The abandoned Oakland Naval hospital (for an interesting photo of the site from 1946 click here) is a very controversial topic these days. It is in the heart of one of Oak Knoll one of Oakland’s most favored neighborhoods and it is the site of one of Oakland’s largest proposed real estate developments. The developer SunCal Cos. of Irvine has set out to build 960 homes on the site.

The controversy is not just the development, but the developer wishes to put $16,000,000 homes atop the prized Oak Knoll ridge. Many neighbors had wished that the ridge line would not  be compromised by the 170 acre project. The project is being designed by well known architect Peter Calthorpe.

The developer has already made some major concessions to the city, including paying $6 million to move and upgrade the Seneca Center, which serves troubled youth, into a new school on the parcel. They will also have up to 72 units of affordable housing, 160 units of senior housing and 50 acres of open space designed in to the project.

The project is moving quickly. The proposal goes to the city planning commission tonight. The homes price’s will range from $700,000 to millions of dollars for mini-mansions over looking the Bay Area. Demolition of the old Naval hospital is expected in late summer or early fall.

The project is expected to bring 1 billion dollars in revenue to the city of Oakland. The city is planning on the project bringing much needed revitalization to East Oakland and to breathe life into the neighborhoods shops and restaurants.

The news was reported in the San Francisco Chronicle. This will be an exciting new project to watch develop.

If you have not already noticed, Zillow was on the cover of Fortune Magazine. Lately, Zillow seems to be the worlds most effective PR machine. There is also a very different article in the Wall Street Journal today that sites Zillow’s inaccuracies. I recently had a run in with an inaccurate Zillow Zestimate that I thought would be fun to share.

Above are two Zestimates I performed using Zillow on February 13, 2007. The two properties are right next door to one another. 4347 Harbord was sold in April of 2004 for $1,152,000. 4355 Harbord was on the Market and recently expired going unsold. I have physically seen the inside of both properties.

First, I can tell you that the Zestimate on 4355 Harbord is inaccurate because there are approximately 172 livable square feet that are not accounted for in the public records and thus they are not accounted for on Zillow’s site. The real square footage of the property is approximately 1,900 square feet. This has long been one of Zillows major problems that they will have to fix in order to make their Zestimates more accurate. Much of the public records in the Bay Area are incorrect. Zillow’s Zestimates rely on this data. While I was visiting the property I also read the disclosures. The house was pretty clean, but don’t ask Zillow about disclosures. Their Zestimates do not take property inspection reports and seller disclosures in to account. The moral of this story is that if you put garbage in to an equation you get inaccurate garbage out. Zillow has attempted to ameliorate this issue, by allowing users to alter their home’s data on their site. Would you trust a seller to accurately post their data? If you do then my 10,000 square foot home just went up for sale!

Second, if the square footage of these two homes is now almost identical, how can there be a $600,000+ difference in the Zestimates. My guess is that Zillow is weighting the more recent sales data of 4347 Harbord that sold for $1,152,000 in 2004. It is important to note that Zillow’s Zestimate is a complicated algorithm. An equation that is not public knowledge might I add. No bank would accept the validity of an appraisal if they could not follow the logic behind the report. Yet, Zillow is feeding the public data that is faulty all the while leaving their evaluation methods shrouded in mystery.

Third, Zillow is claiming that they can address a home like a stock. Check out the thirty day change above. How could one home go up by $110,201 in the last 30 days while the other one goes down by $30,782. For heaven sakes the two properties are right next door to one another. When we value stocks in real time like on Etrade, it is based on actual sales that are occurring every second constantly altering the value of the stock. Since most homes are not even sold from one year to another trying to evaluate price change every thirty days is crazy. Although viewing houses like stocks may be intriguing it is just not accurate. I will be the first to tell you your house is not an ATM and it is not a stock.

I am bringing this to your attention, because I viewed 4355 Harbord. I viewed the property disclosures. Their was nothing dramatic about the disclosures (another important piece of the value equation that Zillow knows nothing about). The property was listed at $930,000 and has now expired going unsold. If you are a seller you may want to visit Zillow’s site before listing your home and while you are at it check out my previous article, Zillow - How Inacurate Data Could Harm Your Homes Value.

