Don’t be fooled by looking at the market in black and white. Last year was a very interesting year for real estate to say the least, and some very profound things were happening here in Greenridge. Not all Eichlers are created equally, and the condition of the property both physically and financially will make a huge difference in regards to price. For example, in 2010 we saw multiple sales in the mid-$600k’s while most of the Eichler sales landed in the mid-$500k’s, and one as low as $505,000. Looking at this on paper can be disturbing for owners and exciting for potential buyers.
This is also the information that appraisers will review to determine value in the market when purchasing or refinancing a home and in my opinion can be misleading and actually hinder well-qualified buyers from getting a loan. Facts need to be taken into consideration that don’t translate when reviewing the listings on MLS, Redfin or any other website. It takes experience and physically seeing the properties and reviewing the disclosures, including but not limited to the pest report, transfer disclosure statement, and seller questionnaire. I have fortunately been to every property that’s been sold in the neighborhood in the last 3 years and because I know Eichler homes and believe I have a strong sense of the market, I can honestly say that in my opinion the Eichler market in Castro Valley has been status quo for the last 2 years, even with overall sales being less in 2011 than 2010.
I don’t want to oversimplify, but the truth of the matter is the homes that sold in 2011 needed more attention than the homes that were sold in 2010. The homes sold in 2010 were more finished and didn’t need as much of an out of pocket expense for repair, remodeling or restoration when the new owners took possession. Don’t get me wrong, the recent sales are all great homes and the new owners did get an excellent value, but you need to take into consideration all aspects of purchasing a home including immediate needed repairs. This is especially important when it comes to things like boilers/heating and roofs because not only are they expensive and essential, but these must be in working order to get an FHA loan funded. Repairing the Section 1 damage listed in the pest report is another requirement now for FHA funding and a couple of the homes most recently sold had substantial Section 1 damage.
Repairs can be negotiated during escrow but it is much more difficult to get them done when working with distressed properties such as short sales and bank-owned properties (also known as REO’s). They will at times give credits or price reductions, but the buyer is still going to have to take care of the issues when they take possession of the property. Short sales also take time to complete and there are a lot of factors that will determine the length of the process with the most important being that all conditions of the contract, including price, are to be approved by the lender (or in most cases, the multiple lenders), and it’s not uncommon to take 6 to 9 months from ratification to possession. I can talk about distressed properties at length but I will save that for another posting or personal conversation. I am a distressed property specialist and I think they can be excellent investments and incredible values, but it is important for buyers to keep in mind every aspect of the purchase from beginning to end and beyond.
So where is the market headed? Well, the most recent sales have been distressed properties and the latest was almost $600,000, making owners feel a little better and buyers perhaps more anxious. The last 2 properties also garnered multiple offers, which make me believe there are more buyers than Eichlers for the right property. Fortunately for the neighborhood the new owners of the properties that were sold are investing time and money in their homes to make them better and adding value to Greenridge. There is also another property in escrow that I believe will be an excellent indicator of the market returning to stronger numbers for owners, yet still lots of value for potential buyers.