The latest offering of an equestrian training center is Footnote Farms in Danville, California – 7171 Johnston Road.  Footnote Farm is situated on a gated 10 acres in the beautiful Tassajara Valley.   It is ranked as one of the most spectacular horse training facilities in the East Bay.  The 2,838 sq. ft. home and pool have been beautifully remodeled and the newly built equestrian facilities feature a 180 x 220 arena; lit 80 x 90 covered Arena;  Magnum Horse Exerciser with 50’ Round Pen; two barns (one with a 1,630 square foot caretaker unit) with extra large stalls and attached paddocks for 17 horses;  five fenced grazing pastures and so much more. Other features include a vineyard, olive grove and stunning views of the Valley.  No expense has been spared including new driveway, drainage, septic and water systems. This property offers potential boarding income and seller financing is available.

Footnote Farm has also created horse breeding facilities.  In fact, a Norwegian Fjord filly just arrived on May 9^th.  I have walked this property from the vineyards to the feed storage barn.  Of all the equestrian properties we have represented over the years, this one is at the top of the list.  It is being offered at $2,980,000.

Contra Costa County and Danville were ‘horse country’ in 1970 when I first arrived from Redondo Beach.  And, shortly after I arrived two horses showed up in our life.  The farthest out homes from downtown Danville were one mile from the freeway.  We rode our horses downtown and all over Mt. Diablo.  There were even hitching posts in front of Diablo Foods that is now Beverages & More.  Flannigan’s Tack Shop was the biggest business in town.  Flannigan’s is now a dance studio – Two Left Feet.

The past 40 years has changed the landscape of the equestrian properties.  In the midst of the real estate’s financial crisis, the equestrian properties continue to thrive. The equestrian enthusiasts generally have the money to support their luxury ‘habit’ and they always prefer to have their horses on their property instead of boarding them.  And, the horse properties have changed from ‘western’ to dressage, eventing, and hunter / jumpers. ( I still ride ‘western’.)   The horse community is now all along the Tassajara Valley instead of downtown Danville.    It is still a very special community to be a part of.  We are so fortunate to assist clients with the selling and purchases of country and equestrian properties in the East Bay.

CONTACT ME if you would like to explore what it would be like to own Footnote Farm.  And we are standing ready to be of service for any of your country property needs.  It is a pleasure to assist our clients with fulfilling their dreams.  Until next time…Jim Walberg

Related posts:

1. East Bay Real Estate: Danville Is Still Horse Country!
2. Horses Were THE Real Deal For East Bay Real Estate In The 70’s
3. East Bay Equestrian Properties Are Still Thriving! WHY?

The Bay Area Team has just been selected to represent a magnificent French country estate and three-bedroom cottage designed on one of the largest lots in Ruby Hill Country Club. It is nothing short of a masterpiece unparalelled in authentic European and American craftsmanship and uncompromising quality.  The selection of The Bay Area Team was made because of their extensive local knowledge and their carefully planned and perfectly executed global reach.Exquisite materials and finishes create an awe-inspiring piece of art that happens to be made of wood, plaster and stone.  The almost 4,000-square-foot home and 1,200-square-foot cottage are adorned in the soothing, soft palettes of the French countryside and take advantage of the views of its sprawling 1.42 level acres of property. This grand property stands alone as the first property inside the Ruby Hill gate providing the ultimate in privacy on every side and has a deep, front, corner front yard and circular driveway with access from West Ruby Hill Drive and Barolo Court. The front entrance, flanked by rose trees is welcoming and inviting.

The extensive use of reclaimed wood from Pennsylvania barns, limestone and a soft organic color palette creates a tremendous harmony to the home that effortlessly continues into the cottage.

French lime plaster is used exclusively on the walls, limestone counter tops are featured in the kitchen and bathrooms, gorgeous Osage Rubble limestone from a western Kansas quarry, handmade and fired ceramic tiles antique French light fixtures, copper gutters, and a slate roof are but a few of the numerous highlights in the home and cottage.

Additionally, every room in the house and cottage guarantees a view of manicured lawns, natural stone and blooming rose gardens in the forefront, and the Ruby Hill lake, golf greens and luscious rolling hillsides in the distance.

