Arlene Baxter

As I read the newly released information from Zillow about property values I was once again reminded how crucial it is to be precise about what area you refer to when speaking about value trends. We start with: "California one of three states with largest losses in property values." Then we go to the supposedly local information: "San Francisco values down 13% from last year". But read on: San Francisco, Oakland and Fremont are all defined as the same area! If you're reading this from another state you cannot fully appreciate the absurdity of this collection of different markets being lumped into one metropolitan area. I am quick to acknowledge that I would have the same problem evaluating the information provided for any area other than the areas where I actively sell. And so the first point: Sell only what you know first hand! and the second point: California is not one housing market, but many completely different markets. San Francisco alone is not one housing market, but many diverse and conflicting markets. I primarily represent the markets of Berkeley, Albany and North Oakland. Last week in a desirable Berkeley neighborhood a house listed in the low $900K range received 10 offers, with the successful offer being more than $350K over list! That was noteworthy, but not unique in my market area. Multiple offers are common, just not having ten of them! We are seeing fewer and fewer contingencies in offers. We see pre-offer inspections by buyers, and once again we have pre-emptive offers. Right here, right now, there certainly are more qualified buyers than desirable listings.

Meanwhile, buyers continue to read that it's their market, and are shocked, and sometimes resentful, when I need to educate them to the true and fast nature of our local market. But the local news is all that really matters!

The home I presented an offer for was very charming with lovely period details and a tastefully updated kitchen, a feature that often translates into considerable interest. The overall charm, plus a full basement, tantalized my clients, despite the fact that the price seemed quite high for the location. A dozen other buyers were attracted as well. And so, to be as competitive as possible, my clients decided to do a pre-inspection. At the high-point of the market this was one of several practices used to gain some advantage in the bidding. Some other aggressive practices were pre-emptive offers, and relative offers, both of which have re-emerged this spring. Conducting inspections in advance of presenting an offer allows buyers to go in without an inspection contingency, as they’ve already truly inspected the property. It means they have also spent around $600, and they and their agent have spent another four hours or so bonding with a property that they may not be able to buy.

Within the written disclosures, items may be mentioned as “possible areas of concern.” That’s a very different perspective than when a highly knowledgeable inspector points to a roof with missing shingles and says “this roof is shot: it needs replacing.” That was the recommendation for our charming bungalow. We also were shown a leaking, rusting water heater and an ancient boiler for a radiant heat system. It needed earthquake retrofitting, demolition of a chimney and various other smaller fixes‑-some inexpensive to deal with, some that could lead to a domino effect of other requirements. So my clients backed off from what they had anticipated offering. That put them in third place out of six, well behind the first two offers. I actually thought the house was listed a bit high at $839K. I now know that the first place offer was over $950K!!

The question on everyone’s mind is Why? Why, in a general atmosphere of doom and gloom regarding the lending industry, and when increasing numbers of short sales and foreclosures are appearing on the market, are there still pockets of such strength here in the East Bay? I believe it’s a combination of factors:

1). Sub-prime loans never were much of a factor in the hotter locations

2). We have no room here to build new developments, the property types that have suffered the most in many parts of California

3). This is an area of intrinsic desirability. It is physically beautiful. It has interesting topography. Within minutes we can be in the woods of Tilden or at the Bay. And we are surrounded by mostly attractive, and in some cases positively gorgeous homes. As Realtors we have the opportunity to represent beautiful architecture, including the works of some true masters. That gives our jobs, as well as our clients, a kind of satisfaction that does not exist in the areas where foreclosures now dominate.

4). We have easy access to interesting, colorful, delicious things that are hard to find in so many areas. The large population of immigrants attracted to the San Francisco area has produced remarkable cultural diversity in our part of the East Bay. In practical terms that has resulted in the broad availability of many types of ethnic music, phenomenal ethnic cuisine at reasonable prices and celebrations from many cultures that have become now part of our experience.

5). Berkeley especially, but other academic settings within the East Bay as well, have attracted huge numbers of people who are attracted to “the life of the mind.” We have exceptional research libraries, and an amazing array of cultural events. We enjoy the richness of a major city, without the traffic hassles of going into San Francisco.

And right now, in this gorgeous spring weather I can enjoy the scent of roses and wisteria. I can look west and see sail boats in a regatta on the Bay, see the light reflecting off windows in San Francisco. So I don't really wonder at the fact that there are ALWAYS buyers for this area, and usually more buyers than there are homes for them to purchase. And so I continue to write offers for my clients, good, clean, strong offers that are beaten by buyers who either have more money, or who are willing to take more risk.

To get a sense of just some of the beauty of our very competitive market take a look at Wisteria Hysteria, at the Berkhills.blogspot.com