Coastal Real Estate and Lifestyles

Finding a few new interesting folks on Twitter this morning, I came across “DariusDunlap”.  He writes a blog about tech, music, politics, etc., which looked interesting, so I started following him.  He tweeted that New Leaf Market will be donating 5% of all sales today to Square Peg Foundation, a program to enhance life skills by working with horses.  This caught my attention because my daughter started riding and living in a world with horses at age 5 and I believe it changed the way she viewed the world.  We still have a horse that needs a new home.  She’s now in college.  Check out this local program, or you could stop by New Leaf on this crisp winter day for some of their delicious warm soup…or stock up on junk healthy snacks for Superbowl Sunday.

This is a loan for someone wanting to build in rehab/renovation costs into the first mortgage.  This avoids a second loan.  It’s a great product for first time home buyers who plan to live in their new home and who may be tight on the extra cash needed to make small improvements.  The other loan associated with this product is the 203K loan which has higher limits but may require permits for the work if structural changes are involved.  Note that this is a different product form the Streamline loan.  From HUD’s fha.gov site:

FHA’s New Streamlined 203(k)
HUD has developed a new FHA insured mortgage, called the “Streamlined (K)” Limited Repair Program, that permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

This is also a worthwhile consideration for first time buyers who might not have considered a fixer.  Contact your lender about this option for financing.  Not all lenders will have this program available to them AND the lender will need to be FHA approved.  Ask for referrals.  I just completed an FHA Streamline transaction on an REO sale in the Half Moon Bay area.  Scott Hershberger, Lanning Financial, Guarantee Mortgage handled the loan.

The loan is based on the “after renovation” value of the home.  You find out the costs by getting bids from the professionals who will do the work (general contractor, window contractor, flooring contractor, etc.)  The appraiser looks at the bids.  I referred the buyers to local contractors and they also did their own research.  Most non-structural projects can be done; your lender can provide you with the list of authorized renovations.  The bid includes the written price estimate as well as a Bio/references.  None of the contractors had heard of this type of loan or been involved in one.  The lender advised us that the most time-consuming portion of this loan was getting the contractors to get their “paperwork” in quickly.  That was not the case for us.  All the contractors were timely and professional.  Of course, we stayed in communication with them to keep them in the loop about the timing and process.

The money is held in a separate escrow account after the close of escrow and two disbursements are made.  One payment shortly after escrow to give your contractors a deposit and the balance is paid at the completion of the job.  The contractors have six months to finish the job and be paid.  Then the escrow account is closed.

What a great way to give first time home buyers the extra cash needed to bring their new home up to par, increase the value in a neighborhood, and “stimulate” the local economy by giving our local contractors more work to do!

Image provided by Absolute Floors in Half Moon Bay, CA.

New Listings vs Number of Listings Sold during the three months 11/01/08 to 1/19/09.  Note January’s numbers are to date.  Some of these may be re-listed if they’ve been off the market for 30 days or more.  This is for the “single family homes” market in Half Moon Bay, El Granada, Moss Beach and Montara. (not condos, lots, commercial, etc.)  Pacifica is not included in these numbers.  Graph taken from Coldwell Banker’s Market Trends data, which I’m told is taken directly from the MLS (mlslistings.com).

This is not total inventory.  Total inventory is currently 99 single family homes for the coastside.  Half Moon Bay Bay - 16; El Granada - 53; Moss Beach - 11; Montara - 19.  It is normal for a bump in new listings to appear at the beginning of a new year.  Usually February and March show a larger increase in new listings.  This year, we’ll see if the local market continues a steady increase or gets the spring spike of new listings.

Rich, at local vacation home Harbor Vista includes me on his mailing list.  I got this notice this morning…then sent a note to see if I could make this available to my readers as well, so here’s the offer:

We’ve got an open week coming up at our house, from Jan 23 (update:  just booked this afternoon) Jan 25 to 30th.  I wanted to offer it to our mailing list first, at 50% off, or $200/night for Mon-Thurs and $250/night for Fri-Sun, with a 3 night minimum.  Lodging tax or pet fees are not included.

In case you need a reminder of our home’s amenities, our website is http://www.harborvista.us/. 

We recently converted the downstairs to a 4th bedroom, and pictures are available on our site.

I’m also offering February nights at 15% off.