Main Home: Four bedrooms, three and a half bathrooms which includes a second master suite/game room/bonus room, formal library, formal dining room, spacious living area, sauna, wet bar, wine cellar, three stone fireplaces, gourmet kitchen, and a butlers pantry.

Cottage: Three bedrooms, two bathrooms in addition to an outdoor living room and dining room with stone fireplace, custom windows, flooring and alder cabinets, fireplace, and private gardens designed by Pat Wagner, a contributor to House & Garden TV.

Outdoors: Large 1.42-acre level park-like setting, three front wading pools on two levels, deep setback from street, gated entry from two sides, mature landscaping, side garage, lawn, flagstone walkways, more than 250 rose bushes and hundreds of flowering bulbs.   There is also an outdoor kitchen with mounted flat screen TV,  a three car garage with room for golf cart, and breathtaking views of the lake at Ruby Hill.

There has never been an estate in Ruby Hill such as this one offered for sale.  Please contact Jim Walberg for further details and to arrange a private tour.   The estate is offered for $4,400,000 USD

Related posts:

1. East Bay Real Estate: New Home Designs Dramatically Changing!
2. The Tobin Clark Estate: A Once In A Lifetime Opportunity For $29 Million
3. East Bay Real Estate: 2012 First Quarter Trending UP!

Topics Addressed Today:

• What makes Silicon Valley such an enticing place to do business?
• What types of deals are getting done?
• What kinds of projects are in the pipeline?
• How does the Tech Industry drive investment and development in other asset classes?
• What other drivers of development exist in Silicon Valley?
• How does Silicon Valley compare to other markets for investment?
• How are the needs of tenants evolving?  How are their evolving needs being met?

Moderator: Sonia Ransom – Allen Matkins:

Panelists:

John Sobarato – The Sobarato Organization:

• Biggest difference today compared to 1960.  No institutional capital available in the 1960’s.  Now it is the opposite.  The banks aren’t lending and the pension funds are.
• Young top professionals want to be employed in the Bay Area.  Google has 90 buses all the way to Solano and Marin Counties.  25% of these bright young professionals don’t even own a car.  “Benching” employees is today’s issue.  There are no more private offices, so how do you design today’s space needs?
• San Jose to Santa Clara – 150% of FAR.  If the companies can’t expand they will be forced to leave.
• Green belt alliance is favorable regarding increased density.  However, Sierra Club says not.
• Congestion will force people into public transportation.
• Tearing down the tilt-ups and building apartments.  A lot of product in Milpitas and Fremont that need to be re-zoned for residential.  The white picket fence is not the trend.  High density housing and apartments are the deal.
• Future:  Infrastructure is in place in the Valley.  Attorney, CPA, etc.  The software side is where the growth is.  More open plan dense buildings filled with software engineers is what today’s market requires.
• Flex structure format seems to be eliminated and going to straight office structures.  R&D process is much different than in the past.  Engineers can work in a high rise.  Lots of windows and an open plan environment.
• San Jose will not allow any industrial conversation.  He believes it is a bit short sighted.  They did rezone the First Street corridor with 6,000 units.
• CalTrains will become electrical.

Jay Bechtel – Google

• Cycle is repeating itself and the demand is starting again from Sunnyvale to Mountain View.  BIG demand
• If we find a smart engineer in the world we can hire them to Silicon Valley.  Commuter lanes are full of buses.  Maybe a Google garage someday.  Many of the young engineers live in San Francisco and commute down to the Valley.
• What is Google looking for?  No ground up development yet.  Next are the NASA and Mountain View sites.  Open look.  No single person private offices.  Lots of meeting rooms – small.  Low panel heights.  They want people to see each other.  Google provides all the tools so they come to the office.  Once they are there, there is no need to leave.
• Google has accepted the cost issue for space.  They are in a very tight commercial market.  In direct competition in a limited area.  They are also landlords.
• General plans of cities will challenge how the growth happens in the Valley.
• A driverless car is already here.
• Credit worthiness is the key to the future.  Residential elements next to or very close to their work place is needed.  Employee amenities; food, bus, volleyball, basketball.  Maybe the commercial developers will deliver the same type of amenities to their clients.
• Bio-techs are a small piece of the Valley mix of companies.  They are coming.
• Samsung is has BIG plans to compete with Apple’s tablet.
• How do you accommodate those who want to live in SF and work in the Valley.  Buses, wi-fi, leather chairs.  Not losing people because of that.
• Can’t Google move their people to public transportation?  Google is designing a plan.  They are working hard to get their people off the road.
• How are they stabilizing energy costs?  Google is 100% focused on GREEN.  Energy, water, efficiencies, etc.  The value is that every savings goes to the bottom line.  However, it cost 2x to get there it is right thing to do.

