'Micro-ish' units planned for San Jose's West San Carlos corridor

For several years, micro units — efficiency studios as small as 250 square feet — have been touted as a solution for the region’s housing crisis, allowing developers to wring more units from ever dwindling supplies of land.

But the concept has been absent in the South Bay’s market-rate apartment pipeline, despite thousands of units developed during the recovery. Instead, micro units have remained something that happens up in San Francisco, like $4 toast and artisanal pickle boutiques.

Now a developer is proposing something kind of — but not quite — micro for a sliver of land on West San Carlos Street.

Shad Design has turned in preliminary plans for 81 units on a .4-acre lot at 1470 West San Carlos. The developer is in contract on the land, which is currently a car lot.

Units would include 379 square feet of living space on the main level plus a 162-square foot mezzanine/loft and a 32-square-foot closet, for a total of 573 square feet of usable space per unit.

That’s not exactly teeny tiny, but it’s a different kind of product for Silicon Valley, where apartments are traditionally a little roomier than in dense urban cores.

The $25 million project — which would include 7,200 square feet of ground floor retail — is being driven “because of the demand and the scarcity of adequate land for development,” said Michael Shadman, president of San Jose-based Shad Design, an architecture and engineering firm. “San Jose has grown quite a bit and demand for residential has gone through the roof. Oakland has gone the same way, and they’re also looking at micro units. San Jose hasn’t seen it, but the demand is there.”

Mahnaz Khazen is developing the project with Shadman and says shefƒ was attracted to the concept after she developed a student housing project in Oakland.

“After graduating, they really got a rent shock,” she said. “I was looking for something with smaller footprints that can be more accessible to young professionals. Michael really embraced it.”

In addition to young professionals, she said corporations looking for transitional housing for new recruits could also be a market. Shadman estimates that the units could rent for a 30 percent discount compared to traditional apartments. Despite the petite size, units would have full kitchens, bathrooms and washers and dryers.

What makes the design work? Making every square foot count.

“Most people think of horizontal space, and then you have an 8, 9 foot ceiling and I’m done,” Shadman said. “But when you have a site that gives you more density, you have to take advantage of the height.”

Cue the loft-level layout, made possible by 15-foot ceilings, floor to floor. “You have your private space, but if you have a guest downstairs, you won’t see a bedroom," he said. "From the bedroom, you can see below.” Khazen calls the idea "micro plus."

This is just the latest proposal on the fast-changing West San Carlos corridor, where Republic Urban Properties recently completed Meridian at Midtown, a 218-unit complex. Republic is also working to develop the Ohlone, which at full buildout could include up to 800 units. Next door to that, Fairfield Residential is working on a 315-unit project on a former lumber yard.

Still, the 1470 West San Carlos project faces some challenges, including parking. The city’s parking requirements mandate 1.25 parking spaces per unit, or 102 stalls in total, plus another 18 for the retail. San Jose allows a 50-percent reduction in the parking requirement, if a developer includes an acceptable transportation demand management program that will cut down on car use. But so far, the project is proposing only 50 stalls, so it’s still a few short. Khazen said she’s interested in parking systems that allow cars to be stacked on top of each other — kind of like the loft design, but for autos.

Also: Residential uses are actually not permitted on the parcel under current planning guidelines. That is expected to change when the San Jose City Council approves the West San Carlos Urban Village Plan, likely sometime later this year. (The plan will allow more than 1,200 units to be built in the village plan area.)

“As soon as it’s approved, then the possibility of residential is activated,” said Matthew VanOosten in the city’s planning department. “At least in the draft plan, which is still not approved, a project like this is something we’d kind of want to see for that space. The parking is the main factor right now, as well as a few other things.”

The proposal is in the early stages, and is likely to be adjusted before the developer submits a formal application. Meanwhile, Khazen said she’s already lining up financing. About $2 million will likely come through EB-5 investors, the federal program that streamlines green cards for immigrant investors. But the majority will come from traditional financing.

“Our market is very strong, interest rates are low and demand for EB5 is not as much,” she said. “And this is a low risk investment. Because of that we don’t have issues raising funds locally.”

Source: Silicon Valley Business Journal, Nathan Donato-Weinstein
http://www.bizjournals.com/sanjose/news/2016/03/22/micro-ish-units-planned-for-san-joses-west-san.html

San Jose council approves 'grace period' for affordable housing law

With the sky high rents in this valley, some cities, such as San Jose, have pushed to enact affordable housing laws. These laws haven't sat well with landlords and developers, but for the time being, San Jose put their local ordinance on hold until they figure out how to enact the said law.



SAN JOSE -- With the city falling dramatically behind its goal to build nearly 2,400 homes for the poor each year until 2022, San Jose's landmark law that requires some developers to reserve units for affordable housing is ready to be enacted -- after surviving more than two years of legal challenges.

But elected leaders Tuesday approved a "grace period" for housing projects approved before June 30 to allow developers and city staff time to plan for the changes, which were on hold while the merits of the law were debated in court. The City Council voted 10-1 to implement the plan at a council meeting Tuesday. Councilman Manh Nguyen opposed.

"With the crisis we face in our housing markets, I only regret that it required a Supreme Court ruling to uphold the ordinance," Mayor Sam Liccardo, who championed the policy against opposition from his loyalists in the building community, wrote in a memo Monday. Liccardo said the city could have had the benefit of several years of the new law.

Developers who have projects approved before June 30 must still apply for an exemption and turn in a compliance plan, said Jacky Morales-Ferrand, the city's housing director.

The city's policy, which was adopted in 2010 and paved the way for dozens of other cities to craft similar legislation, requires developers of market-rate, for-sale developments of 20 or more units to set aside 15 percent of the units for moderate-income people. It does not apply to rental units and mostly targets for-sale units such as condos, single-family homes and townhouses.

Housing is considered "affordable" when a resident isn't paying more than 30 percent of his or her income for housing. In San Jose, "moderate-income housing," which is what the policy seeks to create, targets individuals who earn $74,000 to $89,000 a year -- higher in larger households. Although the law went into effect in January 2013, it was blocked by a legal challenge from the California Building Industry Association. The Santa Clara County Superior Court issued an injunction, which was later overturned by the 6th District Court of Appeal.

The building industry appealed the decision to the California Supreme Court. The high court in June unanimously issued a decision in favor of the city. The building group in September filed a petition with the U.S. Supreme Court seeking review of the California Supreme Court's unanimous ruling, but it declined to hear that petition.

The new policy will begin just as San Jose struggles to build affordable housing amid soaring rents and a staggering housing shortage. The city from 2007 to 2013 built only 2,956 affordable units -- a mere 15 percent of its 19,271-unit goal, Morales-Ferrand said.

San Jose's new goal is to build 20,849 affordable housing units by 2022, and it's already severely behind. The city in the past two years began construction on 576 affordable units. It needs to build roughly 2,400 units annually to meet that goal.

"There is a significant shortage of housing affordable to low and moderate income households, which will only increase as the finite number of residentially zoned lots within the city are purchased and developed for market rate residential developments," Morales-Ferrand wrote in a staff report.

Developers who do not want to comply with the new law have a few other options, including paying an "in-lieu" fee or building affordable housing somewhere else in the city.

Requiring developers to put aside price-restricted units isn't a new idea in San Jose. The city in 1988 adopted a similar policy, but it applied only to Redevelopment Agency properties. The new law applies citywide except Communications Hill and replaces the old policy.

To address the housing shortage of apartments, the city charges developers $17 per square foot to help build new affordable apartments. That program excludes downtown residential projects for five years.

Source: San Jose Mercury News, Ramona Giwargis
http://www.mercurynews.com/bay-area-news/ci_29699322/san-jose-council-mull-grace-period-affordable-housing

Realtors Reveal: ‘The Hardest Home I Ever Had to Sell’

You hear how hot the market is, and how there aren’t enough homes for sale. So selling your house should be a snap, right? Right?

Well, not always. Even in the fastest-moving, most in-demand areas, certain homes—for whatever reason—just sit … and sit … and sit on the market. As a seller, this may lead you to contemplate harm to yourself, your pet canary, your life-size Jeb Bush doll (hey, who are we to judge?). But don’t do it! There’s always hope.

As inspiration, check out these true-life tales from real estate agents on the hardest home they ever had to sell. Their hard-won lessons may benefit sellers struggling to unload their own digs.

