Cost vs Value

I always tell my clients that a kitchen or bathroom remodel is an excellent investment in their homes. But today's email brought a question from Kathi, a long time client...How much of the investment in a central air conditioning system would they expect to recoup when the property is sold someday?
Central air falls in the category of optional (at least in our climate) items that attract buyers and will make the home more appealing. These are the things that make the house sell more quickly and for top dollar, but don't necessarily return all of the cost to the sellers.
Other examples are ultra-expensive materials used in remodeling, and top grade hardwood floors,appliances, carpeting and window coverings.
By all means, buy yourselves these luxuries, especially if you expect to be in the house for many years, but be aware that the $20,000 Wolf range won't pay for itself when you sell a mid-priced rancher.

Bank-Owned Properties

The San Jose Mercury News today featured an article on REOs...real estate owned properties, clearly explaining why there are so few sales at foreclosure auctions in this area. (See my earlier posts on foreclosures, July 2 & 3) The writer explains that bidding typically starts at the amount of the unpaid balance of the first mortgage, and in a soft market, some homes are no longer worth that much.
No wonder the "bargain hunters" at these auctions aren't bidding! In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions. $2.6 billion worth didn't sell and ended up owned by the banks that held the mortgages, according to ForeclosureRadar which tracks these things.
Right now, only 8 percent of homes for sale in Santa Clara County (about 450 properties) are considered "distressed." These are either being sold in short sales (my May 21 blog,)in foreclosure or as REOs. These numbers have increased dramatically in the last year.
The numbers are not high enough in the county for us to be concerned yet, because lenders are not deeply discounting, but I'll keep watching this trend.

A "Snoring Room?"

Just when I think designers are running out of remodeling ideas, a new one pops up. This one is a sleeping closet, or snoring room, where the wide-awake spouse can retreat to blissful quiet when the decibel level gets too high. My sister keeps an extra bedroom handy (she admits to being the "offender" in her household) but these are much fancier versions.
According to 2007's "What's In, What's Out for Homebuyers" survey, snoring rooms are on the rise. These do not have to be new construction, although soundproofing and reconfiguring the floor plan may cost several thousand dollars. A contractor will usually adapt an existing space, such as an office or large closet into these quiet, peaceful havens.
Baby boomers need their rest!

A Weekly Update on Sunnyvale's Downtown

Well, dry weather makes the demolition (and future construction) go quickly, but some downtown businesses are starting to think that Sand Hill Development is well named, since dust and dirt are an ongoing problem. The developers and their demolition company, Devcon, are trying to mitigate the mess by adding a second daily street sweeper and using water trucks to control the dust.
Night work on Washington Avenue should finish this week, and then truck traffic on Mathilda will be less of a problem. Next on the agenda are design plans for sidewalks, tree wells and streetlights.
One positive development from all this activity...the six protected redwood trees that will create Redwood Plaza are starting to show new growth, now that there are fewer buildings around them!

July Fourth...Welcome to America

As I get ready for the House party/Potluck later in the day, I am reminded of the wonderful melting pot this country has always been, and continues to be. Our founding fathers were pretty much a "white bread" bunch, identical in appearance to the Englishmen they declared independence from.
Over the centuries, the look and feel of the country has changed and been strengthened by newcomers from a variety of other lands. Our local demographics have changed, and continue to change, as new citizens join us.
Nowhere was this more visible than my last open houses, where most of the young families were originally from other countries. They were looking for a home in a good school district where they can raise their children and live the "American Dream."
The Spirit of the Fourth lives on.

Playing the Foreclosure Game...From a Pro

What a coincidence! I just started reading the book on the top of my "books waiting to be read" pile, and it was Diary of a Real Estate Rookie, by Alison Rogers, a columnist for Inman News.
Her third chapter, in this eminently-readable book is called, The Sheriff's Sale.
Her advice mirrors some of that in yesterday's post, but she also has some worthwhile suggestions, like remembering that the current inhabitants are losing their home, and might not appreciate your trying to view it prior to the sale. Her idea is a knock on the door with a couple of fifties in hand.
She quotes The Journal of Real Estate Research which says, "If foreclosure, per se, results in such a large discount, we wonder why such properties were not purchased long before they made the multiple listing service. If real estate professionals handling these foreclosure sales do not recognize such profitable arbitrage prospects, who would?"...Intellectual jargon for "If it's such a good deal, why didn't the agent buy it?" She also strongly suggests that you have your repair team already in place. In the rehab world, time is money, as anyone who has watched Flip This House on HGTV knows.

Foreclosures, anyone?

A friend asked me last night how to get updated information on foreclosure properties. In our area, most properties are being sold before they reach that point, but he lives near Sacramento, where the market is much slower.
Foreclosures have skyrocketed in some areas of California over the last year, almost quadrupling in the last six months, due to a combination of a slowing market and risky subprime mortgages.
A little research on my part discovered several web sites with foreclosure data. Since a large number of auctions are postponed or canceled, it is worth a monthly fee to track these changes, even though the data itself is public. Postponed auctions can be potential bargains later, when the bank and homeowner run out of other options and finally agree that the property must be sold.
Sites that track national foreclosure data are: www.foreclosure.com, www.foreclosures.com, and www.realtytrac.com. For a site specializing in California only, try: www.foreclosureradar.com. They all charge about $50 a month for their service.
...and just remember, this is always a risky business, not advisable for any but the seasoned investor. Minimum bids are high, and the winning bidder must be able to pay the full amount in cash on the spot. Properties are sold "as-is" with no chance to inspect them, and there is no guarantee of clear title.