Larry Matarazzi – Colliers International – San Francisco:

• A lot of companies have tons of cash.  Corporate clients are paying for the build out.  Public transportation is a BIG issue for the corporate tenant.  Younger companies are much more robust – real companies, real business, and real profitability.  These are companies who are creating great end user experiences.
• Very dense environments in order to get the energy of the group.  It is so complicated to create today, so collaboration is the deal.  Pressure on the restrooms,  extended business hours, packed offices.  Laps used exclusively,  and requests for pets to be with them at work.
• How are the mid-caps competing against the BIG elephants?  There is plenty of space available.  Cost of real estate relative to the cost of the employee is insignificant today.  A $180,000 for engineer cost $8,000 to house them.
• Small companies with FAST growth are really challenged with future growth needs.  Some of them are growing at 100% a year and more.  It constrains your choices and decisions for the future, so space decisions need to be made early on.   The just need to worry about profitability.  Take the space when it can be found.  They will need people as they grow.  For example, DropBox.com had 30 employees and took 85,000 square feet in order to guarantee their future space needs.
• Fremont is competing with Prague, Shanghai, Austin, etc.  Location is global now.  The Non-core jobs are being located around the world instead of in the Valley.
• Congestion and commuting:  If they double-decked 880 it would still be bumper to bumper.  An alternative is a time shifter.  Flex hours and lots of them.  People will determine when they drive on the freeways.  They will either be in congestion or not.  Many of the foreign professionals are very accustom to public transportation.
• The word TECH are not useful enough to talk about the realities of each of the Valley’s businesses.  They are each unique.  We are in a world market and a lot more collaboration with other parts of the world is happening 24/7.  Good news, the three key components of the Valley.  People, Venture Capital, and Early Adopters is all in place.
• No expectation of the economic collapse similar to the 2000 tech bubble.
• Any change to public transportation takes decades to create results.  Companies can’t wait for the process to come up with solutions.  These companies are competing with other companies for the same employees.  So, they are now in the transportation business and even the restaurant business.

John Eudy – Essex Property Trust:

• Multi-family is a lesser risk for banks.  Must have a capital source.  REITS and pension plans are the main funding vehicle.  Issues:  Timing, complexity, funding, Going green, less parking.  These are all relatively new issues.
• Tech is also driving residential.  The more jobs the more rents and prices rise.  How do they serve the young professionals?  Parking is the BIG issue.  How are they commuting?  What do they want to experience when they come home.  Now they are including retail at the living centers.  They are even minimize kitchens because the young people rarely cook.
• Build more housing where the jobs are so the tenants can walk, bike, bus, skateboard, etc., to work.  Even cutting a bus curb at housing because of this new form transportation that the BIG elephants are creating – buses.
• Higher density, connectivity for the employees anywhere, even home.
• North San Jose has approved 8,000 units.  When those are built the infrastructure will have to be in place before they approve any more.

Michael Biggar – Orchard Partners:

• Relative difficulty of spec building.  It just isn’t happening.  Banks are not willing to take the risk.  Very difficult to get a building built today.
• Pet clauses in leases is a requirement today. (Zynga).  Price incentive tenants can be along the 101 corridor.  Where the cost conscious tenants are looking is Fremont, Milpitas, etc.  Rent is unbelievable in the Valley.  So the wave has not hit the Outlier areas, but it is coming.
• The BIG future issue is transportation.  Where are people going to park and how do they get to the office.
• Broad base market.  No freight train coming at us to wipe it out in the near future.  There are seven or eight segments to the Valley’s economic engine. We can afford to have one or two of these segments have a downturn without it impacting the big picture of Valley’s continued success.