Smells like sabotage

“The most difficult home for me to sell was a five-bedroom in Diamond Bar, CA. The seller had her daughter and the daughter’s children living with her. No matter how much notice I gave them to leave before a showing, they were always there—frequently walking around in their underwear, the smell of weed wafting through the air, even ‘Do Not Enter’ signs on certain rooms. Eventually, my listing expired. There was no shortage of other agents wanting to show the property, so they listed with someone else, but big surprise: It still didn’t sell. Six months later, I received a call from the seller asking me to relist. I told her only if the family agreed to follow my directives. This time around, they cooperated, and in 2015—two years after my initial listing—the property sold.” – Julie Marie McDonough, real estate broker and author of “How to Make your Credit Score Soar”

Lesson learned: Listen up, home sellers—if your agent offers some advice, take it. They’ve sold hundreds of homes, so they know what works. So leave the house during showings, already. And put on some damn clothes.

———

Bring in the drones

“A $12.9 million Fifth Avenue trophy property had been on the market for three years with several different brokers. Everyone said this property was overpriced and would never sell. My co-worker and I weren’t daunted. We took a risk and brought a drone into Central Park—which is technically illegal—and shot some stunning visuals across the reservoir for a promo video for the apartment, even with cops standing nearby. Drones open up the world in visual marketing, and this gave us the ability to shoot and record some grand and spectacular footage from high up in the air. We had so many people taking photos of us and the drone. Lots of attention. But it worked! We got interest in the place, and it sold soon thereafter. The sellers thought it was a straight-up miracle!” – Phillia Kim Downs, Phillia & Claire

Lesson learned: Use the latest tech advancements to shed fresh light on your home. This new perspective not only grabs new eyeballs but could also inspire someone to make an offer.

———

Doughnuts for dollars

“In Portland, OR, Voodoo Doughnuts has a cultlike status—and one of my agents had a listing for a home that was owned by one of the founders. After being on the market for years, the sellers were getting frustrated, so we decided to throw in an offer for free donuts for life to whoever bought it. Now, someone is getting all the glazed, cake, and sprinkles they want: The couple who bought the home had actually gotten married at a Voodoo Doughnuts and had doughnut tattoos!” – Jenelle Isaacson, owner, Living Room Realty

Lesson learned:  Doughnuts rule. Also, sometimes the quirkiest offer or (sweetest) enticement will help you stand out from the pack.

———

Eminem infamy

“We had a property in West Bloomfield, MI, that was clouded by several vacant properties throughout the subdivision. It wasn’t moving at all. So we decided to hold an auction—and the centerpiece of our marketing plan was using the owner’s notoriety as the award-winning producer for Eminem‘s hit song ‘Lose Yourself’ to drive up the price. In the end, we sold the property for $924,000—the highest comparable sales price in the last five years.” – Sara Rose Bytnar, Beth Rose Real Estate & Auctions

Lesson learned: Celebrity connections, even tangential ones, can grab added attention that can get a home sold.

———

Trailers and trash

“As a newer Realtor®, I took on what ended up to be a nightmare in El Sereno, CA. The sellers—a brother and sister who weren’t speaking to each other—were unloading a lot with a burned-out house that had become a dumping ground littered with cinder blocks, old tires, five motorcycles, and countless beer and wine bottles. They wanted to sell it as is, so we tried. We were in and out of escrow three times where investors would offer, than cancel as soon as they saw the lot. But we stuck with it. After eight months—and nearly giving up—we finally sold it to buyers who were young and excited to turn it around. And for a surprisingly large sum!” – Stephanie Miller, associate partner, Partners Trust

Lesson learned: No matter how long the sales process drags on, take heart: One person’s trashed property is another person’s treasure.


Source: Realtor.com, Kimberly Neumann
http://www.realtor.com/advice/sell/hardest-home-to-sell/?iid=rdc_news_hp_carousel_theLatest

Banks Want More Owners to Tap Into Equity

As home prices rise, banks are touting home-equity lines of credit (HELOCs), trying to get more home owners to take equity out of their homes.

J.P. Morgan Chase & Co. started contacting customers in January, marketing the benefits of cash-out refinances for making home repairs, debt consolidation, and tuition payments. PNC Financial Services Group Inc. also increased its marketing on HELOCs.

Read more: 1 Million Borrowers Regained Equity Last Year
But TD Bank may have the most unusual approach. The bank has sponsored a tour bus that travels to hardware stores along cities in the East Coast that invites home owners to step in, grab an iPad, and fill out an application on the spot.

The bank “is placing a bet…home equity will play a bigger part of our business,” Mike Kinane, senior vice president of home-equity lending at TD Bank, told The Wall Street Journal.

A growing number of banks are trying to offset a recent decrease in mortgage originations and refinancings by trying to ramp up a more robust home-equity lines of credit business. They are hoping to hook home owners who are looking to renovate or need cash for other expenses.

Last year, lenders extended more than $156 billion in home-equity lines of credit – the largest amount since 2007, according to data from CoreLogic. The average line of credit extended to home owners last year reached a record-breaking $119,790, according to CoreLogic’s data, which dates back to 2002.

“Lenders are opening up their spigots,” says Sam Khater, deputy chief economist at CoreLogic.

Still, the volume of HELOCs is well-below what it was during the housing boom. At that time, lenders were extending more than $300 billion in credit lines a year – about half of what they currently are extending.

This time around banks also are requiring higher credit scores and in the majority of the cases, borrowers must have at least 20 percent of equity in their home after receiving the credit line. The average FICO score for borrowers who received a home-equity line of credit was 781 in the fourth quarter of 2015, according to Black Knight Financial Services data.

Source: Realtor.com > Wall Street Journal
http://realtormag.realtor.org/daily-news/2016/03/29/banks-want-more-owners-tap-equity?om_rid=AAFmZk&om_mid=_BW$sPQB9ML-H7r&om_ntype=RMODaily

Two Silicon Valley Cities Amoung the Top 25 in The Nation

Palo Alto, Atherton crack top 10 priciest ZIP codes in U.S.

Atherton's 94027 code is No. 2 on the list, with a median sale price of $5,900,000 for 111 transactions last year. The fifth most expensive ZIP is in Palo Alto: The 94301 area includes downtown, Old Palo Alto and Crescent Park. The median price there was $3,150,000 for 157 sales in 2015, according to the PropertyShark website, which compiled the ranking.

All in all, 17 of the 25 most expensive ZIP codes are in California, seven in New York and one in New Jersey.

The list "pretty much tells you where the rich people live," said Nancy Jorisch, PropertyShark's data research manager. "It's the two coasts. And actually, now it's heavily California."

The No. 1 spot on the list is occupied by New York's Sagaponack, in the Hamptons, where the median was $8,500,000, though only five sales were recorded in that exclusive community.

Also on the list are Los Altos (94022, No. 12 on the list; and 94024, No. 14 on the list); Portola Valley (94028, at No. 15); San Francisco (94123, in the Marina District, at No. 16); Palo Alto again (94306, No. 22); Burlingame (94010, No. 24) and Saratoga (95070, No. 25).

Any surprises?

"None at all," said Palo Alto-based Sereno Group real estate agent Alex Wang. "We've had so much appreciation in Bay Area real estate. A high tide lifts all boats, and as Palo Alto and Altherton go up, the surrounding areas go up as well."

Just look at Burlingame. The median price there was $2,215,000 for 415 sales, the most transactions among the top 25 ZIP codes. Total sales volume exceeded $1.1 billion.

"Burlingame has become like the Palo Alto of the north," Wang said. "It's that next place down (from San Francisco) -- beautiful downtown, very vibrant, has good schools and a lot of local amenities, a good option for families."

Incidentally, Beverly Hills' iconic 90210 placed third.

However, Mountain View and Menlo Park failed to crack the top 25, despite their proximity to Google and Facebook. Jorisch said she suspects that the many condo and townhouse sales in those communities brought down the overall median sale prices.

As an example, Mountain View's 94040 ZIP code (No. 58 on the list) had a measly median of $1.5 million.

Meanwhile, Menlo Park's 94025 (No. 37) had a $1.84 million median, still a pittance, comparatively speaking.

There's always next time.

Source: Mercury News, Richard Scheinin
http://www.mercurynews.com/business/ci_29699948/palo-alto-atherton-crack-top-10-priciest-zip

The 6 Worst Homes for First-Time Buyers

Deciding to buy your first home is a little scary. Looking for a home is anxiety-inducing. But actually making an offer? That’s a whole different level of panic. Are you choosing the right one? What if you buy this home and the perfect place comes on the market a week later? What if you end up hating the place in a year?

