The University’s ambition to build a 125 million dollar new stadium has hit a snag. Over the last year I have witnessed numerous postings about saving Berkeley’s oak trees from the wrath of UC Berkeley’s new stadium bulldozers. It appears the trees, neighbors, and city officials may have won a major victory.

On January 29th Bloomberg.com posted that the Alameda County Superior Court Judge Barbara Miller issued a preliminary injunction barring the University from removing the trees. Barbara Miller cited that the removal of the trees would cause, “irreparable harm.” It currently looks like the city of Berkeley and the environmental groups will likely succeed in blocking the universities construction. You can see more about the cities position on this conflict at the city of Berkeley’s web site.

The New York Times and Monterey County Herald also noted that the project was challenged not only on the basis of the oak trees, but also based on the Hayward fault that would bisect the proposed project. The University maintains that the project is seismically safe and that the new stadium is a big improvement over the current structure. It will be interesting to see if the University will continue the fight for this site, or if this injunction will force them to identify another location.

This is good for our property values as strong demand for jobs leads to strong demand for housing.

January 29, 2007

Silicon Valley Rebounds,
Led by Green Technology

New York Times, January 28, 2007

By LAURIE J. FLYNN

SAN FRANCISCO, Jan. 28 — After five years of job losses, Silicon Valley is hiring again. The turnaround coincides with a huge increase of investment in the emerging category of clean environment technology.

“We’re looking at a tremendous market opportunity,” said David Pearce, founder and chief executive of Mirasole, a manufacturer of solar cell technology in Santa Clara, Calif. “Supply is the only constraint.”

Mr. Pearce founded the company in 2001, but it was not until the middle of 2006 that Mirasole embarked on an ambitious plan to grow from 25 people a year ago, to at least 300 employees by the end of 2007. Today, Mirasole has 95 employees, most of them engineers and scientists.

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Use these calculators as a way to begin thinking about how much you will need to fund your old age. Someday, you will not be able to earn income through your work, you will need to have accumulated capital to pay your way. How much will you need and what is your strategy to getting there? I’ll talk more about this in later posts. Remember, the younger you are when you begin, the less costly it is.

O.K., Financial Planners, Grab a Calculator and Let’s Get Started

By DAMON DARLIN
Published: January 27, 2007, New York Times

The only way to know whether you have saved enough for retirement is, when you suck in your last breath, for someone to show you your bank statement.And you smile.

Until then, you’ll have to depend on financial planners and software.

In all the debate over whether Americans are saving too much or too little, there is considerable agreement on a few things. For instance, it pays to start saving early because the power of compounding, especially in a tax-free account, means you’ll have more money later. The other advice that everyone gives the nod to is that you need a plan and you need to revisit that plan every year.

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The seduction of low payments blinded a lot of homeowners to the underlying high interest rates. They are now paying a high price for going after a low payment and for not understanding what could happen with this product. Knowledge is the key to avoiding these mistakes. Learn about the various loan programs before signing up.

Ruling Faults Lender

In Option ARM Suit

A federal district court judge ruled that a Maryland bank must rescind loans made to certain borrowers who took out so-called option adjustable-rate mortgages because it violated the Federal Truth in Lending Act.

The ruling comes at a time of heightened scrutiny of option ARMs and other nontraditional mortgages, which grew in popularity during the housing boom. Option ARMs typically carry a low introductory interest rate and give borrowers multiple payment options.

In recent years, option ARMs have found favor with borrowers looking to buy houses they couldn’t otherwise afford and with homeowners looking to pull out cash without increasing their monthly payments.

Some $208 billion of these loans were originated in the first nine months of 2006, according to Inside Mortgage Finance. That is on top of $280 billion in option ARMs originated in 2005.

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The Mercury News has a real estate blog called the Square Foot Blog, that I often read. It has an interesting perspective on the Silicon Valley real estate market. They recently wrote an article, in which they discussed the flattening of our real estate market.

“the volume of existing-home purchases was down sharply in December compared with a year earlier, median prices are holding steady compared with December 2005.”

While the volume of sales dropped, Santa Clara County’s median home price was actually up by 1.4 percent from a year ago. This same phenomenon is evident in many other Bay Area counties. This is reflected in the inherent resiliency of Bay Area sellers. Typically sellers in the Bay Area have strong financial backgrounds and good jobs. As the real estate market slows they tend to have staying power and they ride out rough patches in the market. You can see this effect in the data from my recent California Data Study Part 1 post. I looked at California’s appreciation history versus prime interest rates. In the past, we can see that as interest rates rise California appreciation slows, but interest rates alone have not made property values take a nose dive.