If you’re interested, you can reach me at the number or email address below.

Regards,

Rich Gaushell

(650) 284-4098

owners@harborvistahmb.com”

Check the Coastside page for more fun things to do in the area.

When you’re not working on your swing, work on finding another type of address…a beautiful golf course home.  An Ocean Colony update is timely due to the dynamics within this neighborhood.  I’ll explain…

This gated community has only seen 2 sales since October 2008 (Ashdown and Eagle Trace) and 4 closings since October 2008:  2 closings in Oct 08 (Turnberry, Cypress Point); 1 closing in Nov 08 (Ashdown); and 1 closing in Dec 08 (Eagle Trace).  There are currently no pending sales.  Yet there are 16 active homes on the market! 

For sellers, be very careful about your pricing strategy.  Keep your long term goals in mind if you’re unhappy about the price your Realtor recommends, particularly if you purchased in 2003 or later.  It may be wise to also consult with your financial planner and tax consultant.  Sellers who bought in 2002 or earlier may see this as an opportune time to move on with their lives if selling is in the picture.  For buyers who want to move into a coastal gated community near the Ritz and the coastal trail…Hel-lo!  Time to pay attention to this special neighborhood.

Here’s what to watch out for:  2 of the homes are short sales; another may may be a short sale if the seller agrees to a purchase price that is below what is owed on the loan(s) - then the lender needs to agree to the price.  That’s what we know from the MLS.  There is one bank-owned (reo) property in this neighborhood at this time..  This is not enough distressed properties to cause great concern for rapid declining values.  I’ve been told by reliable sources (appraiser, my broker) that appraisers take this into consideration when looking at comps for lenders.

List prices have been coming down to reflect market changes.  The list price trend just in the last two months shows an increase in the number of properties with price reductions, from 37% to 41%, and an asking price per square foot of $448, compared to $465 back in November 2008, according to Altos Research data.  We will have to wait for a balanced market in this neighborhood, but we ‘re trending in the right direction.  A balanced market will occur when more of these current listings are absorbed (sold or taken off the market) and new listings are kept to a minimum.  If more distressed properties come on the market and the inventory remains high, the current home value correction of approximately 9% off the peak of 2005 could decrease further.  In my opinion, sellers need to revisit their pricing strategy if the property has been on the market six months or longer.

That being said, special properties in this neighborhood can sell quickly.  Sometimes homes sell before they’re put on the open market.  If you see a home with 0 days-on-market, this obviously was not marketed to the public.  It may have been a pocket listing.  A seller usually has his/her own reasons for selling in this manner.

Here’s a look at some history showing number of sales in the Ocean Colony neighborhood only.

The volume for these sales went from a high of $69,534,000 in 2005 to $20,944,656 in 2008 - a 70% reduction. 

Median/Average prices by year between 2003 and 2008:

• 2003 - $1,025,000/$1,126,941

• 2004 - $1,080,000/$1,357,590

• 2005 - $1,260,000/$1,545,200

• 2006 - $1,150,000/$1,277,435

• 2007 - $1,177,000/$1,277,672

• 2008 - $1,150,000/$1,396,310

This neighborhood in particular, has different types of homes, varying ages, and proximity to the highway and the oceanfront.  A very detailed Comparative Market Analysis would be necessary to see where a specific property fits into the current market.

OCEAN COLONY HOMES FOR SALE INTERACTIVE LINK HERE.

8/14/08 - Ocean Colony:  Facts, Figures & Trends

Marian Bennett’s Half Moon Bay Market Report for week of January 12, 2009 (listing trends)

A bank owned property, also called an REO, is when the property has been foreclosed upon and the lender (note holder) becomes the new owner by default on the loan.  This is not the same as a Trustee’s Sale held at the San Mateo County courthouse steps.  Purchasing one of these homes from the bank who uses a Listing Broker still allows the buyer to do their due diligence before proceeding with the sale.  Not so with a Trustee’s Sale.

The MLS shows 23 bank owned “active” (available) or “pending show” (in contract but contingencies not yet removed) single family homes or condos for Half Moon Bay, El Granada, Moss Beach, Montara and Pacifica.  This may be off a bit because some agents do not change the status to “pending” following the removal of all contingencies.  They range in price from $254,900 for a downtown Half Moon Bay townhouse to $869,900 for an attached Ocean Colony home.