Unfortunately, there isn’t a one-size-fits-all formula for first homes. (If there were, we’d tell you.) And no, we can’t totally destress the process (buying a house is a big deal, after all). But we can help you avoid the biggest mistakes. And, as it turns out, some homes just aren’t right for the average first-time buyer. Go ahead and take a look.

1. The one that’s a little too ‘cozy’

You may not have children when you buy your first house. You may not even be planning on children. But those plans could change in the next five to 10 years, and that tiny two-bedroom historic bungalow you’ve been eyeing may go from just right to clown-car small.

“If you are recently married and plan to start a family, do not buy a two-bedroom home. Unless you bunk the kids together, you will be moving once the second child comes along,” says Seth Lejeune, a Realtor® with Berkshire Hathaway HomeServices in Collegeville, PA. “Three is generally a good average. If you end up staying there longer than expected, you can start a family and still be comfortable.”

2. The bloater

On the flip side, you shouldn’t just get the biggest house you can qualify for, either. Five bedrooms might make sense for you in the future, but if it’s just you and your partner now, you probably won’t need those other four bedrooms for years. In the meantime, you’ll be carrying a much larger mortgage than you need—or possibly can handle.

“There’s almost nothing worse than buying more house than you need and having a reminder come in the mail every month as you scrounge to make payments,” Lejeune says.

3. The money pit

You might be tempted to buy an older fixer-upper—after all, you’ve watched so much HGTV you could give Bob Vila a run for his money—but be careful how much rehab you take on.

If the home needs one or two biggish projects and a handful of small weekend jobs to get into perfect condition, you might come out ahead. But if you can spot a dozen problem areas now, you may end up going broke trying to repair that place.

Instead, opt for a fixer-upper with an end in sight.

“I generally advise people to keep it simple—like kitchens and bath upgrades,” Lejeune says.

4. The weekend stealer

Is the front lawn a tropical garden? Does the house have a swimming pool out back? Is there a huge vegetable garden that needs tending? Those features might look great now, but do you really want to spend every weekend maintaining your home?

“Pools, hot tubs, elaborate landscaping, etc. are great in theory, but all require maintenance,” Lejeune says.

If you’re not up for the challenge, move along.

5. The dream crusher

In an ideal world, you’ll live in your first home for a while, maybe make a few improvements, and sell it for a profit later so you can upgrade to an even more awesome pad.

But that doesn’t mean you should look at every home for its investment potential.

Sometimes your tireless home improvements won’t mean much to the next buyer. And sometimes that home simply isn’t going to go up in price, no matter what improvements you make.

“If you make a row home in the worst part of the city into the Taj Mahal, you’re never gonna get that money back,” Lejeune says.

If your only reason for making an offer is what you might get out of it after you sell it, consider the market very, very carefully before you make the plunge.

6. The doorbuster

If you’ve found a really good deal on a home, go ahead and pat yourself on the back for being a regular real estate pro. But then stop and ask yourself why the deal’s so great. Is the location a bit gritty? You might save big bucks in the beginning, but there also might be big problems if and when you try to sell the home later on.

“I would advise that you pick [a locale] with a strong school district and a fiscally sound municipality,” Lejeune says.

Even if you don’t plan on having children, or you don’t care if a neighborhood is a little rough around the edges, future buyers might—and that means you may be forced to offer the same discount you got when you bought the house. And nobody wants their decisions as a first-time buyer to come back and haunt them as a first-time seller.

Source: Realtor.com, Angela Colley
http://www.realtor.com/advice/buy/worst-homes-for-first-time-buyers/?iid=rdc_news_hp_carousel_theLatest

Which kind of real estate agent is the right one for you

When you’re buying or selling a house, you’ll likely reach out for professional help from a real estate agent. But how to choose? There are Realtors and just plain real estate agents, part-time and full-time agents, family friends who are in the business, maybe even neighbors down the street. Which one is right for you?

Work with a professional agent

Start by eliminating the real estate agents who aren’t right for you. Devin and Karen Carroll of Texarkana, Texas, found what they thought was the perfect house. So they reached out to a convenient real estate connection.

“I called a family friend who is a part-time real estate agent,” Devin Carroll says. “She showed us the house, and we submitted an offer. It was at this point the fireworks began.”

Carroll says the seller’s agent was an experienced negotiator “ready to go to war for her clients.” His agent was immediately intimidated. It took only one phone call for the veteran agent to stand her ground on price, and “from that point on, my agent was scared to negotiate.”

Lesson learned. Carroll says the next time around, he’ll look for a professional agent, one who’s not scared to negotiate and who is more concerned with getting a great deal than with sealing just any deal.

Finding the right agent for home sellers

“The days are gone where a real estate broker simply places a sign in the yard, enters it into (the Multiple Listing Service) and sits around their office waiting for it to sell,” says Damian D. Hall, a real estate broker in Greenville, S.C.

For sellers, that means searching for a proactive, technology-savvy agent, Hall says. Because buyers start with the Internet, he says “photos must be professional, magazine quality, and the description has to be detailed and really sizzle.”

Also, look for an agent who has some social-media marketing muscle. “It’s scary how much Facebook alone knows about its users, but at the same time it’s pure gold for those looking to put a product — or in our case, a listing — in front of the consumer most likely to buy the house,” he says.

Finding the right agent for home buyers

On the other side of the transaction, Scott Durham, a Realtor in Reno, says there’s something to be said for an agent with a solid track record of closing deals.

“The average real estate agent sold only four homes last year,” Durham says. “Think about if you are purchasing a home and you represent 25% of that person’s income for the entire year. Do you really think they have your best interest at heart, or will they do just about anything to get the deal closed?”

He says a typical buyer’s agent will simply search the MLS for homes, but great agents will hunt down homes that aren’t even on the market yet. They’ll contact homeowners in the desired neighborhood or launch a direct mail campaign in the desired area with specifics on the buyers and their family.

Know the difference between Realtors and real estate agents

“Not all real estate agents are Realtors,” says Kellie Tinnin of Albuquerque, who has been in real estate for eight years. “The term Realtor is a registered trademark of the National Association of Realtors.” NAR members pledge to abide by the association’s code of ethics.

Of course, similar ethical standards are enforced as a matter of federal and state law, whether you deal with a Realtor or simply a real estate agent.

Agent interviews: Do better than one and done

Real estate pros urge buyers and sellers to interview at least three agents. Most people don’t — they’re one and done. Peter Boscas, a broker in Columbia, Md., offers these agent-hunting tips:

• Always ask an agent for a list of recent references.
• Ask each agent you’re considering how they plan to help you find the perfect home (for buyers) or market your home (for sellers).
• Note how an agent responds to your inquiry. Boscas says if an agent answers your initial request for information with a prompt, thorough and informative response, there is a good chance that agent will provide that type of service throughout the transaction.
• Ask the agents you’re considering to provide a list of their recent sales, not just a general number of sales or sales volume.

Source: USA Today, Hal Bundrick, NerdWallet
http://www.usatoday.com/story/money/personalfinance/2016/03/27/which-kind-real-estate-agent-right-one-you/82097710/

Happy Easter From The Mimi Wang Real Estate Blog

Happy Easter Everyone

~ from Mimi Wang

INFO GRAPHIC - Woman Buyers Are Coming Back

RELATED:

4 tips for single, female homebuyers

There May Be More Single Women Buying Houses in 2016

Why more single women are now first-time home buyers

5 Tax Benefits of Owning a Second Home

There are tons of benefits that come with owning a second home: novelty and adventure, a place to escape and unwind, an opportunity to create memories that last a lifetime, a valuable tool to make vacation-craving friends like you a whole lot (for better or for worse).

But there’s another benefit that’s often overlooked: the tax breaks.

You already know that owning a home usually offers some tax deductions. But what if you own two? Or three? What if you’re a regular Donald Trump (back in his real estate, meat magnate heyday, of course)?

Since we know you won’t mind a little extra cash to spend while soaking in your surroundings during your next getaway, we thought we’d tell you how to reap the fruits of your second-home purchase.

1. Mortgage interest—yes, again

When it comes to owning a second home, the interest on your mortgage is deductible. The same rules that come with writing off mortgage interest for your first home apply to your second.

