating home values. Users can tweak property information to fine-tune the valuations, which are often "off" by 5 or 10%.

Will Your Line of Credit Still Be There?

Someone in my office just told me that she had a letter from her bank, saying that her line of credit would not be renewed.
Do you have a Home Equity Line of Credit (HELOC) on your house with an unused portion? For instance, if you have a HELOC for $100K but have a $40K balance you have $60K of unused funds available. Some lenders are putting a freeze on any "unused" portion of their HELOCs or reducing the credit limit. Several lenders have announced that they are putting a freeze on accounts for reasons such as payments more than 2 days late, inactivity, zero balance, and depreciating markets.
Gabe Bodner, a mortgage advisor I know, has been watching lenders over the last 8 months tighten their guidelines and increase their lending criteria to qualify for a HELOC. Some lenders are not even offering mortgages with less than 25% down. Others are no longer offering HELOCs or second mortgages at all.
So if you have a plan to use the "unused" funds on your HELOC, you might be wise to draw the funds now and deposit the money in a secure account so you can access the money when you really need it. Otherwise, you might find yourself in a position where you can't borrow all of the money in the future.

The Interest Rate Squeeze

When I spoke to my sister the other day, she was concerned that the interest rates on available CD's were at an all-time low. She and her husband are retirees living in Florida, and these rates are important to them, and to millions of other Americans on fixed incomes. Yields have sunk so low and so fast that some experts are afraid that rate-sensitive investors may switch to riskier investments, such as the so-called "high yield" mutual funds that invest in junk bonds. Yields on CD's had held up pretty well until the Feds dropped the discount rate to banks by 1.25% in a nine day period in January, in a further attempt to slow the repercussions of the subprime meltdown.
The squeeze is worsened by the rise in mortgage interest rates in the past week, as lenders struggle to adapt to the higher limits for conforming real estate loans. Meanwhile, the consumer is caught in the middle.

Hints on Avoiding Hours "On Hold"

Very few things are more frustrating than listening to Musak while on hold for customer service. Even worse is a continuing message that tells us how important our call is to the company while we wait...and wait. I usually find myself answering back to these messages in a less than ladylike manner.
I picked up some hints on how to avoid these situations from Bob Sullivan, in his book Gotcha Capitalism: How Hidden Fees Rip You Off Every Day and What You Can Do About It. Bob Sullivan covers Internet scams and consumer fraud for MSNBC.com. He is the winner of multiple journalism awards for his coverage of online crime and is also the author of Your Evil Twin: Behind the Identity Theft Epidemic.
Start by checking the website gethuman.com for the secret code that will get you to a live representative more quickly. If you call during regular business hours, the best employees will be answering the phones. Another hint is to consider pressing the number for Spanish. You will probably connect with a bilingual operator much quicker than waiting for an English-only one.
It might also be quicker to try the sales office instead. Ask if the rep has the authority to solve your problem. If not, ask to be switched to a supervisor who does.

Open House Signs

We have some nasty weather coming this weekend...heavy winds and rain are forecast...and I am committed to holding open house on both Saturday and Sunday afternoons at my new townhouse listing. The weather may keep all but the most serious buyers away, but I don't mind taking this time to show the place to as many potential buyers as possible. The hardest part is putting directional signs out in pouring rain, and hoping that they don't blow over in the wind. In years past, I've sat in a listing, waiting in vain for visitors, only to find out later that all my signs were flat on the ground. I have since replaced those heavy wooden signs, which are most likely to blow over, with lightweight metal frames and signs that swing freely in the wind.
Now if I could only figure out how to stay dry when I put them out and replace them in the car!

Sunnyvale Public Safety

Don Johnson, Chief of Sunnyvale Public Safety, spoke again to our Realtors' tour meeting this morning. The last time, he demonstrated the portable defibrillator that they use to save many lives. We were so impressed that we donated one for their use, and bought another to keep at the SILVAR (Association of Realtors) office.
Today the subject was the Canine Patrol, and CJ, one of their four working dogs, and his trainer were our guests. We learned that the dogs are given commands in German, so a "perp" can't confuse them by saying "sic-'im" or the equivalent. They also are provided with doggie-sized bullet proof vests when needed. These dogs can sweep through a building quickly, searching for a hidden criminal. They can also sniff out drugs where the officers might miss them. These are certainly a worthwhile addition to an already innovative force that combines fire and police departments.

Still Worthwhile to "Flip" a House?