Jeff Birdwell – Sares Regis Group:

• Users of size owning their own real estate is the trend.  Sares Regis Group has morphed to become a fee-development company – analyzing.
• The commercial world is chasing the BIG elephants. $3 to $4 per square feet triple net is where rates are going today.
• Adaptive re-use is also the trend in the local Valley communities – changing the usage of the real estate.
• Trend:  Some of clients say the construction industry is broken.  How are we delivering product?  Integrated product development – http://www.npd-solutions.com/principles.html .   Contractors who embrace it are succeeding.  Also, check out  www.bridging.org
• One has to be an optimist.  And we need to be cautious.   We are not immune to market cycles and maybe need to diversify part of our real estate focus on the public sector.
• New designs – A more slender building that is similar to what we see in Asia.
• Public transportation needs to create GREAT alternatives.

Related posts:

1. East Bay Real Estate: Colliers International’s Trends 2012 Forum
2. East Bay Real Estate Finally Gets San Ramon City Center!
3. East Bay Real Estate: Jobs Update – Underwater = Not Moving!

Earlier month there was a $26 billion mortgage settlement with the five major banks and the Feds. This is expected to drastically speed up the foreclosure process because of the strict guidelines the banks need to follow when repossessing a home.  The foreclosure process has been stalled for two years because of the “robo-signing” scandal which allowed bank employees to sign millions of foreclosure documents with little verification of the signature.  The banks got caught and the foreclosure system stopped.

This caused the lenders to stop foreclosures because of fearing further government scrutiny until some type of settlement could be reached with the Feds.  It has taken over two years for a settlement to be reached.  This has allowed borrowers who were delinquent on their mortgage payments to stay in their home for sometimes years with never making a payment.  For the past two years it has averaged 370 days, nationally, to foreclose on a home, which is twice as long as it was in 2007.  In has been even longer in New York – 1,056 days, and Florida – 861 days the past two years.

So, because of the Bank settlement this month the slow rate of foreclosures is about to speed up dramatically.  For example, there were over a million foreclosures that could have been acted upon last year that were ignored.  “The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen – both in terms of new foreclosure activity and new short sale activity,”  said Brandon Moore,  RealtyTrac’s CEO.   Now, this may not significantly impact many of our Bay Area micro-markets as noted in my 2012 real estate predictions,  however there are still pockets of troubled properties in the farthest out bedroom communities such as Antioch, Brentwood, and Tracy.  In those communities the increase in foreclosures will likely bring home prices down even further.

The rationale used by the Banks in speeding up the foreclosure process is that it would allow the housing markets to find their local ‘bottoms’ and then stabilize at their true value.  When prices finally hit bottom and home buyers notice the stabilization of prices, it is expected buyers will be ready to jump back into the housing market and make purchases.  In many of our local markets such as Alamo, Danville and San Ramon, prices seem to be turning the corner upward.  And, it is not just prices that are turning the corner, we have had the highest first quarter sales in over five years! Buyers know we are near the bottom of the pricing market and they know interest rates are at 40 years lows, so they are buying.  It is not yet a 2012 trend,  however it appears to moving in that direction.

Contact me TODAY, for a free price evaluation of your home.  We are standing ready to be of service.  Until next time…Jim Walberg.

Related posts:

1. East Bay Real Estate: Banks Forced To Settle With Feds To Provide Fair Foreclosure Practices!
2. East Bay Real Estate: Foreclosures Result In $50 Billion NOT Paid To Mortgage Payments!
3. East Bay Real Estate: Foreclosure Paperwork Mess Continues!

There are also amazing auction items for the limited guest list of 600.  The event is always a sellout, so if you would like to make a tax deductible donation of $50 to the DSV Rotary Club Foundation an Event Pass will be waiting for you at the door.  If for some reason you are not able to join us your tax deductible donation will be put to good use.  MAIL IT TODAY! Jim Walberg, 760 Camino Ramon, Suite 200,  Danville, CA  94526.  I look forward to seeing you there!  Until next time…Jim Walberg.

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1. East Bay Real Estate: 21st Annual Blackhawk Food, Wine & Film Festival!
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3. East Bay Real Estate Agents Support Community Service – All The Time!