My personal opinion is that if a company puts an exact price on a home that is so exact as to be quoted to the dollar (ie. the Zestimate on 4355 Harbord of $811,255) then they are influencing the market to believe that the stated price is the exact price. Even if they post a range of values below. If a company estimates a 30 day trend, they make themselves look like an exert who has been tracking value over time. Even if their original estimate is completely inaccurate. Don’t get me wrong, Zillow is interesting and it is good for estimating general price data. I recently used Zillow’s heat maps to help a client who was moving out of the area and needed a general sense of neighborhood pricing in a city out side of California. It is good at generalities, just don’t rely on it for specifics.

We recently followed this story in a posting entitled Albany Has Plans to Close Streets Leading to the El Cerrito Plaza. The El Cerrito city counsel has just upheld a permit extension that will allow for the development of the project to begin by early 2008. Many home owners and businesses in the area fear that the project will increase traffic and pollution in the area.

Much of the resistance to the project seems to come from the North Albany Neighborhood Association that claims the conditions of the use permit need to be strengthened. Supporters of the project say that this will provide needed housing close to public transit and it will restore a portion of Cerrito Creek that is currently in a culvert.
the 128-unit project will be built along the western side of the El Cerrito Plaza. The new news of the extended use permit was covered in the Contra Costa Times.

Here are some interesting facts for you for President’s Day.

Presidents’ Day Fact Sheet 2006

• On average, the American president has been 71 years of age at natural death.

A new phenomenon in lending is called “trigger marketing”.  When you ask a lender to pull your credit, your information is then sold to many different lenders.  These lenders then call you to offer you a mortgage or to give you a second opinion.  Your information is sold without your knowledge or approval.  The credit bureaus claim this is legal, but is it right?  Do you want your personal information sold to people you don’t know?  This personal information includes your phone number so they can call you.

You can opt out of this by following the instruction in the article below.

Last update: January 28, 2007 – 7:32 AM

Loan applicants may borrow annoyance
along with the cash
Taking out a loan? You might want opt out of unwanted marketing pitches.
Jackie Crosby

When Martha Ortman and her husband decided to refinance their home last year, they agreed to have a mortgage company pull their credit report. Then came the surprise: Within hours, the Fridley couple had fielded eight calls from mortgage companies pitching them on lower rates, better terms or a faster turnaround. This went on for two weeks. “It was like vultures around a dying animal,” Ortman said. “They smelled blood and were drawn to it.”

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I have often said that 70-80% of home buyers search the web before viewing a home. Thus if you are a seller there is a good chance that the buyer of your home will view the on-line marketing materials before they write an offer on your home. That fact alone should make you jump on the internet and see how and where your home is advertised.

Currently, real estate agents have the ability to track on-line marketing data. We can see how many people viewed our online advertising and we can see where the traffic is coming from. This data is invaluable for sellers to take action on managing a listing. It has become so valuable, that viewing and discussing this data has become common place with my sellers.

In order to better serve my clients, I track the many new real estate search services, (ie. Craigslist, Google Base, Trulia, Oodle, Propsmart, Movoto, Vast, Edgeio, ect…) that are trying to capture the large number of buyer’s eyes that are searching the web. So, this begs the question, what is the best place to post a listing and who has the largest market share for internet real estate searching? In other words, where should your agent be posting your home to get the largest viewer ship possible? Because of the large number of new search tools available, my first assumption was that I would see a fragmenting of market share and that it was important for listing agents to post to all of these services in order to best serve their clients. Although, I still believe that maximum visibility is best and that it is a must to post to all of the real estate search sites, the reality is that there is a clear market share leader in Bay Area real estate listing searches. It is not one of the flashy contenders you might expect.

So, where do a majority of buyers search the web? Above is a graph of marketing data from a 2007 listing that I have sold. Over 2000 people viewed the marketing which proves that the internet is an important place to advertise your home. Where else do over 2000 buyers get and interactive experience with your property? I know for a fact that the buyer of this home first encountered the listing on-line. Thus, it should be interesting to sellers where the majority of their internet advertising is being viewed.

The winner is… Google Base Craigslist! It was amazing to see that 90% of the on-line viewing occurred on Craigslist. That means that the rest of the 7+ companies that the marketing was posted to are fighting over 10% of the remaining viewings. That is approximately 200 or so viewings on the above property. This shows that Craislist has a commanding presence in the Bay Area! This is truly interesting considering Craigslist is the least hi-tech of the above mentioned search sites. It is more like a interactive newspaper classified ad then a slick hi-tech searching device.

