Rama Mehra Certified Pre Foreclosure Specialist

Just as Obama said today in the debate, when asked the question on what they don't know.... my answer too is on what I know. And what I know is that people who have the money in this market, to put a substantial downpayment, are winners because they are in the drivers seat.

The stock market taking another nose dive and no one knowing where and when we will bottom out, makes it very evident to me that as hard as we try to catch it, it will never come in our reach.I am not a stock market insider, infact I know nothing about stocks. My knowledge in that arena is not even worth talking about and coming from an old school mentality, I only invest in what is tangible to me. For me stocks are paper transactions that can go into free fall tailspin in one day wiping out my entire life's savings and I am afraid of that.

Real estate, even though currently in a downward trend , cannot lose 30-40-50% of its value in one day or one week !! My 30 year old cousin, who works for Citi, called me today and literally crying because he was down on his savings from 58K to 8K !! I tried to cheer him up but I knew he took a brutal bashing on his 401K investments in the past few weeks.So, he decided to sell his property in Dubai, that will cover his losses on his stocks. And I smiled- at last his piece of tangible investment is bailing him out !

I have been in the country since 1999 and I remember that the time of the dotcom bust in the Silicon Valley, when people lost heavily on the stock market. Wary and tired investors started to shift their dollars into real estate.It just seemed to be a safer and cheaper bet at the time.Stemming out of my rudimentary knowledge of the investment markets,in my opinion,this would be the time to leverage one's money into real estate.Even despite the fact that many people consider real estate to be risky, it does not pose that big of a risk as the stock market to me, given the current conditions. There are lenders who will still give you loans as long as you meet their underwriting criteria. If you are not wanting to take on additional mortgage burden, and have cash to invest- you can make all cash offers and get deep discounts on REO's.

My expertise lies in the market I serve and there are some really great deals to be found in Windemere ! I wish I had the money to buy a house in today's market, I know I would be able to retire in 10 years based on that investment. Speaking from the heart - my house is at the same value as I bought it 4 years ago.The appreciation I made in 2 years got wiped out totally, but I am hanging in there. I know that my intial investment can still be recuperated, if I chose to do so.If you are ready to stay in it for the long haul,of atleast the next 10 years, the house you buy now will most definitely spin money in the future.

Our marketplace is full of short sales and if you have the patience and the right person negotiating on your behalf, you can get a really great bargain.In my next blog, I will give you statistics on Windemere that will give you a clearer picture on the balance of the new homes with resales, short sales and bank owned homes here.Maybe you might decide to join me in my old school thought process and decide this is the the right time for you to invest in a property that you might land up calling your home.

It has been some time since I blogged and it was because I had too much to say and have been debating if I should or not !! Just trying to follow the trends on what is happening in the market and it irritates me to a great extent. I talk specifically about my market in Windemere, San Ramon and trust me, if I had the money to spare, I would buy now.It is not my goal to try and make a sale on these blogs but to express what I see on a day to day basis.

We are in a stalemate with buyers and builders. Buyers are waiting because the builders keep coming down on prices and keep increasing their incentives. This is like feeding blood to a man eating tiger !! When buyers see this trend, they want more and more and more- the extent of buyers' demands is to the point that if you give them a free house they want another one for free!!! This approach has to stop on both ends and I sincerely pray that it will, soon enough.

Buyers have not perceived the bottom... I see some builders holding steady with their bottomline and they are making sales. As opposed to some other builders in this area, who are still pandering over their prices. My first advice to builders in Windemere- get your prices down to a specified bottomline and get out of here by the middle of next year rather than waiting till 2010. And the logic behind this is that none of the builders are left with too much inventory and it is better to cut their losses now before interest rates go up again in the future.

Builders have made their buck in the hey day in Windemere and they need to take a hit on their profitability to accomodate the changing market or else just stop building. The buyers sitting on the fence will perceive the bottom only if the builders will hold fast on their reduced prices and stop giving any further discounts.Here is an example of marketing success with Centex - they dropped the prices low and got everyone to buy without a dime of upgrades offered and no incentives.They are done with La Sera and Sera Vista and Fioli always has people camping out to buy their next releases.