A Realtor-friend of mine who has been successful in remodeling and reselling houses in the past is making an offer on a Sunnyvale listing this week. This one is in really rough shape, but in a good Westside neighborhood. We walked through it on tour a couple of weeks ago, and I must admit that the amount of work was daunting to me...but then I don't have the energy or enthusiasm for this kind of project that she does.
She told me that the first rule of a renovation job is that "the profit is made in the purchase." If you can't get the property at a good price initially, it's not worth the time, effort and money involved in preparing it for resale. She and her partner are coming in with a firm bid, and a two week close. If they don't get it at that price, they'll move on. The most important things are to know an area and its values, and to be familiar with the improvements that will appeal most to potential buyers...the rest is plain hard work!

Do You Have to be Solid Gold to Qualify?

California real estate agents and buyers face a strange lending environment in 2008. Interest-only and 100% loans are history. Subprime borrowers are out of luck. In the wake of the mortgage credit meltdown, lenders have become extremely risk adverse, and the secodary market is evaporating. Some types of loans have simply disappeared.
Although buyers are facing more stringent qualifying standards, we agents will continue to close transactions using methods that we learned during the last downturn.
Banks are looking for no-risk borrowers now. A FICO (credit) score of 620 no longer guarantees that a buyer will qualify for a conventional mortgage. One recent buyer I heard about had a credit score of 799, but he was self-employed, and he just squeaked by because of a 25% down payment!

Stated Income Loans

More on the article from Mortgage Resolution Services...
The loan product that really brings the problem into the forefront is the stated income loan. This loan invites the borrowers to "state" their income for the purpose of loan qualification without the requirement of providing supporting tax returns, and this invitation is generally only extended to those with a strong credit score. These stated income loans are failing at an alarming rate because they were offered to borrowers for whom the loan type was entirely inappropriate...but by no means "subprime" borrowers.
As much as it should not be the duty of the mortgage industry to protect borrowers from themselves, it is clear that imprudent underwriting practices have been a major reason for mortgage defaults. There's no point in flogging homeowners whose only crime was to take on a bad mortgage - in most cases a mortgage that should not have been available to them in the first place. We can make progress towards a solution, but it is going to take a big commitment from the mortgage industry.

Subprime...An Overused Word

Scott Thompson, president of Sacramento based Mortgage Resolution Services, recently wrote an article about the serious mortgage delinquency problem in most parts of California. The Central Valley has had more than its share of casualties over the past several months and the pace at which homeowners are losing homes to foreclosure is showing no signs of abating. As Ive written in earlier posts, this is clearly not a problem exclusive to California. Michigan, Ohio and other states are in worse shape.
Mr. Thompson believes that the mortgage industry desperately wants the public to believe that these delinquencies are primarily the fault of borrowers who tend to do a poor job of paying their bills. If the problem could be explained as too many credit challenged consumers getting into the housing market at a bad time, a look at the actual cause of the problem can be avoided.
Most of those suffering difficulties with their mortgages are borrowers with a perfectly acceptable credit history who somehow got involved in a mortgage loan product entirely inappropriate for their circumstances. The real estate market was that good, creating wealth all across America at a staggering rate. No one wanted to be left out and the mortgage industry delivered products that allowed nearly everyone to chase real estate riches.
It was against this backdrop that zero down payment loans, loans with negative amortization , loans where borrowers picked their own payment, and interest-only loan products became the rule rather than the exception. Borrowers in large numbers, most with strong credit histories, were drawn to these loans because the loan either made home ownership possible or helped them to buy a bigger, better home. It was just too easy for homebuyers to get caught up in the mania and reach for a house, the purchase of which could only be achieved through the use of a non traditional mortgage.

What is Mini Staging?

Realtors and buyers are familiar with staging. In our area, it has become customary to "dress the house for success" before it is placed on the market. A vacant home is cheerless, and buyers are much more attracted to one that invites them in, and shows the rooms to their best advantage. When time and money are a consideration, an experienced Realtor can work withe the sellers to mini stage the house, as I did with my new townhouse listing this morning. The first rule is to depersonalize the property. After a thorough cleaning, all the clutter of daily living is removed, along with family photos, and collections. "Less is more," is the perfect motto when preparing a home for sale. All the cleaning products come off the kitchen counter, the shaving cream and toothbrushes are tucked away in the bathrooms.
Then I bring in new accessories, fresh coordinating towels and linens, and flowers in the patio. When the townhouse goes on the market, it will welcome potential new owners.

A Real Estate Valentine from Washington

It’s official! The President has finally signed the economic stimulus package, which, among other things, includes a temporary increase of the conforming loan from $417,000 to $729,750 locally, and a temporary increase of the FHA loan from $362,750 to $729,750 in our area through December 31, 2008.
With the passage of the stimulus package, people may now obtain less expensive loans, thus reducing their monthly payments, improving homeownership affordability and increasing buyers’ purchasing power. Now couldn’t be a better time for Northern California real estate.
It is projected that this package may result in as many as 500,000 refinanced loans and could help reduce foreclosures by as many as 210,000.
The National Association of Realtors also estimates:
• That over 300,000 home sales could be generated thus reducing housing inventory and home prices could be strengthened by two to three percentage points.
• Nearly half a million people with higher priced jumbo loans may be able to refinance to conforming loans under the provisions of the bill, saving these people approximately $270 to $410 a month.

