April 4, 2009: Weekly Commentary

• Existing Home Sales up another 5.1% as of March 23, 2009
• Pending Homes Sales up 2.1% nation-wide with West leading
• Market to Market accounting returns ( little) to the past standards
• California Association of Realtors Launches Mortgage Protection Plan
• Bargain Prices bring out Investors and Novice Buyers
• Larry Kudlow of CNBC Declares New Bull Market
• Market Value versus Replacement Cost advantage for buyers Protection notice to owners.
• 5 Home Trends for 2010
• 6 Landscaping Tricks to WOW buyers
• Special Commentary: Does your DNA affect your investing and home/selling attitude?

Sorry for the lapse in a week, as the two notes at the top state Existing Homes Sales were up and Pending were up. That translated into calls, showings and listing presentation for Jim and me.

Amazed aren’t you? With all the Media news on lower home prices, and the poor situation of America, America was out buying what they have faith in before all else REAL ESTATE! Here are our local numbers for the past 14 days:
1. Palo Alto: zero closed escrow and 31 pending
2. La Honda zero closed escrow and one pending for 15+ acre Ranch for $1,399,000 list
3. Portola Valley, zero closed escrow and 10 pending
4. Woodside zero closed escrow and 5 pending
5. Atherton zero closed escrow and 4 pending
6. Menlo Park (east of 101 not included) zero closed escrow and 23 pending
7. Redwood City (over $800,000) zero closed escrow and 18 pending.
A big pick up in sales or offers pending closed occurred in the past 14 days. Is confidence back and the pent up demand beginning to show itself. From my stand point it is. If you are a buyer don’t wait, the tendency of sellers to accept lower offers will stop as the news begins to filter out among the agent community. By the time the media picks it up the opportunities will be over!

To jump out of sequence to my notes above the SF Chronicle featured a story on how investors and novice buyers are active and buying the low end of the market of foreclosures and short sales. There is a good article in the Saturday April 4, 2009 issue of the San Jose Mercury News, Real Estate Section in the “Market Wise” column. “Be Realistic in offers, even in a buyer’s market”. The question given is that the writer has made many offers and are rejected, no response or out bid and don’t even get a counter offer. In short sales and foreclosures the lender’s loss mitigation departments will not give property away. The response is that the buyer and agent will keep writing offers until the market shifts. It further states that the prices reflected in today’s listing prices do reflect the present “market”. Well crafted offers will get the property with experienced agents. ALL WELL SAID! Here is one experienced agent willing to help!

California Association of Realtors (CAR) has launched a Mortgage Protection Plan. It is for 1st Time Home Buyers. It is to give peace of mind when purchasing a home. It will provide six months of payments up to $1500 to meet mortgage payments for 1st Time Home Buyers who lose their jobs. For more information write or call me or see www.car.org/aboutus/hafmainpage/carhafmortgageprotection/

Larry Kudlow you’re the man! If you don’t watch CNBC in the morning it is a good show to give you a pulse of the Financial Markets. This guy puts on quite a show! I enjoy watching and listing on my headset while I work out in the gym at 7:30 am to 9:30 am. Larry has stated that the stock market begins a new bull trend 6 months before and economy bottoms and the recession ends. The Wall Street Journal recently stated that Bear Markets average length is 17 months and we have either seen it or we have 3 months to go. We will see if Larry is right. To back Larry though is Friday’s Wall Street Journal front page “Stocks Leap as Fear Ebb”. It has been happening for some time if you have read my prior letters. This time it was more pronounced. Investors bought globally equities, oil futures, industrial commodities, technology stocks, and junk bonds! These same investments they shunned weeks ago says the article. But if you were watching the slow movements up in the prices of these investments the pros were slowly nibbling weeks ago. What did they sell? “They were selling Treasury Bonds, gold, the US $ and other safe-haven refuges”.

Market Value versus Replacement Cost drives markets off of recessionary bottoms. Whether it is company shares or home values; it is cheaper to buy than to build is the motto of takeover plays, mergers and acquisitions. We get USAA Magazine, our insurance company. The spring issue had a great article on Market Value versus Replacement Value. It stated that what you buy your house for may actually be lower than the cost of building the same house from scratch. That is important to know if you presently own and are in the process of buying. In many parts of the country home prices have fallen as much as 30%. While Silicon Valley may be protected in some regards there has been a fall off in home prices from 2006 of at least 13% on average. Meanwhile construction costs which include concrete, lumber, steel and labor are ever rising. A tip for the buyer who is looking at buying and fixing up the property, take the purchase price and cost of repairs and add that together and look at another house that needs no work for the same price. You will buy it with a cheap mortgage in historic terms; Home Mortgage Rates have NEVER been this low. Does it really matter cutting off on the sales price and missing a buy when you will have the cheapest mortgage rate ever for the next 30 years?

FIVE HOME TRENDS FOR 1010
1. The Live-in Kitchen
2. Living Within Our Means
3. The Green Kitchen
4. The Wellness Kitchen
5. Cooking for Fun
“For more on this subject write me for details.”

SIX LANDSCAPING TRICKS
1. Add Splashes of Color: iceberg roses, purple salvia, lavender, crape myrtle tree will add color to the seasons.
2. Size trees and shrubs to scale. Don’t block doors, windows and other architectural features on the home’s façade
3. Maintain a perfect lawn. Don’t have brown spots, some rocks, pebbles, boulders, drought tolerant plants and ornamental grasses will generate more kudos, especially in drought times and water conservation times as we may have after our rain season ends.
4. Light up the outside with good illumination, create drama at night. Use low voltage lamps to highlight branches of specimen trees, a front doors, walks, and corners of the house.
5. Let them HEAR THE WATER, nothing is more soothing than the sound of water. Use fountains or create a small stream with rocks to provide pleasant gurgling to block street noise.
6. Use decorative architectural elements, a new mail box, planted window boxes, and a low fence wrapped in potatoes vines ass cachet, particularly in winter months.

Special feature: DOES DNA AFFECT YOUR INVESTING PERSONALITY?

Again a feature in the WSJ (Wall Street Journal), thanks to Jason Zweig, did you buy high, sell low zig when you should have zagged. Maybe it was your ancestors who gave you this trait. Or are you the fortunate that are just never on the wrong side?

25% of people with European ancestry have a gene that dampens their fear circuitry when it comes to making money. 20% of Caucasians have a gene that makes them more responsive to gambles. Some people are 50% more sensitive to fear. Well, does that mean we all go out in swab our mouths and get tested? 20% of the variation in risk taking among individuals is genetically determined; the rest comes from upbringing, experience, education and training. There is always a tug of war inside us all between nature and nurture. Bear Markets and Recessionary Markets give nature the upper hand, it never more important now to stick to disciplines that can over ride your genetic impulses.

Warren Buffet said it perfectly, during time of greed there should be fear, during times of fear there should be greed. Find a seasoned pro and work with them to guide you through the times of nature. I didn’t get this gray hair from a bottle!

Until later…..