In fact, you can write off as much as 100% of the interest you pay on up to $1 million of debt, which includes total debt taken on to pay for both homes, as well as money spent on improving the properties. (That’s not up to $1 million for each property—just up to $1 million in total.)

2. Home improvements

Is your second home a fixer-upper? If you want to spend the off-season making improvements to your hideaway, you can deduct the interest on a home equity loan or line of credit.

But there are a couple of exceptions.

For starters, there will be a limit on the amount you can deduct if the home equity loan on your main or second home is more than $50,000 if filing single or $100,000 if married or filing jointly.

Second, the amount you can deduct has a limit if the mortgage is more than the fair market value of the home, says Gil Charney, director of The Tax Institute at H&R Block.

For example, let’s say a taxpayer has a mortgage of $220,000 and takes out a home equity loan of $65,000. The property’s fair market value is $275,000. Since the difference between the fair market value and the mortgage is $55,000, then $55,000 of the home equity loan can be deducted, not the full $65,000.

3. Property taxes

You can also deduct your second home’s property taxes, which are based on the assessed value of the home. That’s good news. Even better news? Unlike the mortgage interest tax deduction, there’s no dollar limit on the amount of real estate taxes that can be deducted on any number of homes owned by the taxpayer.

But beware: Taxpayers who can afford two homes are likely to land in a higher tax bracket—which means slimmer pickings for tax savings. For example, in 2016, a married couple whose gross income exceeds $311,300 would have limits on the types of itemized deductions they could take.

4. Renting out your home

If you rent out your second home for 14 days or less over the course of a year, that rental income is tax-free—and there’s no limit to what you can charge per day or week. Score!

But if you’re hoping to put your secondary digs on Airbnb or another rental site for more than 14 days during the year, be prepared to do some heavy math come tax time.

You’ll want to figure out the number of days you rent your home and divide that by the total number of days your home was used—whether it was you or a renter staying there. (The total number of days that the home was vacant doesn’t fall into this equation.)

For instance, let’s say you rented out your vacation home for 30 days within a year, and vacationed in your home for 90 days.

We’ll divide 30 (the days you rented it out) by 120 (the total number of days the home was used). The result: 25% of your rental-related expenses—which could range from utilities to the cost of a property manager—can be deducted. Now, if your home is losing value, that same percentage (in this example, 25%) of depreciation costs can also be deducted.

Here’s the caveat, Charney explains: Depreciation costs can be deducted only if there is rental income remaining after taking into account other deductions, such as mortgage interest, property taxes, and direct expenses tied to renting your home—like agent fees or advertising.

5. When it’s time to sell

Maybe you bought a far-off hideaway that you’re lucky to visit a couple of times a year. Or perhaps your vacation home is just a quick drive away, and you spend every possible moment there.

If it’s the latter—and you don’t already know which of your homes is your primary residence and which is the second home—now’s the time to figure it out. Distinguishing between the two can have big tax implications when it comes time to sell.

That’s because a capital gain of up to $250,000 (or $500,000 for taxpayers who are married/joint filers) on the sale of the principal residence may be excluded from taxable income.

Your principal—or primary—residence is the home you used most during the five years prior to the sale. But other factors—such as your job’s location, voter registration address, and banking location—could also come into play. Among other requirements, you must own and use that principal residence for at least two of the five years before the home is sold.

We know—that’s a lot of heavy stuff to take in. But you knew your second home would pay off in more ways than one, right? Now, hurry up and file your tax return—so you can escape to your happy place and forget about burdensome things. Like taxes.

Source: Realtor.com, Renee Morad
http://www.realtor.com/advice/finance/second-home-tax-benefits/?iid=rdc_news_hp_carousel_theLatest

Starter home crisis: San Jose is third worst in U.S. for first-time buyers

As the spring house-hunting season approaches, tight inventory and rising prices are casting a lengthening shadow over the plans of starter homebuyer across the United States. And guess where the crisis is most pronounced?

Oakland.

That's right. According to a new Trulia report on the 100 largest U.S. metro areas, Oakland is as bad as it gets when it comes to buying a starter home. The rest of the top five, in order, are Los Angeles, San Jose, San Francisco and Sacramento.

Compared to the rest of the nation, the Bay Area is "taking the biggest hit," said Ralph McLaughlin, chief economist for Trulia, which released the quarterly price report titled, "House Arrest: How Low Inventory is Slowing Home Buying."

Of the top 10 U.S. metro markets showing the sharpest decrease in starter home affordability since 2012, nine are in California. The report defines a starter home as one that's priced in the bottom third of all homes in the market -- where first-time buyers often look. Similarly, Trulia defines starter homebuyer as those whose household incomes fall in the lower third of the income distribution for a given metro area. In the Oakland metro area, that means an income of $52,700 and under; in San Jose, of $64,900 and under; in San Francisco, $62,000 and under.

Here are three snapshots of what's happening in our own region:

• In the Oakland area -- where the tech boom has spread, driving up prices -- the typical buyer of a starter home would have to spend 69 percent of household income to afford a 30-year fixed mortgage, with 20 percent down. That's 29 percent more of the income than would have been needed in 2012. The median price of a starter home in the Oakland area is $374,000, according to the report.

• As bad as that sounds, consider the plight of San Jose starter homebuyer, who would have to spend 87 percent of household income to afford a mortgage -- 27 percent more than in 2012. The median price in the San Jose metro area is about $586,000.

• Finally, San Francisco metro buyers would have to pay a whopping 110 percent of household income to afford a starter home mortgage -- 25 percent more than in 2012. The median San Francisco metro price is $714,000.

"I'm proud to be from the Bay Area and to see how much economic activity is here and how much technological advancement," said McLaughlin, who grew up in San Jose's Berryessa district and moved two years ago from San Francisco to Oakland. "At the same time, I'm ashamed by how those in the middle and lower income brackets are essentially becoming locked out of the housing market."

Given the demand in pricey markets like the Bay Area, a new phenomenon is growing: When it comes time to move, middle-tier homeowners "increasingly find themselves looking down the housing ladder" toward houses priced in the lower third of the market, McLaughlin said.

Here's an example: Say a worker who owns a comfortable place in more affordable Contra Costa County suddenly must move close to a new job in San Jose. He or she may wind up downsizing because of the increased cost of housing.

"Or someone who is moving into the Bay Area from another market -- even from Sacramento," McLaughlin said. "Normally they might want to buy a four-bed, three-bath house for the family. But they get there and they can't afford it."

Again, they downsize, sometimes dramatically.

As those middle-tier buyers move down the housing ladder, it exerts pressure on prices in the bottom third of the market, intensifying the competition for first-time buyers.

Trulia reports that of the 100 largest metro areas in the U.S., 95 have shown a decrease in the number of starter homes since 2012. Of the 10 metro areas showing the biggest decline, all are in the West and South. Salt Lake City tops the list: In four years, the number of starter homes there has plummeted from 1,243 to 151. That's an 88 percent drop-off.

The report cites three reasons for falling inventory in the starter home and mid-tier "trade-up" categories:

• Investors snapped up foreclosed homes during the recession and converted them to rentals.

• A larger share of lower-priced homes remains underwater compared to higher-tier homes. Their owners therefore are less likely to sell and take a loss.

• Rising prices have created a general housing gridlock, as the price spread between trade-up and premium homes keeps widening.

It all adds up to bad news for starter-home buyers. Those "making their first foray into homeownership," the report said, "are worse off than they've been in years."

Souce: San Jose Mercury News, Richard Scheinin
http://www.mercurynews.com/business/ci_29670665/starter-home-crisis-san-jose-first-time-buyers

6 Ways to Explain Low Inventory

Everywhere you turn, there's a new story about how the lack of homes on the market is driving up prices and driving buyers crazy. But what's the reason behind this trend?

There are a number of factors, according to a recent article at Real Estate Economy Watch. Make sure you understand the logic behind the market, so you can be the best advocate for your clients during these somewhat stressful times.

1.) Many home owners are still underwater. One of five homeowners with a mortgage still doesn’t have enough equity to sell. This isn't the same situation as we saw during the depths of the housing crisis, but it's still making its mark on inventory levels. Although rising prices may slowly reduce the number of home owners who owe more than their property is worth, Real Estate Economy Watch predicts that significant numbers will continue to be equity-challenged for several years to come, especially in Arizona, California, Florida, and Nevada.