There are many factors that have caused the increase in ‘sold homes’ the first quarter.  Here are a few of them.  1) Low inventory of homes for sale.  In East Bay alone there has been a 62% increase in home sales compared to the first quarter of 2011, and with 32% less inventory of homes for sale!   2)  Record low mortgage interest rates of around 4%.  It appears the Feds will support this rate for at least two more years.    3)  A sense that home prices have generally hit bottom as confirmed by Warren Buffett in his CNBC interview last month.  This is reflected today by having more homes in escrow than are currently for sale – an indication of a Seller’s market. 4)  A pent up Buyer demand that seems to feel it is finally time to take action on a home purchase – a reflection of consumer confidence and a lack of fear that has been driving the market the past four years.  5)  Landlords have driven up rents to the point of it being less expensive today to own a home than to rent one if you have the required down payment.

The challenge for both Buyers and Sellers today is that they are unfamiliar with the effective strategies to be used when dealing with multiple offers.  Below are a few of the ones we are recommending to our clients.

For Buyers:

1. Act quickly if this is a home you want to own.  Time is of essence when multiple offers are a possibility. Often times the first offer in is the one that is negotiated first by the Seller.
2. Do your homework regarding comparable sales.  This is not a time to create a “low ball” offer.  Often times it takes missing two or three home purchases to clearly understand we are in a Seller’s market.
3. If you are one of the Buyers in a multiple counter offer situation consider upping the purchase price compared to what is being countered by the Seller.  Often times the other Buyers will just accept the price that has been submitted by the Seller and yours will now stand above the others.  It can be as small of an increase as $2,500 to $5,000 that makes the difference between your offer getting accepted or not.
4. When in a multiple counter offer consider improving the terms of your offer;  close of escrow date;  shortening the time frame of removing contingencies;  increasing the Good Faith deposit;  offering a free rent-back; and others.

For Sellers:

1. Play fair.  No matter if it is a Seller’s market or a Buyer’s market the objective is to always end up with a win / win purchase agreement.
2. When dealing with multiple offers find a way to have each of them reflect the same terms and pricing that you want for your home.  For example, if there are three offers on your home with different terms and conditions,  create multiple counter offers that requires them to be all the same;  days to remove contingencies;  close of escrow date;  good faith deposit amount;  rent back terms; and others.
3. If more than one of the multiple counter offers is signed and returned to you, it is not time to send out another multiple counter offer to see if you can get an even higher price.  It is assumed that the multiple counter offer you created for their consideration is one that is acceptable to you if it is agreed to.  Pick the one that best meets your needs and open escrow.

Again, the first quarter of 2012 does not make a trend.  However, we are in a Seller’s market and you need to know what strategies to implement.  CONTACT US TODAY for a free price report on your home, or if you are a Buyer and need effective representation with your next home purchase.  Until next time…Jim Walberg

Related posts:

1. East Bay Real Estate: 4-Topics For Buyers/Sellers To Consider After The S&P Downgrade To AA+
2. East Bay Real Estate: 2012 First Quarter Trending UP!
3. 2009 East Bay Real Estate Pricing Strategies – Jim Walberg’s Recommendations!

Here is just one of the stories of how things are turning out for the Sellers we represent.   Starting in January our clients spent over a month preparing their home to come to the market place in last February.  As you have read in my past articles,  buyers are focused on ‘turn key’ homes, which allows those properties to sell much quicker and for a higher price than homes that need ‘sweat equity’, and allow these properties to appraise for the purchase price.   Our Sellers agreed with our recommendations and invested over $7,000 to get their home to a ‘turn key’ condition.

We launched the home the last weekend in February with a price of $899,000.  It was in a desirable neighborhood, on a large lot backing to open space, 2,500 square feet, 4-bedrooms and 3-baths.  The kitchen was original, however the interior was newly painted and tile floors were installed in the bathrooms.  It was professionally staged, too.  At the end of the first day we had eleven showings.  The following day, Sunday, we held the home open.  There were 87 families who came through during a three hour period!  By that evening we had received five offers, one of which was all cash for $31,000 over the asking price with a 21 day close.  The all-cash offer was accepted and our clients were ecstatic with the results.  This story has been played over and over again this first quarter of 2012 from Lafayette to Pleasanton.  So, is this a trend?