Happy Valentines' Day!

Water Damage in the Bathroom?

I recently read an interesting article by Tom Todd of Bay Bathrooms. He mentions that bathrooms are naturally prone to water leaks, which can penetrate behind walls and under floors. When I am looking at homes that we are preparing to sell, I often see telltale discoloration around the base of the toilet or tub.
Todd gives three rules of the thumb with regard to bathroom water damage:

#1. If you think those discolored stains and blisters along the caulked areas of the tub or tub-shower are leaks, you're probably right.
#2. What you are seeing is probably only the tip of the iceberg in terms of water damage.
3. If left unattended, the damage is likely to get worse. Water seeps into the structural wood and promotes the growth of destructive fungi, which thrive on temperatures between 40 and 100 degrees, your typical bathroom environment.

Several years ago, we had a terrible situation when the sewer backed up into our shower, master bathroom and bedroom. The Homeowners Association sent out "specialists" who cleaned the mess, replaced the bedroom carpet and placed a huge machine in the bathroom for three days to absorb the excess moisture.
It wasn't until we removed the baseboards several years later, as part of a "minor" bathroom remodel, that major fungus damage was found in the wall, extending behind a relatively new shower. Our minor remodel grew into a very expensive one, involving replacement of walls and the entire shower.

Stocks and Real Estate

As we watch the Dow and NASDAC bounce up and down over the last weeks, we can easily see the similarity between the stock market and the real estate market. Both are affected by the national economy and investors' fears of a recession. And both have people waiting on the sidelines for "the bottom" when they will jump in and invest. The problem is that you can never time it exactly right...you never know until values start moving up, and then it's too late. Leslie Appleton-Young, economist for CAR whom I quoted in my post a couple of days ago, says that real estate buyers are out there waiting until they think prices are reasonable. "Nobody rings a bell at the bottom of the market," she said. "Everybody's waiting for the bell."

Eichler Neighborhood Will Remain One-Story

The Sunnyvale City Council has made permanent (unless a majority of neighbors later choose to repeal it) a neighborhood's moratorium on second story homes that was due to expire in July. 54 homes in an area of mostly-Eichler built houses will be impacted. The boundaries are Helena Drive, Wright Avenue, Homestead Road, and Cupertino Middle School. The controversy began when a "monster home" was built in the midst of one story models. Neighbors didn't object to tastefully remodeled two story homes, but felt that this one wasn't compatible with other houses in the area. Most residents agree with the decision, but a few are concerned that it will limit their ability to remodel, and might potentially affect the resale value of their properties.

Sunnyvale Council Study Issues

More than 120 "study issues" were presented to the City Council for evaluation in 2008, and they decided to focus on a list of 41 projects. A left-turn lane from the Kaiser Hospital complex onto Westbound Homestead Road is first on the list. This has been a controversial subject, and I expect much input from the neighbors on surrounding streets. Other issues to be reviewed in the coming year are: a more aggressive approach to code enforcement, a branch library near East Maude and North Sunnyvale Avenues, revisions to the mobile home park conversion rules, a community theater downtown and evaluation of the Community Theater Center on Remington, parking in areas north of the Caltrain station and a soundwall funded by residents, and my favorite...a study of the study issue process itself!

Area Homeowners May Really Benefit From the Stimulus Plan

The biggest winners in the economic rescue plan now awaiting President Bush's signature are likely to be Americans with more expensive homes who will be able to refinance their home loans at cheaper rates.
For those who can take advantage of them, the bill's mortgage market provisions are likely to give more of a long-term financial boost than the tax rebates that many of us in the valley will never see.
The stimulus package temporarily raises the maximum size of mortgages that government-sponsored mortgage companies Fannie Mae and Freddie Mac can purchase and market as securities from $417,000 to $729,750. It also makes a similar change for FHA loans.
As defaults have surged, investors have been extremely skittish about the U.S. mortgage market. With less money available to loan, banks are charging much higher rates for riskier loans that can't be sold to Fannie and Freddie....the so-called Jumbo Loans. Raising the caps should result in a refinancing boom for those properties. The problems that we foresee are that that thee new limits are due to expire by year-end unless Congress makes the changes permanent, and that the impact of the changes is likely to take several months to be felt in the mortgage market. Doug Duncan, chief economist at the Mortgage Bankers Association said investors will want to study default levels on loans above $417,000, and prices could reflect a higher level of risk until that is known.