2.) Boom buyers are still holding out. About 16 million families bought homes in the peak of the boom around a decade ago, and many are still waiting around to make a profit, even if they aren't underwater. Even if CoreLogic's prediction that the national median price will reach the peak of 2007 in the next year or so does come to fruition, Real Estate Economy Watch says many of these peak buyers will have to wait another five years or more before they realize much profit on their homes.

3.) The inventory shortage is squeezing move-ups. Owners who may be ready to move into a larger or more expensive home are often considered hidden drivers of the market. But right now, price instability and the lack of available homes is causing this group to hold off. But Real Estate Economy Watch says that stability is coming, despite the inflationary impact of market shortages, and predicts that this "vicious cycle" will ease.

4.) Investors aren't ready to sell single-family homes they're renting. They're making money from both rising rents and home price appreciation. And that's why Real Estate Economy Watch cautions against assuming they'll "sell their mini gold mines to homeowners anytime soon." The upside? At least some young prospective owners have access to a relatively affordable alternative to apartments, where they can start families while they wait for entry-level homes to come on the market.

5.) New-home construction is still very low. It may be tempting to blame this on the builders, but Real Estate Economy Watch points out that after the crash in 2007, thousands of smaller builders closed down, and many of those who survived did so by selling off their inventories of prime real estate earmarked for future construction. They predict that builders will make a dent in the higher-tier housing soon, but that they would help the inventory problem more if they concentrated on the lower-end demand.

6.) Baby boomers are running behind. Everything from later retirement ages, longer careers, better health, and loss of household wealth/equity during the Great Recession have contributed to a slower-than-expected timeline for this generation. But Real Estate Economy Watch predicts that this will change as many must convert their equity into cash while they can still enjoy it, and says others won't be able to afford the costs to retrofit current homes in order to age in place.

Source: Realtor Mag Onlin - Real Estate Economy Watch, Where Have All The Sellers Gone?
http://realtormag.realtor.org/daily-news/2016/03/23/6-ways-explain-low-inventory?om_rid=AAFmZk&om_mid=_BW8tT2B9MB5MZl&om_ntype=RMODaily
http://www.realestateeconomywatch.com/2016/03/where-have-all-the-sellers-gone/

6 Times You Really Can Get Your Earnest Money Back

In real estate, the importance of being earnest is measured not by a handshake and a “Sure, we’ll buy your house,” but cold hard cash—aka earnest money. That’s the deposit that you, dear home buyer, put down once you agree to purchase a place (typically 1% of the home’s price) and that you stand to lose if you back out of the deal for no good reason.

While this safeguard serves to keep fickle buyers from changing their minds unnecessarily, there are plenty of times when you can—and should—bail with your earnest money firmly in hand.

Here are six good reasons to walk away that won’t force you to forfeit this chunk of money.

1. The house was appraised for less than expected

One surefire way to get your earnest money back is to have an appraisal contingency. Your lender will want to have the property appraised to see if it’s really worth what you agreed to pay for it. If the estimate is lower, the lender will loan only up to the lower amount—which means it’s up to you to cover the difference. But with an appraisal contingency, “the buyer only has to buy the home at the appraised value,” says Joshua Jarvis, a Realtor® in Atlanta.

An appraisal contingency gives you leverage to ask the seller to lower the price or to sweeten the deal by, say, paying your closing costs. But if no agreement is reached, then you can take your earnest deposit and skedaddle.

2. Your financing fell through

If you can’t find a lender who will loan you money within a certain amount of time, a financing contingency allows you to get your money back. Normally you have to be flat-out denied financing by the lender in order to get a refund; in other words, you can’t bail scot-free because you didn’t like the interest rates offered.

A typical time frame to find financing is “often two weeks from date of the approved contract,” says Doris Phillips, a Realtor and broker with Lake Homes Realty in Pelham, AL.

3. Your other house didn’t sell

It’s hard to buy a home if all your money’s tied up in your old one—which is why many buyers in this all-too-common scenario have a sale contingency in their contract: They will buy the new place only if they can unload their old digs within a specific amount of time. How much time that is depends on how quickly homes move in your market, so consult your Realtor for more specifics. But the nice thing is, as long as you’ve got this contingency in place, if your old home doesn’t sell, you can back out of your new purchase without losing anything but time.

4. You find out the home has a major flaw

Most sales are contingent on a home inspection—that’s where an inspector checks out the house, soup to nuts, and identifies any problems. While many flaws can be fixed and the deal can go through, there are some doozies that should give you major pause. They include a history of problems with mold, foundation, electrical, pollution, and flooding. If your home inspection unearths these problems, you can either negotiate to pay a lower price (since you’ll have to pay for repairs) or abort the mission and take your earnest money with you.

Also keep in mind that sellers are legally required to reveal certain flaws (which vary by state) in a disclosure document. So if you find out a seller has tried to cover something up—and that something is big—it is typically well within your rights to take your earnest money and run.

5. The house isn’t finished

Sounds weird, right? But it’s something you should keep an eye out for if you’re buying a new build.

“Builders are notorious for not delivering a finished product, and the buyer has every right not to close for what they are paying for,” Jarvis says. “I had one where the builder wanted the buyer to close even with an unsafe deck.” In that instance, the buyer would have been able to back out and get the earnest money back, but eventually the construction company fixed the problem (after firing the deck builder).

6. The seller backs out

This may be a no-brainer but just in case you’re wondering: You’re entitled to your earnest money “if the seller backs out for whatever reason,” says Lynn Windle, a Realtor in Plano, TX. Perhaps the most common scenario for this is when you’ve got a sale contingency, but while you’re waiting to sell your home the sellers decide to take another offer. But sellers can bail for all kinds of reasons, and whatever they are, rest assured, your earnest money is all yours.

Keep in mind, though, that it all depends on your contract: If it says your earnest money is nonrefundable, then you’re probably not getting it back without a lawsuit.  If it is refundable, you’ll then need to get a release of contract and disbursement of earnest money form signed by all parties—here’s an example of one.

Source: Realtor.com, Craig Donofrio
http://www.realtor.com/advice/buy/reasons-to-get-your-earnest-money-back/

Flippin' A House Isn't Easy: 7 Things To Consider Before You Take The Plunge

Turn on HGTV or any number of other channels almost anytime during the day or night and you're bound to find at least a couple of shows about flipping houses. Some provide a cautionary tale about overextending yourself financially or making other rookie flipping mistakes, but the vast majority end up with a profit of $30,000, $60,000, or $100,000+ in profit for a couple of months (or a couple of days, in the case of one new flipping show).

Enticing, right? If you're getting ready to plunk down cash for your own flip, here are a few things you need to think about.

1. Make sure you've got the money

Sounds obvious, but…do you really know the financial stakes involved? "The first expense is the property acquisition cost. While low/no money down financing claims abound, finding these deals from a legitimate vendor is easier said than done. Also, if you're financing the acquisition, that means you're paying interest," said Investopedia. "Every dollar spent on interest adds to the amount you will need to earn on the sale just to break even."

If you're planning to pay cash, you won't have to worry about interest, but you will have carrying costs including utilities, property taxes, and HOA fees where applicable.

Here are a few other options for buying property to flip, courtesy of Auction.com: "If you don't have enough cash to purchase a home, the next cheapest source is a home equity line of Credit (HELOC). These are low-interest, variable-rate lines of credit that are secured by either your primary residence or an investment property. Typically, the HELOC rate is set about 1–2% above the prime rate. You need to put the HELOC in place before you bid on any homes; then you can bid on the home as a ‘cash deal,' rather than as a ‘financing deal.' Many investors use hard money loans or other conventional mortgages to finance their flips. Because of the higher interest rates and points paid at closing, both will reduce your net profit considerably, and are not recommended for flips unless absolutely necessary."

2. Buy in the best location you can

"Expert house flippers can't stress this enough," said MoneyCrashers. "Find a home in a desirable neighborhood, or in a city where people want to live." And keep in mind the convenience factor—for the potential buyers, certainly, but also for you. "You will work on this house daily in the weeks and months to come. Do you really want to work all day, and then drive an hour to get home? Don't invest in a house too far away from where you live; you will spend more money on gas, and it will take longer to fix up the house."

3. Work with a realtor...or become one

Tying to maximize profit by selling a flip yourself rarely works out well if you don't know what you're doing. If you think trying to figure out if the wall you want to take down is load bearing is complicated, just try to figure out disclosures and conditions without going to real estate school. The money you spend on a Realtor commission can be well worth it for the ability to concentrate on other things and know the sale is in good hands.