Well, it is too early to tell if this is a trend.  One quarter does not make a trend.  However, we are noticing that the ‘turn key’ homes listed for sale that are priced to reflect current pricing are getting the lion’s share of the buyers attention.  The remaining three quarters of 2012 are still a mystery.  There are so many ‘wild cards’ in front of us;  unemployment is improving but still has a long way to go;  conflicts in the Middle East are impacting fuel prices;  the European debt crisis is far from over;  we have a presidential election that has already been extremely divisive;  and other events that we can’t even imagine yet.

Is it still a great time to purchase a home in our region of California?  YES!  If you recall, Warren Buffett has recommended everyone who can afford one to purchase a single family home this year because of home prices and because of extremely low mortgage interest rates.  Will this real estate window of opportunity continue for buyers?  We believe these conditions will be favorable for buyers all the way through 2014.  What about sellers?  In our micro-markets home prices will take years to recover their values from 2007 – maybe one or two percent price increases per year for the next five years.  So, what advice would I give a seller today?

If a seller in our market areas is thinking of selling their home in the next six months, we would recommend they do all they can to get their home on the market as soon as possible.  Inventory is still low, however as we get into the Summer that will change.  There is a buyer pool that is now making purchase decisions in a way we have not seen in four years.  So, there is a pent up appetite for home purchases and we need more inventory.  So, whether you are a Buyer or a Seller, we are standing ready to serve your real estate needs.  CONTACT US TODAY! A conversation won’t hurt.  In fact, you may be surprised at your options.  Until next time…Jim Walberg

Related posts:

1. East Bay Real Estate: 4th Quarter Is The Best Time To Sell Or Buy Bay Area Homes!
2. East Bay Real Estate: Mulitple Offer Strategies For Buyers & Sellers
3. East Bay Real Estate: 2012 Real Estate Predictions

Last week, Mr. Buffet was interviewed on CNBC regarding his forecast for 2012.  During the interview he spent a good amount of time explaining why he believes it is time to buy single family homes.   They are cheap, interest rates continue to hover around 4%, and it is an attractive long term investment.   He also stated that many stocks were undervalued and he recommended purchasing them for the similar reasons.  In 2012 he is not a fan of Treasury Bills, precious metals, are keeping assets in cash.  To show you how Bullish he is on single family homes, he said he wished he could buy “a couple hundred thousand single-family homes” and easily manage them, and he would “load up on them” and “take mortgages out at very, very low rates.”  ( Do you remember a past posting of mine that also said there has not been a better time to buy residential real estate than right now and the FEAR was one of the key factors stopping buyers from taking action?) He went on to explain the challenge of having that many homes is managing them.  With stock purchases it is as easy as a click or two on your computer.

As you read the transcript from the CNBC interview, you will note that Mr. Buffet’s advice to young investors is to buy a single family home with a 30 year fixed mortgage.  And, if they are a bit courageous, buy a couple of homes at distressed prices, fix them up, and rent them.  Remember, the Mr. Buffett is noted for purchasing undervalued assets, and he is convinced that the single family housing market is one of those undervalued assets in 2012.  One of the indicators of housing values is the Price-To-Rent Ratio. That number has fallen to 2003-04 levels – we are talking VALUES.  And, there is still work for our government to complete that will accelerate the housing recovery.  So, if you are considering whether to rent a home or buy a home in 2012 – BUY!

Mr. Buffet also said during the interview that “…housing will come back – you can be sure of that.”  There are two factors impacting the health of the housing industry in 2012 –  Supply and Demand.  These two factors break down to housing starts and consumer demand impacted by the number of household formations.

So, the average annual housing starts from 2002 to 2007 was 1.34 million a year.  The average annual household formation during the same period was 1.05 million.  Do you see the problem?  And, as we all now know, the housing bubble burst in 2008 and the U.S. and global economies have yet to fully recover.  The good news from Mr. Buffet is, the situation has reversed in 2012.  Here is what he said,  “People may postpone hitching up during uncertain times, but eventually hormones take over. And while ‘doubling-up” may be the initial reaction of some during a recession,  living with in-laws can quickly lose its allure.”  The key factor that has now made 2012 the time to buy a single family home is that housing starts in 2011 were 609,000 and household formation was 1.14 million.  This means a pent-up demand with the perfect storm of an undervalued asset that can be financed at around 4% for 30 years.  WOW!