Lately, I have heard many different opinions on the Bay Area real estate market. Some think the sky is falling, or the proverbial bubble is bursting. Others view the flattening of our market as a buying opportunity. I think we all could benefit from a review of the old fable Chicken Little. I encourage buyers to look at the data versus following a feeling. The data shows us that the sky is not falling.

Many people wish they had a crystal ball that could tell us which way the real estate markets would go in the near future. The reality is that the market will go up… then it will go down… Then it will go up again… then it will go down again. The most successful property owners I have seen accept and are comfortable with this fact. So they often buy and hold for the long term (5-10 years). They know that over the last 30 years California’s real estate appreciation average is about 9 percent. We are now seeing a normalizing of our market where there is a healthy amount of inventory, and buyers and sellers have generally equitable power to transact. Successful property owners know that since 1947 average interest rates are around 8-9 percent and that currently 30 year jumbo rates are historically low around 6 percent.

The Bay Area has a robust real estate economy and our current market climate has many opportunities. One thing is for sure, our market is never boring.

Berkeley’s Iceland will be closing after giving the community 70 years of ice skating memories. The story was reported by the Contra Costa Times on January 19, 2007. The owners commented that declining business, demands of maintaining the 1940’s building, and the aging refrigeration system are the reasons for its closure. The rink was put up for sale last year for 6.45 Million, but received no offers.

Iceland will be missed by the community, its patrons, and myself who often skated at the rink as a child. You have given us many fond memories. Hit the ice for the last time before Iceland closes on March 31, 2007.

Orlando based hotel owner CNL announced on late Thursday afternoon that they would take $22.50 per outstanding share of common stock in cash from Morgan Stanley. It is a 6.6 billion dollar deal that will include the Claremont, La Quinta Resort & Club and PGA West in La Quinta, the Grand Wailea Resort Hotel & Spa in Maui, Hawaii, and other well-known resorts. The deal is expected to close in the second quarter of 2007. The deal was noted today on Yahoo Finance.

Realtor Magazine online has just posted an interesting web page that has illustrations, photographs and detailed descriptions of different residential architectural styles. They also nicely break down the different home features (such as dormers, molding or roof styles) with in each style.

The East Bay’s neighborhoods are a menagerie of different architectural styles and this site is helpful for identifying different styles of architecture within a neighborhood. Looking at this page takes me back to some of the art history courses I took in College.

There is an interesting story in the Contra Costa Times posted on Friday the 12th. It looks like the closing of Cornell and Talbot Avenue and creation of a cul-de-sac at the end of Evelyn Avenue on the south side of the El Cerrito Plaza is in the works. This could benefit the apartment buildings and houses located on these streets by reducing traffic. It could also cause much of the through traffic to be shifted to San Pablo Avenue, creating traffic jams.

To complicate matters further, the city seems to be using the closure of the streets as a bargaining chip with a developer that has a proposed 128-unit condominium building to be built in the El Cerrito Plaza parking lot. It will be interesting to see how this progresses.

If you love farmers markets, you will appreciate this link to a Contra Costa Times article that lists the local farmers markets times and locations.

As we identified in our last historical data study e-mail, we are shifting from a seller’s to a buyer’s market. More inventory has spawned buyer power. Our transformation to a buyer’s market has continued to create valuable buying opportunities for many of our clients. Congratulations to those of you that have recently purchased homes and investment property with us. Our market is developing nicely allowing buyers to negotiate value while maintaining historically low interest rates. We are currently immersed in a much more balanced market.
Below is the second installment in a research series we have created to document the history of the California real estate market. As promised, we have localized our appreciation data, and in this installment we are taking a closer look at the Bay Area. Below is our study of Bay Area appreciation history verses prime rate history.

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Calling it ‘retirement’ doesn’t really mean anything to someone who is 30 years old. Yet it is precisely that decade that can make such a huge difference in someone’s retirement 35 years from now.

• ‘Paying for yourself in old age’ is probably a little bit better than calling it retirement.
• How about making sure you aren’t a burden to your children in old age?
• Or, invest now so when you are old you can do all of those things you don’t have time for now.