On the same note buyers also need to understand that it is possible to get a good deal but for heavens sake do not come in and make ridiculous offers of 30-50% below what sellers are asking for !! Just because the media is talking of the end of the housing market does not mean it is true ! There are micro markets in every market and you have to play the game in a different manner. And to vent some of my frustrations, buyers please- prices are down. You are still waiting for the bottom, trust me none of us can catch the bottom. Yes, not even us Realtors cannot catch it despite all the data and resources available to us. You are trying to catch a falling knife and you will not know when it hits.

It is a great market to buy in and I have an article from the county assessor that I thought might be interesting to read.San Ramon is a great place to live, schools are the top selling reason in Windemere and this will keep driving sales.San Ramon is very desirable for families with young children and if buyers continue to expect to get everything- low prices, great schools, family friendly neighborhood- they can expect also to miss the boat very soon. Once the builders are out of here, prices will go up and then you will have to play the rules of another changing market. I explain this to my clients all the time.. some get it and some don't.

Buyers need to understand that they are purchasing a home where they will raise their kids and grow old in, there are human bonds tied into it, a home is the place you put your roots down.A home is not a commodity that has no emotional ties to it, so please stop treating it that way. You have to love the home you buy and ofcourse it has to be at an affordable price tag.

I was positively ecstatic to hear the news yesterday when finally the propaganda about the deterioration of the housing market was not the news !! The media finally came out and said that the activity increased by 29% in the bay area.So, I decided to do some of my own investigation for San Ramon.

Here is what I found:( these do not include new home sales, as these figures are not available to us)

January 2007- Total 52 sales January 2008- total 36 sales
February 2007- Total 74 sales February 2008- total 42 sales
March 2007- Total 122 sales March 2008-total 52 sales
April 2007 -Total 94 sales April 2008- total 66 sales
May 2007- YTD 55 sales May 2008- YTD 38 sales

Although everyone said that 2007 was a terrible year for sales, 2008 has been rougher on sales in San Ramon .But, our board does not have the functionality to allow us to pull data of number of pendings in the last few months or years to compare the live data we have now. As of today,127 properties are pending with only 330 resale properties listed for sale in San Ramon area. That is about 3-4 months of housing supply.Like I said in my earlier post, we are experiencing flattened market in San Ramon and if the inventory goes down in the summer months, things will start looking better for sellers.

In Windemere, there are a total of 400 homes left to build with the new home builders.Centex is almost done and during the course of informal chats with sales reps, it seems the pace of sales have increased and the estimated time for builders to leave the area maybe preponed to end 2009 rather than 2010.There is definitely an end in sight for sellers in the resale market who have been hurting !!

Lenders are becoming more willing to lend money as long as the buyers meet their strict guidelines.FHA has come out with new programs which are making money available in the market.It is a buyers market and now is the time to buy.Some might say that I am trying to influence them but I can already see the change shifting slowly.By the time the media's machinery starts to move on the positive angle, the market would have started heating up.No, I do not see ridiculous price gains atleast for 2 years but if the available inventory starts to deplete, then the market could take a turn earlier here in San Ramon.

I am finally feeling vindicated- I have proof now of what the builders are doing !! Saville in Windemere had posted 2 properties on the MLS that I had been following for sometime.One was on Fenwick Way priced on the MLS for $835,800, a plan 2 and another one on Enfield Street, a plan 4 at $859,000.Well here is what they sold for: $726,065 and $748,487 respectively !! The bigger home sold for $350.08/sq ft and the smaller home sold at $371.96/ sq ft.I said in my last post that the plan 4 should go around 740K and now I am so glad that my prediction was right.Looking at percentages, these homes sold for 87% of the listing price and in my opinion there should have been more room for negotiation.

Looking into the county recorders sales figures over the last 5 months at Saville, their prices have been coming down steadily. The average drop seems to be 13K with every months sales.Herein lies the question- how would I purchase this home? At $371.96/sq ft too, this home is expensive.With no backyard done, no upgrades included by the time you are finished you will be spending another 20K on top of your price.The bigger homes at other communities are selling for cheaper per sq ft value.Do your due diligence by researching prices of sold homes before you get carried away and make an offer that the builder will love.