7 are pending - of these 7, 2 have an extension on the close of escrow date.

16 are active

By location:

5 are in Half Moon Bay

2 are in El Granada

1 is in Montara

15 are in Pacifica

A year ago, we had very few bank-owned properties, but more short sales.  Twenty-two (22) REO properties have sold here in the last six months.  Some sold for over list price.  There is a misconception that you can get bank-owned homes for a bargain.  I guess it depends on how you define “bargain”.  You may get a very good deal, but think twice if you believe the bank will give it away.

The first article I wrote about this very unique benefit of living (or visiting) the San Mateo County coast with the Peninsula Open Space Trust in our backyard was back in August 2007 when I spotlighted the Princeton-by-the-Sea neighborhood in El Granada.  Again, last month, POST completed three sales totaling 1001 acres in Half Moon Bay, Moss Beach, and San Gregorio, enabling these parcels to remain open space.  Forty-nine (49) of those acres are between the under 10-mile stretch of Half Moon Bay and Moss Beach.

December 23, 2008:  Sale of 32 acres in Half Moon Bay for $650,000.

December 24, 2008:  Sale of 952 acres on the the east side of Highway 1 north of San Gregorio for $3 million.

December 31, 2008:  Sale of 17 acres near Moss Beach at Pillar Point (adjacent to Fitzgerald Marine Reserve per POST) for $1.825 million.  According to POST, “Informal trails have crossed this private property for years; eventually trails will be improved and opened officially to the public.”

The Peninsula Open Space Trust prepared a press release this week to make the announcement.

Our local open space and available recreational activities are one reason why home price values are what they are.  Local buyers and sellers understand this.  Those relocating to the Half Moon Bay area for nearby jobs in San Francisco or Silicon Valley have to get used to the sticker shock before they can settle on a home.  Note:  This post isn’t about home prices; there are many articles, tools, and references throughout the site highlighting the current opportunities and trends.

Related articles:

One Reason people move to the Coastside, by Marian Bennett 12/28/07

Quiet neighborhood reaps the benefits of POST, by Marian Bennett 8/27/07

Sustainability.  Sustain a mortgage, sustain a city, sustain a home, and of course, sustain our planet.  This will require a shift in our collective thinking.  Sustainability has yet to reach a tipping point, yet many of us are beginning to make lifestyle decisions based on their sustainability factors.

Home vs investment.  The debate continues as to whether your primary residence real estate purchase is a investment, in the true sense, in addition to your home.  The coming year will see a shift based on the basic question:  “Is this the home I want to be in for several years?” versus “Could this property give me a good return on my investment?”  Those of us looking at retirement strategies are asking this question again.

Conventional wisdom will be questioned.  Buyers and sellers will begin to realize that lives cannot or will not wait for the big guns to get their act together.  We’re in unprecedented times and we’re all adjusting.  Rather, they are beginning to take a hard look at their current financial situation, and will begin to strategize on how to get to the next step in their lives.  Call it thinking out of the box, or tossing old “tapes” that no longer apply.

News source selection.  Consumers have control over where they get their real estate news, but many don’t know it yet.  They still read the newspaper headlines, web news headlines, or mainstream media.  More and more people will select their media sources and news feeds for additional information, or trends, or analysis on issues that they feel is pertinent to the decisions they need to make.  Select your information sources into a custom Reader, download podcasts from respected sources, read the blogs of industry experts.  These sources are becoming more respected and used.

Know your Neighbor.  It just seems like the more deregulated we became, the more isolated we became.  (This is not a political statement, just an observation!)  Connections is a keyword of 2009.  Whether it’s within a local community, neighborhood, office, or industry.  There are more ways than ever to connect; however, connecting will go beyond just adding a name to your “friend” list, or attending the annual picnic.  It will be more about what can we learn from each other, or create together, or share with each other on a regular basis.

Ok, so why did I come up with such a list and why this list of 5 topics?

I started this post because I’m reading articles with the word “sustainable” in them practically every day.  My realization that this concept will continue to evolve beyond just environmental concerns got me thinking about what else I think will change in 2009.  The other four quickly came to mind.  They are just my opinion.

There may be others, they just didn’t come to me this morning.  Share a comment if you have another thought or want to expand on one of the issues.  Let’s make 2009 a good year.  Thanks for reading.

Happy New Year.