Planning for old age isn’t very appealing but having a good time when you are old will be. I think we each could do ourselves a favor by sitting down occasionally and imagining what old age would like with too little money in the bank. This is a sure reality for about 70 million baby boomers.

While you are doing that exercise, take some time to imagine how great life will be if you have plenty of money in the bank and the dignity of having worked and saved to get there. Social Security – this is a promise that no one wants to keep. Young tax payers resent paying into a system where they will likely not see a dime. Raising the ceiling on how much income is taxed could cost jobs and could send us into an economic slowdown that would thwart efforts to salvage Social Security.

Lump sum illusion is when someone has $100,000 or $1,000,000 and thinks it is enough. The correct number to look at is the annual income this can generate. 4% withdrawal rate is a good number to use so $100,000 provides $4,000 annually at retirement or $350 per month. $1,000,000 provides $40,000 in annual income or $3,333 per month. If you are used to a gross income of $15,000 per month, then $3,333 is only 22% of the way there. A million isn’t as big a number as it seems to be!

To replace $180,000 in annual income, you need a portfolio of investments that equal about $4,500,000. How’s that coming along? Employer matching of 401(k) contributions is a gift from heaven; one that too many people are not getting because they are not contributing into their 401(k). Longevity risk means that people are going to live a lot longer than they have been planning for. This means that their money needs to last longer so they need to accumulate more and manage their other risks better.

Inflation on milk is different than inflation on health care or college expenses. When the government reports inflation numbers, it is for a basket of goods. Your basket of goods in old age will likely be made up of travel and health care, both will inflate more than the inflation numbers given by the government.

Compound interest is like magic.

This is a worthwhile podcast to build your financial knowledge. Listen for the distinction of longevity risk and lump sum illusion. This will sharpen your financial instincts as you plan and act with your finances for the sake of taking care of your family and your future. The podcast is about 18 minutes long. Unfortunately, it requires a log in but it’s free and takes only a few seconds to complete.

Here is the link to the podcast:

http://knowledge.wharton.upenn.edu/article.cfm?articleid=1533&CFID=679&CFTOKEN=46898762

As a realtor working in the EastBay and living in Point Richmond, I hear lots of comments about the negative perception Richmond has concerning crime. Some people think Richmond is the most crime ridden city in the East Bay. They would be wrong.

Tom Butt, a Richmond city council member, has an e-forum he uses to regularly update interested constituents about the issues and happenings in the City of Richmond. He recently posted an interesting violent crime report by the FBI. The Semiannual FBI Crime Report can be seen on the FBI’s web site. The Press release on the story and a partial transcript of the corresponding KRON channel 4 news story can be read on Tom Butt’s e-forum.

Knowing that the city has long attempted to rid itself of its sometimes unprecedented violent image, it is nice to see that violent crime is down 8% in the city of Richmond, while the national average increased by 3.7%. It is my view that most of the violence in the city of Richmond is contained to a 2 mile radius which has been dubbed the Iron Triangle.

I have sold many homes in the city of Richmond and I have experienced that 90% of the city’s neighborhoods resemble the good neighborhoods of other neighboring cities, such as Berkeley, El Cerrito and Pinole. When I envision the city of Richmond I think of the cities 32 miles of coastal shoreline, and its panoramic, unobstructed views of San Francisco, the Golden Gate Bridge and Marin’s Mount Tamalpais. The city is home to some of the Bay Area’s best seaside parks, beaches, fishing piers, biking and jogging trails, wildlife preserves and yacht harbors. Richmond has many million dollar homes with bay views in neighborhoods that resemble Sausalito not South Central Los Angeles. I have long believed that Richmond’s real estate has been undervalued. When Richmond gets control of its hooligan image, it will have some of the most valuable sea side real estate in the Bay Area.

Some of you may know that Ben Stein is one of my favorite writers. Although I don’t agree with Ben on everything, I do appreciate when he reminds me of all that we have to be grateful for. I’m posting this today as a helpful reminder to begin the New Year counting our blessings instead of counting our shortcomings.

June 5, 2005
Lessons in Gratitude, at the Basement Sink
By BEN STEIN
My father entered Williams College in Williamstown, Mass., in September 1931. The United States was entering the downswing of a small uptick at the beginning of what would be the worst industrial depression in history.

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