His final comments about why he believed so strongly about buying a single family home in 2012 were, “Demographics and our market system will restore the needed balance – probably before long…  I believe pundits will be surprised at how far unemployment drops once that happens. They will then reawake to what has been true since 1776:  America’s best days lie ahead,” said Buffett.  Please CONTACT US today if you would like to take action on the most undervalued assets in 2012 – a single family home.  Until next time…Jim Walberg.

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1. East Bay Real Estate: Why Buy A Home NOW?
2. East Bay Real Estate: Buy Your Home NOW!
3. East Bay Real Estate: Some Housing Recovery Solutions!

The format of Trends 2012 started with a panel made up of Jim Morgensen from Zynga, Michael Bangs from Adobe Systems, Dr. Ian Sobieski from Band of Angels, and Andy Zighelboim from Colliers International. The first question posed to the panel was, “What is your Silicon Valley crystal ball?” Zighelboim provided the first response, “We expect a prolonged cycle of expansion in Silicon Valley and the Peninsula.  And, we recognize that world economies are still in a recession.  When the world recovers it should set up an even bigger growth opportunity for the Bay Area because of having such a head start on our recovery.”  He further added,  “Today the three legs of our economic stool are: the Cloud, computing, and social networking.  Because of this, the actual cost of distribution from these business sectors is zero.  With 25% of the world ‘connected’, and with that number growing to 50% in seven years, there is only an upside to these industries.”

The next question was pointed to Dr. Sobieski.  “What is going to be the foundation of the next economic swings?” He responded with, “People rush into the next bubble and are only perceptible in hind sight.  Make no mistake, we are at the front end of the next bubble.  It will be a period of creative inventions and creative destruction.  We are so fortunate that the Bay Area has a competitive advantage over almost any other place in our country.”

The panel discussion continued with Morgensen and Bangs answering the question, “Tech companies are not typically built on good planning. What are some of the challenges you are facing at Zynga and Adobe.” Bangs started with, “Because of the speed at which cycles happen in our industry, we don’t get our planning right very often.  So, space needs in the Bay Area are a constant issue, and if they can’t be met the larger tech companies will move to where they can be met.”  Mortgensen said,  “Our biggest challenge is planning for our young employee base as they age and mature.  When you are in your mid-20’s the lifestyle and where you live is much different if you are married and have kids.  Our company will need to trend with them as the company ages.  Today our tight work spaces are a key to the successful collaboration between our team members.  As they age we need to design ways for collaboration to continue as we will need to spread out the space for our employees.”

The last question to the panel was, “Who are the next players coming to the tech world?” Dr. Sobieski responded, “The Facebook millionaires.  They will be buying real estate and investing in start-up ventures, and many will lose their fortunes.  They will believe they are smarter than they really are because they now have money from hitting a home run.  One can’t base their success on yesterday’s hits.  And, the industry to watch is Cloud Computing.  Pay close attention to how the Cloud evolves.”

The day ended with the keynote address from Gregory Valliere, the Chief Political Strategist from the Potomac Research Group. The perspective he brought to the day was invaluable.  Obviously, what happens in Washington impacts all aspects of our Bay Area economy.  Valliere predicted that the national economy will grow at 2.5% for 2012 and that the Fed interest rate will remain at zero for years.  Unemployment is the key issue in Washington, not inflation.  The budget deficit is coming down, however he believes it will hit a brick wall about 2014 with government entitlements – Social Security, Medicare, and health care.  Valliere talked extensively about what could screw up our recovery.  His main concern was not renewing the Bush tax cuts for ordinary income tax, capital gains tax, estate tax, and the dividend tax reverting back to ordinary income.  This is our economic Wild Card.  He believes that Obama will win the election, not because he is a Democrat or a Republican, but because the Republicans have significantly damaged themselves during their 19 debates.