I also looked into county records for Campton and found this information:

November 2007-2 houses on Paddington court for $751,500 and $809,500
December 2007- 2 houses on Paddington for $816,000 and $976,000
January 2008- 1 house on Paddington for $801,500
February 2008- 1 house on Wimbledon court for $935,500
March 2008- 1 house on Wimbledon court for $824,500
May 2008- 3 houses on Wimbledon court for $726,000,$765,000 and $820,000

Now, I cannot tell by county records which were the plans but it does give you a general idea on how the price curve has come down.So, please think carefully before you make your offer.If you want further details of price variants in other communities in Windemere, please email me or call me.I have also updated statistics on my site on price graphs and trends in San Ramon, so please do take a look at them.

When a reader brought it to attention, I looked back at my blogs to see if that is what I was doing.My words may seem like that but the thought behind all my blogs is the same strong sentiment- deals have to be REAL DEALS !!!! Let me clarify myself for those who read my blog and if thereafter I seem to go off on a tangent, please excuse me as I am not a professional writer !

Centex:
La Sera and Sera Vista- When they started their price correction, the plan 1 at $838,000 on dirt lots was a great pricing but builder did not give any upgrades.They were giving standard features and buyers who did not care for upgrades but just wanted an affordable home got a great deal.Builder soon realised that the concept of selling dirt lots was getting an amazing response, they created a marketing hype around their homes and started bumping up prices immediately- now these same homes were not good deals anymore but consumers did not realise because they caught up in the whirlwind.

Fioli- When they had not even opened doors officially, they were trying to sell October release homes, again dirt lots.Their pricing started at $482,000 and were amazing prices.I later got to know from my buyers at this community that the builder was charging them for every small item, touting it as an upgrade. Despite this fact, these homes were amazing deals.In 7 days the word spread around and people starting flocking to the sales center and builder realised they had another golden goose on their hands.When they had the community innaugral, they sold July lots and people camped the night out( including my buyers) and prices were given out when buyers sat down with the sales rep.Now they had bumped up prices 20K !! Even then, they were in the correct price range. Then with every release, prices were being increased by 15-20K and people are still camping out. Now they are no longer good deals and buyers are not understanding !!

Lennar:
Escalante and Stafford Place- Sales were very slow for them when they started these communities early last year.They were at the 800K-900K+ mark and yet no buyers.They increased incentives and made some sales. At that time Centex was in the high 900's and over the million dollar mark at their communities. They even offered brokers upto 6% referral fee but it was slow sales. Towards the last quarter they gave deep discounts, but they were reaching their fiscal year end and the builder wanted to make numbers.At that time, prices & incentives were really good. Starting January 08, prices went up substantially and now they were no longer good deals.Buyers heard from their friends of the great prices they got last year and want the same prices this year but the builder will not consider it.

Brookfield:
Saville and Campton- They were making sales in the 800K price point when La Sera was above the Million dollar mark and these were the only affordable community.BUT, the builder did not adjust prices with market conditions.While Centex slashed prices to make sales, Brookfield was like a gargantuan moving at a slow pace, well behind market conditions.In my blog, I wrote that my hunch was that the builder will try to blow out this community in the summer, because Centex had changed course on their selling strategy.But after making this prediction and going to the sales center, it was a big surprise to me that they were still totally out of synch with the marketplace !! Hence my raving and ranting last night.

Hawthorne- Gorgeous homes but still over priced.Ideally they should be within the 1.1 Million dollar mark. High Lot premium is a load of B.S.

Santorini- The creme de la creme of the Windemere community, amazingly beautiful homes. Slightly bigger than Hawthorne and they should be within the 1.2 million dollar mark at the highest.At 1.4 million they are way too high because you can pay the same price at Old Ranch summit and get huge homes on almost 1/4 acre flat lots with views of the valley !!

I am still predicting that some communities( that are seeing reasonable sales) will tighten incentives because the big player, Centex, is almost finished. This will not be the best for buyers: builders slowing down inventory and incentives would mean push in resale market.This would be a great situation for sellers( and I guess this is where my contradiction came into play because I am a home owner in Windemere !!) but it would not be a good one for buyers.That is why I said that there are some good deals to be found in resales right now and ignoring them would not be a wise decision because their prices will start to creep up if there is low inventory in the market.

I hope I was able to clarify myself to some readers who may get confused with what I am ranting about !! When I spot a good deal, I will shout myself hoarse.