Beyond getting the home sold, good real estate agents can be helpful in other important ways when it comes to flipping. "They can help you find great deals, get you comps, help you connect with lenders or contractors, and a lot more," said BiggerPockets. "Don't settle for an average agent though—find a great investor friendly agent."



4. Check the comps. And check them again

Speaking of comps…you can't make a smart decision on buying, fixing up, and flipping a house if you aren't aware of the prices in the neighborhood. And that might be easier said than done. In states like Texas, home sales are not reported and are not public record like they are in states like California. Do your research so you know what you're up against.

5. Make smart updates

Knowing where to spend your money is key to a successful flip. You don't want to leave key areas untouched but you also don't want to over-improve for the neighborhood. "Home improvements that increase the value of a home might include upgrading kitchen appliances, repainting the home's exteriors, installing additional closet storage space, upgrading the deck, and adding green energy technologies," said MoneyCrashers. "On the other hand, avoid home improvements that won't increase the selling price, like installing a pool, installing a whirlpool bath, or adding a sunroom to the house."

This is another good reason to use a Realtor who is a local expert: they'll be knowledgeable about specific updates that are important in your market.



6. Use good products

Scrimping on construction costs may seem like a good idea if it means your financial commitment is lower, but low-end materials might not get the home sold or fetch the sales price you want.

7. Work with good people

Everyone you work with has the ability to make your flip a success or derail it. Partner with those you can trust, and don't forget to make sure they're qualified for their role. A bargain basement subcontractor that does a shoddy job on your floors can end up costing you thousands when you have to have it redone by a professional.

On the flip side, "The real money in house flipping comes from sweat equity, said Investopedia. "If you're handy with a hammer, enjoy laying carpet, can hang drywall, roof a house and install a kitchen sink, you've got the skills to flip a house. On the other hand, if you've got to pay a professional to do all of this work, the odds of making a profit on your investment will be dramatically reduced."

Source: RealtyTimes, Jaymi Naciri
http://realtytimes.com/consumeradvice/buyersadvice1/item/43128-20160317-flippin-a-house-isnt-easy-7-things-to-consider-before-you-take-the-plunge?tmpl=component&print=1

Video - One Cool Thing (Home Projects)

Tax Tips for Rental Property Owners

It’s tax season again. If you own a rental property, your tax strategy is more complex than for the home you live in. Here are some important tax tips for rental property owners.

Rental property tax considerations each year

Here are some points to keep in mind when you file your annual return:

• Your rental property shows up on Schedule E of your tax returns, which logs rental income and expenses. The expenses include mortgage interest, property tax, maintenance, repairs, utilities, property management fees, depreciation, and all other costs associated with owning the property.
• If you pay points when you close your rental property purchase loan, you cannot fully deduct them the year they were paid like on a primary residence purchase. Instead, you must deduct points over the life of your loan.
• If your rental income exceeds expenses each year, the income is taxable just like any other income.
• If expenses exceed rental income on Schedule E — which is common because of the depreciation expense line item — you can deduct rental losses if your non-property income is up to $150,000 per year. If your non-property income is up to $100,000, you may be able to deduct rental property losses up to $25,000 annually. If you earn between $100,000 and $150,000, this potential deduction benefit is cut in half. And if you earn above $150,000, you cannot deduct rental property losses.
• If you earn too much to deduct rental property losses, the losses can accrue as an offset to capital gains taxes when you sell.
• Ask your tax adviser whether deductions or accrual of rental losses fits your tax profile.

Rental property tax considerations when you sell

When you sell a rental property, you will pay capital gains taxes on your appreciation. You must consult a tax adviser to get accurate figures, but here’s a simplified formula for estimating capital gains taxes and net profit on a sale.

Subtract purchase price, cost of improvements you made, and total selling cost (including realtor, title, and local tax fees) from sales price. The resulting number is your capital gain, and you’ll pay federal and state taxes of about 25 to 30 percent (based on your tax profile) on the capital gains.

Let’s see what this formula looks like if you bought a home eight years ago for $200,000 using 20 percent down and a 30-year fixed rate of 6 percent (the rate at the time). A quick mortgage calculator analysis tells us that your balance is now $140,435.

Suppose you made $10,000 in improvements to the home along the way, you earn less than $100,000 per year (so you didn’t accrue any rental losses to offset capital gains), and you’re now selling the property for $300,000. In a county that has a total of 7-percent selling cost (including real estate agent commission, transfer taxes, title, and settlement fees), your estimated capital gains would be about $69,000.

Using the capital gains tax formula above, you’d have about $17,250 to $20,700 in taxes due, and you’d therefore net about $117,865 to $121,315 on the sale.

How to avoid capital gains taxes on rental property

You can avoid this tax hit if your intent is to buy a new rental home immediately after you sell.

You do so with an IRS benefit called a 1031 Exchange, which is named after the IRS code number. This allows you to defer paying the capital gains taxes at closing as long as you identify a new rental property to buy (in writing) within 45 days, and close the new purchase within 180 days of closing your sale.

To get the full tax benefit, the new purchase must be of the same or greater than your sales price, and you must put every penny of net proceeds from the sale into the new purchase.

A 1031 Exchange defers rather than eliminates the tax hit in your sale.

If you plan to convert the new rental property to a primary residence at some point in the future after the exchange, the IRS has no specific rules prohibiting you from doing so. If this is your strategy long term, consult your tax adviser on capital gains tax implications before you enter into your exchange.

Source: Zillow Blog, Julian Hebron
http://www.zillow.com/blog/tax-tips-rental-property-owners-194050/

Sales flat, prices mixed in February Bay Area housing market

A shortage of Bay Area homes for sale sparked bidding wars last month but kept sales low in what was the second-slowest February in eight years, according to a report released Thursday.

Sales of single-family homes were flat from a year ago across the region, the real estate research firm CoreLogic said, but it was a mixed market.

First-time buyers were moving eastward, keeping sales robust there, said Andrew LePage, a research analyst with CoreLogic.

"There's more activity in some of the inland markets because of affordability," he said. But overall, sales "are off to only a slightly stronger start than in 2015," LePage said.

Real estate agents in parts of the East Bay and South Bay said there was plenty of demand -- just not enough homes on the market. But in some areas, buyers were giving up.

"A lot of people are dropping out of market," said Lynne French of Windermere Real Estate in Clayton in Contra Costa County. "For first-time buyers, $739,000 for a house is tough."

High prices pushed millennial first-time buyers to the edges of eastern Contra Costa County. Sales were up 7.6 percent from a year earlier in that county and the median price of $460,000 was up 2.2 percent.

"Affordability is the issue," said Jennifer Branchini, a real estate agent in Pleasanton. "First-time buyers are being pushed really far out."

For Lisa and Brian Johnson, it's been a war on multiple fronts, competing with downsizing baby boomers and investor-flippers for what they hope will be their first home.

"It's a difficult market," Lisa Johnson said. "It's just highly competitive. You're fighting off 10 to 15 other people who want the exact same house. And then there are the people purchasing houses to flip them. It's crazy."

The Johnsons have been looking for five months and have an offer in on a $290,000 condo in Pacheco, a small town next to Pleasant Hill. "We're hoping this is the one," she said.

Low inventory and overbidding drove prices up 15.7 percent to $640,000 from a year ago in Alameda County, while the number of sales dropped 1.6 percent.

Inventory levels "dropped off a cliff in December" and are just now coming back, said Glenn Bell with Mason-McDuffie Real Esstate in Berkeley.

But at this point there's still a shortage in Berkeley and Oakland, said Barbara Reynolds with McGuire Real Estate.

"Anything on the market is going for $200,000 to $300,000 over asking for houses priced at $900,000 to $1 million," McGuire said. "There are plenty of buyers," she said. "That's the issue. There are 15 offers for every home."

In San Mateo County, sales were up 3.9 percent over the year, but prices remained below $1 million for the second month in a row at $977,500. Median house prices also dipped below $1 million in San Francisco on a 25 percent drop in sales. It was the first year-over-year decline since February 2012, but LePage cautioned that it could be a one-time blip.

In Santa Clara County, sales dropped 11.3 percent from last February while prices rose 7.7 percent to a median of $862,000. Eight out of the past 12 months have seen double-digit price increases, but LePage said it's too soon to declare a trend toward slowing prices.

