The More Things Change...

These days, no news seems like the best news when it comes to the real estate market. And no news is just what we got last week when the June median home price for Marin County came in virtually unchanged from 2009. In an odd sort of way, this jibes with what we've been experiencing on the street. Sellers have been saying, "It sure seems like prices have gone up this year." (Hopeful thinking.) While buyers keep telling us, "I think the market is still going down." (More hopeful thinking.) It would appear that, as usual, the truth lies somewhere in the middle.

If you're looking for the glass-half-full take on the data, it's this...The number of units sold was up over 6% while the median price stayed nearly flat. Why is this news? Because until recently, the only thing that drove unit sales was falling prices. An upturn in activity without a corresponding decline in values is, in our opinion, an indicator of a market that's finding it's footing. And that's probably good news for everyone.

Fuel for the Fire?

In nature, they say that wildfires and forest fires are part of the natural cycle. They clean out the dead and dying vegetation in one violent burn and set seed for a whole new generation of growth. Sure, it can be terrifying to watch as thousands of acres burn, but it may just be what mother nature ordered. In fact, sometimes the best choice is to just let the fire burn itself out until all the fuel is used up.

Of course, the issue gets cloudier when we find out that a fire wasn't started by a random lightning strike or other natural spark. We tend to feel differently when we find out that human negligence was involved. A cigarette butt tossed out a window or a camp fire left untended. When a fire was set deliberately by some nefarious individual, we may even be furious. And when that fire burns houses instead of mere trees and brush, we become enraged.

Which brings is to another buried lead in this article from sfgate.com. While it is certainly notable that the upper end of the market is feeling the foreclosure pinch, more interesting is the acknowledgement that banks are holding back REO inventory to prevent a freefall in property values. If you're a buyer looking for a bargain, you may find this irritating. If you're a pure free marketer, you may find it manipulative. But if you would prefer to see property values stay within shouting distance of where they were a few years ago, this doesn't seem like the worst strategy. Sure, it's in the banks' interest, since they're sitting on more real estate than they ever expected to own. But it's not necessarily bad for regular Joes or Joans who own just one or two properties and would prefer not to see those values decline even further.

How does this relate to a forest fire? The first question is, are we better off just letting this one burn itself out. Are bank-owned properties just so much fuel for the fire and does the long term health of our real estate forest depend on letting that fuel get used up in one massive inferno. (Forgive the belabored metaphor.) Or should should we control this burn and even try to put it out. And does it change the way you answer when you factor in the notion that human greed, negligence, and (cue the conspiracy theories) intent may have been the spark that started the blaze. Where do you stand?

A Leg...Sideways?

Until about three years ago, home ownership seemed like the key to a better life for nearly every American. A first step up the financial ladder. And even before risky loans and reckless borrowing brought the dream to its knees, a more honorable approach to first-time home buying emerged in the form of "Below Market Rate" housing. Cities and counties throughout California began requiring that developers set aside a certain portion of new housing units in a particular development to be included in BMR programs that would allow people to own real estate who would ordinarily never have been able to afford it.

Sounds like a noble endeavor all the way around.

So check out this article in the Marin IJ. It's nominally about how the financial crisis is forcing counties to revisit how they handle these BMR programs and how this is causing an uproar among buyers of regular market rate units in those developments. The buried lead, however, can be found in paragraph three: Buyers of BMR units "must sell them at about the same price they purchased them for."

Forget for a moment that there's a financial crisis going on. Pretend it's business as usual in the world of real estate. Can anyone explain how a BMR program is supposed to help someone get a leg up in the world if the appreciation potential of the investment is essentially nil. We're not economists, but this has troubled and confused us for years. SF has a similar program and it's never made sense to us. Shouldn't BMR units at least be able to appreciate at rates similar to comparable unit in the development? Otherwise, what's the point? All the headaches of homeownership (repairs, maintenance or HOA dues) with hardly any of the financial benefits?

We welcome your thoughts on this. It's something we've wondered about for years.

Enough is enough?

Scroll down to the real eastate-related blub in this nugget from the Bloomberg Report in today's Chron. It will come as a surpirse to many in the Bay Area to hear that foreclosures show no sign of letting up. It's nice to see the notices of default are down a tad, but that doesn't mean much for those looking a present problems (or opportunities). To us, this is a reminder that, while the recovery does appear to be fully on, it is still likely to be slow and fitful. We read recently that real estate prices aren't expected to return to their pre-downturn levels for another five years. Taking the temperature of our local markets, that feels about right.

Skipping Along the Bottom?

Today's article in the Chron may be the first evidence that the bottom of the market may be in the rearview mirrow. Maybe. We're inclined to wait a month or three to see whether we're just skipping along the bottom or actually bouncing off it.