I must note that the above data does take into account many but not all of the major stake holders in real estate listing search. There are many other avenues for marketing a property properly for sale (ie. MLS, open houses, the newspaper, realtor.com, private brokerage sites such as redoakrealty.com, individual agent web sites like katieandmark.com, ect…). I will also note that each property in the Bay Area tends to be different from the one next door. So, I approach each of my listings as an exclusive marketing opportunity that needs to be calculated, unique, and individualized.

This is a very interesting article about research on happiness and how this relates to buying a house.  There are useful tips in here for you to maximize your happiness.

Monks, Not McMansions, May Hold the

Key to Happiness

By Katherine Salant
Saturday, February 10, 2007; F07

Most people think economists study money.

In fact, economists use various analytic tools to predict behavior. True, the majority of economists’ predictions deal with financial matters. When economists talk about new houses, for example, their focus is invariably on the factors that determine prices, such as mortgage interest rates.

But some economists have gone in a different direction. Rather than study dollars and cents, they have used the tools of their discipline to explain other phenomena, such as why people make certain choices.

In the past, economists assumed that an individual’s choices were always guided by rational self-interest. Today they recognize that human foibles, biases and our hunter-gatherer origins can often be critical factors.

University of Chicago economists Luis Rayo and Gary Becker, a Nobel laureate, have carried this approach one step further and used economics tools to predict which choices make people happy. Their research is based in part on study of recent developments in psychology, biology, evolution and neuroscience, including brain scans.

In a recent interview, Rayo discussed their research on happiness as it applies to the purchase of a new house, an enterprise that most find is fraught with emotion.

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I often find myself telling clients that the Bay Area is full of individualized real estate micro-climates. With buyers I am always hoping for bloated inventory and
inefficiencies in different local markets that can be used to minimize their cost and maximize future property values. With sellers I am always looking for periods of slim inventory and positive market conditions to maximize their sales price and current value. Some of my clients are selling in one area and buying in another which makes their predicament all the more complicated.

There have been many times I have read articles and looked at data that makes our markets seem similar and flat. The reality is that the Bay Area is an amalgamation of complex micro-climates and that the job of a Realtor is easier said then done. Altos Research shows this trend in their real-time median price data graphs shown above. This is a great visual representation of how 6 different Bay Area cities median price data can look. It is also a great representation of what a Realtor must navigate in order to serve their client’s best interests. These 6 cities are only several miles apart in terms of geographic location, but they are worlds apart in terms of market micro-climates.

It is evident that the media is behind the investment curve. I studied this latent effect in a college business course, when I reviewed a study that looked at all of the top tier money magazines (for example Money, Forbes, BusinessWeek, ect…). The study assumed that an individual bought in to all of the magazines combined hot stock picks. The study found that following this strategy would net you a worse than -200% return. Yuck! The interesting conclusion we came to was that by the time the information had been printed in the magazine, it was common knowledge. That the information contained in the article was useless, because it was common to everyone, and the market had already adjusted for the news.

So how does this relate to real estate? Every day we are bombarded with news information about our local real estate markets. For the past 8 months I was bombarded with information about how the real estate markets were slowing down. Being that I am a constant practitioner of selling real estate (through transacting I constantly have my finger on the markets pulse), I can say that by the time the media started talking about a slowdown, it had already happened. Behind the curve once again. This is important, because many times when I first meet with real estate buyers and sellers, I find they are relying or are influenced by what the media has to say. A generally bad decision unless you want to be behind the curve.

Above is a graph from a company called Altos Research. Altos Research provides real time real estate data to customers (Stay tuned, I am currently writing a posting that will use Altos Research’s data to show how individualized neighborhood real estate markets are very different from each other). On their home page they show the above graph, which I thought is an excellent illustration of the news media being behind the real estate slowdown curve.

How do you estimate the market? How do you get your market news? Let us know what interesting uncommon information you rely on.