Another factor depressing inventory is soaring rents, which make it tempting to rent out a home rather than sell it.

"The rental market is really good and a lot of people originally trying to sell have decided that rental income is so good, why shoot the golden goose," said Mark Wong of Alain Pinel Realtors in Saratoga.

Buyers have to jump fast, Wong said. One of his clients snagged a Cupertino home for $1.3 million only by making an offer before the open house. "Buyers want to buy, so the timing is very critical," Wong said.

Several real estate professionals said they've seen first time buyers competing against downsizing baby boomers.

"It's a generational thing," said Kevin Kieffer with Keller Williams in Danville. "The empty-nesters are coming in and taking all the properties. The baby boomers are the first-time buyers' toughest competition, and nine times out of ten the baby boomer is winning."

The CoreLogic report covers sales that closed in February. These are typically purchases that began late last year or early January.

Source: San Jose Mercury News, Pete Carey
http://www.mercurynews.com/business/ci_29651329/sales-flat-prices-up-february-bay-area-housing

What Boomers Want

These 10 Expenses Are Why Realtors Don’t Make The Kind Of Money You Think They Do

People often think when I tell them I am a Realtor that the money is rolling in and I do little work. The fact is that the opposite is usually true. Real estate IS NOT an easy business despite what many think, and the money, well, it can be relatively good, it's not just rolling in.



Much of the general public is oblivious to all the costs associated with being a real estate agent. They mistakenly believe we all drive Benz’s and are grossly overpaid. Nothing could be further from the truth. Carrying a real estate license comes with great expense, and we have to charge our clients accordingly to cover the costs of doing business.

According to Payscale.com, the median yearly salary for real estate agents is $44,488. Most agents don’t even sell five homes per year. With that in mind, there’s a myriad of monthly costs that must be covered, whether we sell a home that month or not.

To demonstrate that it’s not all fancy cars and mansions in the lives of agents, I’ve listed 10 things real estate agents blow their commission checks on which the public has no idea about.

1. Lockboxes:
These little guys, who hang on your door when your home is for sale, are not cheap. Think about it, these are boxes that are destruction proof and operate by satellite. Not to even mention the expensive supra key that you have to buy and have a subscription to, in order to unlock the boxes. Agents who have 10+ listings have thousands of dollars in lockboxes alone.

2. Signs:
An agent can’t sell a home without a sign. Signs aren’t free. Much like lockboxes, when an agent has dozens of signs, they have lots of money invested. The design and shipping alone is hundreds of dollars. Agents use yard signs, open house signs, location signs, sold signs, pending signs, and in the HOA controlled neighborhoods, designer signs. It adds up very quickly.

3. NAR Dues:
The National Association of REALTORS® (NAR) is America’s largest trade association, representing over 1 million members involved in residential and commercial real estate. Not all real estate agents opt to join NAR and become REALTORS®, but the vast majority do. And guess what—NAR wants its money every month. And they don’t take IOUs.

4. MLS Dues:
On top of belonging to NAR, you have to pay monthly to have access to the MLS. The MLS is the source that lists all the homes for sale. Trulia and Zillow don’t have near as much data as the MLS. The MLS charges a hefty monthly fee to list and sell the agents’ homes. It’s very much a necessary tool in the agent toolbox.

5. Marketing Materials:
The agent’s main job is to market. They market properties and themselves. Between websites, business cards, flyers, and belonging to sites like Zillow and Trulia, the average agent will spend almost $1,000/month on marketing materials. Some spend $10,000+ in marketing each month. It’s not cheap to spread the word about a multi hundred thousand dollar asset for sale.

6. Advertising:
Paid ads aren’t cheap. Whether it’s on Facebook, a billboard, or the baby seat in a shopping cart, ads cost a lot of money. They’re the lifeblood of a good agent. That’s how they sell your home—by advertising it.

7. Website Hosting:
If you’re going to sell real estate in this digital age, you need a website. You’ve got to have a place for your prospects and clients to come and search for homes. That website has to feed into the MLS (another fee to do that), and the website has to be responsive. The average custom website costs $5,000 and comes with a monthly charge of $200. You starting to see the pattern here?

8. Open Houses:
You may think that we just sit in your home using up your free wifi, but that’s not the case. Depending on the agent, there’s food involved as well as balloons, signs, ads, and staging—all designed to make the place look and feel like a million bucks. I’ve even paid to have someone mow the yard and trim the bushes before an open house. I didn’t have time to wait on the owner to take action.

9. Closing Gifts:
In most markets its customary (but not necessary) for agents to give a gift to the clients after doing business with them. What most don’t know is that they usually send one to the title company and the loan officer as well. When everyone puts in hard work, the agent wants to reward them so they continue to do so. You may view it as frivolous, but you can never be too nice to title companies and banks. When you need a favor, gifts go a long way.

10. Office Space (often included in an agent’s commission split—read more here)
Most people think that agents have a job with an office. They don’t realize that the broker charges for the office space and the furniture that occupies it. Just know this: Nothing is free in the real estate game. Not even a place to do your work. Agents are nickled and dimed to death. And as you know, commercial office space isn’t cheap.

So next time you’re thinking about hiring an agent, and you think their fees are a little high, think of this list (which is just a fraction of what’s really paid for). They’re all things to facilitate properties getting moved faster and for higher dollar amounts.

It’s not easy, cheap or always fun being a real estate agent, but the smile we see on our clients’ faces when they buy a new home or profit from selling their old one, makes it 100% worth it.


Source: LighterSide of Real Estate, Ryan Stewman
http://lightersideofrealestate.com/real-estate-life/agent-life/10-expenses-realtors-dont-make-kind-money-think

Happy St Patrick's Day!

Happy St. Patrick's Day from The Mimi Wang Team!

Foreign Buyers Are Pulling Back, Realtors Say

Demand from foreign buyers is weakening, the National Association of Realtors says, undermined by a strong U.S. dollar and rising home prices.

Last year, many real-estate experts predicted that foreign investors could flock to U.S. real estate as a safe haven amid global economic tumult. Last June, Realtors reported that Chinese buyers had surpassed Canadians as the top foreign buyers of U.S. real-estate, saying this reflected growing interest in the U.S. as a secure place to park their money.

In fact, there is growing evidence that many foreign buyers have been pulling back, in part because prices in many of the cities they favor, such as New York and San Francisco, have risen sharply. The affordability of those properties is weakened further by a stronger U.S. dollar.

In January, the median price of existing U.S. homes had increased 67% for a buyer from Brazil, factoring in the exchange rate, compared with a year earlier, according to NAR. For a buyer from Canada, it increased 27% and for a Chinese buyer, 14%.

China is also cracking down on buyers who try to evade a $50,000 annual limit on how much money they can transfer out of the country. Chinese buyers often skirted this requirement by transferring money via friends, family member or employees. In January, the country began more closely monitoring such transfers, NAR said.

Lawrence Yun, NAR’s chief economist, said it is unclear whether Chinese demand for U.S. homes will fall as much as demand from other countries. Chinese economic growth may have slowed, but the country is still reporting growth of more than 6%. And while many Chinese residents have lost money in the stock market, giving them less to spend, that could also prompt them to try to diversify their investments.

Foreign demand is difficult to quantify. NAR does so through a survey of real-estate agents it conducts annually, looking at the period from April through March. The results of this year’s survey are expected to be released in the early summer. Mr. Yun said he expects to see a decline in demand.

Foreign buyers remain a small sliver of the U.S. housing market. But any pullback could have a disproportionate effect on demand for high-end condos in places like Miami and Manhattan and luxury homes in Southern California.

There could be a silver lining, however: Falling foreign demand could help make homes more affordable for U.S. buyers.

“Given that the U.S. currently has a housing shortage, any demand pullback helps,” Mr. Yun said.

Source: The Wall Street Journal, Laura Kusisto
http://blogs.wsj.com/economics/2016/03/08/foreign-buyers-are-pulling-back-realtors-say/

Plans firm up for industrial-chic Railyard Place in San Jose

Eight months after acquiring a 10.6-acre site on the edge of downtown San Jose, Insight Realty Co.’s plans for what it’s calling Railyard Place are starting to come into focus.

The development firm turned in fleshed-out plans last week for a mixed-use project that would include a 230,000-square-foot office building and 476 apartment units, all wrapped in an industrial look — complete with faux smokestack — that executives say will attract corporate tech tenants and their workers.