Mr. Valliere continued his remarks with comments regarding what he believes is the biggest Wild Card for all of us – geo-politics;  Iran having weapons of mass destruction and Israel not allowing them to proceed with them;  Greece defaulting;  and the price of oil going over $200 a barrel.  He was also asked to comment on housing market’s shadow inventory of foreclosed homes.  He said,  “There is no resolution on the shadow foreclosure markets – none!  The housing markets will continue to flounder, with micro-market exceptions such as the Bay Area.  Quietly Washington wants the housing markets to seek their own levels without any government assistance.

Valliere concluded his presentation with a view of our elected officials, “The level of distrust (hatred) between the parties has never been worse than the past five years.  What we need is a ‘Ronald Reagan’.  He set a much more relaxed and cooperative tone in Washington.  You may recall he even stopped working at 6pm each day.  Here is one of his many famous quotes. “No one ever said hard work would kill you.  But why take a chance.”  - Ronald Reagan.  It ended that day with a laugh with everyone in the audience knowing the serious work required for the Bay Area to continue its leadership in the world economies.  CONTACT ME if you would like a copy of all my notes from Trends 2012.  Until next time…Jim Walberg.

Related posts:

1. East Bay Real Estate: 2012 Real Estate Predictions
2. East Bay Real Estate: 2012 First Quarter Trending UP!
3. East Bay Real Estate: San Francisco / Silicon Valley Real Estate Summit

The question our clients are now asking is, “Is this a trend or just a momentary spike?”  We believe it may become a more significant aspect of our Bay Area real estate market for next two years unless solutions to the house crisis are enacted. So, what is causing the high-end housing market to move into the world of foreclosures?  Here are three of our answers the question;  1) The length of the recession;  2) The luxury home owner’s dwindling resources;  3) and, Jobs.

Below are the details of the three reasons why we believe the trend for the higher-end housing market foreclosures will continue to increase over the next two years.

Recession: Yes, the current recession feels as if has gone on forever,  and FEAR is still influencing the housing markets. In fact, it is the longest recession in our country’s history.  All of us hoped that home values would begin to rise well before 2012.  And, many Bay Area luxury home owners believed that if they could just hang on long enough the economy would take care of home prices.  Well, it has not turned out that way.  We are still on the tail end of the Perfect Storm regarding housing; fraudulent lending practices;  ineffective government policies;  home values dropping back to 2001 prices;  and, a significant tightening of credit, specifically the ability to qualify for a mortgage.

Dwindling Resources: The demographics of our high-end home buyer are;  people 45 years old and above;  business owners or high level executives;  have reserves such as their kid’s college fund, stocks/mutual funds, retirement accounts, and savings.  The challenge this group has experienced the last four years is they could service all of their debt including the mortgage because of their reserves.  Since the recession has continued longer than any other in our history they have blown through much or all of their reserves.    They now need to either have the bank take the house back or sell it for less than is owed and pay the difference.

Jobs, Jobs, Jobs: Unemployment has been one of the major drags on our Bay Area economy, with the bright spot being Silicon Valley.  Because of this factor, unemployed homeowners of high-end properties are in the worst possible position.  They have no income and the reserves they spent years accumulating are being spent on their daily expenses and debt, including their mortgages.  As you can imagine, it doesn’t take long to just plain run out of money, or come to the conclusion that they will stop making their mortgage payment and live in the house as long as they can – sometimes more than a year.  Or, they attempt to secure a loan modification from their lender.  Just in Contra Costa alone, there were twice as many Short Sales in 2011 of high-end homes as there were in 2009, according the DataQuick – one of our most reliable real estate information source.

And, to put this topic in its proper perspective, the high-end home foreclosures in the Bay Area represent a small percentage of all the Bay Area homes sold in 2011.  It is still a trend to watch carefully, and it is a BIG issue for the high-end homeowners who are now experiencing what the rest of the foreclosure market has endured the last four years.  We will report back as to how this trend unfolds in 2012.  CONTACT us today for a free price analysis of your home, or for any of your real estate needs.  Until next time…Jim Walberg

Related posts:

1. 2010 East Bay Real Estate Update: Challenges Facing $1 Million+ Buyer/Sellers
2. East Bay Real Estate: Foreclosure Squatting Coming To An End!
3. East Bay Real Estate: 4th Quarter Is The Best Time To Sell Or Buy Bay Area Homes!