What the Real Estate Pro's Have to Say

Leslie Appleton-Young, chief economist for the California Association of Realtors spoke in our area the other day. As in the Merrill Lynch commercial...When Leslie speaks, everyone listens. This time she said that she was revisng her forecast for this year to include a median price decline of ten percent, up from her original four percent estimate.
Fortunately, she added that the lost value would be primarily in areas where prices fall in the lower end, and where the sub-prime market flourished. She described the Bay Area as a relatively strong, stable, market compared to almost every other part of California."
This reflects what what we are seeing, in busy open houses and multiple offers.

Blue Skies and Extreme Cold

The beautiful weather is like a gift this week, after all the rain we've been having, but it brought along some very cold temperatures, especially at night. For me, the cold weather meant only the inconvenience of adding an extra layer of clothing, and scraping frost off the car windshield before heading to the office. For the 125 to 225 homeless who are sheltered at the Sunnyvale Armory each night, it meant much more.
A question now before the redevelopment authority is which of several housing proposals will be chosen for a final low income housing plan. If the Armory location is chosen for redevelopment, the winter shelter location could be lost. Some disadvantaged citizens might be helped, but others could literally be "left out in the cold." The meeting will be held in March, and I'll be watching to see what is decided.

Mary Avenue Bicycle and Pedestrian Bridge Will Finally Be Built

Construction of the Mary Avenue Bicycle and Pedestrian Bridge over Interstate 280 between Cupertino and Sunnyvale is finally scheduled to start in February, after 10 years in the planning stage. It was considered too costly to build until consultants suggested changing the design from concrete to less expensive steel. The main structure of the bridge will be done by September, and it should be ready for public use by the end of 2008.
Homeowners in the neighborhood never wanted Mary Avenue to be extended across 280 as a traffic corridor, but the pedestrian bridge will create a pathway for bicyclists and pedestrians, especially for De Anza College and Homestead High School students.
Over 125,000 bicycles and 60,000 pedestrians are expected to use this bridge every year. The $14.8 million bridge project is funded primarily by VTA and the city of Cupertino. The city of Sunnyvale contributed $190,000.
"It will be the Golden Gate Bridge of Cupertino," said Cupertino Councilman Gilbert Wong.

Too Optimistic About California Schools?

I wrote a couple of days ago describing the upcoming improvements at Stocklmeir Elementary School. Now I'm not so sure about them.
The recent news is that if the Governor's budget is passed by the legislature, schools will get only 90% of what they expected in 2008-2009, or about $740 less per student.
If this cut does pass, we can expect that classes presently shrunk to 20 to 30 students will swell to the high 30's again, that teachers may be discharged, and that "non-essentials" such as art, music and phys ed will be eliminated.
As it is, California has only three percent of students in districts with per-pupil expenditures at or above the U.S. average. Can we afford to drop any lower?

More About "Moving Right"

The trial continues against local AV Movers, indicted along with a group of other moving companies for fraud. Clients of mine had asked if the moving company they planned to use was on the list, and I was able to reassure them that it was not.
Here is a list of what a reputable mover will do, from The Move Advocate:

Ask to perform a visual survey of your household goods and will give you a not-to-exceed or binding price. A phone survey is not a guaranteed estimate.

Give Written Estimates—Do not accept a verbal estimate. Always get it in writing.

File and Publish a Tariff—Reputable movers have filed a tariff with the government for state-to-state moves. The tariff outlines exactly how their prices are calculated. Movers may discount from this tariff but they may not exceed it. If a mover does not have a published tariff they are not a reputable mover.

Calculate state-to-state moves using weight, distance, and special services.

Ask for payment upon delivery, not before.

Allow client to accompany driver to the weigh station to verify weight of shipment.

Not jeopardize quality service by “low-balling” the estimate for your move. An estimate that is significantly below that of other recognized movers is a red flag.

Have his/her own moving trucks and equipment. A reputable mover will not show up in a truck marked with another moving company’s name on the side.

New Improvements at Stocklmeir Elementary

One of the reasons that my Sunnyvale townhouse in the Sunset Oaks development has held its value is its location in the Cupertino School District. However, our elementary school, Stocklmeir on Dunholme Way, is overcrowded. Built to handle 750 students, its current enrollment is 840
and growing, as young families move into the area. A study updated in October estimates that there will be over a thousand students in the school by 2010. With an increase like this, portable classrooms will not be enogh to solve the overcrowding.
An ambitious new plan calls for three buildings on the west side of the school campus to be reconfigured, creating 13 new classrooms. The district also plans to demolish two buildings currently used by the Montissori Preschool in order to create a new library and music room. New play areas are also planned, and a new parking lot and drop-off area on Dunholme will complete the project, scheduled to begin in February.