Shameless Plug

We try to make this space informative and entertaining, but that doesn't mean we can't promote our listings every once in a while.

Here's our latest and greatest.
6033 Shelter Bay Ave., Mill Valley
317 29th St. #203, SF
290 Nevada St., SF
2248 15th St., SF

And while we're at it, we represented the buyers of this lovely Mill Valley home:
83 Sunnyside Ave., MV

Music To Our Ears

We're on vacation, but this item in the IJ didn't escape our notice. Longtime readers of this blog who remember our tribute to Charlie Deal know that we've got a soft spot for the old Mill Valley. It appears that some of what made our home town great may be making a comeback. We say, welcome back!

Rate of Return

We suppose there's a way to interpret this as something other than good news, but we sure can't think of one. Right now, low mortgage rates are just the thing to keep both buyers and sellers happy. Here's hoping...

Welcome to the Neigborhood

We've been touting the evolving Divisidero corridor for a couple of year now. It may still be a bit gritty for some folks, but the neighborhood has vitality and genuine diversity more reminiscent of Brooklyn than the Mission district. From a real estate perspective, we think values already reflect the area's future more than its past. In other words, it's probably too late to bet on the come. But if your goal is to live in an exciting, vibrant, true urban neighborhood with decent weather and access to Golden Gate Park, you'd be hard pressed to do better. So the next time you're cursing the traffic as you travel from the Marina to Noe Valley, consider just parking the car and walking. You may be pleasantly surprised by what you find.

Taxing Situation

Most people don't realize that there can be tax consequences to a short sale. Just when you think you've gotten out from under an unfortunate financial situation, you may find that you have a substantial tax bill. Today's Chron article spells out the pitfalls that may sellers are completely unaware of.

School of Thought

If you aren't raising children in San Francisco, this story might not seem like a big deal. But if you or someone you know has young 'uns in Baghdad by the Bay, then you know that the public school selection process is one of the single most important issues in town.

What's the real estate connection? The school board's decision to grant partial neighborhood preference could well have some impact on property values for homes near the most desirable schools. Of course, if the board had granted full neighborhood preference, the impact would have been huge.

In Marin, schools are a driving force behind property values. In San Francisco, schools are often a driving force behind people moving to Marin. Will the board's decision stem this tide? Time will tell. Did the board's decision only serve to further segregate SF's public school or did they not go far enough? We'd love to hear readers' thoughts (real estate-related or otherwise) on this very divisive issue.

Helping or Hurting?

Missed this one a few weeks ago, but it's worth a trip back in time. New appraisal guidelines are making it harder than ever to get financing for a home purchase. These days, anti-reform and anti-regulation stances are less popular than ever, but reform for reform's sake can backfire.

In our sphere, we've heard innumerable stories of local appraisals being done by out-of-area appraisers. (Mill Valley house, Sacramento appraiser. San Francisco condo, Morgan Hill appraiser.) We talk often about the importance of working with a Realtor who really understands a local market. Well, that wisdom gets severely compromised when an out-of-area appraiser can step in and blow up a transaction.

So is this a good thing or a bad thing? Are regulators protecting us from ourselves or are they preventing the market from recovering?

The Biggest Investment That Isn't

Apropos of today's earlier post, we were thinking about the conventional wisdom that one's home is usually one's largest investment. In light of the number of people walking away from their "largest investment," it's worth asking...if a person buys a home with zero down and an interest-only loan (as was the case for more than a few buyers during the boom time), is it really an investment at all? The only thing the buyer is risking is his credit score. There's no judgement or political statement implied by the previous sentence. Just an observation meant to spark debate.

Who's At (De)Fault?

An interesting article in today's Chron raises the questions about what happens when defaulting on debt no longer carries much of a stigma. Up to 25% of foreclosures are occurring because homeowners simply walked away from their home; something what was all but unthinkable for previous generations. For those with a talk radio viewpoint on this subject, the piece makes the notable point that it's not just individual homeowners who are walking away from financial obligations. Developers are abandoning multi-million dollar projects. And, of course, we all know about the Wall Street bailouts, which resulted from similarly reckless behavior, with consequences softened only by the government's golden trampoline. We'd be interested in hearing what readers think about everyone from homeowners to Wall Street brokerages getting into trouble from which they cannot recover. Has fiscal accountability become a national afterthought? And if so, is this a temporary phenomenon or a permanent shift in how Americans view debt and risk? Can the shame of being a welsher ever be recaptured? (I'm one quarter Welsh, so I think I can use that word.) Should it be?

Money Train

Another update on the progress of the SMART train. In case you're wondering why we keep reporting on this story, we believe that the SMART train (whether it makes it to the station or not) will have a big impact on North Bay real estate.