“The office building almost looks like an old textile factory you’d see in Boston,” said Insight managing director Dennis Randall. “Those old factories used to have their own power plant, and the smokestack is reminiscent of that, to give it a true industrial vernacular. Then we’re basically building a SoHo-style neighborhood around it.”

The proposal would transform a site that has long sat fallow and largely cut off from the rest of downtown. It is located where Highway 87 crosses over Coleman Avenue, between a PG&E substation and the Union Pacific Railroad, and fronts the Guadalupe River Trail. To make the site developable, Insight will have to build a new bridge over the river to connect to Autumn Street, at a cost of at least $5 million, Randall said. “It’s an improvement for the entire area,” he said.

But a bigger challenge might be zoning rules. The land is currently zoned for commercial use only, and San Jose’s policy prohibits changing industrial sites to allow housing without a general plan amendment. Officials worried about the city’s low jobs-to-employed-resident ratio have for years resisted granting those, because of a fear that it could open the door to widespread conversions.

“It’s an interesting concept, but we have this hard line in the sand with the general plan,” said Michael Brilliot, a planning division manager for the city. “So everyone’s talking about it, saying, ‘What do we think.’”

Brilliot said the city isn't saying "no" to the concept at this point, just that more study is needed to figure out how it could work within the city's goals and policy framework. "One issue the city will have to grapple with is anytime you allow someone to convert a site, you have to ask, what are the unintended consequences," he said. "Why not there, there and there — and everyone will start lining up."

Randall says the concept for Railyard Place — with the housing — actually brings more jobs to the site than Insight would have to do under existing zoning, which would allow, for instance, a low-density industrial or R&D building. “We’re providing over 1,000 jobs on it,” he said. “I could build 135,000 square feet of industrial which would be 250 jobs.”

The residential, he said, is necessary to get the financing for the project as a whole — and is actually a big attraction point for tech office tenants.

“We have several tenants talking to us, and they love the residential being next door,” Randall said. “It helps them recruit talent. They might not live there forever, but it helps them get to know San Jose.”

The city’s jobs targets and policies regarding industrial lands are also being discussed in the context of the ongoing update of the Envision 2040 General Plan, which I’ve written about here. There is increasing consensus that San Jose’s job goal is probably too ambitious, but it’s unclear how a lower target could be reflected in land-use policies; and, in any event, the general plan update won’t address specific sites, such as Railyard Place.

While Randall said he supports job growth in San Jose, the hard prohibition on residential in certain contexts, especially so close to the core of downtown, “is small-town thinking. ... And the thinking has to change if we’re going to bring thousands and thousands of residents downtown,” he said.

Insight is proposing to build the project under a Planned Development permit, which allows zoning to be fine-tuned for the neighborhood and to support complex or unique projects. “With the PD Zoning, we are proposing exactly what we’re going to build,” Randall said. “It’s not an amorphous general plan amendment with a promise to build ‘something.’ It will give the city exactly an idea of what we want to build. We want it to be iron clad, and we want to build the office and the multifamily, and we think they’ll both go up together.”

Despite the uncertainty, Randall said he expects Insight could get approvals by October, “and we’re gearing up to break ground minutes after.” Lining up a capital source he said was no problem given the current economic environment.

Railyard Place is one of several developments with significant commercial components being proposed for the downtown area. Last week, Trammell Crow Co. showed off new pictures of its project near Diridon Station. More may be coming: Insight is working with the city of San Jose to acquire a development site next to The Tech Museum for a mixed-use tower. A group called SJSC Properties is also planning a two-tower office complex across from San Jose's City Hall.

Source: Silicon Valley Business Journal, Nathan Donato-Weinstein
http://www.bizjournals.com/sanjose/news/2016/03/09/plans-firm-up-for-industrial-chic-railyard-place.html

San Jose third costliest North American housing market -- if you believe the rankings

Here they come down the final stretch, folks! It's San Francisco in first, followed by Manhattan -- yes, Donald Trump's Manhattan -- close behind in the second spot! And -- look out -- that's San Jose in third place!

Real estate rankings are like overlapping horse races, with one finish line replacing the next as data crunchers continually spew out their latest findings.

This week's new joint analysis by the Point2homes.com and PropertyShark websites points to San Francisco as the costliest housing market in the U.S. and Canada, with a median home price of $1,085,000. Manhattan captured the No. 2 position ($1,059,000), while San Jose ($700,000) took the third spot, followed by Brooklyn in fourth place, Los Angeles in fifth and Vancouver in sixth.

Those are the top finishers in what's billed as North America's Superstar Housing Markets.

"These kinds of headlines aren't good for our workforce," said Jacky Morales-Ferrand, San Jose's housing director. "When you get housing prices that are so expensive, it makes it very challenging for people's kids, for grandparents and for companies to recruit here," she said.

She called the obsession with rankings "a sign of this recovery." "Because the latest recession was all about housing and its prices, and we now have this recovering market. But how high can it go again? When it reaches its cap, it's going to deflate. It's going to have to go down," she added.

Sometimes it's hard to make sense of all the number crunching from competing sources. Just as an example, the Demographia housing affordability index recently named Vancouver as the third most expensive city in the world, after Hong Kong and Sydney, while Point2homes.com ranks it as the sixth most expensive market in North America.

At times contradictory, the rankings are a confusing aspect of contemporary culture, celebrating the fact that entire markets are now out of reach of ordinary pocketbooks. But people are fascinated, anyway. It's something like a new turn on the old joke by Groucho Marx, who said, "I don't want to belong to any club that will have me as a member" -- the inference being that he envied the razzle-dazzle lifestyles that seemed beyond his own comfort zone and reach.

Oakland didn't make the Top 15 of the Point2homes.com ranking. But fear not, it appears on another new list: The Top 30 Hipster Zips for Home Flips, compiled by RealtyTrac. It ranks Oakland's 94606 ZIP code -- where 28.1 percent of the population is aged 20-34 -- in the 17th position nationally, with a $185,000 average gross profit per home flip. (A flip is defined as the purchase and re-sale of a house within a 12-month period.) That represents a 74 percent return on investment.

San Francisco and San Jose didn't even make that list, probably because most millennials can't afford to buy a dirt lot in those cities.

Housing officials, affordability proponents and real estate agents cull from a gazillion sources across academia and the nonprofit and commercial worlds. Some of the big brokerages and real estate franchises crunch their own numbers.

This newspaper often relies on CoreLogic, the real estate information service whose February data analysis showed the median price for a single-family home in the nine-county Bay Area to be $635,000 -- though that wouldn't mean much if you live in San Mateo County (where the median was $1,001,000) or Santa Clara County ($830,000).

Boring down by ZIP code, there is even more variability: like the Bay Area weather, real estate is about microclimates.

In January, RealFacts reported that Bay Area landlords pushed rents up by nearly 10 percent across the region in 2015. In San Jose, the average monthly price for an apartment rose to $2,436 -- a 9.4 percent increase over the fourth quarter of 2014. In Oakland, the rise was even steeper: up 13.7 percent to $2,806, RealFacts said.

More recently, the Abodo apartment search website reported that rental costs for one-bedroom units in San Jose fell 11 percent from January to February this year, said to be the biggest decline in the nation. But when Abodo tabulated the 10 largest declines from February to March, San Jose wasn't on the list, though Sacramento ranked second (down 16 percent) and San Francisco ranked ninth (down 6 percent).

Is your head spinning yet?

Just wondering.

Because Zumper, the apartment rental website, has just reported that the median rent for a one-bedroom house in San Francisco last month was $3,590, making it (yet again) the costliest rental market in the United States. Commenting on San Francisco's continued reign, the Curbed SF real estate blog noted that for $3,950, "you could rent a house in Zumper's cheapest city (Wichita, Kansas, $450 a month) and have enough left over to buy a monthly bottle of Napa's Screaming Eagle cabernet sauvignon, the ninth most expensive wine on the market today."

Meanwhile, the blog continued, Oakland "climbed to the survey's number four spot in February," with a median rent of $2,250. That just barely dislodges San Jose from number four; a one-bedroom there is also $2,250, but for Oakland that number is a record, rising 2.3 percent and breaking the previous Oakland Zumper high of $2,210 back in December."

But that soon will be old news. Who's in first place right now?

Stay tuned.

Source: San Jose Mercury News, Richard Scheinin
http://www.mercurynews.com/business/ci_29628585/san-jose-third-costliest-north-american-housing-market