The Wall Street Journal recently published a lengthy article on the retirement lies we tell ourselves. I’m posting these over time so that you have a chance to read this in shorter snippets. I have heard all of these (and more!) from clients. The home as a safety net requires either a reverse mortgage that is costly and has limited loan amounts or a sale of the home and a move to a less costly locale. It’s likely that neither of these will be an option that most people will want when they retire. Will you want to move away from the community you know? What if your children and grandchildren live nearby, do you want to move away from them?

Here is the 2nd Retirement Lie We Tell Ourselves:

“My home is my safety net.” To listen to many people in the 50-plus crowd, they have little to worry about when it comes to financing their retirement. That’s because they can always turn to the equity in their homes. A recent study by Spectrem Group, a consulting firm in Chicago, found that almost two-thirds of affluent baby boomers (with investable assets of at least $500,000) intend to finance their retirement by selling their homes. That should come as no surprise; housing prices in many locales have skyrocketed in recent years. (The median value of the primary residence among Americans age 55 to 64 rose to $200,000 in 2004 from $139,000 in 2001, according to the Federal Reserve.) The home-as-piggy-bank strategy, though, may not be as easy or attractive as it first appears. Most people have two options: trade down to a smaller, less-expensive home, or borrow against their equity. The first option, in theory, will result in lower annual expenses and a nice addition to your nest egg (if you walk away with a profit). Most Americans, though, wish to remain in their homes and communities as they age. Selling might sound good today, if you’re several years from retirement. But when the time comes, will you actually want to pack up and move? And will you be able to adjust to a smaller residence? Borrowing against your home, meanwhile, could be tricky. If interest rates rise in coming years, the value of your property could fall, meaning you may not be able to pull as much money from your home as you wish. Reverse mortgages are attracting more borrowers, but fees are high, and many loans are capped. (Depending on your age and where you live, a $300,000 home might yield $115,000). REALITY CHECK: “A home is not a panacea for shortfalls in retirement savings,” says Andrew Eschtruth, an associate director at the Center for Retirement Research at Boston College. At best, “you can tap only a portion of your equity,” he says. If you decide to trade down, the sooner the better. Given that many retirements today will last 20 years or more, it’s never too early to reduce expenses and shore up savings. If you plan to apply for a reverse mortgage, think of those funds as a last resort — to help pay for medical bills or long-term care — and not as money for groceries or vacations.

In 2006 I had the pleasure of sitting on the board of the Red Oak Realty Opportunity Foundation also known as ROOF. We just had our annual meeting to identify the charitable organizations that would receive funding and I must say that it was a pleasure to help decide where our donations were allocated.

My experience with ROOF can be summarized by a story that occurred 2 years ago. Our office had a charity called Youth Bike Adventures (Trips for Kids) come and speak at a company meeting. One of the programs leaders who had just returned from an excursion in Berkeley’s Tilden Park spoke about how much they enjoyed their trip. It was a touching story of children who had enjoyed their first trip to the East Bay Regional Park System. Yet, nothing would prepare me for how the story ended. At the end of the trip one of the children had said, “I never knew that the parks in the hills were open to us.” His statement was more profound then even he knew. It instantly struck me how could any East Bay resident not know that the East Bay Regional Park system was public and open to all? It was at this point that I realized how much of a difference ROOF makes in the community and that I wanted to get more involved in the ROOF organization. ROOF is one of the sole funders of Youth Bike Adventures.

This year we broke the roof raising over $100,000. on January 18th, we held our annual ROOF Awards Evening , where we celebrated all of the donations made by Red Oak Realty’s Realtors, business associates, and clients. The evening could not have been more perfect, filled with music by the Cantare Con Vivo Children’s Choirs of Oakland, who is one of ROOF’s recipients. Berkeley’s Mayor Tom Bates attended the event and praised the work of ROOF.

It was a banner year for ROOF. Not only did we break all of our past donation records, but we also received the Berkeley Association of Realtors “BAR Cares Award”, given “in appreciation for members who make a difference in our communities.” It is nice to know that we can all make a difference in the communities we live in and serve. A big thank you goes out to all for making this a banner year for the Red Oak Realty Opportunity Foundation.

The Federal Reserve Board of Governors kept the Federal funds rate at 5.25% yesterday.  This means that the Prime Rate will stay at 8.25% and that home equity loan rates will not change.  The prime rate is 3 points above the Federal Funds rate.  Check out bloomberg.com to learn more.